Limits On Comparative Price-Based Advertising Between Shops Of Different Sizes

On 8 February 2017, the Court of Justice of the European Union (the "ECJ") held that advertisements issued by a retail chain that includes stores of different sizes and compares the prices of products sold in its larger stores with those found in a competing retail chain's smaller stores without clearly informing consumers of the difference underlying the comparison are unlawful within the meaning of Directive 2006/114/EC of 12 December 2006 concerning misleading and comparative advertising (the "Advertising Directive"), read in conjunction with Directive 2005/29/EC of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market (the "Unfair Commercial Practices Directive") (ECJ, 8 February 2017, Case C-562/15, Carrefour Hypermarchés SAS v. ITM Alimentaire International SASU).

The ECJ delivered its judgment in response to a request for a preliminary ruling from the Paris Court of Appeal in a dispute between the supermarket chain Carrefour Hypermarchés SAS ("Carrefour") and a company ("ITM") representing such a retail chain, the Mousquetaires Group (i.e., Intermarché). Carrefour had launched an advertising campaign comparing prices of products sold in certain of its largest hypermarket stores with those offered in the smaller supermarket stores of its competitors. Carrefour then offered to reimburse customers double the difference in price if they found a lower price from a competing retailer. The advertisements, however, did not indicate that the price comparisons did not apply to prices offered at Carrefour's smaller stores. ITM brought proceedings against Carrefour before the Paris Commercial Court, which then ordered Carrefour to pay compensation on the grounds that, by failing to comply with the objectivity requirements of the French Consumer Code, Carrefour had engaged in unfair competition.

Carrefour appealed the judgment, arguing that the Advertising Directive, transposed into national law by the French Consumer Code, does not require that advertisements only compare prices between products sold in stores of a similar size and format.

Pursuant to Article 4 of the Advertising Directive, comparative advertising is permitted under specific conditions. Article 4(a) requires that such advertising should "not [be] misleading within the meaning of Articles 2(b), 3 and 8(1) of this Directive or Articles 6 and 7 of [the Unfair Commercial Practices Directive]", while Article 4(c) requires that such...