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November 24, 2012

On November 23, 2012, the U.K. Office of Fair Trading (OFT) announced that it had written to 100 leading price comparison websites (“PCWs”) asking that they take steps to ensure they were providing clear information to consumers (see: here).  In making the announcement, which followed a detailed Review of Price Comparison Websites, the OFT said:

“The OFT has written to 100 leading price comparison websites asking them to ensure they are providing clear information to consumers, after a review published today by the OFT suggested that some sites could do more to improve trust amongst the public.

The review says that in general, price comparison websites have represented a major step forward for consumers, enabling them to secure better value when buying goods and services, but that some people are missing out on potential savings because of a lack of trust.  The review also says that the role of such sites is likely to become even more important in the future as online sales continue to grow and initiatives such as the Government’s ‘midata’ project put more information in consumers’ hands.

As part of its review, the OFT conducted a web sweep of 55 price comparison sites which found that a number of sites could improve their privacy policies and their complaints and redress processes.  It also identified scope for some sites to provide greater clarity about the way search results are presented, and clear identification of the business operating the website.”

Some of the specific issues considered by the OFT in its Price Comparison Website Report include privacy (e.g., the collection of customer information relating to searches and disclosure and use of information), transparency of information (e.g., how searches are ranked, commercial relationships between comparison sites and vendors and the proportion of the market searched) and complaints and exclusions of liability (e.g., clarity of complaints policies and scope of exclusions of liability).

Recommendations made by the OFT to PCWs include ensuring that privacy policies are clear; being clear about how search results are presented; being clear about the nature of the search; ensuring that there is a clear complaint and redress process; and ensuring clear identification of the website’s operator.  The OFT also issued “six top tips” for consumers to keep in mind for price comparison sites.

In Canada, like other jurisdictions, comparative advertising can be a perfectly legitimate and consumer enhancing advertising strategy.  It can also, however, in some instances raise issues including misleading advertising (or performance claim), defamation or intellectual property concerns – for example, the recent Rogers performance claims case involving a challenge by the Bureau of Rogers for comparative cell phone reliability claims made by Rogers.

In general, comparative advertising can in some cases raise issues under the general civil or criminal misleading advertising provisions of the Competition Act (sections 74.01 and 52), as well as under subparagraph 74.01(1)(b) (a standalone performance claims provision).

Some of the more specific issues that the Bureau in Canada has raised in the past relating to comparative advertising include exaggerated superiority claims, unsupported performance claims and ensuring that demonstrations are performed under equivalent conditions (see e.g.: here).

The Bureau has, however, also recognized the potential pro-competitive nature of accurate comparative advertising (as appears to be also the case with the OFT, given its rather tempered announcement in connection with the release of its Price Comparison Report) – for example in its Self-regulated Professions Report.

This recent U.K. OFT report also reminded me of another recent Canadian case, Direct Energy Marketing Limited v. National Energy Corp., where the Ontario Superior Court of Justice held that National Energy had contravened the Trade-Marks Act (subsections 7(a), 22 and 53.2) and  criminal misleading advertising provision of the Competition Act (section 52) in comparative advertising to its competitor Direct Energy.

With respect to the advertising law claim, the Court found that National Energy had made false and misleading representations about the efficiency of its competitor’s water heater tanks, price increases and non-compliance with industry standards (claims suggesting that Direct Energy was unable to supply “Energy Star” certified water heaters).

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