Misleading and comparative advertising regulations implemented
The European Communities (Misleading and Comparative Marketing Communications) Regulations 2007 (SI 774/2007) have come into force. The regulations:
- supplement the Consumer Protection Act 2007;
- replace the European Communities (Misleading Advertising) Regulations 1988; and
- implement the Misleading and Comparative Advertising Directive (2006/114/EC).
The Misleading and Comparative Advertising Directive is an updated and codified version of a 1997 directive, with which Ireland had not fully complied.
The directive aims to set out criteria for valid comparative advertising. However, the regulations go further by proscribing a range of categories of misleading or deceptive conduct in trade. Effectively, they extend the Irish unfair competition regime and will in many circumstances offer an additional cause of action in cases involving passing off or trademark infringement.
The key aspects of the regulations are the extremely broad definitions of 'marketing communication', 'comparative marketing communication' and 'representation'. These definitions cover marketing and sales conduct in its broadest sense. Almost any type of representation made in the course of trade in connection with the supply of goods or services - whether orally, over the counter, in advertising of any form or in the context of a contract - could be caught by the regime.
There are two types of proscribed conduct:
- misleading marketing communications; and
- comparative marketing communications which are misleading or confusing.
The first category deals with deceptive representations in relation to specified qualities of a product or service and of their provision; it includes false representations concerning affiliation or connection and approval or sponsorship. Under Section 3(2)(b) of the regulations, the deceptive representation must either be "likely to affect the trader's economic behaviour" or, "for any reason specified in this paragraph", either "injure" or be "likely to injure a competitor". This rather curious wording appears to have mistranslated the sense of the equivalent text in the directive by narrowing the scope of who is affected by the representation. The directive specifies "the persons to whom it is addressed" or to whom it reaches, whereas the regulations state "the trader to whom it is addressed" or to whom it reaches.
The second category prohibits comparative marketing communications which are not just comparative advertisements in the traditional sense, but are defined as "any form of representation made by a trader that explicitly or implicitly identifies a competitor of the trader or a product offered by such a competitor". Under Section 4(2) of the regulations, representations of this kind are prohibited in a range of circumstances where, "as regards the comparison", the representation:
- is a misleading commercial practice under Sections 43 to 46 of the Consumer Protection Act;
- confuses, discredits, denigrates or takes unfair advantage of the trademarks, trade name or trademark indicia of a competitor; or
- fails to compare equivalent product features objectively.
The regulations place the onus on the allegedly misleading trader to prove that the representation is true. If the trader fails to do so, the representation is presumed untrue and the court can make an order against the trader without proof of actual loss, damage or intention to infringe. Traders can bring private actions before either the Circuit Court or the High Court, which have jurisdiction to make orders:
- banning the representations;
- requiring corrective statements; and
- banning the trader from carrying on such marketing communications in the future.
Similarly to the Consumer Protection Act, there is no express provision made for damages; however, costs may be awarded. Notably, actions can be brought without reference to the newly established Consumer Protection Agency and in less restrictive circumstances than under the act.
There has been very little local comment on the new regulations. This is surprising as they have expanded the scope of unfair competition law in Ireland and potentially provide a powerful tool by which traders can prevent their competitors from making misleading representations and unfair comparative advertisements, or from falsely associating themselves with competitors.
Alistair Payne, Matheson Ormsby Prentice, Dublin
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