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Tuesday, 19 September 2006

SAVE A LIDL MONEY? REDUCING THE RISK


Save a Lidl money?

This morning the ruling of the European Court of Justice in Case C-356/04 Lidl Belgium GmbH & Co KG v Etablissementen Franz Colruyt NV was posted on the Curia website. The case goes like this:

Lidl and Colruyt both operate chains of stores in Belgium. In January 2004 Colruyt sent its customers a mailshot that read (in relevant part)

"Last year, 2003, you were able once again to make significant savings with Colruyt.

On the basis of our average price index for the past year we have calculated that a family spending EUR 100 each week in Colruyt stores:

– saved between EUR 366 and EUR 1 129 by shopping at Colruyt’s rather than at any other supermarket (such as Carrefour, Cora, Delhaize, etc.);

– and saved between EUR 155 and EUR 293 by shopping at Colruyt’s instead of a hard discounter or wholesaler (Aldi, Lidl, Makro).

On the reverse side you will see the evolution of the price differential vis-à-vis other stores in the course of 2003. The figures indicate that the price differential between Colruyt and the other stores has increased even further over the last few months.

In order to be able to continue to guarantee the lowest prices, we compare daily 18 000 prices in other stores. In addition, we also collect all promotions. Our data are thus very much up-to-date. We store all the prices in our central computer.

Each month we use those prices to calculate the price differential between Colruyt and the other stores. We refer to this as our price index which is certified by Quality Control (Instituut voor Kwaliteitscontrole), an independent body.

The result: at Colruyt’s you enjoy, every day and at any time of the year, the lowest prices. In 2004 also we remain true to this guarantee".
There were two charts on the back of the mailshot. The first set out the price differential between Colruyt and its competitors as at 22 December 2003, allegedly calculated on the basis of a daily comparison of the prices, including promotional prices, of comparable products sold in the respective stores. The second illustrated the development of that differential across 2003. Further, Colruyt's till receipts carrid the message:


"How much did you save in 2003?

If you spent EUR 100 at Colruyt’s each week, then, according to our price index, you will have saved:

– between EUR 366 and EUR 1 129 in comparison with another supermarket (such as Carrefour, Cora, Delhaize, etc.);

– between EUR 155 and EUR 293 in comparison with a hard discounter or wholesaler (Aldi, Lidl, Makro)".
In addition to the mailshot and receipts, further advertising material of a similar nature was issued in relation to Colruyt's BASIC products.

Lidl sought an order requiring the cessation of those various advertising practices, which it considered to be contrary to Article 23a of the Belgian Law of 14 July 1991 on commercial practices and consumer information and protection as amended by the Law of 25 May 1999, implementing Article 3a of the Directive on misleading and comparative advertising. The company objected that the information put out by Colruyt was not objective or verifiable and was misleading. The court stayed the proceedings and referred the following questions to the ECJ for a preliminary ruling:

"(1) Must Article 3a(1)(a) of [the] Directive … be construed as meaning that the comparison of the general price level of advertisers with that of competitors, in which an extrapolation is made on the basis of a comparison of the prices of a sample of products, is impermissible inasmuch as this creates in any event the impression that the advertiser is cheaper over its entire range of products, whereas the comparison made relates only to a limited sample of products, unless the advertisement makes it possible to establish which and how many products of the advertiser, on the one hand, and of the competitors used in the comparison, on the other, have been compared, and makes it possible to ascertain where each competitor concerned by the comparison is positioned in the comparison and what its prices might be in comparison with those of the advertiser and of the other competitors used in the comparison?

(2) Must Article 3a(1)(b) of [the] Directive … be construed as meaning that comparative advertising is allowed only if the comparison relates to individual goods or services that meet the same needs or are intended for the same purpose, to the exclusion of product selections, even if those selections, on the whole and not necessarily in regard to every component, meet the same needs or are intended for the same purpose?

(3) Must Article 3a(1)(c) of [the] Directive … be construed as meaning that comparative advertising in which a comparison of the prices of products, or of the general price level, of competitors is made will be objective only if it lists the products and prices being compared of the advertiser and of all the competitors in the comparison and makes it possible to ascertain the prices being charged by the advertiser and its competitors, in which case all products used in the comparison must be expressly indicated for each individual supplier?

