Think BR: Price comparisons must always be like-for-like

News that Tesco Ireland has been ordered to pay substantial damages amounting to £120,000 to Aldi Ireland for trade mark infringement in a comparative advertising campaign is a timely reminder to all retailers that clear rules apply and they must be adhered to.

Aldi Ireland alleged that Tesco Ireland had been misleading consumers with its in store advertising campaign by failing to compare the prices of like-for-like products.

In some instances the price of the competitor’s product was shown to be incorrect and in others the composition of the products was different or the weight of the contents varied, making a fair price comparison impossible.

The legal challenge brought by Aldi Ireland has since been settled out of court, prior to the start of an eight-day hearing.

Among the instances of infringement cited, two tins of spaghetti were compared, indicating that Tesco’s product was cheaper. However, the advertising failed to mention that Aldi was in fact selling a similar product at the same price as that of Tesco.

In another instance, Tesco claimed that their maple syrup was cheaper than Aldi’s maple syrup but failed to inform the consumer that its product was in fact only 40% maple syrup, whereas Aldi’s was 100% maple syrup.

In today’s cut-throat retail climate, there has been resurgence in the use of comparative advertising, which is used to inform consumers about where they should go to get the products they like at the best price.

Aldi’s TV advertising campaign, based on the theme of ‘liking’ compares the prices of two similar products - one from Aldi and the other a branded product available from another retailer.

In producing its campaign, the retailer will have checked and double checked that only like-for-like products were being compared, according to the criteria set out in comparative advertising case law.

European legislation controlling the use of comparative advertising was first set out in 2006. The law permits its use as long as it is not misleading to the consumer. It must compare goods or services that are used in the same way and have a similar designation of origin. It must not discredit or degrade the trade marks of a competitor and it should not create confusion or otherwise aim to imitate the goods or services of another protected trade mark.

When planning a comparative advertising campaign it is also important to ensure that the methods used to check that goods and services are like-for-like are objective and the results are verifiable.

In 2006, a case brought against Lidl Belgium (Lidl Belgium GmbH & Co KG v Etablissementen Franz Colruyt NC Case C356/01) led to what has become known as the ‘shopping basket’ rule, which prevents retailers from showing a selection of products that are cheaper than those of a rival in order to imply that their whole range is cheaper.

A further case in 2010, Lidl SNC v Vierzon Distribution SA, confirmed that this rule should apply when till receipts for a selection of goods are compared because it is not easy for the consumer to check the accuracy of the price comparison.

In another hotly-contested case - L’Oreal SA v Bellure NV & others - cheap perfumes were being designed to look and smell like those of L’Oreal. Lists comparing the prices of the cheaper versions with the luxury branded products were sent to consumers, encouraging them to compare the products and view them as the same.

In this case, the European Court of Justice concluded that because they were intentionally using the well-known trade mark of another to secure a commercial advantage and benefit by association, the actions of Bellure amounted to trade mark infringement. 

When it comes to Tesco Ireland’s infringement, the out-of-court settlement means that there will be no judgment to pour over.

However, the lessons for advertisers are clear. When comparing your own products or services with those of a competitor it is important not to mislead consumers by implying that they are of similar quality, composition and origin, if they are not.

All comparisons must be fair and transparent and the processes used to check that the comparison is fair must bear scrutiny and be easy to check.

Aldi’s TV advertising campaign, which is based on comparative advertising is a lesson to others in how to get it right and stay on the right side of trade mark law.

Fiona McBride, trade mark attorney, Withers & Rogers