The Irish Court of Appeal recently overturned an earlier High Court ruling which stated that Dunnes Stores had infringed Aldi's trade marks by the use of a comparative pricing advertisement. We examine the judgment and the likely impact on retail advertising.
The High Court proceedings
Dunnes ran an advertising campaign in the summer of 2013 which claimed that their prices were cheaper than Aldi's prices for 262 separate products. In June 2015, the High Court held that significant differences between 14 products meant that the advertisements were in breach of both the European Communities (Misleading and Comparative Marketing Communications) Regulations 2007 and the Consumer Protection Act 2007. A further 247 labels were condemned for similar reasons for their failure to specify the comparable products. The campaign included shelf-edge labels, banners and floor stands which were all found to be unlawful.
At a later hearing of the High Court, a permanent injunction was granted against Dunnes.
Questions raised on appeal
Central to this appeal were a number of legal questions:
- Did the trial judge apply the correct legal
tests?
Under the 2007 Regulations, in order for a valid comparison to exist, the advertisement or communication must objectively compare one or more features of the products. The feature(s) must be material, relevant, verifiable and representative. Judge Cregan, in the High Court, understood the test to be that "if the plaintiffs can establish that the defendant's advertisements do not objectively compare the relevant features of the relevant products, then the defendant's advertisements infringe Article 4(2)(d)." The High Court took the view that, if that part of the test is satisfied, the comparative advertisement is unlawful and there is no need to further consider whether the advertisement is misleading. The Court of Appeal disagreed with the High Court's interpretation of the test. In particular, it noted that the 2007 Regulations do not require a comparison of all material, relevant, representative and verifiable features. As a result, it found that the High Court had begun its determination of the case with an incorrect interpretation of the 2007 Regulations. - Was the judge incorrect in his evaluation of the expert
evidence?
Dunnes also took issue with the High Court's almost exclusive reliance on the evidence of the expert witness put forward by Aldi. This expert's evidence appeared to suggest that any material, relevant, verifiable and representative differences between the products must be made known to the consumer in comparative advertising. The Court of Appeal did not agree with this evaluation of the legal rules. It also criticised the lack of reasoning for the preferential treatment of one expert witness's testimony over another. However, this point alone was not enough to overturn the decision. - Was the High Court justified in finding that the
advertising was misleading within the meaning of either or both the
2007 Regulations and the 2007 Act?
The High Court held that the advertisements in question were in breach of various provisions for failing to specify exactly which Aldi product the advertisement related to. The Court of Appeal relied on the CJEU judgments in Lidl Belgium v Colruyt and Lidl v Vierzon in deciding that a comparative advertisement containing a generic description of goods does not infringe the Regulations. The Court was of the view that "no sensible person could be misled by the use of general slogans that are the commonplace stuff of most advertising" and considered the trial judge's approach to be "unrealistic and inconsistent with the attitude to be ascribed to a reasonably well-informed and circumspect shopper". The Court of Appeal upheld the illegality of the relevant banners because they did not objectively compare individual products. They instead contained pictures of a cluster or a basket of goods.
As a result of the substantial success of Dunnes, the injunctive relief granted in the High Court was deemed to be inappropriate and was reversed.
Conclusion
This judgment provides welcome clarification on the correct interpretation and boundaries imposed by comparative advertising legislation in Ireland. The Court's emphasis on the "common sense" of the average consumer will no doubt provide comfort to retailers wishing to engage in comparative advertising campaigns.
It remains to be seen whether a retrial will now be ordered to assess Aldi's original challenge to the validity of the comparisons using the correct legal test. The Court of Appeal is due to hear further submissions from the parties as to how the matter should proceed.
ch of both the European Communities (Misleading and Comparative Marketing Communications) Regulations 2007 and the Consumer Protection Act 2007. A further 247 labels were condemned for similar reasons for their failure to specify the comparable products. The campaign included shelf-edge labels, banners and floor stands which were all found to be unlawful.
At a later hearing of the High Court, a permanent injunction was granted against Dunnes.
Questions raised on appeal
Central to this appeal were a number of legal questions:
- Did the trial judge apply the correct legal
tests?
Under the 2007 Regulations, in order for a valid comparison to exist, the advertisement or communication must objectively compare one or more features of the products. The feature(s) must be material, relevant, verifiable and representative.
Judge Cregan, in the High Court, understood the test to be that "if the plaintiffs can establish that the defendant's advertisements do not objectively compare the relevant features of the relevant products, then the defendant's advertisements infringe Article 4(2)(d)." The High Court took the view that, if that part of the test is satisfied, the comparative advertisement is unlawful and there is no need to further consider whether the advertisement is misleading.
The Court of Appeal disagreed with the High Court's interpretation of the test. In particular, it noted that the 2007 Regulations do not require a comparison of all material, relevant, representative and verifiable features. As a result, it found that the High Court had begun its determination of the case with an incorrect interpretation of the 2007 Regulations.
- Was the judge incorrect in his evaluation of the expert
evidence?
Dunnes also took issue with the High Court's almost exclusive reliance on the evidence of the expert witness put forward by Aldi. This expert's evidence appeared to suggest that any material, relevant, verifiable and representative differences between the products must be made known to the consumer in comparative advertising.
The Court of Appeal did not agree with this evaluation of the legal rules. It also criticised the lack of reasoning for the preferential treatment of one expert witness's testimony over another. However, this point alone was not enough to overturn the decision.
- Was the High Court justified in finding that the
advertising was misleading within the meaning of either or both the
2007 Regulations and the 2007 Act?
The High Court held that the advertisements in question were in breach of various provisions for failing to specify exactly which Aldi product the advertisement related to.
The Court of Appeal relied on the CJEU judgments in Lidl Belgium v Colruyt and Lidl v Vierzon in deciding that a comparative advertisement containing a generic description of goods does not infringe the Regulations. The Court was of the view that "no sensible person could be misled by the use of general slogans that are the commonplace stuff of most advertising" and considered the trial judge's approach to be "unrealistic and inconsistent with the attitude to be ascribed to a reasonably well-informed and circumspect shopper".
The Court of Appeal upheld the illegality of the relevant banners because they did not objectively compare individual products. They instead contained pictures of a cluster or a basket of goods.
As a result of the substantial success of Dunnes, the injunctive relief granted in the High Court was deemed to be inappropriate and was reversed.
Conclusion
This judgment provides welcome clarification on the correct interpretation and boundaries imposed by comparative advertising legislation in Ireland. The Court's emphasis on the "common sense" of the average consumer will no doubt provide comfort to retailers wishing to engage in comparative advertising campaigns.
It remains to be seen whether a retrial will now be ordered to assess Aldi's original challenge to the validity of the comparisons using the correct legal test. The Court of Appeal is due to hear further submissions from the parties as to how the matter should proceed.
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