OPINION OF ADVOCATE GENERAL
TIZZANO
delivered on 12 September 2002 (1)

Case C-44/01

Pippig Augenoptik GmbH & Co. KG
v
Hartlauer Handelsgesellschaft mbH, Verlassenschaft nach dem verstorbenen Franz Josef Hartlauer


(Reference for a preliminary ruling from the Oberster Gerichtshof (Austria))

((Approximation of legislation – Misleading and comparative advertising – Permissibility of comparative advertising))

1. By order lodged on 2 February 2001, the Oberster Gerichtshof (Supreme Court), Vienna, Austria, referred a number of questions to the Court of Justice for a preliminary ruling on the interpretation of Directive 84/450/EEC (2) relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising, as amended by Directive 97/55/EC  (3) so as to include comparative advertising (in the following observations, I shall refer to Directive 84/450/EEC, as amended, simply as Directive 84/450 or the directive). By these questions, the referring court seeks to ascertain, in particular, the conditions under which comparative advertising is to be regarded as permissible within the meaning of the directive and the extent to which Member States may introduce more restrictive measures in this connection.

The legal framework

The relevant Community provisions

2. The purpose of Directive 84/450 is to protect consumers, persons carrying on a trade or business or practising a craft or profession and the interests of the public in general against misleading advertising and the unfair consequences thereof and to lay down conditions under which comparative advertising is permitted (Article 1).

3. Misleading advertising is defined in Article 2(2) as any advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behaviour or which, for those reasons, injures or is likely to injure a competitor; in determining whether advertising is misleading, Article 3 states that account must be taken of all its features. (4) However, Article 7(1) provides that the directive shall not preclude Member States from retaining or adopting provisions with a view to ensuring more extensive protection, with regard to misleading advertising, for consumers, persons carrying on a trade, business, craft or profession, and the general public.

4. Comparative advertising is defined in Article 2a of the directive as any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor. In that connection, Article 3a of the directive provides as follows:

1. Comparative advertising shall, as far as the comparison is concerned, be permitted when the following conditions are met:

(a) it is not misleading according to Articles 2(2), 3 and 7(1);

(b) it compares goods or services meeting the same needs or intended for the same purpose;

(c) it objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price;

(d) it does not create confusion in the market place between the advertiser and a competitor or between the advertiser's trade marks, trade names, other distinguishing marks, goods or services and those of a competitor;

(e) it does not discredit or denigrate the trade marks, trade names, other distinguishing marks, goods, services, activities, or circumstances of a competitor;

(f) for products with designation of origin, it relates in each case to products with the same designation;

(g) it does not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor or of the designation of origin of competing products;

(h) it does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name.

2. Any comparison referring to a special offer shall indicate in a clear and unequivocal way the date on which the offer ends or, where appropriate, that the special offer is subject to the availability of the goods and services, and, where the special offer has not yet begun, the date of the start of the period during which the special price or other specific conditions shall apply

.

5. For present purposes, it should be noted that although, as we have seen, Article 7(1) allows more extensive protection to be ensured at national level, with regard to misleading advertising, for consumers, persons carrying on a trade, business, craft or profession, and the general public, Article 7(2) provides that that paragraph, shall not apply to comparative advertising as far as the comparison is concerned. The reason for that provision is given in particular in the 18th recital in the preamble to Directive 97/55, where it is explained that the provision on the introduction of more restrictive national measures should not apply to comparative advertising, given that the objective of amending the said directive is to establish conditions under which comparative advertising is permitted.

The relevant national provisions

6. Directive 97/55 was transposed in Austria by means of an amendment to the law on unfair competition (Bundesgesetz gegen den unlauteren Wettbewerb, hereinafter referred to as the UWG) which entered into force on 1 April 2000. However, the provisions of the UWG were already being interpreted in the case-law in the light of the provisions on comparative advertising contained in Directive 84/450.

7. According to the order for reference, before the abovementioned amendment entered into force, the second sentence of Paragraph 2(1) of the UWG stated that comparative price advertising (5) was permissible, so long as it did not infringe Paragraph 2(1) itself or Paragraph 1 of the UWG. Paragraph 2(1) provided in particular that an injunction may be brought against any trader who, to gain a competitive advantage, makes statements which are liable to mislead consumers; Paragraph 1 on the other hand, so far as we are given to understand, imposed a general obligation of correct conduct (understood to mean respect for current usage) in business relations.

