How do I compare thee…with a product meeting the same need and intended purpose?

CAP and BCAP have today announced changes to their price comparison rules. Previously, advertisers were required to compare prices with a competitor for an identical or substantially equivalent product. For example, an advertisement could not compare a retail advertiser’s own-branded product against premium branded products sold by their retail competitors. That requirement not only prevented certain price comparison claims that may have been of benefit to consumers, but also appeared to go beyond the minimum requirements for comparative advertising set out in law.

Following full public consultation, CAP and BCAP have amended rule 3.39 of the UK Advertising Codes to remove the requirement that advertisers must compare identical or substantially equivalent products. This allows advertisers to compare products that may not be identical, but nonetheless meet the same need or intended purpose (rule 3.34). So, you could compare the price of your non-branded baked beans with a competitor’s price for premium branded baked beans. However, it remains the case that advertisers must make the basis of their comparison clear (rule 3.39).

CAP and BCAP have also amended rule 3.35 to make clear that advertisements may objectively compare one or more features which may include price. You can read the new rules here.

The change to the rules will benefit both consumers and advertisers by allowing a broader range of comparative claims to be made, while retaining robust protection in the Codes to prevent misleading advertising. CAP and BCAP’s full regulatory statement can be found here along with an evaluation of the responses it received.

The amended rules take immediate effect.

VAT claims in advertising

Price claims don’t have to be taxing

CAP and BCAP have also today announced changes to the rules governing the use of price claims that are inclusive or exclusive of VAT. Previously, VAT-exclusive price claims could only be used when advertisers could be sure that most or all of the audience paid no VAT or could recover it. However, the rule did not reflect the fact that advertisers could clearly address claims to business consumers without confusing general consumers. In addition, it was difficult, if not impossible, for advertisers to be confident that their advertisements would only be seen by those who did not pay VAT or could recover VAT, potentially discouraging them from making legitimate VAT-exclusive price claims.

In light of this, the Advertising Codes have been changed to allow advertisers to make VAT-exclusive price claims, provided the claims are clearly addressed to those that pay no VAT or can recover it. For example, an advertiser could state “business price £X, excl VAT at 20%”, or present two prices, one for business customers and one for the public. It remains the case that when using VAT-exclusive prices, advertisers must prominently state the amount or rate of VAT payable.

Avid Update readers will note that the equivalent CAP rule changed last year to reflect this new policy position, particularly for websites where the use of VAT-exclusive pricing was more prevalent. However, the wording of the CAP rule has also now been amended slightly so it is the same as the new BCAP rule to ensure consistency across media.

The amended rules take immediate effect.

 

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