Comparative Advertising in the Court of Appeal

In Aldi Stores (Ireland) Limited and Aldi GMBH & Co. KG v Dunnes Stores [2017] IECA 116, Dunnes Stores (Dunnes) succeeded in its  appeal against a High Court ruling that its 2013 comparative advertising campaign against Aldi was contrary to EC (Misleading and Comparative Advertising) Regulations, 2007 (the 2007 Regulations) and the Consumer Protection Act, 2007 (the 2007 Act).

In essence, the Court of Appeal determined that the High Court applied the wrong test.  It did not make a decision as to whether the 2013 campaign was lawful, but criticised a number of adverse findings made by the High Court.

Three elements of Dunnes' comparative advertising campaign were at issue. The Court of Appeal overturned the High Court's finding that two of these elements (i.e. shelf edge labels stating the Dunnes and Aldi prices for specific products were comparable, and shelf edge labels carrying the slogans 'Lowest Price Guarantee' and 'Always Better Value') were contrary to comparative advertising law. However, it held that the third element of the campaign, comprising banners and floor stands, was prohibited, but for a different reason than that found by the High Court – while the banners displayed the Aldi trademark along with the wording "Lower Price Guarantee" and "Guaranteed lower prices on all your family essentials every week", they did not involve any comparison as against Aldi, and were therefore not a permitted form of comparative advertising under the 2007 Regulations.

The Court of Appeal held that the trial judge had proceeded on foot of a misunderstanding of the regulatory regime for comparative advertising, and applied an incorrect test in assessing the legality of various aspects of the Dunnes campaign. In particular, the Court of Appeal held that the trial judge had conflated two of the conditions of comparative advertising under the 2007 Regulations, namely Article 4 (2) (c) and (d). Article 4  (2) (c) provides only products meeting the same needs or intended for the same purpose can be compared. Article 4 (2) (d) provides that a comparative advertisement must objectively compare one or more material, relevant, verifiable and representative features of the products compared, which may include price.

The Court of Appeal held that both subparagraphs serve different purposes. Article 4 (2) (c) provides for what can be compared, whereas Articles 4 (2) (d) relates to how the comparison may be made.  Furthermore, it held that there is no requirement to specify all differences between products, and that it is sufficient to compare products on the basis of price alone, provided that the comparison is not outlawed as misleading, either pursuant to Article 3 of the 2007 Act, or as a 'misleading commercial practice' pursuant to specified sections of the 2007 Act.

While the decision represents a 'win' for Dunnes Stores, the judgment does not necessarily endorse its campaign. The Court of Appeal noted that it would have been open to the High Court to assess whether the differences between the products were material (or sufficiently material) to render the Dunnes advertisements misleading and invalidate the comparisons. However, it set aside the High Court's decision on the basis that it was reached by reference to a fundamentally incorrect legal test.

The Court of Appeal is to hear submissions from the parties this month in relation to whether a retrial should be directed on the basis that the issues were not evaluated by the High Court in accordance with the appropriate rules.

For more information please contact Katie O'Connor.

Date published: 9 May 2017