Can a competitor have recourse to the provisions of the Consumer Code for misleading advertising?
A commercial practice is considered misleading when it relies on false accusations, indications or representation or allegations that could lead a consumer to make a mistake, whereas usually a consumer should be informed, reasonably cautious and aware.
There is more than one type of misleading commercial practice: practices ‘through actions’ (L. 121-2 of the French Consumer Code), ‘by omission’ (L.121-3), or ‘practices deemed to be misleading in all circumstances’ (L. 121-4).
Section L. 121-5 of the same code stipulates that the provisions of sections L. 121-2 and L. 121-4 apply to B2B. The provisions related to misleading commercial practices ‘by omission’ are therefore excluded in such assumption.
Two factors must be considered to establish if a commercial practice is misleading: the behaviour of the business and its impact on the consumer.
If a consumer is incited into taking a purchasing decision that he would not have taken in other circumstances, this represents a change in behaviour. It should be noted that when Directive 2005/29/EC known as the ‘unfair commercial practices’ directive was transposed into French law, it did not mention the change in consumer’s behaviour as a condition, even though this condition is expressly mentioned in the directive.
In this respect, in a lawsuit opposing two competitors, the Court of Cassation recently recalled that the change in the consumer’s behaviour is a condition that must imperatively be verified by the Judges who decide on the merits of the case (Cass.Com., 1 March 2017, No.15–15.448, P+B+I).
A cosmetics manufacturer had named one of its products ‘soap made in the Alep tradition’, whereas the soap was manufactured in Tunisia. This detail was also mentioned on the packaging, but barely visible in very small print. The Lyon Court of Appeal esteemed that the product’s name misled clients into believing that the product was produced in Alep, and such confusion was evidence of unfair competition with respect to a company that marketed soap that was indeed manufactured in Alep, Syria.
By overturning the Appeal Court’s decision, the Court of Cassation confirmed the need to demonstrate a substantial change (effective or potential) in the consumer’s economic behaviour to prove that a commercial practice is misleading.
A misleading commercial practice can create unfair competition, even though the business invoking the provisions of the Consumer Code may not be the target of its competitor’s market (this is common with comparative advertising). Even so, all the factors involved in such practice must be combined for a competitor to invoke them.
Let us not forget that misleading commercial practices are dealt with by the criminal and civil courts, which target practices introduced in France or which could produce effects here and provide room to enforce the law on practices introduced abroad.
NB: The Consumer Code no longer only enforces the law on misleading advertising, but incriminates more broadly misleading commercial practices since 2008. Such misleading commercial practices fall into the scope of more general unfair commercial practices.