Wednesday, 19 October 2016

Comparing prices in hyper- and supermarkets - AG Saugmandsgaard Øe in Carrefour Hypermarchés (C-562/12)

AG Saugmandsgaard Øe has issued an opinion today in the case C-562/12 (Carrefour Hypermarchés) concerning an issue of a potential misleading and comparative advertising. Carrefour holding consists of many hyper- and supermarkets across France, with supermarkets generally being smaller in size than hypermarkets. One of its main competitors is Intermarché holding that also operates many hyper- and supermarkets. While Carrefour has 223 hypermarkets, Intermarché has 79. 

In December 2012 Carrefour run a new advertising campaign, both on TV and online, in which it compared prices of selected 500 leading brand products in its shops and competitors' shops under a slogan 'Lowest price guarantee'. The comparison was clearly favourable to Carrefour, who also promised to pay twice the price difference if consumers proved that the advertised prices were incorrect. Intermarché questioned the objectivity of this price comparison and its correctness, as well as a possibility of this advertisement misleading consumers, as it wasn't made clear to consumers that the comparison was between prices of consumer products in Carrefour's hypermarkets and Intermarché's supermarkets. Especially, since both Carrefour and Intermarché belong to retail outlets which each have shops of identical format and size, whose prices where then not directly compared with.

The CJEU was asked to answer such questions as (1) whether comparative advertisement referring to prices of consumer goods should be allowed only if the shops are of the same size and format; (2) if the compared shops differ in size and format whether consumers should be informed about this under the UCPD's obligation of Art. 7 to reveal material information to consumers; (3) if (2) is answered positively, how should this information be given to consumers.

The AG advises the Court to answer that indeed (1) comparative advertisement may only compare prices of goods sold in shops of similar formats and sizes but only IF:

"it is found, in the light of all the relevant circumstances of the case, and in particular in the light of the information in or omissions from the advertising at issue, that the transactional decision of a significant number of consumers to whom that advertising is addressed is likely to be made in the mistaken belief that all the shops in those retail chains have been taken into account in calculating the general price level and the amount of savings which are claimed by the advertising and that, accordingly, those consumers will make savings of the kind claimed by the advertising by regularly buying their everyday consumer goods from shops in the advertiser’s retail chain rather than from shops in the competitor’s retail chain"

or 

"the selection of the shops for the comparison has the effect of artificially creating or increasing any difference between the prices charged by the advertiser and by the competitor."

Thus, the national court has to consider the effect of a given advertisement on both consumers and fair competition to assess whether in a given case the comparative advertisement showed by Carrefour has infringed requirements of the Directive 2006/114/EC. If it is not misleading and it is done in an objective way, it should be allowed. 

"In my view, there is in principle no reason to consider that an advertiser’s economic freedom does not also extend to the possibility of comparing prices in shops having different formats and sizes. In so far as an advertiser is capable of benefiting from economies of scale, as a result of the size, format or number of shops available to him, and, consequently, of charging prices lower than those of his competitors, he should be able to derive the benefits therefrom for marketing purposes." (Par. 30)

The discretion of the advertiser in designing his marketing strategies is not unlimited, however, and should consider the need to provide objective comparisons and not to mislead consumers.

The AG expresses also an interesting view on the capabilities of average consumers: "I consider that the average consumer is fully capable of deciding whether a price difference justifies, in his view, purchasing a product in one or other of the shops, when those shops have different formats or sizes, which may also entail differences in terms of the geographical proximity of the shops." (Par. 31) However, in the particular case: "I consider that an asymmetric comparison of that kind might deceive an average consumer as to the actual difference in the prices charged in the advertiser’s shops and in the competitor’s shops, by giving that consumer the impression that all the shops in the retail chains were taken into consideration in calculating the price information presented in the advertising, although that information applies only to certain types of shops in those retail chains." (Par. 42)

Only the second requirement - whether the comparison might artificially create or increase difference in charged prices on the market - should, however, be considered by the national court when assessing (2) whether consumers should have been informed about divergence in size and format of shops compared in this advertising. In general, the AG does not see the information on size and format of shops as always being material to consumers, but in certain circumstances it may become material information. (Par. 68-69)

If the information on the difference between compared shops should have been given to consumers, this would need to occur in the advertisement itself (3), pursuant to the AG. Only such dissemination would assure that the information is provided in a clear, intelligible, unambiguous and timely manner, esp. since choosing to compare prices of goods sold in shops with different sizes/ formats was a voluntary choice of the advertiser. (Par. 78)


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