Who: Committee of Advertising Practice
When: 20 March 2014
Law stated as at: 2 April 2014
The Committee of Advertising Practice (“CAP”) writes and maintains the UK advertising codes for broadcast and non-broadcast media, also offering authoritative advice and guidance on how to ensure that advertising remains within the rules of its codes – the CAP Code for non-broadcast media and the BCAP Code for broadcast media.
Recently CAP published some new guidance on the CAP Code on the contentious area of price comparisons with both competitors’ and advertisers’ own prices.
The guidance supplements its own previous Help Note on Retailers’ price comparisons (last updated in February 2013) and articles from its AdviceOnline database on comparisons in advertising generally, verifying comparisons and lowest price claims and price promises all of which offer advice on the interpretation of rules 3.33 to 3.40 of the Cap Code relating to the use of comparisons in advertising.
In the recent help note, CAP focussed on the following hot topics:
• Accuracy and currency of prices
The central principle of the CAP Code is that all advertising should be legal, decent, honest and truthful – and therefore it is important that any prices quoted should be accurate, up to date and include all ‘hidden’ costs associated with the product.
CAP highlighted that comparisons with competitorsprices that may change quickly should only be used in media with a short ‘shelf-life’ (such as leaflets or daily newspapers) or that can be easily changed as and when the prices change.
In the era of digital advertising it is likely that the Advertising Standards Authority (“ASA”) would consider any digital ads as being possible to change easily.
It is advisable to include the date on which the prices were verified. Advertising in magazines, even if including the date of verification, when the sector is prone to regular price changes may risk a complaint being lodged that the ad has become misleading due to inaccurate prices.
• Comparisons with identifiable competitors
There is no requirement to identify a competitor when making a comparative claim but it is particularly important when identifying a particular product or competitor that the comparison is based on like-for-like products. This does not mean identical, but products meeting the same need or intended for the same purpose – highlighting if necessary where there are significant differences (even if it is a benefit of the other product).
Rule 3.35 requires that a comparison is verifiable and a 2006 European Court of Justice case (Lidl v Colruyt) effectively provided that the advertiser must give the consumer sufficient information about the comparison to enable the consumer to understand it – which must be signposted in the ad itself – usually by including a web address in the small print. CAP has adjudicated on verification issues since that ECJ case and it is clear that this verification requirement applies to all types of comparisons and that there is no justification for not including verification because of its complexity.
CAP also highlighted that it may be misleading to not state that a comparison is limited to a particular geographical area if the pricing between the advertiser’s stores is not consistent. Fuel prices, for example, vary on a localised basis and as such any ad that references fuel prices should ensure that it sets out clearly the geographical limits of the claim.
• Giving an unrepresentative or unfair advantage
It is important to ensure that, when comparing against an unidentifiable competitor, that the advertiser does not give itself any unfair advantage. Therefore the comparison should not be based on products which significantly vary in size or quality unless those differences are explained clearly in the ad.
• Promotional prices vs. non-promotional prices
CAP have clarified that there is no prohibition on comparing promotional prices with non-promotional prices – however the advertiser should make it clear that its competitors’ prices are not on promotion, should set out the end date of the advertiser’s promotion and should ensure that the prices are accurate. The following are two cases where the ASA upheld a complaint concerning the comparison of promotional prices against a competitor’s non-promotional prices.
Wm Morrison Supermarkets plc, 5 August 2009
The ad involved a basket comparison between Morrison’s and its competitors and in the small print of the ad included the text ‘comparison includes promotions’. The ASA considered that this was misleading as it was not sufficiently clear that the comparison was of promotional products vs non-promotional products from its competitors.
Furthermore the ASA considered the ad misleading due to the fact that Morrison’s price comparison was time limited, due to being based on promotional offers, and was not representative of the savings achievable in a typical shop.
Larnhealth Ltd, 13 may 2009
A comparison ad showed prices for the same products at two competitors and referenced the date on which the prices were compared and specific small print that the prices may have changed since the referenced date. The competitor complained on the basis, amongst other things, that the price comparison was unfair as its products were on promotion and the non-promotional price was used in the comparison. The ASA considered this was misleading as the consumer would expect the comparison to be on a like for like basis unless otherwise stated.
• Lowest Price Claims
CAP have provided some additional guidance to clarify that a ‘price promise’ where an advertiser promises to refund the difference (or more than the difference) if the consumer can find the product cheaper elsewhere, and any conditions are satisfied, is different to a ‘lowest price claim’ which is an outright claim that the advertiser’s price is cheaper than its competitors, and as such will require verification. The ASA ruled on this issue in the follow adjudication:
Telecom Plus plc, 30 May 2012
The ad involved the sale of utilities and included a ‘UK’s cheapest’ price claim as well as a price promise, and the complaint challenged whether the price claim was misleading and could be substantiated. Telecom Plus argued that when taking into account their payment of double the difference price promise, they were by definition cheaper once the refund had been provided.
In the ruling the ASA clarified the difference between a lowest price claim and a price promise and that a price promise cannot alone justify a lowest price claim and to be able to do so would require adequate price monitoring and adjustment policy – with the requisite substantiation to prove this. Without such substantiation the ASA upheld the complaint.
Why this matters:
Although CAP has provided previous guidance on this area it has provided some additional guidance in its note to assist advertisers in ensuring that its ads are compliant.
Retailers are operating in an increasingly competitive market and in certain sectors the use of comparative advertising is very prominent, however it can also often mislead consumers – which can result in a loss of confidence by the consumer and damage to the reputation and brand of the advertiser. By its nature, a comparative ad will also directly get the attention of any identified competitor – putting additional attention and scrutiny on the accuracy and compliance of the ad – who is likely to be the first to issue a complaint should it feel that there are any grounds to do so.
In the past year the ASA received complaints about nearly 250 ads based on the use of comparisons (CAP Code rules 3.33 – 3.40) and with the publication of this note it is clearly a hot topic at the moment. A review of the CAP guidance could ensure that your next ad remains free from complaint.