8. From 1 April 2000, in order to give full effect to the directive, Paragraph 2(2) of the UWG was partly amended, the new version stating that comparative advertising was permitted so long as it complied not only with Paragraphs 1 and 2(1) but also with Paragraphs 7 and 9(1) to (3) concerning the prohibition on discrediting competitors, creating confusion with their distinguishing marks and taking unfair advantage of their reputation. At the same time a new Paragraph 2(3) was added, providing that in any case comparative advertising must refer only to products with the same designation of origin and that any comparison referring to a special offer must indicate in an unequivocal way the period during which the offer was to apply and state, where appropriate, that it would last only for so long as the goods and services were available.

Facts and procedure

9. The main proceedings concern a dispute between Pippig Augenoptik GmbH & Co. KG (hereinafter referred to as Pippig) and Hartlauer Handelsgesellschaft mbH (hereinafter referred to as Hartlauer) and the estate of Franz Josef Hartlauer, deceased, former managing director of Hartlauer.

10. Pippig is a firm of specialist opticians, with three shops in Linz, selling well-known brands of spectacles. It obtains supplies direct from the manufacturers, with whom it has a permanent relationship, and it has a representative selection of the various brands in each of its shops.

11. Hartlauer, on the other hand, is a major distribution chain with large stores throughout Austria, selling products of various kinds (electronic goods, computers, telephones, photographic and optical goods, etc.). Hartlauer stores have optical divisions (more than 100 in all), which also sell little-known brands of spectacles at low prices. As regards the more famous brands (about 5% of the total), Hartlauer has no direct relationship with the manufacturers but obtains supplies through parallel imports, with the result that only a few models of each brand and a limited number of examples are generally available in its optical divisions.

12. In September 1997, Hartlauer arranged for a leaflet to be distributed throughout Austria, with a print run of almost two million, advertising its own optical products as compared with spectacles on sale at specialist opticians. The leaflet claimed in particular that 52 price comparisons with various Austrian opticians showed that spectacles sold by Hartlauer cost ATS 204 777 less overall (on average ATS 3 900 less per pair of spectacles). The leaflet also stated that an optician's profit on the sale of Zeiss lenses amounted to 717% and that the low prices charged by Hartlauer were the reason for the constant attacks levelled against it by the optical industry.

13. In addition to these general comparisons with specialist opticians, the leaflet also made a specific comparison between the price of ATS 5 785 charged by Pippig for an Eschenbach flexible titanium frame with Zeiss bifocal lenses and the price of ATS 2 000 charged by Hartlauer for the same frame with lenses having equivalent features made by Optimed (a less well known firm). The same comparison was also made in a number of commercials broadcast on various radio and television channels in September 1997 but in this case the brands of the spectacle lenses were not compared and it was not made clear that different brands were involved. (6) The television commercials also included shots of Pippig's shop with the company logo.

14. According to the information provided by the referring court, the said comparison was carried out by means of a test purchase made on 8 July 1997 from one of Pippig's shops by one of Hartlauer's employees, who asked to have that particular type of rare and very expensive Zeiss lenses set in the Eschenbach frame. The test spectacles were collected on 1 August and were then photographed for the advertising leaflet, where they appeared twice, representing both the Pippig and the Hartlauer models. Apparently, Eschenbach frames in flexible titanium were not yet on sale in Hartlauer stores when the test purchase was made. They became available only later and, even then, in small numbers and not in all colours and sizes.

15. Considering itself to be injured by such comparative advertising, Pippig brought an action claiming that the court should declare it to be unlawful; authorise the publication of the judgment to that effect in various national newspapers; prohibit the broadcasting of similar advertising in future; and lastly order Hartlauer to pay damages. Pippig's first two claims were partly accepted by the court before which the action was brought, in a judgment which was subsequently largely upheld on appeal.

16. All the parties lodged extraordinary applications for review before the Oberster Gerichtshof. According to the order for reference, four main questions were raised before that court, namely: (i) whether the comparison between spectacles with brand-name lenses and no-name lenses is lawful; (ii) whether the comparison between a brand-name product purchased directly from the manufacturer and the same product obtained through parallel import is a comparison of like with like; (iii) whether a comparison by means of a test purchase, made before the offer from the person making the comparison opened and presented in such a manner as to maximise the price difference, is lawful; (iv) whether a comparison which gives the general impression that specialist opticians charge excessive prices is such as to discredit those opticians.

