Wednesday, 8 February 2017

Can a hypermarket compare its prices with those of a supermarket? CJEU in C-562/15

Today, on 8 February 2017, the Court of Justice delivered its judgment in case C-562/15 Carrefour Hypermarchés. The case dealt with an advertising campaign carried out by the French retailer back in 2012. The contested marketing strategy of Carrefour featured a series of TV spots in which the company compared the prices charged in its hypermarkets with the prices of its competitors. Importantly, the advertisement did not make clear that it did not apply to smaller shops from the Carrefour group and that the prices selected for comparison referred to competing supermarkets, not hypermarkets. 

A competing retail chain, Intermarché, challenged the legality of this practice and obtained a favourable ruling in the court of first instance. Carrefour appealed. In these circumstances, the Court of Appeal in Paris decided to stay proceedings and ask the Court of Justice for clarification of Article 4(a) and (c) of Directive 2006/114/EC concerning misleading and comparative advertising. The provision in question lays down conditions under which comparative advertising is permitted. It requires, among others, that advertisement compares prices objectively and is not misleading within the meaning of Article 7 of Directive 2005/29/EC.

CJEU judgment

According to the Court, comparative advertising based on prices charged in shops having different formats and sizes is not in itself prohibited, but has to comply with conditions set out in Directive 2006/114/EC. 

With regard to objectivity, the Court held that where the advertiser and competitors belong to retail chains which each have a range of shops of different sizes and formats and where the advertiser compares the prices charged in shops in its retail chain having larger sizes and formats with those identified in shops having smaller sizes and formats in competing retail chains, without that fact appearing in the advertising, the objectivity of the comparison may be distorted. [para 26]

The Court went on to analyse whether such an advertisement is also liable to be misleading, meaning that it is capable of, firstly, deceiving the average consumer and, secondly, causing him to take a transactional decision that he would not have taken otherwise.

In line with the opinion of Advocate-General Saugmandsgaard Øe, the Court held that advertising, such as the one described in the case at hand, is liable to both deceive the average consumer by giving him the impression that all shops forming part of competing retail chains have been considered in the comparison, and to influence his economic behaviour. This would not have been the case if consumers were informed, in the advertisement itself, that comparison was made between prices charged in shops of different sizes or formats [paras 36, 38].

To conclude, the question posed in the title of this post should be answered in the affirmative. The analysed judgment does not go as far as to say that price comparisons are permitted only if the goods are sold in shops having the same format or size. Such an advertisement may, nevertheless, be classified as non-objective or misleading if conditions set out in Directive 2006/114/EC are not fulfilled. Main consideration for advertisers is thus to make sure that all relevant circumstances are duly disclosed.

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