Comparative advertising based on prices between shops of different formats and sizes may be unlawful

In Carrefour Hypermarchés SAS v ITM (Case C-562/15) the Court of Justice of the EU (CJEU) ruled that comparative advertising based on prices of products sold in shops having different formats and sizes is liable to be unlawful and misleading, unless consumers are informed clearly in the advertisement itself of the difference in the formats and sizes of the shops.

The Facts

In December 2012, Carrefour launched a television advertising campaign which compared the prices of 500 leading brand products charged in Carrefour shops and in competitors’ shops (including Intermarché shops).  Carrefour offered to reimburse consumers twice the price difference if they found cheaper prices elsewhere. From the second televised advertisement onwards, all of the Intermarché shops selected for comparison were supermarkets, while all of the Carrefour shops were hypermarkets. That information appeared only in smaller letters beneath the name Intermarché.

ITM, a company responsible for the strategy and commercial policy of the outlets belonging to the Intermarché retail chain, brought proceedings before the French courts seeking an injunction to stop Carrefour's advertising, and damages in respect of misleading advertising.

The Court of Appeal, Paris, asked the CJEU whether such advertising, which compares the prices of products sold in shops having different sizes or formats, is lawful in the light of the Misleading and Comparative Advertising Directive 2006/114. It also asked whether the fact that the shops concerned are of different sizes or formats constitutes material information which, in accordance with the Unfair Commercial Practices Directive 2005/29, must be brought to the knowledge of the consumer so that he/she can take a commercial decision in full knowledge of the facts.

The Decision

The CJEU held that where comparative advertising does not relate to shops of the same size or format the objectivity of the comparison may be distorted, and liable to be unlawful and misleading, if the advertising does not mention that difference. The prices of everyday consumer goods are likely to vary in relation to the format or size of the shop, with the result that a comparison may have the effect of artificially creating or increasing the difference between the advertiser’s prices and the prices of competitors.

The CJEU found that comparative advertising which omits or hides material information which the average consumer requires in order to take an informed transactional decision, or which provides that information in an unclear, unintelligible, ambiguous or untimely manner, and which may consequently cause the average consumer to take a transactional decision that he would not otherwise have taken, is misleading.  It is vital that the material information is provided both clearly, and in the advertisement itself.  It is now for the national court to determine whether Carrefour has met that condition in the present case.

Comment

All comparative advertising must compare prices objectively and must not be misleading. The CJEU's decision clarifies that comparative price-based advertising of products in shops of different sizes is permissible, provided the consumer is informed both clearly, and in the advertisement itself, of the difference in the shop sizes. A key consideration will be whether the comparative advertising allows the consumer to make an informed transactional decision.

For more information please contact Davinia Brennan.

Date published: 28 February 2017