A recent UK case has illustrated that European courts can have a wide degree of discretion when determining whether an advertiser has selected like-for-like goods in its comparative advertising.
The case related to a campaign by UK supermarket chain Tesco, in which Tesco offered its customers a refund if the customer would have been able to purchase products equivalent to those included in Tesco’s scheme for a lower total price at one of its main competitors. One of those competitors, Sainsbury’s, argued the comparison did not comply with the Comparative Advertising Directive (or equivalent measures under English law) as a number of Sainsbury’s ‘own label’ products were objectively tested in accordance with ethical certification schemes, or were otherwise produced in accordance with high environmental practices.
As the equivalent Tesco products did not comply with the same standards, Sainsbury's argued those products could not be deemed to 'meet the same needs or be intended for the same purposes', or be considered as being 'sufficiently interchangeable' as required by UK and EU law. In its initial ruling, the UK’s Advertising Standards Authority (ASA) stated it considered the ‘same needs’ test had been met, given that foods, such as meat or eggs, were interchangeable and were intended for the same purpose.
The ASA acknowledged there would be differences in environmental and ethical sourcing practices, but on the evidence were satisfied that Tesco had taken those elements into account when selecting which products to compare. The ruling was appealed to an independent reviewer; then ultimately was subject to a (rare) application for judicial review. However, neither overturned the initial ASA ruling.
The case is illuminating in its rejection of two key arguments advanced by Sainsbury's:
- The 'sufficiently interchangeable' test could not be satisfied where objective 'non-price' elements (e.g. a fair trade accreditation) were relevant to a comparison, and those elements would be a material factor on the decisionmaking process for a reasonable proportion of customers.
- The court rejected the idea that there was any such absolute requirement under EU law.
- The ASA had allowed Tesco too much discretion in determining when non-price elements should be taken into account, and had come to its decisions based on the ASA’s own experience in similar cases rather than relying on any objective reports or evidence.
- The court confirmed that EU law provides no real guidance to national courts on how they should determine whether products should be treated as meeting the same needs or being intended for the same purpose - it only required a court to make ‘an individual and specific assessment of the products’ - which the ASA had done in this case.
The case also provides another example of how the English courts generally interpret the Comparative Advertising Directive in a manner that is most permissive to comparisons.
This article is part of BrandWrites by Bird & Bird - May 2015