Comparative advertising allowed under Swiss law

Switzerland

In a case (4C.375/2002) involving two competing chains of opticians, the Supreme Court has confirmed that comparative advertising is allowed under Swiss law. The court also clarified the rules relating to comparative advertising emphasizing that it must be fair and accurate, and presented in a way that does not confuse or mislead consumers.

The plaintiff, a major chain of opticians that claims to offer the lowest prices for optical products in Switzerland, filed a complaint against a competing chain, arguing that its comparative advertising was in breach of unfair competition law. The defendant had included the results of a consumer magazine's comparative price study in its advertisement. The study, based on the pricing policies of a number of Swiss opticians (including both the defendant and the plaintiff), indicated that the defendant's prices were lower than the plaintiff's for certain products. However, the study noted in small print that the defendant's lower prices were due to special discount sales.

The defendant's advertisement did not reproduce the results of the study as they had been printed in the consumer magazine. Instead, the advertisement reproduced only part of the published table and featured an additional column showing the total price for each product, with the figures suggesting that the defendant's total sum was lower than the plaintiff's. Text on the advertisement alleged that the table resulted from an independent study and showed that the defendant offered the lowest prices in Switzerland.

A first instance tribunal dismissed the plaintiff's case holding that, among other things, the principle of good faith precluded the plaintiff from complaining against the defendant because its own claim that it offered the lowest prices in Switzerland was incorrect and unfair. The plaintiff appealed.

The Supreme Court reversed the first instance decision finding that the defendant was in breach of unfair competition law. It rejected the lower court's suggestion that the plaintiff was prevented from complaining against the defendant on the grounds of bad faith. The court held that, in most circumstances, a party that has itself acted illegally is entitled to bring an action against another party that has also acted unlawfully, particularly where consumers are affected by these acts.

The Supreme Court also noted that Swiss law allows comparative advertising in principle because it encourages transparency in the market and helps consumers to make informed choices. However, the court stated that not all comparative advertising is acceptable and it set out a number of guidelines to help determine whether a particular advertisement is fair. These guidelines include the following:

  • Comparative advertisements must be accurate, and based on precise and complete facts.

  • The advertiser must include all relevant facts that may influence a consumer's decision, these include any facts that portray the advertiser in a negative light.

  • Price comparisons must relate to products of equal quality and quantity.

  • Where special sales prices are included in comparison with ordinary prices, the advertiser must expressly draw the consumer's attention to this fact.

  • Comparisons must be presented in a way that does not confuse or mislead consumers.

  • Advertisements that include a third party's comparative test must be shown in full, or if modified, must not be distorted.

  • The advertiser assumes full responsibility for the accuracy of any study, including those performed by third parties.

  • Advertisers whose claims include material facts that can be verified on an objective basis must be able to prove the veracity of such claims.

  • Obvious exaggerations or claims in general terms that cannot be examined objectively are not covered by unfair competition law.

Applying these principles to the defendant's comparative advertisement, the Supreme Court found that it had acted unfairly.

Kamen Troller, Lalive & Partners, Geneva

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