UK: Comparative Advertising- General Price Comparisons Confirmed

Last Updated: 11 October 2006
Article by Lucy Kilshaw and Susan Barty

In a case concerning price comparisons with low cost Belgian supermarket chain Lidl, the ECJ has confirmed that the Comparative Advertising Directive allows general comparisons in advertisements between prices of baskets of goods without the need to list exhaustively all products which have been compared. However, details must be given as to where such information may be found.

The court warned that referring to a range of price differences between competitors, without distinguishing which price variation applies to which competitor, may be misleading. The clarification is likely to influence the ASA’s adjudications on future claims comparisons and will be relevant to UK courts. It is reassuring for advertisers that the court recognised it as unrealistic to include all details and confirmed that a common sense approach should be taken.

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Comparative advertising- general price comparisons confirmed

In a case concerning price comparisons with low cost Belgian supermarket chain Lidl, the ECJ has confirmed that the Comparative Advertising Directive allows general comparisons in advertisements between prices of baskets of goods without the need to list exhaustively all products which have been compared. However, details must be given as to where such information may be found.

The court warned that referring to a range of price differences between competitors, without distinguishing which price variation applies to which competitor, may be misleading. The clarification is likely to influence the ASA’s adjudications on future claims comparisons and will be relevant to UK courts. It is reassuring for advertisers that the court recognised it as unrealistic to include all details and confirmed that a common sense approach should be taken.

The Comparative Advertising Directive (97/55/EC) permits comparative advertising on certain conditions, including that it is not misleading, it compares goods or services meeting the same needs/purpose and objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price. There have been ongoing aggressive comparative advertisements between UK supermarkets on pricing issues which have been considered by the Advertising Standards Authority (ASA). However, this case, between Belgian supermarket chains Colruyt and Lidl, concerning the interpretation of the Directive was referred by the Belgian courts to the ECJ.

Facts

As part of its advertising campaign Belgian supermarket Colruyt sent to customers a mailshot stating, "Last year, 2003, you were able once again to make significant savings with Colruyt….we have calculated that a family spending EUR 100 each week in Colruyt stores… saved between between EUR 155 and EUR 293 by shopping at Colruyt’s instead of a hard discounter or wholesaler (Aldi, Lidl, Makro)."

Based on their price checking mechanisms they also claimed, "The result: at Colruyt’s you enjoy, every day and at any time of the year, the lowest prices." Similar statements appeared on till receipts. There were also charts setting out the price differential between Colruyt and its competitors, which was stated to have been calculated on the basis of a daily comparison of the prices, including promotional prices, of comparable products sold in each Colruyt store and in the competing stores located in the region. The letter and the checkout receipts referred to Colruyt’s website where further explanation/details appeared.

To arrive at the comparison Colruyt had compared a very wide selection of individual prices on a monthly and annual basis sold by the various outlets. Individual prices were then weighted according to the quantity of each product purchased from Colruyt.

Complaint

Lidl brought proceedings in Belgium on the basis that the advertising was not objective, not verifiable and misleading. Lidl was not complaining that the price comparisons of particular products were unfair; rather the way in which the general claims were made. The ECJ found as follows:

Objectivity: A comparative advertisement does not need to refer exclusively to pairs of comparable products, viewed separately, but instead can relate collectively to two sets of comparable products. Obviously the individual pairs of products must satisfy the test of comparability.

It is not a requirement to list exhaustively all products compared in each advertisement – practically this could be very difficult on limited advertising space. However, the products must be capable of identification in order to verify the accuracy of the general price comparison.

Verifiability: It is not necessary for the advertiser to set out details of the comparison in the advertisement provided that the advertiser indicates where the details may be examined with a view to verifying.

Misleading: An advertisement could be misleading if (i) the reader were misled into thinking that all products of competitors had been compared and the comparative prices calculated, instead of only a sample of products; (ii) it did not inform the audience of the source of the information; or (iii) it contains a collective reference to a range of saving amounts without specifying individually the general level of prices charged respectively by each of those competitors (as in this case).

It is for the national courts to decide whether the advertisements in fact display such characteristics.

Conclusion

This decision has confirmed that a common sense approach should be adopted as to the level of information to be provided in an advertisement and how to avoid making misleading price comparisons. As with all claims, there should be evidence to substantiate all claims made and the source of that evidence provided. There is an obvious benefit to the consumer in having access to general comparisons between retailers rather than very specific data on specific products and it is useful that this has been confirmed. As a word of warning, it appears from (iii) above that it may be deemed misleading to give a range of savings against a collective group of competitors instead of matching the difference to each individual competitor. However, the view taken by the ASA in the UK or the courts may depend on the range cited, for example if the saving range is very narrow it may not be necessary (e.g. £450-£455), whereas a broad range (e.g. £1- £500) may be unfair and misleading.

The clarification is likely to influence the ASA’s adjudications on future claims comparisons and will be relevant to UK courts. Ultimately, a careful balancing exercise needs to be carried out to consider the level of detail necessary in the context of any advertisement, but it is reassuring that the court recognised it as unrealistic to include all details. This case reinforces earlier suggestions that a common sense approach is likely to be adopted.

Case: C-356/04 Lidl Belgium GmbH & Co KG v Establissementen Franz Colruyt NV

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 10/10/2006.

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