Bulgaria: Metro penalised for unfair comparative advertising campaign

27 February 2019 | newsletters

The Commission for the Protection of Competition (CPC) recently penalised Metro Cash & Carry Lev14,972,320 or 2% of its 2017 turnover for conducting an unfair comparative advertising campaign. The CPC ordered Metro to terminate the campaign immediately and inform two national newspapers of the decision.

Facts

Lidl Bulgaria EOOD claimed that Metro had competed unfairly by running a comparative advertising campaign which encouraged Lidl's customers to shop at Metro instead.

According to Lidl, the campaign featured multiple clips that referred to Lidl's popular themed weeks, during which it offered food and drink from specific countries and regions with unique culinary traditions (eg, during 'Italian week', Lidl offered specials on Italian wines, pasta, sausage and cheese).

Metro's ad had stated that "the Italian/Asian/German/American week in Metro begins on 1 January and is until 31 December… don't change your taste, change your supermarket!".

According to Lidl, the ad implied that Metro supplied the same products offered in Lidl's themed weeks, but throughout the year. The ad was therefore a means for Metro to assert its superiority and encourage Lidl customers to shop at Metro instead.

However, Metro argued that themed weeks are not unique to Lidl because other supermarket chains conduct similar campaigns (eg, Kaufland and Billa). In addition, Metro stated that, compared with Lidl, it employs a completely different business model, which is much larger and targets predominantly professional vendors and resellers (ie, wholesale trading and bulk supplies). In comparison, Lidl operates on a much smaller scale: its customers buy food and groceries on a daily or weekly basis.

Metro also stated that it operates on a different level of the market compared with Lidl and targets different customers. In Metro's view, the ad in question had simply tried to demonstrate that:

  • Metro's hypermarkets offer a wide variety of products; and
  • unlike its Bulgarian competitors (including Lidl), Metro's customers benefit from this variety all year round.

Decision

Article 32(1) of the Protection of Competition Act explicitly prohibits companies from conducting misleading or unfair advertising due to the adverse effects that it can have on competitors, particularly in terms of influencing customer behaviour.

Despite Metro's arguments, the CPC determined that:

  • most customers associate themed weeks with Lidl; and
  • Metro's advert, at least indirectly, had referred to Lidl.

In addition, the CPC established that other supermarket chains do not engage in identical ad campaigns. Therefore, the notion that the products associated with "Italian/Asian/American week in Metro" would be available throughout the year was considered an attack on Lidl's longstanding business strategy.

Moreover, the CPC considered the phrase "change the supermarket" anti-competitive as it directly encouraged Lidl's customers to shop at Metro instead.

Therefore, Metro's comparative advertising campaign was found to have violated Bulgarian competition law.

Comment

The CPC's decision on Metro's comparative advertising campaign is arguably strict; however, it also strengthens the legal framework for protecting businesses and ensuring fair competition.

Companies designing advertising campaigns should carefully consider any direct or indirect references to their competitors, particularly if such references have negative connotations.

This article was co-authored by Rosen Manchev.

This article first appeared on International Law Office.

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Further reading:
Bulgaria: Welcome to Miami?

Galina Petkova

Galina Petkova

Attorney at Law

T: +359 2 93310 83
g.petkova@schoenherr.eu

legal service:

eu & competition

country:

bulgaria