Comparative advertising in Europe

Nowadays word-of-mouth is not considered a reliable way to inform customers about company’s production. Advertising is crucial in order to get rapid sales of a product or service, and to have a successful marketing campaign - some companies use comparative advertising. Such a form of advertising can be very useful in order to underline the benefits of a company’s products against its competitors, however there are certain rules to be followed when using comparative advertising.

Legislation

The main legal act regulating comparative advertising in the EU is Directive 2006/114/EC. The directive 2006/114/EC was adopted to codify the former Directive 84/450 and its amendments and to harmonize the use of comparative advertising in the Member States. This directive lays down uniform general principles for misleading and comparative advertisement. The Member States choose the form and appropriate method by which to attain these objectives in their own national law. The Directive entered into force on the 12^th of December 2007.

According to article 4 of the directive, comparative advertising is permitted when:

(a) it is not misleading;

(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 trademarks, 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 trademarks, trade names, other distinguishing marks, goods or services and those of a competitor.

The goal of comparative advertising is to show that a company’s product or service is superior to a product or service of another company. Companies try to do this by comparing benefits, costs and other things that make their product seem better.

European case law

A few decisions by the European Court of Justice (ECJ) regarding the directive are relevant to determine the boundaries of comparative advertising.  

In the Lidl-case, Lidl accused another company of publishing a misleading advertisement in a French newspaper. It was misleading, according to Lidl, because it compared prices of certain goods (mostly food products) in a few supermarkets without naming the brands of the goods compared. This means that a consumer would not be able to identify the product mentioned in the advertisement when he goes to the supermarket, in order to check whether the advertisement was correct. The ECJ agrees with this last part and states that in some cases it is necessary to provide the brand names and details of the products.

So, when thinking about creating a comparative advertisement it is important to provide the relevant information about the products that are being advertised.

When using comparative advertisement, intellectual property rights, such as trademarks, are involved. In the Toshiba-case a company advertised goods which can be used as spare parts Toshiba products. The European Court of Justice held that the use of another company's trade mark may be legitimate where it is necessary to inform the public of the nature of the products as long as it does not take unfair advantage of the distinctive character or the reputation of the mark or is detrimental to it.

In the case O2 v. Hutchinson 3G UK, the European Court of Justice stated that the use of the trade mark of a third party in a comparative advertisement is not lawful if it would cause confusion to the consumers.

The defendant in a case about optical products advertised with a comparison of the prices of a certain combination of products. In the advertisement he also showed the logo and a picture of the shop of the competitor. The European Court of Justice held that, in principle, it is not prohibited to show the logo of the competitor, if it complies with the conditions laid down in the directive. As for the combination of products the ECJ held that persons to whom the advertising is addressed should be capable of knowing the actual price differences between the products compared and not merely the average difference between the advertiser's prices and those of its competitors.

This means that companies should be precise in showing the actual products and prices.

In a more recent case one company advertised ‘smell-alike’ perfumes for a low price, using a comparison list for retailers that indicated the word marks of the luxury trade marks to which the ‘smell-alike’ product corresponded. The other company owned some of these well-known trademarks. The ECJ came to the conclusion that the use of the well-known trademarks was not lawful, because unfair advantage was taken of the reputation of the well-known trademarks.

As pointed out above, the European Court of Justice set out some guidelines for comparative advertising. Although comparative advertising is permitted, each Member States chose the form and appropriate method by which to attain these objectives in their own national law. There are many things to take into consideration before starting a marketing campaign with comparative advertising. Not only the Misleading and Comparative Advertising Directive, but also other directives such as the Trade mark Directive and the Unfair Commercial Practice Directive are applicable when it comes to comparative advertising. Different fields of law overlap when it comes to this topic, which makes it important to think carefully about the way of advertising.

For more information please contact our English speaking solicitors in Lithuania, Latvia and Estonia at info@gencs.eu