CJEU rules that comparative advertising based on prices in shops of different sizes and formats may be unlawful and misleading in certain circumstances

Further to a reference from the Paris Court of Appeal in a case between Carrefour Hypermarchés SAS and ITM Alimentaire International SASU, the CJEU has issued its ruling on the lawfulness of comparative advertising focussing on the prices charged by shops of different sizes and formats. The effect of the decision is that such advertising may be unlawful and misleading, where the advertiser and the competitors belong to retail chains which each have a range of shops of different sizes and formats if the comparison does not relate to shops of the same size and format, unless consumers are informed of this fact clearly in the advertisement itself.

Business impact

• The judgment provides helpful clarification that prices charged in one type of store may be compared with prices charged by a different type of store (eg. hypermarket prices vs supermarket prices), provided the consumer is informed clearly.
• The case focusses upon the average consumer being given material information, to be able to take a meaningful buying decision. The touchstone is whether the average consumer may take a buying decision that they would not otherwise have taken.
• Lawful comparative advertising under EU law must involve comparing products or services like for like, in an objective way, to avoid misleading the consumer.

The decision

In December 2012, Carrefour launched a major television advertising campaign in which it compared the prices of 500 leading brand products with those charged by its competitors, including Intermarché (which is run by ITM). Carrefour offered to reimburse consumers twice the price difference, if they could find those products cheaper elsewhere. Carrefour and Intermarché both operate a range of stores of different sizes and formats, from hypermarkets to smaller, convenience-type stores. Within such chains, the prices charged in hypermarkets may be lower than those charged in other sizes of store, due to economies of scale and other factors. From the second advert onwards, all of the Carrefour stores selected for comparison were hypermarkets, whilst all of the Intermarché stores represented were supermarkets. The former factor was indicated on Carrefour's homepage and the word "super" was included in small lettering underneath "Intermarché" in the ads in question.

ITM brought proceedings before the Paris Commercial Court, seeking an injunction to stop Carrefour from running the ads, together with damages in respect of misleading advertising. The first instance court found in ITM's favour and awarded ITM damages of EUR 800,000. Carrefour then appealed to the Paris Court of Appeal, which referred the following questions to the CJEU:

• Is advertising which compares the prices of products sold in shops having different sizes and formats lawful, in light of the Directive on misleading and comparative advertising [2006/114]?
• Does the fact that the shops in question are of different sizes or formats constitute material information which must be brought to the knowledge of the consumer, in accordance with the Directive concerning unfair commercial practices [2005/29]?
• If so, how must that information be disseminated to the consumer?

In essence, the CJEU was asked to consider whether Carrefour had failed to comply with the rules requiring neutrality and objectivity, by comparing prices in hypermarkets with prices in supermarkets, without informing consumers of the difference between the formats of the shops being compared.

The CJEU noted that, under the applicable Directive, all comparative advertising must compare prices objectively, like for like, and must not be misleading. However, where the advertiser and competitors subject to the comparison each operate retail chains which comprise a range of shops of different sizes and formats, the difference in size or format of the shops used for the price comparison may distort the objectivity of the comparison. This was in line with the Advocate General's opinion, which suggested that a comparison of that kind may have the effect of artificially creating or increasing the difference between the advertiser's prices and those of its competitors, depending upon the selection of shops used for the comparison – at least where that fact is not made clear to consumers.

The CJEU also found that comparative advertising would be misleading, if it omits or hides material information which the average consumer requires in order to make an informed transactional decision, or if it provides that information in an unclear, unintelligible, ambiguous or untimely manner such as to cause the average consumer to take a transactional decision that they would not have taken otherwise. As in this case, advertising is liable to deceive the average consumer by giving them the impression that all the shops forming part of the retail chains featured in the comparison have been taken into consideration in making the comparison. Accordingly, it would suggest that the price differences indicated are valid for all shops in each chain (irrespective of their size or format). This is liable to influence the consumer's economic behaviour by causing him to take a decision in the mistaken belief that he will benefit from the price differences claimed in all shops in the advertiser's retail chain. Nevertheless, the CJEU held that such advertising would only be misleading if the consumer is not informed of that fact, to enable them to make an informed decision.

In that regard, the CJEU noted that the information must be provided clearly, in the advertisement itself, and not hidden. It is now for the national court to determine whether that condition was met by Carrefour.

As a more general point, care should also be taken to make clear in comparative advertising the basis upon which any price comparison is made where this is based upon statistical averages, bearing in mind the requirement that such advertising must be objective and allow the consumer to take an informed buying decision.

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