With the Competition and Consumer Protection Act 2014 just signed into law, the recent case of Vodafone Ireland Limited -v- Telefonica Ireland Limited (O2) is very topical. Although the judgment is limited in its application, the case is significant as it saw a major company using consumer protection law against one of its main competitors.
In February 2014, Vodafone challenged O2’s advertising of its ‘Freedom’ Pay-As-You-Go mobile phone package in the High Court, alleging that it was misleading to Irish consumers. Vodafone’s claim was based on section 71 of the Consumer Protection Act 2007 (“CPA”) which allows “any person” to apply to court for an order prohibiting a trader or person from engaging in a prohibited act or practice. Vodafone also based its claim on the 2007 Misleading Advertising Regulations which allow a trader or any person apply to Court for an order prohibiting a trader from engaging in a misleading marketing communication or a prohibited comparative marketing communication. In short, Vodafone asked the High Court to prohibit O2 from engaging in what Vodafone alleged to be deceptive advertising.
The advertising campaigns
Specifically, Vodafone took issue with O2’s autumn 2013 campaign, which advertised “unlimited internet” for €10 on across various media. In particular, Vodafone claimed that special advertisements on bus shelters were misleading to customers. Some advertisements lacked any small print to explain that a top up of €20 was required to redeem the offer. Where such advertisements did state the top up requirement, Vodafone argued that the small print was so small as to be unreadable by the average consumer.
In February 2014, the ‘Freedom’ campaign was replaced by a similar promotion, once again offering “unlimited calls” for €10. After O2 declined Vodafone’s request to stop these adverts, Vodafone brought the case in the High Court.
Unsurprisingly, O2 rejected allegations of misleading advertising, suggesting that their approach to the ‘Freedom’ campaign represented standard “industry practice”.
Mr Justice Barton’s judgment focused on how the case should advance, rather than on the substance of Vodafone’s claim. As a result, it is a limited ruling. However, some interesting points may be taken from O2’s evidence.
O2 pointed to the success of its Freedom product in winning “price conscious” pre-pay customers as evidence that the advertising of the product could not be described as misleading. It highlighted the absence of compelling evidence to suggest that customers had switched their mobile provider on the basis of misleading advertising. In addition, O2 asserted that Vodafone had not come to court “with clean hands”, as Vodafone had employed similar methods in previous advertising campaigns.
What is the effect of this case?
While ultimately the judge did not have to reach a decision on the substance of the dispute, the case marks a significant milestone in the development of Irish competition and consumer protection law. In contrast to our continental neighbours, Irish and English law have no tradition of permitting traders to sue competitors for breaches of consumer law. Instead, the approach in Ireland is that the prosecution of unfair commercial practices is a matter for consumers and regulators.
The CPA permits traders in Ireland to take legal action against a competitor where the trader can prove that consumers’ purchasing behaviour has been affected by the competitor’s misleading practices. At this stage, Vodafone does not appear to have presented concrete evidence of effects on consumer behaviour resulting from O2’s campaign. It remains to be seen whether Vodafone will be able to overcome the burden of proving substantial interference in customers’ purchasing behaviour once the case returns to the High Court for full hearing.