The matter at hand

In December 2012, Carrefour launched a major television advertising campaign entitled ‘Carrefour lowest price guarantee’, which compared the prices of 500 leading brand products charged in its shops and in shops of competitors, including so-called Intermarché shops, and offered to reimburse consumers twice the price difference if they found cheaper prices elsewhere.

All of the Intermarché shops of competitors selected for comparison were supermarkets and all of the Carrefour shops were hypermarkets. That information appeared only on the homepage of the Carrefour website, where it was stated in small print that the guarantee ‘applied only in Carrefour and Carrefour Planet shops’ (the hypermarkets) and not in the smaller ‘Carrefour Market, Carrefour Contact or Carrefour City shops’.

ITM, a company responsible for the strategy and commercial policy of the outlets belonging to the Intermarché retail chain, brought proceedings before the French courts by which it sought an injunction to stop the advertising campaign. In essence, ITM argued that the comparative advertising campaign was unfair, because it compared the prices of the large Carrefour hypermarkets with the prices of smaller Intermarché shops (which due to their size are not able to offer prices as low as hypermarkets), while excluding, in an inconspicuous manner, the smaller Carrefour shops from the comparison.

As the referring court had doubts on how to address the principle of comparative price advertising between shops with different formats, it decided to ask the ECJ whether such advertising, which compares the prices of products sold in shops having different sizes or formats, is lawful in the light of Article 4 of the Misleading and Comparative Advertising DirectiveDirective 2006/114/EC of the European Parliament and of the Council of 12 December 2006 concerning misleading and comparative advertising. It also asked whether the fact that the shops whose prices are being compared are of different sizes or formats constitutes material information, within the meaning of Article 7 of the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market, and, where relevant, what degree and what medium of communication that information must have.

The judgment of the ECJ

First of all, the ECJ points out that advertising which compares the price of products sold in shops of different sizes or formats must compare prices objectively (paragraphs 23 and 24).

The ECJ holds that this objectivity may be distorted by the difference in size or format of the shops selected for comparison “where the advertiser and the competitors whose prices have been identified belong to retail chains which each have a range of shops of different sizes and formats and where the advertiser compares the prices charged in shops in its retail chain having larger sizes and formats with those identified in shops having smaller sizes and formats in competing retail chains, without that fact appearing in the advertising” (paragraph 26).

After all, “the prices of consumer products are likely to vary according to the format or size of the shop, with the result that an asymmetric comparison of that kind may have the effect of artificially creating or increasing the difference between the advertiser’s prices and the prices of competitors, depending on the selection of the shops used in the comparison” (paragraph 27).

Furthermore, the ECJ states that advertising must not be misleading, which in this case means that “the consumer is informed that the advertising in question compares the prices charged in shops having larger sizes or formats in the advertiser’s retail chain with the prices displayed in shops having smaller sizes or formats in the retail chains of competitors” (paragraph 35). Considering that such information “is necessary to enable the consumer to take an informed decision to buy the products concerned in the advertiser’s shops rather than in competitors’ shops and not to take a decision to purchase which he would not otherwise have taken”, the ECJ holds that such information constitutes material information (paragraph 35), which must not only be provided clearly, but be contained in the advertisement itself (paragraph 38).

The ECJ concludes – with reference to its judgments in Lidl (C‑159/09) and Ving Sverige (C‑122/10) – by stating that “it is for the referring court, in order to assess the lawfulness of such advertising, to ascertain whether, in the case in the main proceedings, in the light of the circumstances of the present case, the advertising at issue satisfies the objective comparison requirement and/or is misleading, first, by taking into consideration the average consumer of the products in question who is reasonably well informed and reasonably observant and circumspect and, secondly, by taking into account the information contained in that advertising, in particular the information concerning the shops in the advertiser’s retail chain and those in the retail chains of competitors whose prices have been compared and, more generally, all of the elements in that advertising.” (paragraph 40)