Court of Appeal: Comparative advertising used by Dunnes Stores not in breach of EU Regulations

About this case:

• Judgment:
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The Court of Appeal ruled that the trial judge had erred in interpreting the regulations, and that the injunctive relief granted to Aldi had to be set aside.

Background

Dunnes’ supermarkets ran an advertising campaign from June to August 2013 in which shelf-edge labels stated the Dunnes’ prices and Aldi prices for 262 separate products that Dunnes maintain were comparable.

The issue in the proceedings was whether this comparative advertising carried on by Dunnes Stories was in compliance with the rules contained in the European Communities (Misleading and Comparative Advertising) Regulations (S.I. No. 774 of 2007), which implement Directive 2006/114/EC and the Consumer Protection Act 2007.

President Seán Ryan explained that a key aspect of the Directive 2006/114/EC is that it permits comparative advertising using the trade mark of a rival provided, however, that certain conditions are complied with. At the heart of the appeal was therefore the question of whether the price advertising campaigns employed by Dunnes’ in the summer of 2013 which employed Aldi’s trade marks for identification and comparison purposes complied with these conditions.

President Ryan outlined some of the questions which arose in the appeal, stating that the specific context of the case could be illustrated by reference to some of the products with which the High Court was concerned. For example: “Can Dunnes’ in their in-store advertising compare their own-brand tomato ketchup with Aldi’s for the purposes of a price comparison when Aldi’s ketchup has more tomato content? Or its own-brand shower gel when Aldi’s has a small quantity of tea tree oil and Dunnes’ does not? Or its own-brand pork sausages when the Aldi product carries the Bord Bia mark and Dunnes’ does not?”

High Court

The High Court found that each of three elements of the in-store advertising campaign was in breach of multiple regulatory provisions contained in both the 2007 Act and the 2007 Regulations.

The High Court held that differences between 14 of 15 products that it considered in detail meant that the labels were in breach of both the 2007 Regulations and the 2007 Act.

The remaining 247 labels were condemned for similar infractions because they did not specify the compared products and they carried the words “Always Better Value” and “Guaranteed Lower Prices”.

The Court also found that the third limb of the campaign consisting of banners and floor stands was unlawful.

The remedy issued by the High Court was that Aldi was entitled to a restraining injunction.

Court of Appeal

Delivering the judgment of the three-judge Court of Appeal, President Ryan identified the questions at the heart of Dunnes’ appeal:

Although the trial judge did refer to the terms of Article 4(2)(d) accurately on a number of occasions, President Ryan held that the trial judge’s understanding was that comparability of products was governed not only by subparagraph (c) – subject of course to the restriction on misleading communications – but also by (d).

President Ryan was therefore satisfied that the trial judge began with an erroneous interpretation of the 2007 Regulations, and consequently followed through in a consistent manner with this erroneous interpretation.

As such, President Ryan disagreed with the trial judge’s finding that “Dunnes had failed to make known to consumers the differences that he found to exist between the products and that this constituted a breach of Article 4(2)(d)”.

Allowing the appeal against the findings of the High Court of breaches of the 2007 Regulations, and of the 2007 Act in respect of the 15 shelf-edge labels and the labels generally – President Ryan stated that he would “replace the decision with regard to the banners with a declaration that they were not permitted because they did not constitute comparative advertising”.

Setting aside the injunctive relief ordered by the High Court; President Ryan added that the question remained whether the Court “should direct a retrial by the High Court of Aldi’s challenge to the lawfulness of the 15 comparisons and the labels generally since those issues were not evaluated at first instance according to the appropriate rules”.