In the European Union, comparative advertising is permitted under European Directive 84/450, as amended and now codified as Directive 2006/114, which sets forth the regulation of misleading and comparative advertising. The Polish Act on Combatting Unfair Competition complies with Directive 2006/114 and provides, among other conditions, that a comparative advertisement must not be misleading.
On December 13, 2013 the Polish Supreme Court handed down a judgment, which significantly lowers the bar for justification of comparative advertising involving product prices in Poland. The parties to the dispute were two supermarket chains LIDL and TESCO. The battle started with a promotional advertisement circulated by TESCO in 2008, which comprised a list of foodstuffs sold in TESCO, accompanied by information on prices in comparison to prices of same products at LIDL. Pursuant to information contained in advertisement the commercial offer of TESCO was valid from October 16, 2008 to November 12, 2008 and price tests in compared chains were performed on September 22, 2008. Both dates were displayed in the advertisement. The advertising campaign was run under the slogan “Discount prices at Tesco.” Subsequently, LIDL responded to TESCO’s campaign with lowering its prices. At the time of the campaign, TESCO’s prices were not advantageous compared to the offer at LIDL.
Shortly after TESCO launched its advertising campaign LIDL brought an action against TESCO and claimed that the advertising campaign deceived and misled the consumers on two counts. First, the advertisement suggested that TESCO products were cheaper than those offered by LIDL, whereas in fact at the time of promotion at TESCO, prices were equal in both supermarket chains. Second, the comparison in the advertisement included products that LIDL didn’t offer in its stores.
The Court of First Instance in Warsaw granted LIDL part of its request on the grounds of unfair competition, but TESCO lodged an appeal. In a judgment of October 10, 2012 the Court of Appeal in Warsaw reversed the first instance judgment and held that the description in the comparative advertisement was sufficiently clear to enable consumers to test the accuracy of compared prices shown in the advertisement.
In particular, the Court of Appeal found that a comparison of prices from different dates does not make the advertisement non-objective and that companies are allowed to continue comparing prices, even if the competitor changes prices, provided that the advertisement contained the information on dates on which compared prices were valid. The advertisement should also be examined in the context of the model of an educated, circumspect and critical consumer, who is fully aware of its rights. Consequently, the Court of Appeal ruled that TESCO’s advertising campaign complied with law and fair competition rules. LIDL filed a cassation complaint to the Supreme Court. Upholding the decision in the appellation, the Supreme Court held that any doubts regarding comparative advertising should have been interpreted in favour of such practice. The fact that the advertisement had some inaccuracies didn’t mean that it was unfair. Moreover, it was advantageous for consumers since it encouraged lowering of prices.
The discussed judgment of the Supreme Court provides new guidance for supermarket chains present in Poland, giving indications on acceptable and unacceptable price advertising. Unfortunately, it seems, that the Supreme Court, as well as courts of lower instances, missed the point in this case - that the issue was not a mere admissibility of comparing prices from different dates, but that TESCO continued its campaign after LIDL decreased its prices, what made compared information outdated. It is hard to accept that comparing in advertisement outdated information complies with goals of Directive 2006/114, which clearly states that comparative advertising should be legitimate measure intended for informing consumers on their advantage and that comparative advertising should not have adverse effect on consumer’s choice.
The decision of the Supreme Court is an incentive for price comparability, but it also rekindled the ruthless price wars between leading retailers. By rejecting LIDL’s argument that a comparative advertising should provide consumers with accurate information on compared prices and products, the Supreme Court opened Pandora’s box: what are the limits for comparing outdated information and how long such false comparison may continue?
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