A Lidl bit pricier? Can consumers verify Vierzon? The CJEU rules

It's a big day for comparative advertising today, with the long-awaited ruling of the Court of Justice of the European Union (CJEU) in Case C-159/09 Lidl SNC v Vierzon Distribution SA, a reference for a preliminary ruling from the tribunal de commerce de Bourges (France).

In short, Lidl is a giant supermarket chain and runs a chain of food stores in France, one of which is an unwelcome neighbour of Vierzon Distribution, which sells everyday consumer goods under the name ‘Leclerc’. In September 2006 Vierzon Distribution placed an advertisement in a local newspaper which reproduced till receipts listing, by means of general descriptions, accompanied, as appropriate, by their weight or volume, 34 items -- mainly food -- purchased respective from Vierzon Distribution and Lidl, showing the bill for its own goods at EUR 46.30 as against Lidl's EUR 51.40.  The advertisement also included the slogans

‘Not everybody can be E. Leclerc! Low prices – And the proof is E. Leclerc is still the cheapest’ and ‘In English, they say “hard discount” – in French they say “E. Leclerc”’. [Says the IPKat, someone probably sent their child to university for three years so that he could learn to write like that-- and they say that creativity is dead.  Says Merpel, I alway thought "hard discount" was a French term].

Lidl sought an (i) damages for unfair competition and (ii) publication of extracts of the judgment in its favour in the press and on posters in its store.  According to Lidl, Vierzon infringed Article L. 121‑8 of the French Consumer Code: the advertisement at issue deceived, or even misled consumers [it's quite difficult to do the one without the other, though ...], both as a result of its presentation and because Vierzon selected only products which placed it in an advantageous position after aligning, where necessary, its prices with those of its competitor.  Moreover, the products were not comparable, since their qualitative and quantitative differences meant that they did not meet the same needs, as the reproduction of till receipts showing the list of the products compared does not per se let consumers identify the specific characteristics of those products or understand the reasons for the price differences.

Vierzon disagreed: two products which are not the same may be compared, provided that they meet the same needs or are intended for the same purpose and are thus sufficiently interchangeable, which was the case here. The differences between the products at issue were clear and no-one would have been deceived. The fact that Vierzon  itself chose the products to be compared was not unlawful and, since the items were purchased on the same day, any possibility that the prices could have been manipulated was also ruled out.

Feeling a need for guidance from Luxembourg the tribunal de commerce de Bourges decided to stay the proceedings asked the CJEU for a preliminary ruling on this question:

‘Is Article 3a of Directive [84/450 on misleading and comparative advertising] to be interpreted as meaning that it is unlawful to engage in comparative advertising on the basis of the price of products meeting the same needs or intended for the same purpose, that is to say, products which are sufficiently interchangeable, on the sole ground that, in regard to food products, the extent to which consumers would like to eat those products or, in any case, the pleasure of consuming them, is completely different according to the conditions and the place of production, the ingredients used and the experience of the producer?’

On those grounds, the Court (Fourth Chamber) hereby rules:

"Article 3a(1)(b) ..., as amended by Directive 97/55 ..., is to be interpreted as meaning that the fact alone that food products differ in terms of the extent to which consumers would like to eat them and the pleasure to be derived from consuming them, according to the conditions and place of production, their ingredients and who produced them, cannot preclude the possibility that the comparison of such products may meet the requirement laid down in that provision that the products compared meet the same needs or are intended for the same purpose, that is to say, that they display a sufficient degree of interchangeability.

Article 3a(1)(a) of Directive 84/450, as amended ..., is to be interpreted as meaning that an advertisement such as that at issue in the main proceedings may be misleading, in particular if:

– it is found, in the light of all the relevant circumstances of the particular case, in particular the information contained in or omitted from the advertisement, that the decision to buy on the part of a significant number of consumers to whom the advertisement is addressed may be made in the mistaken belief that the selection of goods made by the advertiser is representative of the general level of his prices as compared with those charged by his competitor and that such consumers will therefore make savings of the kind claimed by the advertisement by regularly buying their everyday consumer goods from the advertiser rather than the competitor, or in the mistaken belief that all of the advertiser’s products are cheaper than those of his competitor, or

– it is found that, for the purposes of a comparison based solely on price, food products were selected which, nevertheless, have different features capable of significantly affecting the average consumer’s choice, without such differences being apparent from the advertising concerned.

Article 3a(1)(c) of Directive 84/450, as amended ..., is to be interpreted as meaning that the condition of verifiability set out in that provision requires, in the case of an advertisement, such as that at issue in the main proceedings, which compares the prices of two selections of goods, that it must be possible to identify the goods in question on the basis of information contained in the advertisement".

Says the IPKat, the easiest way to ensure that it is possible for consumers "to identify the goods in question on the basis of information contained in the advertisement" is for the comparative advertiser to make reference to branded goods (eg our Mars Bars are cheaper than theirs).  This is more difficult, or may even be impossible to achieve, where the competing goods are supermarket own-brands.  Goods sold by geographical indication are also easy to compare: even though they may be made by different manufacturers, the GI/PDO has a specification with which competitors must comply, so they should always be equivalent.

This decision comments on the much-criticised ruling of the same court in Case C‑487/07 L’Oréal and Others v Bellure (on which see the IPKat here, among other places):

"16 Article 3a of Directive 84/450, with which the question referred is concerned, lists, in subparagraphs (1)(a) to (h), various cumulative conditions which comparative advertising must satisfy in order to be permitted (see, inter alia, Case C‑487/07 L’Oréal and Others [2009] ECR I‑5185, paragraph 67). ..

20... it is apparent from the Court’s case‑law that the purpose of the various conditions listed in Article 3a(1) of Directive 84/450 under which comparative advertising is permitted is to achieve a balance between the different interests which may be affected by allowing comparative advertising. Thus, it is apparent from a reading of recitals 2, 7 and 9 in the preamble to Directive 97/55 that the aim of Article 3a of Directive 84/450 is to stimulate competition between suppliers of goods and services to the consumer’s advantage, by allowing competitors to highlight objectively the merits of various comparable products while, at the same time, prohibiting practices which may distort competition, be detrimental to competitors and have an adverse effect on consumer choice (L’Oréal and Others, paragraph 68).

21 It follows that the conditions listed in Article 3a(1) of Directive 84/450 must be interpreted in the sense most favourable to permitting advertisements which objectively compare the characteristics of goods or services, while ensuring at the same time that comparative advertising is not used anti-competitively and unfairly or in a manner which affects the interests of consumers (L’Oréal and Others, paragraph 69 and the case‑law cited)".