ECJ provides more guidance on comparative advertising

European Union
In Lidl SNC v Vierzon Distribution SA (Case C-159/09, November 18 2010), a reference for a preliminary ruling from the Tribunal de Commerce de Bourges (France), the Court of Justice of the European Union (ECJ) has given guidance on the use of price comparison in advertisements for consumer goods.
In this comparative advertising dispute between Lidl SNC and Leclerc (Vierzon) supermarkets, the ECJ ruled that comparisons based on price may not meet the Misleading and Comparative Advertising Directive (84/450) criteria for legitimate comparative advertising where:
  • the goods compared are selected by the advertiser to give an impression of cheaper overall prices at their supermarket compared to another where this is not necessarily the case (this may be misleading under Article 3a(1)(a)); or
  • the advertiser does not specifically and individually identify the difference between the products that are compared (as this may not be an objective comparison as required by Article 3a(1)(c)).
The comparison advertisement at issue was part of a Leclerc newspaper campaign from 2006. It featured till receipts from each supermarket, using general descriptions, rather than brand names, of 34 items showing Lidl to be much more expensive than Leclerc. Leclerc's advert also carried comments such as "the proof is E Leclerc is still the cheapest".

Lidl claimed that this was an infringement of the French Consumer Code, and that the advertisement was misleading or even deceptive. Lidl also argued that the selection of products had been made to make Leclerc's prices look favourable. Further, the comparisons were not necessarily of the same product made by the same producer or to the same quality.

The ECJ's answer to the referred question suggests that such advertisements will not be legitimate, since they may be misleading under Article 3a(1)(a) if consumers mistakenly believe that the selection of goods is representative of the general level of prices compared to the other retailer, or if other features of the compared goods were significantly different (other than price) and would affect the consumer's choice. Neither would it be on objective comparison of verifiable features if the consumer could not work out from the information provided by the advertiser which particular item was being compared (Article 3a(1)(c)).

The decision suggests that, if businesses wish to use price comparisons legitimately in comparative advertising, these will have to be actual like for like (eg, not own brand for famous brand equivalent, or economy pack/basics range for normal range), unless the consumer is informed of the specific and individual differences.

The till receipts reproduced in the advertisement at issue used general descriptions of 34 products, accompanied by their weight or volume - showing the total at Leclerc to be €46.30 as against €51.40 at Lidl. The advertisement included the slogans "Not everybody can be E Leclerc! Low prices - and the proof is E Leclerc is still the cheapest" and "In English they say 'hard discount' - in French they say 'E Leclerc'".

Lidl brought an action in the French courts claiming that:
  • the advertisement was deceptive and misleading; and
  • Leclerc selected only products which placed it in a good light in relation to Lidl.
Further, the products were not truly comparable since their qualitative and quantitative differences meant that they did not meet the same needs. The till receipts did not allow customers to perceive the specific characteristics of the products or, therefore, to understand the reasons for the differences in prices claimed by the advertisement.

The ECJ confirmed that the previous case law and the recitals to the directive sought:
  • a balanced approach of consumer and business interests; and
  • to encourage legitimate comparative advertising that informed the consumer and stimulated competition between suppliers.
However, practices that distorted competition or were detrimental to competitors and had an adverse effect on consumer choice were to be prohibited.

Referring to its previous decision in L’Oréal SA v Bellure NV (Case C-487/07) (for further details please see "ECJ clarifies the meaning of 'unfair advantage' in smell-alike case"), the ECJ stated that the directive's criteria should be interpreted in a way most favourable to permitting advertisements which objectively compare the characteristics of goods or services, while ensuring at the same time that comparative advertising is not used anti-competitively and unfairly in a manner which affects consumer interests. For example, there is an interest in permitting comparative advertising in order to stimulate competition between suppliers to the consumers' advantage.

The ECJ further held that:
  • The fact that food products differ in qualities may still mean that the products compared meet the same needs or are intended for the same purpose - that is to say, that they display a sufficient degree of interchangeability.
  • However, the condition set forth by the directive that the comparison must be verifiable requires that it must be possible to identify the goods in question on the basis of information contained in the advertisement.
  • Such a price comparison advert may be misleading, in particular, if:
(a) it is found, in the light of all the relevant circumstances, and in particular the information contained in, or omitted from, the advertisement, that the decision to buy on the part of a significant number of consumers to whom the advertisement was addressed may be made in the mistaken belief that:
(i) 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 such consumers will therefore make savings of the kind claimed by the advertisement by regularly buying their everyday consumer goods from the advertiser rather than the competitor; or
(ii) all of the advertiser’s products are cheaper than those of its competitor;
(b) it is found that, for the purposes of a comparison based solely on price, food products were selected which, nevertheless, have different features capable of significantly affecting the way the average consumer would exercise choice, without such differences being apparent from the advertising concerned.
Joel Smith, Laura Deacon and Rachel Montagnon, Herbert Smith LLP, London

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