The “quick guide” on business-to-business promotions and comparative advertisements published by the Office of Fair Trading (OFT) at the end of March 2009 tells us nothing we don’t already know about the Business Protection from Misleading Marketing Regulations 2008 (BPRs). However, it is worth a look if only to confirm the regulator’s approach to enforcement of the BPRs. Although the examples it gives of infringement are simplistic, businesses can have little excuse for breaching the regulations through any of the practices to which the guidance refers.
The BPRs came into force on 26 May 2008 alongside the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). Misleading advertisements directed at consumers are now dealt with under the CPRs. The BPRs prohibit businesses from advertising products in a way that misleads traders and sets out conditions under which comparative advertising, to both consumers and business, is permitted. The BPRs also require code owners (namely traders and bodies responsible for codes of conduct or monitoring compliance with such codes) not to promote misleading advertising and comparative advertising, which is not permitted.
As the OFT points out,
If your business advertises goods or services to other businesses, or if in your advertisements to businesses or consumers you make comparisons that identify a competitor, or products offered by a competitor, the regulations are likely to apply to your business.
The BPRs cover conventional forms of advertising as well as marketing and promotional activities such as details in catalogues or websites and descriptions on packaging. In general terms, an advertisement will be misleading if it deceives or is likely to deceive the trader to whom it is addressed or whom it reaches and, by reason of its deceptive nature, is likely to affect their economic behaviour or, as a result of the economic effect on traders, it injures or is likely to injure a competitor in some way.
An advertisement can be deceptive if it contains a false statement of fact, conceals or leaves out important facts, promises to do something where there is no intention of carrying it out, or creates a false impression. The new guidance also illustrates the concept of injury to a competitor as a result of the effect on the trader’s economic behaviour.
In determining whether an advertisement is misleading, account must be taken of all its features and in particular any information about the characteristics of the product, such as its availability or fitness for purpose. The guidance provides the following example of misleading advertising.
A computer company advertises high definition computers on its website. On purchasing some computers for his office the trader discovers that the computers are not high definition but could be if further software is bought. This requirement was not mentioned on the website. The representations made on the company’s website would be considered misleading regarding, amongst other things, the nature and specification of the product.
Comparative advertising is now regulated under the BPRs and, insofar as it is directed at consumers, also to some extent by the CPRs. A comparative advertisement is one that identifies a competitor or products offered by a competitor either explicitly or by implication.
The OFT’s guidance sets out a comparative advertising compliance checklist, i.e., those features that a comparative advertisement must not contain and gives several examples of prohibited comparative advertisements. These include
Manufacturer A’s website compares the price of their desk chairs to that of manufacturer B’s, highlighting the fact that their chairs are £100 cheaper than manufacturer B’s. Manufacturer B’s chairs are more expensive as they are made of leather, whilst manufacturer A uses faux leather.
This comparative advertisement could be misleading under the BPRs (e.g., deceiving traders and, as a result, affecting their economic behaviour) since it is potentially deceptive in terms of the lack of information provided about the composition of the product.
The BPRs place a duty on the OFT to enforce breaches of the BPRs alongside other enforcement authorities, in particular, local authority Trading Standards Services. The trader may be required to publish a corrective statement about the advertisement. The OFT says that it will generally seek to ensure compliance with the BPRs through education, advice and guidance in the first instance. An injunction will be sought generally only after the OFT has consulted with the trader in an attempt to obtain compliance. The enforcement authority may accept undertakings from the trader that the breach will be rectified. Misleading advertising is also a criminal offence, punishable with up to two years’ imprisonment and/or an unlimited fine.
Businesses do not have a direct right of action under the BPRs although, in its response to the consultation leading up to implementation, the Government indicated that it would keep this under review. Nonetheless, there was speculation over how competitors might exploit the interaction of the BPRs with, for example, the enforcement of intellectual property rights, false attributions of which may amount to misleading advertising under Regulation 3. A veiled allegation of criminality can have a sobering and inhibiting effect on even the most aggressive comparative advertiser.