11 February 2009
As times get tough, consumers become more focussed on price and businesses need to find ways to distinguish their products and offerings from those of their competitors. Comparative advertising and marketing can be a very useful tool for businesses in the current economic climate. However, advertising or marketing communications that compare products, product offerings or services with those of competitors must do so in an objective manner. The comparison must be a truly objective overall comparison, and must not be misleading.
Anything less than a truly objective overall comparison could end up in litigation, whether for trade mark infringement, breach of the Consumer Protection Act 2007 or breach of the regulations governing comparative advertising and comparative marketing communications.
What are comparative advertising and comparative marketing?
The European Communities (Misleading and Comparative Marketing Communications) Regulations 2007 (“the Regulations”) set out what constitutes comparative advertising and comparative marketing communications, which, for ease of reference, we shall collectively call “comparative communications”.
A comparative communication is a representation by a trader that identifies, either expressly or by implication, a competitor of that trader or a product offered for sale by that competitor. The definition of “representation” is very wide, and so the regulations cover a huge range of communication tools, such as advertisements in newspapers or magazines, promotional leaflets, in-store promotional posters, and even shelf-edge promotional cards or stickers in shops.
Generally, comparative communications specifically refer to a competitor, its products or its product offerings. The primary example is to advertise a particular product as being on offer in your store at a cheaper price than in a named competitor’s store. Retailers should note however that the communication can be deemed comparative even if it merely implies reference to a competitor, its products, or product offerings, without specifically naming them.
What kinds of comparative communications are prohibited?
Under the regulations, certain forms of comparative communications are prohibited. Firstly, comparative communication is prohibited if it is misleading. It is misleading if the comparison is factually inaccurate in its depiction of the main characteristics of the product or product offering in question, and if it serves to deceive the consumer.
The main characteristics of a product or product offering would be any substantive characteristics and would include, for example, the geographical origin of the product; its commercial origin; its quantity; weight or volume; its availability at a particular time or place, or at a particular price; the manner in which that price is calculated or the existence or nature of a specific price advantage.
Comparative communication is also prohibited if it does not compare equivalent products or if it does not objectively compare the features of different products, including price. In other words, for comparative communications to be allowed, they must be accurate. For example, if you want to put a sign up in your shop proclaiming that your packs of beef-burgers are one euro cheaper than your competitor’s across the road, you need to make sure that it is for the same quality and quantity of burgers, and that your sign clearly states the date on which the prices were compared. In other words, you must compare like with like.
It is also important that the sign remains accurate for as long as you leave it on display. This requires regular price-checks as your competitor’s prices could drop. The same is true for price comparisons in newspaper and media advertisements.
Comparative communication is also prohibited if it constitutes a misleading commercial practice by a trader under the Consumer Protection Act 2007. There are several types of misleading commercial practices, as follows:
• the provision of false or deceptive information on the main characteristics of a product of products
• marketing or advertising likely to cause the average consumer to confuse a competing product, trade name or trade mark with the trader’s
• a trader representing that he is bound or abides by a particular code of practice, when in fact he does not comply with the code of practice in question
• a trader omits or conceals material information that the average consumer would need to know in order to make an informed decision when deciding whether or not to buy a product
• to constitute a misleading commercial practice, any of the above practices must also be likely to influence the average consumer to make a purchase that he would not otherwise make
Finally, comparative communication is also prohibited if the communication confuses, discredits, denigrates or takes unfair advantage of the trademarks, trade name or other distinguishing features of a competitor and/or its products.
What are the repercussions of prohibited comparative communications?
The regulations provide remedies for traders who are the victims of prohibited comparative communication. Under the regulations, a trader can take proceedings in the Circuit Court or High Court to obtain an order prohibiting the offending trader from continuing to engage in the prohibited comparative communication.
Where the truth of a factual claim in a comparative communication is at issue, the regulations place the onus on the defendant trader to prove on the balance of probabilities that the representation is true. If the defendant trader fails to do so, the representation is presumed untrue.
The court will have particular regard for the public interest and can make an order against the defendant trader without proof of actual loss or damage to the offended trader, or without proof of an intention to infringe by the offending trader. Offending traders can also be required by the court to publish corrective statements at their own expense. There is no express provision made in the regulations for damages, but costs may be awarded against offending traders.
There are also separate provisions under the Consumer Protection Act 2007, whereby misleading commercial practices within the meaning of that Act constitute a criminal offence. In addition, the Consumer Protection Act 2007 provides for a right of private action in the Circuit Court and High Court for prohibition orders to prohibit persons from committing or engaging in a prohibited act or practice.
Comparative communications can be a useful advertising and marketing tool for businesses, particularly given that consumers these days are becoming increasingly price-conscious. However, in their comparative communications, businesses must be able to justify any factual claims they make. In essence, accuracy is essential, and you must not mislead the consumer.
Comparative advertising at a glance
A comparative communication is a representation by a trader that identifies, either expressly or by implication, a competitor of that trader or a product offered for sale by that competitor
Comparative communication is prohibited if it is misleading. It is misleading if the comparison is factually inaccurate in its depiction of the main characteristics of the product or product offering in question
Comparative communication is prohibited if it does not compare equivalent products or if it does not objectively compare the features of different products, including price
Comparative communication is prohibited if it constitutes a misleading commercial practice by a trader under the Consumer Protection Act 2007
Comparative communication is prohibited if the communication confuses, discredits, denigrates or takes unfair advantage of the trademarks, trade name or other distinguishing features of a competitor and/or its products
A trader can take proceedings in the Circuit Court or High Court to obtain an order prohibiting the offending trader from continuing to engage in the prohibited comparative communication
Offending traders can be required by the court to publish corrective statements at their own expense
Matheson Ormsby Prentice will host a breakfast seminar at 70 Sir John Rogerson’s Quay Dublin 2, on Thursday 19 February 2009, which will examine comparative advertising in the context of advertising examples from the retail, financial services, FMCG, and telecommunications industries.
The seminar will give an overview of the do’s and don’ts of comparative advertising and will provide guidance in the effective use of this marketing strategy to successfully beat the competition. This seminar will be of particular interest to marketing executives and in-house counsel in the retail, advertising, financial services, FMCG, and telecommunication sectors.
If you would like to attend this seminar, please email firstname.lastname@example.org quoting “Shelflife Invitation” or contact Emma Foley at Matheson Ormsby Prentice (70 Sir John Rogerson’s Quay, Dublin 2) on 01 232 2608
© Matheson Ormsby Prentice 2009
The information in this article is not intended to provide, and does not constitute, legal or any other advice on any particular matter, and is provided for general information purposes only.
This legal update is compiled by Lorraine Compton and Darragh McElligott from the Retail and Leisure Group of leading corporate law firm, Matheson Ormsby Prentice. The firm’s Retail and Leisure Group comprises lawyers who provide a one-stop shop designed to cater for every aspect of the retail and leisure business.
For more detailed legal advice please contact Lorraine Compton or Darragh McElligott at Matheson Ormsby Prentice, Solicitors, 70 Sir John Rogerson’s Quay, Dublin 2, by telephone on 01 232 2000 or by email at email@example.com or firstname.lastname@example.org. Further information on the firm is available at www.mop.ie