Comparative advertising can be an effective marketing tool, but it’s important to tread carefully when you develop your ad campaign, so you don’t fall foul of laws that relate to comparative advertising. In this article, our intellectual property solicitors explain what comparative advertising is, the risks of comparative advertising and the rules that relate to comparative advertising.
Jump to:
- What is comparative advertising?
- What is an example of comparative advertising?
- Is comparative advertising legal?
- What laws relate to comparative advertising?
- What are the main risks associated with comparative advertising?
- What are the advantages and disadvantages of comparative advertising?
- What can businesses do if claims made in the advert are false?
- What legal remedies are available to companies that have been harmed by misleading comparative ads?
- What legal defences can companies use when facing claims related to comparative advertising?
- Summary
What is comparative advertising?
Comparative advertising is a form of advertising that compares the products or services of a business to those of a competitor, either explicitly or by implication. It often uses the competitor’s trade marks to identify them, or their products.
What is an example of comparative advertising?
'Basket of goods' advertisements are a common example of comparative advertising. These types of adverts, commonly used by supermarkets, feature a basket of items available from the advertiser’s store and show them costing less than a basket of the same items available from a competitor. But a comparative advertisement could simply claim that the advertiser’s goods or services are better, or cheaper than those of a competitor.
Is comparative advertising legal?
Yes, comparative advertising is usually legal. Complex rules designed to protect consumers and businesses apply regarding what comparisons may be drawn. This is also an area that has been subject to a lot of trade mark disputes. Care must be taken to ensure that advertisements comply with applicable law.
What laws relate to comparative advertising?
The Comparative Advertising Directive is an EU directive, introduced to harmonise the laws on misleading and comparative advertising throughout Europe. The aim of the directive is to protect traders and consumers against misleading advertising and its consequences.
The Comparative Advertising Directive was implemented in the UK by the Business Protections from Misleading Marketing Regulations 2008 (the BPRs). The BPRs reproduced certain provisions of the Comparative Advertising Directive and also introduced some additional provisions (see below for further details).
The Unfair Commercial Practices Directive (UCP Directive) is also relevant to comparative advertising. The UCP Directive governs unfair business-to-consumer commercial practices, including advertising, and was implemented in the UK by the Consumer Protection from Unfair Trading Regulations 2008 (CPUT).
What are the main risks associated with comparative advertising?
Given the nature of comparative advertising, it is likely that advertising businesses will face pushback from the competitors they feature in their ads and there are several ways in which businesses (or consumers) may seek redress, including actions for:
- Breach of the BPRs
- IP infringement (trade mark and copyright)
- Trade libel
- Malicious falsehood
- Passing off
Businesses and consumers may also complain to the Advertising Standards Authority (ASA) if they suspect that an advertisement breaches the UK Code on non-broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code).
Neither the BPRs nor the CPUT Regulations can be enforced by businesses or consumers by direct court action. Trading Standards Services (TSS), the Competition and Markets Authority (CMA) or other consumer protection agencies may initiate proceedings on behalf of businesses and consumers, for example by seeking an injunction prohibiting the publication of unlawful comparative advertising.
Trading Standards Services (TSS) may require that all other options for dealing with the complaint have been exhausted before they are willing to pursue the issue in the courts, including via the ASA. This can be a ‘chicken and egg’ scenario, as the ASA will not investigate any complaint that has or will be the subject of legal scrutiny. If an advertisement is found to breach the CAP Code, the advertiser may be asked to withdraw or change it, which can be costly and result in adverse publicity (but will not compensate traders who have suffered damage). If the ASA is not satisfied with the steps the advertiser takes to comply, it may also refer the matter to TSS or the Competition and Markets Authority (CMA).
Businesses may face a number of sanctions if a comparative advertisement is found to breach the rules and the consequences can be severe. Under the BPRs:
- An individual trader who engages in misleading advertising may face a fine, a sentence of up to 2 years in prison, or both.
- A corporate body will be guilty of an offence if it can be proved that the offence was committed with the consent or connivance of an officer or that the offence was due to the officer’s neglect. The corporate body may be fined, and the officer may face a fine, a sentence of up to 2 years in prison, or both.
If the aggrieved trader sues for trade mark infringement, though the courts are often reluctant to grant injunctions to stop advertising and it is an expensive route to take. Complainants are more likely to achieve success through the enforcement of the BPRs or CPUT Regulations following a complaint to TSS or CMA.
What are the advantages and disadvantages of comparative advertising?
It’s useful to be able to tell customers about differences between your goods or services and those of your rivals. The whole idea of trade marks, after all, is to distinguish one trader’s wares from others’. This is why comparative advertising has been around for a long time, and it’s a safe bet that it will become more common in the future.
What can businesses do if claims made in the advert are false?
A business which falls victim to a competitor’s unfair comparative advertising has two choices.
A complaint to Trading Standards or the Competition and Markets Authority costs nothing (apart from the complainant’s time) and does not risk landing you with liability for the other party’s costs if you lose. But there’s no guarantee that they will take up your complaint: public bodies are frequently underfunded and have many calls on their limited resources. You might be lucky and take a problem to them that fits with a larger project on which they are working, but that would be a happy coincidence.
You can sue for trade mark infringement, passing off, or (possibly) copyright infringement. In some cases, a judge might grant an injunction to stop the advertiser, even before trial.
What legal remedies are available to companies that have been harmed by misleading comparative ads?
Complaining to Trading Standards or the CMA might bring about an end to the advertisements, but it won’t fix the damage you have suffered. It might be feasible to bring a claim for damages if the advertiser is convicted of an offence, but probably the most effective way to recover compensation might well be to bring a claim for trade mark infringement, passing off, copyright infringement or malicious falsehood. Of course, to do that you would need to have evidence to show that one of those wrongs had been committed.
What legal defences can companies use when facing claims related to comparative advertising?
Comparative advertising is only prohibited when it fails to meet the conditions set out in the BPRs. A comparative advertisement will also be considered misleading for the purposes of CPUT Regulations if it causes a consumer to make a transactional decision they would not otherwise have made – for example, to buy from Tesco rather than Aldi. So an advertiser who is accused of comparative advertising that is unfair or misleading, or which infringes a trade mark, has to show that it is none of those things.
Summary
The law rightly recognises that comparative advertising plays an important role in commercial life. It cannot be allowed without restriction – there is too much scope for harming the interests of competitors and consumers. Legal regulation in the UK centres around a set of conditions designed to ensure that comparative advertisements are fair to other traders, along with protection for consumers where comparisons might be misleading. While the law might look complicated, the basic principles are simple and not hard to grasp, and any business which makes it a priority to compete fairly will find that compliance with the law on comparative advertising comes naturally.
