07 Jun 2007

Mine's bigger than yours: when can you compare products in ads?

by Cameron Gascoyne

A recent decision by the Federal Court of Australia has confirmed that advertisers using comparative advertising do not have to compare products that are "like for like".

Comparative advertising can be an effective way of singing the praises of your products, but it runs up against a central problem: What exactly can be compared? Can you compare apples and oranges, or does that breach the laws prohibiting misleading and deceptive conduct?

Until very recently, the answer to that question has been a little unclear, but the recent decision over an Optus advertising campaign has answered it and made comparative advertising an easier and more attractive option.

The bunny and the battery

Before the Optus case, the main guidance came from an earlier battle in the Federal Court over advertisements for batteries.

Gillette compared its "Duracell Alkaline" battery with Energizer's "Eveready Super Heavy Duty" battery, and claimed that the Duracell Alkaline battery lasted up to three times longer than the Eveready Super Heavy Duty battery. There were three aspects of the ads that Energizer objected to:

  • The batteries were based on different technologies and so were not "like for like"
  • The ad did not disclose that Energizer also had an alkaline battery that was directly comparable to the Duracell Alkaline battery
  • The ad also didn’t mention that the Duracell Alkaline battery cost about one and a half times as much as the Eveready Super Heavy Duty battery.

This wasn't misleading, said the Court, because it was a truthful comparison between two clearly identified products and did not suggest Energizer had no other comparable products. The advertisement focused on the two batteries' relative lasting power, so it was not misleading for Gillette to be silent about price. Consumers would make their own assessment about price at the check-out counter.

Unfortunately, this decision did not clear up the issue completely because of its complexity and technical nature. Could these principles be applied more broadly? The Optus/Telstra case suggests they can be.

$39 vs $49 plans

Optus' print and television campaigns compare its "$49 Cap Plan" with Telstra's "$40 Phone Plan". The advertisements listed some key features of each plan, such as call rates, the value of calls included, and the type and value of phone included. All the information was factually correct.

As it turns out, Telstra and Optus have other plans that are more comparable on a '"like for like" basis. Telstra applied to the Federal Court for a temporary injunction to stop the advertisements, arguing that the advertisements were misleading because they suggested the products being compared were directly competitive products, whereas in fact they were not.

The Court did not accept Telstra's argument; so long as the comparison is truthful, it said, advertisers can choose which competing products they compare, and the features on which the comparison is made. An advertiser does not have to inform consumers that a competitor may have other comparable products, and does not have to correct any mistaken assumption by consumers about the choice of the product with which the comparison is made.

So when can you use comparative advertising?

The good news for advertisers is that they are free to choose which competing products and features they compare, and the products do not have to be "like for like". Of course, any comparison must be truthful and not misleading in other ways, for example, by suggesting a competitor does not have other comparable products. Additionally, the comparison must remain valid for the duration of the campaign.

The bad news is that your competitors won't just sit back. While the Optus/Telstra case further closes the door on one legal avenue to stop an adverse comparison being made, competitors can still ask the court if your comparative advertising is misleading and deceptive. And, of course, they are perfectly free to run their own comparative advertisements in response!

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.