Who: Committee of Advertising Practice, Broadcast Committee of Advertising Practice
When: 20 February 2013
Law stated as at: 5 March 2013
On 20 February 2013, the UK’s Committee of Advertising Practice (CAP) and Broadcast Committee of Advertising Practice (BCAP) announced changes to their price comparison rules.
The changes bring the CAP Code and BCAP Code more into line with the position under UK and EU law, by removing the requirement that price comparisons must be in relation to identical or substantially equivalent products.
The Codes still require that products compared in ads must meet the same need or intended purpose, and that the basis of the comparison
must be clear. However, whereas previously advertisers could not compare the price of own-brand economy baked beans with their competitors’ price for a tin of premium branded baked beans, now this will be possible.
Slimmed-down rule 3.39
Previously rule 3.39 in both the CAP and BCAP Codes stated:
Advertisements that include a price comparison must state the basis of the comparison. Comparisons with a competitor price must be with the price for an identical or substantially equivalent product and must explain significant differences between the products. If the competitor offers more than one similar product, marketers should compare their price with the price for the competitor’s product that is most similar to the advertised product.
Now, the rule simply states:
Advertisements that include a price comparison must make the basis of the comparison clear.
Why the change?
The previous requirement to compare only against identical or substantially equivalent products went beyond the requirements of the Misleading and Comparative Advertising Directive 2006/114/EC (MCAD). Article 4 of MCAD states that:
Comparative advertising shall, as far as the comparison is concerned, be permitted when the following conditions are met:
(a) it is not misleading within the meaning of Articles 2(b), 3 and 8(1) of this Directive or Articles 6 and 7 of Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market (“Unfair Commercial Practices Directive”);
(b) it compares goods or services meeting the same needs or intended for the same purpose;
(c) it objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price;
(d) it does not discredit or denigrate the trade marks, trade names, other distinguishing marks, goods, services, activities or circumstances of a competitor;
(e) for products with designation of origin, it relates in each case to products with the same designation;
(f) it does not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor or of the designation of origin of competing products;
(g) it does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name;
(h) it does not create confusion among traders, between the advertiser and a competitor or between the advertiser’s trade marks, trade names, other distinguishing marks, goods or services and those of a competitor.
Further, in Lidl SNC v Vierzon Distribution SA [C-159/09] – a “basket of goods” comparison case – the European Court of Justice held that requirement (b) above does not prevent comparisons between goods of different quality or ingredients, so long as they “meet the same needs or are intended for the same purpose, that is to say, that they display a sufficient degree of interchangeability”, although any material differences in the products must be “apparent from the
MCAD is a full harmonisation directive in so far as it relates to comparisons in advertising (Article 8(1), MCAD). Accordingly CAP/BCAP’s previous rule 3.39 was vulnerable to challenge on the basis that it gold-plated the directive, prohibiting categories of comparative advertising that should be permitted under applicable European law. This would also potentially have compromised the Advertising Standards Authority’s positioning as an “established means” for enforcement of the requirements of the Business Protection from Misleading Marketing Regulations 2008 (BPRs),
which implement MCAD in the UK.
Regulation 13(4) of the BPRs requires Trading Standards and other
enforcement bodies to have due regard to the desirability of encouraging compliance with comparative advertising laws through such “established means” – such as the ASA – as they consider appropriate.
Why this matters:
The comparative advertising rules do not affect independent price comparison sites and services. The changes will however give online sellers greater scope to make price comparison claims relating to products with differing specifications. (It remains an anomaly that point-of-sale marketing claims fall outside the CAP Code for the offline world, but are within remit online.)
Changes permitting VAT-exclusive business-to-business prices to be stated in copy for a mixed business/consumer audience, subject to certain conditions, were also introduced as part of the same announcement.