Hungary: Pepsi Fined By The Hungarian Competition Authority For Organizing A Misleading Promotional Campaign

I. Background

During the summer of 2014, Pepsi has organized a promotional campaign in which consumers who collected a certain number of Pepsi bottle caps were promised to win different types of gifts, including an illuminating Pepsi labelled ball.

After the start of the promotion, demand for the ball greatly exceeded the expectations of Pepsi and the stores quickly ran out of the Pepsi ball.

II. The Decision of the HCA

The Hungarian Competition Authority ("HCA") investigated whether Pepsi – and its media agency partner who was in charge of conducting the operational side of the promotional campaign – misled the consumers by stating that the ball is a guaranteed prize and if Pepsi and the media agency have prepared the promotion in a way which is contrary to the requirements of professional diligence (case number: Vj-120/2014).

In connection with the requirement of professional diligence, the HCA found that Pepsi and the media agency were diligent when they prepared the promotion. They have calculated the potential number of prizes based on a very similar campaign conducted by Pepsi in Poland in 2013. The HCA found that this method of calculation was sufficient from a professional point of view, therefore it was in line with the requirement of professional diligence. However, the HCA had also noted that some factors were not taken into account when the promotion was prepared, e.g. Pepsi did not consider the fact that the promotion was held during the 2014 Football World Cup, when Pepsi conducted a more intensive advertisement activity, which increased the demand for their products and as a result the participants in the promotional campaign as well.

In connection with the misleading nature of the promotion, the HCA considered two circumstances: firstly, that the advertisements of Pepsi stated that the ball is a guaranteed prize, and secondly that the advertisements also stated that only a limited number of prizes are available. The HCA assessed that these statements contradict to each other (i.e. if it is guaranteed, then it shall be provided unconditionally). The HCA found that the main message of the advertisement was that the prizes are "guaranteed," while the disclaimer concerning the limited availability was only a subsidiary message which did not change the main message perceived by the consumers. Pepsi could have taken steps to resolve this contradiction (e.g. by ordering additional items, etc.), however such measures were not taken.

On the basis of the above, the main message of the advertisement was that the prizes were guaranteed if the consumer submits a certain number of bottle caps, which proved to be untrue, thus the commercial practice of Pepsi was misleading and received a fine of HUF 40 million (approx. EUR 130.000).

III. Similar Earlier Decisions of the HCA

The HCA has an established practice of imposing fines for such type of unfair commercial practice, i.e. when a promised prize was not available at the stores at all or in very limited quantity or only with conditions which are not clearly communicated to the consumers. Vodafone has received a fine earlier for misleading consumers by stating that only a very limited number of consumers were eligible to win a car in the promotion even though a wide range of their clients were actually eligible to participate (case number: Vj-25/2013). Tesco was also fined earlier for not securing that there is sufficient supply from the promotional product at the start of the promotional period.

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