Sainsbury's fail again to overturn Tesco ruling by the ASA
The supermarket retailer Sainsbury's has failed in its latest bid to overturn the result of an adjudication by the Advertising Standards Authority (ASA) which gave a clean bill of health to rival supermarket Tesco's "Price Promise" advertising g campaign (Sainsbury's Supermarkets Ltd, R(on the application of) v The Independent Reviewer of Advertising Standards Authority Adjudications [2014] EWHC 3680 (Admin)).
The ASA's original ruling in July 2013 had been challenged by Sainsbury's who took the matter to the Independent Reviewer (IR) of ASA adjudications. When he held that there were no substantial flaws in the ASA's adjudication that merited any change to it, Sainsbury's sought a judicial review by the High Court of the IR's decision
Background
In March 2013, Sainsbury's complained to the ASA in about
its rival's "Price Promise" comparative advertising
campaign which compared the prices of certain comparable food
products on sale at Tesco and Sainsbury's.
In their complaint, Sainsbury's argued that in making the
comparisons between various products, Tesco had not taken into
account so-called "non-price" elements such as product
quality, sustainability and ethical matters. Products which had
certain accreditations or which were produced according to specific
ethical or environmental standards, Sainsbury's contended, were
bound to be more expensive than products which did not have some or
all of these features. As a result, so Sainsbury's claimed, the
comparisons that Tesco made were unfair and misleading because
these important elements were not taken into account in the price
comparisons.
For example, Tesco had compared the price of its Haddock Fillets to
those of Sainsbury's Haddock Fillets. But whereas
Sainsbury's claimed their products were Marine Stewardship
Council (MSC) accredited, Tesco's weren't (although they
were sourced from the same MSC recognised farm as the
Sainsbury's product). Thus, Sainsbury's argued, Tesco were
not comparing "like with like". Similarly, Tesco had
compared the price of its "Everyday Value" teabags to
Sainsbury's "Basics" Fairtrade teabags. This too was
unfair in Sainsbury's view because the Sainsbury's products
were "Fairtrade" and Tesco's were not.
Therefore, by failing to take account of the fact that
Sainsbury's products were differentiated from Tesco's in a
"non-price" way, Sainsbury's alleged that the price
comparisons did not meet the requirements of the CAP Advertising
Code.
The CAP Code is broadly written to follow the relevant legislation
concerning comparative advertising and the relevant EU case law.
This obliges advertisers to confine price comparisons to products
that meet the same need or are intended for the same purpose. This
means that the products to be compared must have a "sufficient
degree of interchangeability" for the price comparison to be
valid. Whether they are sufficiently interchangeable has to be
assessed by reference to the particular facts of the case.
Tesco for its part had set out in some detail the basis on which it
compared the disputed products for these purposes. That process
included forming a judgment about the importance to consumers of
non-price factors for particular products. Tesco confirmed that
where non-price factors were present in rival products and were
really significant to consumers, this would certainly be a factor
in whether or not the Tesco products would be compared. But where
Tesco's research indicated that such matters were not material
in consumers' decisions to purchase the products, then it was
correct to still make the comparison – despite the
differences in non-price factors.
Applying the CAP Code and the legal principles set out by the Court
of Justice of the European Union (CJEU) in various comparative
advertising cases, notably Lidil v Vierzon, the ASA had
concluded that Tesco were entitled to make the comparisons they had
and that these were neither unfair nor misleading. The ASA accepted
that Tesco had, as part of its process, taken into consideration
the relative importance of non-price features. The comparisons made
in the "Price Promise" campaign did not breach the CAP
Code.
Moreover, the fact that Tesco had also been running another
campaign at the same time entitled "We're changing"
was not likely to be viewed by consumers as part of the Price
Promise campaign and did not undermine the comparisons made in that
campaign.
Sainsbury's request for a review by the IR
Sainsbury's were unhappy with the ASA's decision and
requested a review by the IR.
The IR accepted that Sainsbury's had made a persuasive case
about the increasing importance and value attached by consumers on
such matters as provenance and ethical issues when considering food
purchases. However, he could not accept that ASA's ruling was
substantially flawed. Accordingly, the original ASA adjudication
would have to stand.
Sainsbury's reacted to this news by applying to the High Court
for permission to bring a judicial review of the IR's decision.
Permission was granted by the Court in February 2014 to bring the
application and the matter was heard in October. Judgment was given
on 10 November.
The judicial review & comparative advertising law
Judicial review is a domestic UK legal process under which
decisions made by the government or other public bodies (including
the ASA) can be scrutinised by the Courts and, in appropriate
cases, set aside on the application of an affected party. However,
the focus in such cases, is very much on a scrutiny of the decision
making process and outcome and whether it was irrational, contained
an error of law by the decision maker or involved a procedural
flaw. It is not generally the task of the Court to make wider
rulings concerning the substantive law – in this case the
domestic and EU legislation concerning comparative advertising. But
inevitably the Court has to have regard to what that law
says.
Underlying the whole concept of comparative advertising is a
well-established principle that, subject always to ensuring the
advertising is not unfair, anti-competitive or detrimental to
consumers, a Court has to interpret the law in a manner most
favourable to permitting the advertising.
EU case law has also confirmed that when it comes to advertising
food products, there is no rule that you can only compare
identical products. You are allowed, to an extent, to
substitute equivalent products for the purposes of a comparison.
But in each case where a substitution is made, there has to be an
individual and specific assessment of the products in question. In
order to be properly compared, they must, as has been observed, be
"sufficiently interchangeable".
Finally, it is also a feature of comparative advertising law that
where there is a price comparison between two products, one of the
products could well have characteristics, besides price, which
might have a significant effect on a consumer's choice between
them. If such differences are not adequately explained by the
advertiser and the consumer is thereby deceived, the advertising
will not amount to a fair comparison.
Against that legal setting, the Court had to examine the basis for
the IR's decision to uphold the ASA's original
adjudication.
The Court's conclusions
The Court was satisfied that the IR had neither erred in law nor
been irrational in reaching his decision to uphold the original ASA
adjudication. The ASA had been entitled to decide that Tesco's
price comparisons were fair and not misleading.
In the view of the Court, the approach suggested by Sainsbury's
to dealing with the effect of non-price factors on the comparison
was too inflexible to accord with the relevant law. The ASA had
been entitled to form its own judgment on the facts on a common
sense basis without having to conduct independent consumer research
of its own and the IR was right to accept that approach. Also, the
mere fact that one party's product might have an official
accreditation from a relevant body as being ethically produced
whereas another's did not, was not an automatic bar to making a
price comparison.
Finally, the Court also dismissed the argument about the effect of
Tesco's "We're changing" campaign on the
comparisons in the Price Promise campaign.
Although the Court's ruling in the Sainsbury's case is not
strictly speaking a decision about comparative advertising law, but
rather the lawfulness of the decision made by the IR, the case
nevertheless demonstrates that great care is needed when making
price comparisons for advertising purposes. It is very important to
consider the qualities and features of the goods concerned and
examine all possible grounds for competitors to challenge the
comparison. It would appear in this case that Tesco managed to do
that successfully – much to the displeasure of its rival!
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