The Bulgarian Competition Protection Commission has recently fined several companies on various unfair competition practices in what is a sound reminder of the importance of competition compliance reviews in daily business/marketing activities.
On 15 November 2018 the Commission fined Net Info AD with approx. BGN 267,000 for misleading and unlawful comparative advertising. In line with its established practice, the Commission considered that a slogan claiming service benefits/qualities based on subjective perceptions rather than objective criteria qualifies as misleading. In particular, the Commission found that Net Info’s statement that its Adwise service provides access to “…80% of the highest quality traffic…” may not be based on objective criteria (such as number of page visitors, as suggested by Net Info) since each user may regard different site content to be of “quality”. While there may be space to argue whether, given the target audience of the ad, Net Info’s reference to quality is intended and could be understood in such context, this decision clearly shows the importance of conveying objective and clear messages in marketing/promotional communications.
Further, the Commission found that Net Info’s comparison with the performance results of a competitor’s service based “on a client’s” feedback constitutes unlawful comparative advertising because it is not based on verifiable and objective data. In general, companies are well advised to avoid advertising messages which directly or indirectly compare their company or product/service with identified or identifiable competitor or its product/service unless the conditions of Article 34, par. 2 and 3 of the Competition Protection Act are clearly met.
It is important to note that, unlike the Consumer Protection Act, the Competition Protection Act prohibits misleading advertising directed both at physical and legal persons to the extent that they would be the users of the advertised service/product.
In another decision of 1 November 2018 the Commission fined the retailer Ozone with approx. BGN 100,000 for misleading advertising. In an earlier decision on this case, the Commission had found that the statement “best price” used by Ozone may not be misleading even when the same product is being offered on a lower price by competitors since the characteristics that make the price “best” are not solely related to its amount. This decision was annulled by the Supreme Administrative Court with the argument that the average consumer normally considers the amount of the price as its main quality. According to the court, the Commission had failed to analyze in detail the market at the time of the alleged infringement.
This time, the Commission took into consideration the offers of competing retailers which, according to its findings, were of lower price (and equal other terms) to conclude that Ozone’s advertisement was misleading.
Marketing and promotional messages need careful drafting and presentation. The Commission had previously avoided getting into deep analysis by relying on the (odd) provision of Article 95 of the CPA which shifts the burden of proof on the legality of the advertisement to the advertiser. In such proceedings, the defendants need to actively support their case by both legal argumentation and relevant data. Having clear concept and legal justification prior to initiating marketing campaigns may be useful in such event.
Both decisions are subject to appeal before the Supreme Administrative Court.
* The opinions expressed in this article are not a legal advice and should not be relied upon as such. The author has no personal, financial or other interest in the outcome of the proceedings discussed.