Who: Volvo Car UK
Where: Advertising Standards Authority, UK
When: 29 April 2015
Law as stated at: 8 May 2015
What happened:
The Advertising Standards Authority (“ASA”) investigated complaints in respect of a radio ad for the Volvo V40 R-Design. The offending ad included a voice-over that stated:
“When it comes to driving in old Blighty, you do things a little differently. There’s not miles of long, straight roads over here – just roundabouts, roads with barely enough room for a car, let alone a man in a van coming the other way. And of course, the speed bumps – brilliant, isn’t it? That’s why the Volvo V40 R-Design was tuned and tested to tackle those wonderfully British roads … The Volvo V40 R-Design – made in Sweden, tuned for Britain”.
The ad was challenged by three complainants, who understood that the Volvo V40 R-Design was manufactured not in Sweden, but in Belgium. Therefore, it was said, Volvo’s claim: “the Volvo V40 R-Design – made in Sweden, tuned for Britain” could mislead consumers into thinking that the V40 was made in Sweden.
Despite acknowledging that the final assembly of the V40 R-Design did indeed take place in their factory in Ghent, Belgium, Volvo successfully defended its claim.
Ad means Volvo model “born” in Sweden not made there says Volvo
It argued that it considered the V40 R-Design to have been “born” in Sweden, because the design and development work, as well as the construction and primary testing of the model, had all taken place in Sweden. Volvo went on to say that it believed listeners would generally understand that it was a Swedish brand and that the ad would be interpreted to mean the design of the V40 R-Design originated from Sweden.
Luckily for Volvo, the ASA agreed that most listeners would be aware that Volvo was originally a Swedish company and the complaints were not upheld. The ASA noted that the emphasis of the ad, including the offending claim, was on how the design of the car had been modified to suit a British environment and that in that context, they considered that listeners were likely to understand that “made in” Sweden merely meant that it had been designed in that country, rather than manufactured there.
The ASA also noted that even if the “made in” claim were interpreted to mean that the V40 R-Design was actually manufactured in Sweden, that interpretation would be unlikely to influence consumers’ decisions in relation to the product. It concluded that the ad was not misleading and that Volvo had not breached the CAP code.
Why this matters:
While there is currently no legal requirement to state the origin of a product, unless failure to do so would be misleading, advertisers need to be cautious in making such “made in” claims.
In the now repealed Trade Descriptions Act 1968 (“TDA”), section 36 stated:
“For the purposes of this Act goods shall be deemed to have been manufactured or produced in the country in which they last underwent a treatment or process resulting in substantial change.”
Applying this test, it would seem that if the TDA had still been in force, the ASA’s decision would have been questionable. But what is the law today?
The TDA has for these purposes been replaced by the Consumer Protection from Unfair Trading Regulations 2008 (“CPRs”).
These do not re-enact the “substantial change” rule but “geographical or commercial origin of a product” is listed in Regulation 5 (5) of the CPRs as one of the “main characteristics” of a product as to which the giving of false information will likely be a “misleading commercial practice” in respect of which enforcement action can be taken.
Place of manufacture not relevant to consumer’s purchase decision, says ASA
This CPR provision contrasts with the ASA’s to say the least interesting view in the Volvo case:
“We considered that even if the claim were interpreted to mean that the V40 R-Design was manufactured in Sweden, that interpretation would be unlikely to influence consumers’ decisions in relation to the product.”
Also, Article 24 of Council Regulation (EEC) No. 2913/92, which established the Community Customs Code and is still very much in force, states:
“Goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an under-taking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture.”
“Last substantial change” rule still applies according to BIS
Furthermore, a March 2015 Report published by BIS on the possible introduction of compulsory origin marking in Consumer Product Safety Regulations, clearly indicated that the “last substantial change” test still applied, viz:
“3.3.4 Defining Country of Origin
If [compulsory origin marking] were introduced, several respondents wanted to see the following changes to Origin Marking Regulations …
• Making the definitions of “last substantial change” more strict to avoid consumers being misled as to where the majority of the manufacture is taking place.”
Were these requirements considered by the ASA before reaching its decision? There is no reference to them in the ASA adjudication report. Volvo clearly argued that special considerations applied given the underlying Swedish nexus and the ASA accepted this, but it would have been helpful to other advertisers if the ASA had at least explained exactly why it felt that the normal rule did not need to be applied.
