Who: The Court of Justice of the European Union (the CJEU)
When: 8th February 2017
Law stated as at: February 2017
In December 2012, French retail giant Carrefour launched a TV advertising campaign entitled “garantie prix le plus bas Carrefour” (“Carrefour lowest price guarantee”), which favourably compared prices of 500 leading brand products charged in Carrefour hypermarkets with those charged by its competitors in their smaller stores – including long-time competitor Intermarché. The advertisement further offered to reimburse consumers twice the price difference if they found cheaper prices in another shop.
Both Carrefour and Intermarché operate retail chains which include supermarkets and hypermarkets. However, from the second televised advertisement onwards, all of the Intermarché shops selected for comparison were supermarkets while all of the Carrefour shops were hypermarkets, the size difference being mentioned only in smaller letters beneath the name Intermarché.
Intermarché brought legal proceedings against Carrefour before the Paris Commercial Court, seeking an injunction to stop the disputed TV advertisement and damages on the ground of misleading advertising. Further to the Paris Court ruling in Intermarché’s favour, Carrefour appealed to the Paris Court of Appeal, which referred the following questions to the CJEU:
- Should the Misleading and Comparative Advertising Directive (2006/114/EC) (MCAD) be interpreted as meaning that a comparison of the price of goods sold by retail outlets is permitted only if the goods are sold in shops having the same format or size?
- Does the fact that the shops whose prices are compared are of different sizes or formats (i.e. supermarket versus hypermarket) constitute “material information” in accordance with the terms of the Unfair Commercial Practices Directive (2005/29/EC) (UCPD) and must therefore be brought to the knowledge of the consumer?
Answering the first question, the CJEU stated that Article 4 of the MCAD does not impose a general prohibition on comparisons between prices charged in different types of shops, even though similarity in format or size is likely to contribute to the criteria of “objectivity” set out in the Directive for lawful comparative advertising.
However, the CJEU pointed out that, in certain circumstances, the difference in size or formats of the shops in which the prices are being compared could distort the objectivity of the comparison. Indeed, the CJEU ruled that advertising will be misleading under the MCAD and the UCPD if it:
- omits material information that the consumer requires, according to the context, in order to take an informed transactional decision; or
- hides material information or provides it in un unclear, unintelligible, ambiguous or untimely manner, and
- either of the above causes or is likely to cause the average consumer to take a transactional decision he/she would not otherwise have taken.
For instance, the CJEU considered that the Carrefour advertisement had the effect of influencing the economic behaviour of the consumer, by causing him/her to take a decision in the mistaken belief that he/she would benefit from the price differences claimed in the advertisement when buying the targeted products in any type of Carrefour shops, rather than in Intermarché shops; and therefore this was misleading.
Answering the second question, the CJEU held that, while the UCPD does not specify how advertisers should communicate material information, that information must be clear, unambiguous and provided in a timely fashion, and a national court considering the communication must have regard to the “constraints affecting the means of communication”.
In the Carrefour advertisement, the CJEU considered that comparing prices charged in larger Carrefour shops with those charged in smaller Intermarché shops, without that being clearly brought to consumers attention in the advertising itself, would be misleading.
Why this matters:
The CJEU reminds advertisers operating a retail chain with shops of different format and sizes that they will need to carefully review their advertising techniques when making price comparisons with competitors operating a similar chain. More generally, it underlines the need to call out clearly and prominently any material ways in which a comparison is no “like-for-like”.