(4) Must Article 3a(1)(c) of [the] Directive … be construed as meaning that a feature in comparative advertising will satisfy the requirement of verifiability in that article only if that feature can be verified as to its accuracy by those to whom the advertising is addressed, or is it sufficient if the feature can be verified by third parties to whom the advertising is not addressed?

(5) Must Article 3a(1)(c) of [the] Directive … be construed as meaning that the price of products and the general price level of competitors are in themselves verifiable features?".
The ECJ ruled as follows:

"1. The condition under which comparative advertising is permissible that is laid down by Article 3a(1)(b) of Council Directive 84/450 ..., as amended by Directive 97/55 ..., must be interpreted as not precluding comparative advertising from relating collectively to selections of basic consumables sold by two competing chains of stores in so far as those selections each consist of individual products which, when viewed in pairs, individually satisfy the requirement of comparability laid down by that provision.

2. Article 3a(1)(c) of Directive 84/450, as amended ..., must be interpreted as meaning that the requirement, laid down by that provision, that the advertising ‘objectively compares’ the features of the goods at issue does not signify, in the event of comparison of the prices of a selection of comparable basic consumables sold by competing chains of stores or of the general level of the prices charged by them in respect of the range of comparable products which they sell, that the products and prices compared, that is to say both those of the advertiser and those of all of his competitors involved in the comparison, must be expressly and exhaustively listed in the advertisement.

3. Article 3a(1)(c) of Directive 84/450, as amended ..., must be interpreted as meaning that the following constitute, for the purposes of that provision, ‘verifiable’ features of goods sold by two competing chains of stores:

– the prices of those goods;

– the general level of the respective prices charged by such chains of stores in respect of their selection of comparable products and the amount liable to be saved by consumers who purchase such products from one rather than the other of those chains, in so far as the goods in question do in fact form part of the selection of comparable products on whose basis that general price level has been determined.

4. Article 3a(1)(c) of Directive 84/450, as amended ... must be interpreted as meaning that a feature mentioned in comparative advertising satisfies the requirement of verifiability laid down by that provision, in cases where the details of the comparison which form the basis for the mention of that feature are not set out in the advertising, only if the advertiser indicates, in particular for the attention of the persons to whom the advertisement is addressed, where and how they may readily examine those details with a view to verifying, or, if they do not possess the skill required for that purpose, to having verified, the details and the feature in question as to their accuracy.

5. Article 3a(1)(a) of Directive 84/450, as amended ..., must be interpreted as meaning that comparative advertising claiming that the advertiser’s general price level is lower than his main competitors’, where the comparison has related to a sample of products, may be misleading when the advertisement:

– does not reveal that the comparison related only to such a sample and not to all the advertiser’s products,

– does not identify the details of the comparison made or inform the persons to whom it is addressed of the information source where such identification is possible, or

– contains a collective reference to a range of amounts that may be saved by consumers who make their purchases from the advertiser rather than from his competitors without specifying individually the general level of the prices charged, respectively, by each of those competitors and the amount that consumers are liable to save by making their purchases from the advertiser rather than from each of the competitors".
The bottom line, as it seems to the IPKat, is that price comparisons can safely be conducted on a generalised basis without the need for Colruyt to engage in the exhaustive listing of every single price in respect of every single item of every single retailer. If that were otherwise, overall price comparisons would be too information-rich for most consumers to want to read. Merpel adds, most consumers make their decisions relating to price preference on the basis of how much a whole basket of shopping costs rather than on a one-for-one monitoring of individually priced items, so this ruling makes sense.


Reducing the risk

The IPKat is grateful to his friend Miri Frankel for this recent newsy snippet: the good news is that insurance cover is now possible for such intangible assets as the music and other copyright-protected material that is stored by copyright licensees on their MP3 players. The bad news is that coverage is in respect of fire, theft and flood - but not for such rampant accidents as accidentally wiping out your downloads.

Accidents will happen here and here
Accidents waiting to happen here and here

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