Stores’ claims of cheaper goods could be illegal

STORES that advertise their goods are cheaper than their competitors could be acting illegally following a ruling by the European Court of Justice.

Price wars between supermarkets must be fair, with comparisons made only between identical products, the court says.

In Ireland, retailers are bound only by a voluntary code that says they must compare like with like.

But yesterday’s decision makes it illegal for shops to claim their goods are cheaper than their competitors unless they list all the items they are referring to.

The case was brought by the German chain, Lidl, against Belgian supermarket Colruyt that regularly advertised that consumers could save by shopping with them. Colruyt claimed that a consumer spending €100 would get better value than in any other supermarket in the country.

They based their claims on the price of a wide sample of basic goods, some of which were own brand and therefore were not identical.

They also claimed in another advertisement that all its products with its own brand “Basic” label were sold at the lowest price in Belgium.

The court ruled that comparing identical products helped competition and so was allowed. But the exact same products must be compared and the advertisement must tell the consumer where they can compare the goods for themselves.

The judges also ruled that claiming competitors’ prices for a sample of products is higher are illegal unless the products are individually listed and priced.

They added that it is up to the national court in each EU country to decide if such advertising conforms to these rules.

Frank Goodman, chief executive of the Advertising Standards Authority for Ireland, said business regulates itself in Ireland and is required to live up to a code of conduct.

The Department of Enterprise, Trade and Employment said it would study the ruling especially in light of new consumer legislation being finalised.