Be careful when you say what you think of your competitor!
January 2022 – At the beginning of 2021, the Antwerp Court of Appeal was called upon to examine a case between two hoover manufacturers. One had linked the other to the scandal surrounding the rigging software of a famous car brand. For the court, this is unacceptable.
Energy label with an empty bag
A manufacturer of bagless hoovers (hereinafter: X-Sans) found that a competitor-manufacturer of bagged hoovers (hereinafter: Y-Avec) was selling its products with the A energy label. This was wrong, according to X-Sans, because the tests to obtain the energy label had to be carried out with an empty bag.
X-Sans therefore went to the European Court of First Instance to challenge the test procedure. This happened in 2015. Following this procedure, the manufacturer issued a press release in which it pointed out that the consumer was being misled about the actual energy consumption by the way the tests were to be carried out.
Following this release, a journalist asked further questions and received an e-mail with the following details: Y-Avec represented a group of brands and it turned out that... one of these brands had been involved in the car rigging scandal. In the email, X-Sans linked the two, deliberately using the terms "rigging scandal" and "scandal (name of car brand).
The journalist used the information obtained from X-Sans in his article and the next morning Y-Avec swallowed his coffee wrongly while reading the newspaper. Y-Avec took legal action, but was only partially successful: X-Sans was convicted in 2016 for disparaging comparative advertising. X-Sans appealed against this judgment.
In 2018, the European directive that defines how the tests for the energy label are to be carried out was annulled following a complaint by X-Sans. The result? Y-Avec could no longer use the A-label...
Is this advertising?
In the proceedings before the Court of Appeal, X-Sans argued that its press release was not advertising. It was information for the 'public'.
However, the Court disagreed. The Economic Law Code defines advertising as: any communication with the direct or indirect purpose of promoting the sale of products, regardless of the place or means of communication. According to the Court, the press release and the e-mail to the editor met this definition, because they had the aim, or at least the indirect aim, of promoting the sale of products.
Moreover, it was comparative advertising. Namely: any advertising that explicitly or implicitly identifies a competitor or goods or services offered by a competitor. The fact that the reference to the rigging software was only included in the e-mail and not in the press release is no excuse: when sending its communication, the manufacturer should at least have taken into account that this information could be picked up by the journalist in question.
Disparagement
The judge at first instance also concluded that the press release, in combination with the e-mail, should be considered as disparagement. According to the case law, disparagement occurs when an act is contrary to honest market practice. Denigration or defamation occurs in the case of a particularly damaging attack on a company that damages its reputation or the reputation of its products, services or activities, by a defamatory or slanderous act, or even by a simple criticism that identifies it.
The insinuation that the manufacturer of hoovers with bags would 'rig' the product in order to obtain better results in tests was denigration, both for the judge at first instance and for the Court of Appeal. X-Sans could not imply that a competitor had committed legal offences, without these offences having been established in court.
The Court added that it was irrelevant whether X-Sans had filed a complaint against the test procedure at the time of the denigration. The argument that - after examination - X-Sans' claim would have proved to be correct, does not mean that the communication could not be disparaging. A company is allowed to criticise its competitors, but it must respect the reputation of that other company.
Even if the competitor is cheating
In this particular case, the competitor had not been convicted of cheating at the time of the accusations. It later turned out that X-Sans was not wrong, but even then it could not talk about rigging or make the connection with the car brand scandal. The manufacturer of bagless hoovers was also convicted on appeal of comparative advertising.
