Business Impact

  • Complaints to the Advertising Standards Authority ("ASA") are often brought by businesses seeking to challenge the advertising activities of their competitors. The ASA is currently undertaking an internal review to try to limit the number of complaints received by competitors. However with the extension of the remit of the ASA on 1 March 2011 in relation to on-line advertising such complaints may well increase.
  • There are ways of challenging the adjudications of the ASA.
  • The court has shown itself willing to be innovative in determining advertising disputes between competitors in the recent Rockwool case in which Herbert Smith acted.

The ASA's Role

There has been recent press coverage of the decision of the Advertising Standards Authority ("ASA") that elements of an advertising campaign run by ASDA were misleading. In that case ASDA offered a "price guarantee" that shopping at ASDA would cost less than at certain named supermarkets, if not ASDA offered to give the customer the difference in price. This offer was subject to certain exclusions. The ASA determined that ASDA's advertising did not give sufficient warning of these exclusions (for example, the offer did not relate to non-grocery items) and, as such, some of the ads were misleading.

The ASA is the UK's independent regulator of advertising across all forms of media. It ensures that advertising in the UK complies with the relevant Advertising Codes (the UK Code of Broadcast Advertising and the UK Code of Non-Broadcast Advertising)1. From time to time its activities come to the attention of the general public through, for example, press coverage of its determinations on particular advertising campaigns such as the recent ASDA decision. In that case a complaint to the ASA was initiated by a competitor which was also one of the supermarkets named in ASDA's ad campaign.

New remit for ASA from 1 March 2011

From 1 March 2011 the ASA's remit in relation to on-line advertising will be extended to cover not only paid for advertising but also advertisers' marketing claims on their own web-sites and in other non-paid for space under their control (e.g. on Twitter and Facebook). This may well increase the number of complaints received by the ASA, especially from competitors. See our IP Newsflash of 1 February 2011 on the extension of the ASA's remit).

Complaints by Competitors

Businesses will often take what ever steps are available to them to complain about their competitor's activities. Such complaints may even result in litigation such as in the dispute between supermarket chains LeClerc and Lidl arising from another advertising campaign involving price comparisons. (See our IP Newsflash of 23 November 2010 on the ECJ's ruling in that case).

Whilst anyone can make a complaint to the ASA it is not uncommon for complaints to be made by competitors, especially since making a complaint to the ASA is free and relatively straightforward. Currently if a complaint is made by a competitor, the competitor is required to (i) provide grounds for its complaint; (ii) agree to the disclosure of its identity; (iii) endeavour to resolve its differences, wherever possible, direct with the marketer or through the relevant trade or professional organisation; and (iv) confirm that it is not engaged in simultaneous legal action on the point in issue.

If a complaint is upheld by the ASA then usually the advertiser will act quickly to amend or withdraw the advertising that is in breach of the Codes. The ASA publishes its adjudications weekly on its website and this can generate bad publicity for the offending advertiser so this can act as a strong incentive not to breach the Codes. Also media owners can refuse to feature ads that break the Codes and the ASA can ask publishers not to print non-compliant ads and broadcasters not to air them. Ultimately the ASA can refer persistent offenders to the relevant regulatory body, the OFT in the case of non-broadcast ads and Ofcom in the case of broadcasting.

Challenging an adjudication

It is possible to seek a review by the Independent Reviewer2 of (i) an adjudication made by the ASA; or (ii) a refusal by the ASA not to investigate a complaint after an initial assessment. This can be done if (a) there a substantial flaw in the process of adjudication is apparent; or (b) additional relevant evidence becomes available. Independent review can be requested by advertisers, complainants or broadcasters. If such a request is accepted then, after his investigation, the Independent Reviewer will make a recommendation to the ASA Council which must consider the recommendation but is not obliged to accept it.

If a complainant or advertiser disagrees with the ASA's adjudication it may be possible to make an application for judicial review on the grounds of illegality, irrationality or procedural impropriety. However before seeking a judicial review all other alternative internal remedies must be exhausted (such as requesting review by the Independent Reviewer). Unless the ASA's decision was "manifestly unreasonable" the court will not intervene. There are only a few cases where judicial review has been granted but we are likely to see more challenges here.

The ASA is currently carrying out an internal review of its processes in response to recommendations made by Berkshire Consultancy Ltd in March 2010. As part of this review the ASA is considering ways of reducing the number and nature of complaints made by competitors, for example by insisting that, before the ASA agrees to undertake any investigation, competitor complainants provide documentary evidence that they have made a genuine attempt to resolve their concerns direct with the advertiser. If this requirement is implemented it may reduce the number of vexatious complaints made by competitors. The ASA has rejected proposals that it could levy a charge for competitor complaints or introduce an expedited competitor process.

As part of its internal review the ASA considered whether the "substantial flaw" test for seeking a review of an adjudication was unreasonable. The Berkshire Report considered that the only realistic alternative to the current review process would be to introduce an independent appeal panel. This would add an additional layer of decision-making and increased costs with little guarantee of increased effectiveness. As such, the ASA has no plans to alter the Independent Review process.

Recent judgment in comparative advertising dispute

Hebert Smith acted for Rockwool in a recent comparative advertising dispute, in which judgment was handed down on Monday 21 February 2011. The decision is innovative as the Court has shown itself to be prepared to grant declarations of fact on whether certain representations are made and, if made, are misleading. This may offer many advantages for brand owners in having significant commercial disputes settled by a court, rather than by the ASA under the Codes which could be viewed as a less rigorous process. (See our IP Newsflash of 24 February for a fuller report of the Rockwool case).