Brands including Duracell and Energizer use comparative advertising to promote their batteries over their competitors by implying, or explicitly stating, that their product is of better quality or value. This is called comparative advertising and can be a very persuasive tool, providing customers with an ‘assessment’ of one product’s worth over another. Several brands including Coca-Cola and Pepsi use this form of advertising and clearly name or identify their competitors. Below, we explain the regulations around comparative advertising and illustrate with some examples on how to avoid breaching Australia’s Consumer Law.
Several brands including Coca-Cola and Pepsi use this form of advertising, clearly naming or identifying their competitors. Below, we explain the regulations around comparative advertising and illustrate with some examples how to avoid breaching Australia’s Consumer Law.
Comparative Advertising Regulations
Businesses need to take care when using comparative advertising so as not to mislead or deceive consumers. For example, if Duracell advertises that their batteries are cheaper than Energizer, the advertisement must clearly and accurately state the difference in price. Misstating a price difference, no matter how small, can still amount to misleading or deceptive conduct (see Luxottica Retail Australia Pty Ltd v Specsavers Pty Ltd 86 IPR 247).
The regulations focus on protecting the consumer, and not competitors from each other. For example, businesses need to take care and ensure that their comparisons are accurate. Brands cannot create a false impression in the mind of their consumers, and need to substantiate all claims by scientific or survey testing.
Comparative Advertising Conduct: Keep It Clean!
Recently, the Federal Court of Australia (FCA) in Reckitt Benckiser (Australia) Pty Ltd v Procter & Gamble Australia Pty Ltd  FCA 753, looked at two companies that import and sell dishwashing tablets in Australia.
Reckitt Benckiser imports and sells the product Finish, while Procter & Gamble imports and sells the product Fairy. The competitors agreed between themselves that Finish captured 70 percent of the dishwashing product’s market while Fairy only captured 8.5 percent. Fairy then brought some advertisements comparing its dishwashing products with those of a ‘leading brand’.
The advertisement claimed that the ‘leading brand’ tablets were unable to clean effectively without the dishes first being rinsed. It was clear that consumers interpreted the advertisement to mean that Fairy cleaned better than Finish, yet Fairy did not have any evidence of this or include any in their advertisement.
The FCA held that Finish presented a strong case that Fairy’s claims were on face value false, misleading or deceptive or were likely to mislead or deceive. The Court decided that it was then appropriate to issue an interim injunction, as Finish would likely suffer serious losses if Fairy continued with its advertisements. The Court is yet to determine whether the claims against Fairy breached the Australian Consumer Law.
Businesses can successfully employ comparative advertising to persuade consumers to buy their products over a competitor’s and can often provide consumers with accurate information about the choices available. But as has been discussed, brands need to take steps to avoid falling foul of Australia’s Consumer Law when using comparative advertising.
Advertisers need to make sure that:
- Their statements are accurate;
- The comparable products are reasonably similar;
- The comparison will be true for as long as the product is advertised;
- The statements will be true in every location the advertisement is shown (i.e. in all of New South Wales, or in all of Australia).
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