In 2006 the vehicle manufacturer BMW published in an automobile magazine an ad containing a photo of a BMW and the wording: “Congratulations to Audi for winning South African Car of the Year 2006. From the Winner of World Car of the Year 2006.” Audi replied to this ad with an advertising commercial containing a photo of an Audi car and the wording: “Congratulations to BMW for Winning World Car of the Year 2006. From the Winner of Six Consecutive Le Mans 24 Hour Races.”
Even Subaru seized the opportunity and joined this advertising race publishing an ad with a photo of one of its cars and the annotation: “Well done to Audi and BMW for winning the beauty contest. From the winner of the 2006 International Engine of the Year.” This pungent comparison of the advantages of the two make of cars was loudly interrupted by an advert where in addition to the Bentley logo there is merely a photo of a sleek, mature man, wearing a suit and sitting on a leather couch and flashing his middle finger directly in the lens.
In Slovenia, such advertising wars are not common, but the described technique of advertising among commercial companies is nevertheless very popular. This is the so called comparative advertising, i.e. when a company, in an advertisement, compares directly or by implication (indirectly) its product or service with products or services of a competitor by emphasizing its advantages in quality, price, efficiency, sustainability, etc. Indirect comparative advertising includes the use of references, such as: “The least expensive”, “Ahead of everyone”, “The best in Slovenia”, “Quality, like anywhere else” and the like. In this way, it is showed to the public that a particular company’s offer has advantages over others, which inevitably requires a preliminary comparison of offers. In the case of direct comparative advertising, the ad is designed in such a way that the company specifies the specific characteristics that make its product / service more advantageous than the competitor’s. In this context, a competitor is often stated explicitly, and his trademark may also be used.
Comparative advertising can have a strong impact on the consumers’ economic behaviour and on the competitive situation on the market. This is why it was banned for many years in most European countries and gradually began to be introduced only in the 1970s and 1980s, when some countries began to emphasize the advantages of this kind of advertising technique. One of the most important advantages was that such advertising encourages producers or service providers to constantly improve their products and make it easier for consumers to make a choice since it provides them with comparative information needed to make a purchase decision. On the other hand, in order to prevent intentional blacklisting of competitors, exploiting the reputation of already established products and to protect consumers, other European countries have kept the ban on such advertising.
In order to harmonize legislation, EU Directive 2004/114/EC, which explicitly sets out the conditions under which comparative advertising is permissible, was adopted at EU level in 2004. The Directive is transposed into Slovenian law by the Consumer Protection Act (ZVPot), which fully resumes the conditions from it. However, from the point of view of consumer protection, the Consumer Protection against Unfair Commercial Practices Act (ZVPNPP) should also be taken into account, and from the point of view of competition protection, the provisions of the Prevention of Restriction of Competition Act (ZPOmK-1). Comparative advertising is permitted under the ZVPot if it meets several conditions simultaneously: inter alia, an advertisement must not be misleading to consumers or other companies. The comparison must be objective and must relate to true information about products or services that meet the same needs or have the same meaning for consumers (substitutes). In the case of a product bearing a designation of origin, only products of the same origin may be compared. A comparative advertiser must not create confusion on the market, nor should he unfairly profit from the reputation of established competing brands – not even in the way that a product or service is presented as a copy of a particular product with a protected trademark. In doing so, a commercial company or an advertiser must have evidence of the truthfulness of the claims mentioned in the advertisement, as the court or an inspection body may request from it to submit such evidence in the procedure. If a commercial company fails to do so or the evidence is insufficient, it is considered that the claims in the advertisement are not true, which is a violation of the rules on comparative advertising.
Where a commercial company wants to use also a competitor’s brand in an advertisement to display a comparison of products or services, it must also take into account the Directive 2008/95/EC (or the Directive 2015/2436/EC replacing it) implemented in the Industrial Property Act (ZIL-1), as well as the case law of the Court of Justice of the European Union (CJEU), which formed the standpoint when the use of a foreign brand in comparative advertising (still) is permissible.
Due to detailed regulation, it can quite quickly happen that a company infringes the law on consumer protection or competition protection. However, if we also take into account autonomous rules, such as the Slovenian advertising code, it is clear that a company that does not want to be exposed to the risk of paying a fine, compensation or an obligation to withdraw the ad, should carefully inspect that all the conditions are met for it to publicly announce that its product is the best or better than the competitor’s.
(The text was published in the form of a column on 02.06.2017 in the weekly business v newspaper Svet kapitala. The author of the column is Nina Krajnc, LLM, junior associate at Law Firm Miro Senica and attorneys Ltd.)