Comparative advertising is a well-known marketing tool that has been used by companies for decades. It is a feature all year round, but especially in the run up to Christmas we are seeing more and more examples of comparative advertising campaigns as companies and brands vie for the top spot in Christmas sales. The question is, how do you keep comparative advertising campaigns legal?
In a typical comparative advertising campaign a company will compare its products or services with those of a competitor and point out to the customer why their products or services are better.
Often comparative advertising forms part of a long-running campaign against a company’s competitor but these campaigns can eventually turn into 'battles of the brands' or 'supermarket wars'. Some famous examples are those marketing battles between Coca Cola and Pepsi, Apple and Microsoft and of course between the UK supermarkets.
The principles of comparative advertising are set out in the EU Comparative Advertising Directive (2006/114/EC). Provided that a comparative advert complies with the conditions set out in this directive, it should be permitted and a brand owner would not be able to rely on its trade mark rights to oppose the advertising,
Generally, a comparative advert shall be permitted only if:
The courts in the UK and Europe are generally reluctant to get involved in comparative advertising and seem to appreciate that comparative advertising promotes competition within the UK markets which is in the interest of consumers. However, to avoid trade mark infringement, brand owners need to be careful that their use of a competitor's trade mark does not give rise to a likelihood of confusion between their respective goods and services.
In most cases this seems unlikely, as the whole point of comparative adverts is to draw a distinction between the goods and services of the advertiser and those of its competitor. This difficulty in proving confusion may be one reason why so few cases relating to comparative advertising go through the courts.
The majority of comparative advertising cases are dealt with by the Advertising Standards Authority (ASA) which upholds the Code of non-broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code) and its broadcast equivalent the BCAP Code (the codes). The codes contain similar principles to the EU Directive but go into more explicit and practical details in order to advise companies considering comparative advertising on how to comply with the law and with the codes.
Although the ASA cannot grant injunctions, levy fines or award compensation, the ASA may refer persistent or serious offenders to Trading Standards or, for broadcast advertising, Ofcom. Trading Standards and Ofcom can initiate court action or, where there are wider competition law issues, can refer the matter on to the Competition and Markets Authority.
In recent years the ASA has made rulings against hundreds of companies in relation to their comparative advertising, including ASDA, Easyjet and Unilever.
Whilst comparative advertising is a complex area of law, it seems to be an area where companies are willing to push the boundaries in order to show their products are better than those of a competitor. On the one hand, comparative advertising is in the interest of consumers and companies, as it encourages competition which drives down prices and in turn increases sales. However, on the other hand, if used in an unfair or misleading manner, it can adversely affect competitors and decrease consumer choice. Advertisers need to make sure that they find a balance between these differing interests and make sure that their comparative adverts fall on the right side of the law.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at December 2014. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.
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