Home > Topic > Consumer and marketing law > Price marketing – the marketing control act section 26, subsection 1 – court of appeal ruling dated 11 april 2014
Price marketing – the marketing control act section 26, subsection 1 – court of appeal ruling dated 11 april 2014

Price marketing – the marketing control act section 26, subsection 1 – court of appeal ruling dated 11 april 2014

Early 2014 Gresvig AS, a leading Norwegian franchisor of sports outlets, introduced a Price Match offer for purchases in the G Max and G Sport stores. “Price Match” means that the customer is reimbursed the difference in price when he/she finds the same item at a competitor at a lower price. In addition, the customer gets 20 % discount on his/her next purchase.

In February, the Price Match was marketed inter alia by a commercial where the main message was: “Norway’s largest sports chain matches any competitors’ prices.” The film also contained the following text: “Price Match on identical goods” and “Read about the Price Match on gsport.no and receive gift cards.”

The main competitor XXL brought this marketing to court, by the Disputes Act Chapter 34 regarding temporary precautionary measure. XXL believed that the marketing would be perceived as a price guarantee, meaning that all the prices on G max and G Sport always was as low or lower than those of the competitors.

Furthermore XXL alleged that the promotion would at least be perceived as a “price-promise”. A “price-promise” means trying to be the best in price and demonstrating that arrangements to ensure continuous monitoring of prices among competitors, and that procedures for downward adjustment of own prices has been established.

XXL also stated that the alleged illegal marketing inflicted a significant and irreversible loss of reputation and revenue on XXL. Therefore, it was necessary to have a provisional order prohibiting the film and other marketing with the same message.

G Max and G Sport rejected all objections from XXL and argued that there were no reasons to assume that the marketing would be perceived as a price guarantee or “price-promise”. The average consumer would perceive the marketing as a reimbursement, and nothing more than that. They argued further that there under no circumstances was a need for any temporary prohibition, because any unjust damage to XXL could be compensated by an ordinary action for damages.

The case was first heard in Heggen and Frøland district court, which on 26 February this year ruled in favor of G max / G Sport. The court concluded that the average consumer would not perceive the marketing as to contain any price guarantee or “price-promise”. Although it was not necessary in order to justify the conclusion, the court also pointed out that there was no evidence that any illegal marketing could inflict XXL such damage that a temporary ban would be necessary.

XXL appealed the ruling to the Court of Appeal, which on 11 April this year ruled in favor of G Max/ G Sport (the ruling is now final) (http://lgl.kn/54e95). However, the Court of Appeal had a different justification.

The Court of Appeal first agreed that the promotion should be evaluated based on how “a general informed, reasonably observant and well informed average consumer will perceive the marketing message “.

Secondly, the Court of Appeal agreed with the district court that the word “Price Match” would not be perceived as a price guarantee or “price-promise”.

The appellate court also agreed that the phrase “Price Match on identical goods” does not contain any message about price guarantee or “price-promise”.

But the text “matches all competitors’ prices” could in the view of the Court of Appeal’s not necessarily be considered as non-deceptive marketing, as the district court had assumed. The Court of Appeal stated that there was not given any explanation for the reimbursement in the film itself, and that the consumer had to follow the written referral on gsport.no to see what the content of the Price Match was.

The Court of Appeal did not go further in their considerations about the phrase “matches all competitors’ prices”, but limited itself to establish that it can be argued there is a risk that the average consumer will perceive the message as a price guarantee. It was not necessary for the Court of Appeal to go further since XXL under no circumstances had proven that any illegal marketing would be able to inflict a significant and irreversible loss of reputation and revenue. Due to this, XXLs petition for a temporary ban should then be rejected.

The Court of Appeal therefore did not give an answer to the legality of the message in the film regarding “match all competitors’ prices”. In my view, the legality depends on whether one considers the references in the explanatory text as adequate. In the rest of the marketing, there is a asterisk next to all text with the word “Price Match” or “Match(es)”, which again leads to a text that refers to the last page of advertising material where the explanatory text are included. Such referral is believed to be unquestionably sufficient, and in my view this is not less complicated than the reference contained in the film that was labeled “Read about the Price Match on gsport.no …” But this question will remain open until it eventually is brought up for the consumer authorities or by a new judicial review.

By Terje Sverdrup Mår

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