The European Court of Justice has ruled that a retailer's use of comparative advertising to highlight price differences between its goods and those of its competitor may not be misleading, even though the products being compared are not identical. The decision (Lidl SNC v Vierzon Distribution SA (Case 159/09) concerns the interpretation of European Directive 84/450/EEC (the "Directive"), following a referral to ECJ by the French national court.
Background
Lidl, a supermarket chain, objected to an advert placed in a
local French newspaper by its competitor, Vierzon Distribution
("Vierzon"). The advert reproduced till receipts listing
34 products purchased from Vierzon (selling goods as
"Leclerc") and Lidl respectively. Most of the products
were foodstuffs listed by way of general description, and, where
appropriate, included weights or quantities. The till receipts
indicated that customers would make a saving by purchasing from
Vierzon rather than its competitor.
Lidl objected to the advert, claiming that the products were not
comparable because qualitative and quantitative differences between
them meant that the products being compared would not meet the same
needs of the consumer. It also suggested that the advert misled
consumers because Vierzon only selected Leclerc products that
placed it in an advantageous position over its competitor.
Vierzon contended that two products which are not identical can be
compared as long as they meet the same needs of the consumer or are
intended for the same purposes, and therefore are sufficiently
interchangeable. It considered that the differences between the
products were made suitably clear to consumers in the advert, and
accordingly that the advertising was not misleading.
Article 3a of the Directive (which was inserted by Directive
97/55/EC) provides that comparative advertising is allowed where a
number of criteria are met, including:
- that the advertising is not misleading (Article 3a(1)(a));
- that the advertising compares goods or services meeting the same needs or intended for the same purpose (Article 3a(1)(b)).;
- that the advertising objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price (Article 3a(1)(c)).
The French court stayed its proceedings in the case and referred
the following question to the ECJ:
"Is Article 3a of the Directive to
be interpreted as meaning that it is unlawful to engage in
comparative advertising on the basis of the price of products
meeting the same needs or intended for the same purpose, that is to
say, products which are sufficiently interchangeable, on the sole
ground that, in regard to food products, the extent to which
consumers would like to eat those products or, in any case, the
pleasure of consuming them, is completely different according to
the conditions and the place of production, the ingredients used
and the experience of the producer?"
Decision
The ECJ held that the Directive must be interpreted in the most favourable sense to permit comparative advertising, as long as such advertising is not used anti-competitively or unfairly in a manner which affects consumers' interests. The ECJ considered that the wording of the Directive did not prohibit comparative advertising of non-identical food products and that to enforce such a prohibition would be restrictive and would rule out comparative advertising of a "particularly important category of consumer goods".
In its judgment the ECJ first looked at Article 3a(1)(b) of the Directive. It decided that this should be interpreted as meaning that although foodstuffs differ in terms of the extent to which consumers would like to eat them and the pleasure to be derived from eating them (according to the conditions and place of production, their ingredients and who produced them), this does not preclude different food products from meeting the same needs of consumers or being intended for the same purpose. The ECJ held that it is for national courts to decide whether the products are sufficiently interchangeable to enable comparison.
The ECJ then considered Article 3a(1)(a) of the Directive and the use of the till receipts in the Vierzon's advert. It concluded that it is for a national court to consider whether an advert is misleading, taking into account circumstances such as the perception of the average consumer and the features of the advert. National courts must also look at any omissions which could render an advert misleading, including facts which might have deterred consumers from making the purchase. The ECJ noted that advertising could be misleading if a significant number of consumers decide to buy products in the mistaken belief that the selection of goods made by the advertiser is representative of the general level of its prices as compared with those charged by its competitor, and that consumers will therefore make savings of the kind claimed by the advertisement if they regularly buy their everyday consumer goods from the advertiser rather than from the competitor. Advertising could also be misleading if consumers are led to believe that all of the advertiser's products are cheaper than those of its competitor.
The ECJ also considered Article 3a(1)(c) of the Directive, which provides that for comparative advertising to be permitted, the comparison must objectively compare one or more "material, relevant, verifiable and representative features" of the products. The ECJ only considered verifiability, deciding that it must be possible to identify the products in question from the information in the advert, and that this is a consideration for national courts.
Comment
This decision follows on from the previous ECJ case involving Lidl and re-emphasises the permissive approach for comparative advertising intended by the Directive ( click here). In particular this decision confirms comparative advertising of foodstuffs is permitted in accordance with the provisions of the Directive and usefully allows retailers to compare food products that are not identical. The judgment shows the ECJ's attempt to achieve a "balance between the different interests which may be affected by allowing comparative advertising".
Advertisers should, nevertheless, take care when using comparative advertising, particularly when referencing products that are not identical. All material information relevant to the comparison should be included in the advert, and the products being compared must be sufficiently interchangeable; it is not, for example, appropriate to omit a brand name from comparative advertising where the brand may affect the buyer's decision to purchase.
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
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The original publication date for this article was 06/12/2010.