17. As there are now specific Community rules on comparative advertising, in order to resolve those issues, the Oberster Gerichtshof therefore considered it necessary to refer the following questions to the Court of Justice for a preliminary ruling:

1. Is Article 7(2) of Directive 97/55/EC of the European Parliament and of the Council of 6 October 1997 amending Directive 84/450/EEC concerning misleading advertising so as to include comparative advertising ( the directive) to be interpreted to the effect that comparative advertising, as far as the comparison is concerned means the statements regarding the product offered by the advertiser himself, the statements regarding the product offered by the competitor and the statements regarding the relationship between the two products (the result of the comparison)? Or is there a comparison within the meaning of Article 7(2) of the directive only in so far as the statements are made regarding the result of the comparison, with the consequence that misconceptions regarding other features of the compared goods/services may be assessed on the basis of a national standard governing misleading statements which is possibly more strict?Is the reference in Article 3a(1)(a) of the directive to Article 7(1) of the directive a lex specialis in relation to Article 7(2) of the directive, with the result that a national standard governing misleading statements which is possibly more strict may be applied to all elements of the comparison?Is Article 3a(1)(a) of the directive to be interpreted as meaning that the comparison of the price of a brand-name product with the price of a non-name product of equivalent quality is not permitted where the name of the manufacturer is not indicated, or do Article 3a(1)(c) and Article 3a(1)(g) of the directive preclude indication of the manufacturer? Is the image of a (brand-name) product a feature of the product/service within the meaning of Article 3a(1)(c) of the directive? Does it follow from a (possible) negative answer to this question that any (price) comparison of a brand-name product with a no-name product of equivalent quality is not permitted?

2. Is Article 7(2) of the directive to be interpreted as meaning that differences in the procurement of the product/service whose features are compared with features of the advertiser's product/service must also be assessed solely on the basis of Article 3a of the directive?If this question is answered in the affirmative:Is Article 3a of the directive to be interpreted as meaning that a (price) comparison is permitted only if the compared goods are procured through the same distribution channels and are thus offered by the advertiser and his competitor(s) in a comparable selection?

3.

Is comparison within the meaning of Article 7(2) of the directive to be construed as including the creation of the bases for comparison through a test purchase?

If this question is answered in the affirmative:Is Article 3a of the directive to be interpreted as meaning that the deliberate initiation of a (price) comparison which is favourable to the advertiser through a test purchase which is made before the beginning of the advertiser's own offer and is arranged accordingly makes the comparison unlawful?

4. Is a comparison discrediting within the meaning of Article 3a(1)(e) of the directive if the advertiser selects the goods purchased from the competitor in such a way that a price difference is obtained which is greater than the average price difference and/or if such price comparisons are repeatedly made with the result that the impression is created that the prices of the competitor(s) are generally excessive?Is Article 3a(1)(e) of the directive to be interpreted as meaning that the information on the identification of the competitor must be restricted to the extent absolutely necessary and it is therefore not permitted if, in addition to the competitor's name, its company logo (if it exists) and its shop are shown?

18. In the proceedings instituted before the Court, in addition to the parties in the main proceedings, the Austrian Government and the Commission intervened. The intervening parties, with the exception of the Austrian Government, made their submissions at the hearing on 23 April 2002.

Legal analysis

The first question

19. The first question raises a number of points designed to ascertain, on the one hand, whether a national standard that is stricter than the Community rules may be applied to comparative advertising and, on the other, whether the name of the manufacturers must be indicated when comparing the price of a brand-name product with the price of a no-name product of equivalent quality. It will be best to consider these two aspects separately, starting with the second, in order to preserve a logical sequence.

(a) As to whether the name of the manufacturers must be indicated when comparing the price of a brand-name product with the price of a no-name product of equivalent quality

20. With regard to this aspect of the question, the referring court is in fact starting from the conclusion reached by the national courts of first and second instance that price comparisons between brand-name products and no-name (or, to be more precise, less well known brand-name) (7) products of equivalent quality are not permitted if the names of the manufacturers are not indicated. In particular, so far as we are given to understand, they found that the advertising material comparing the price charged by Pippig for the Eschenbach frame with Zeiss bifocal lenses and the price charged by Hartlauer for the same frame with lenses with equivalent features made by Optimed (a much less well known brand) was not permitted in cases where there was no indication of the brand names of the lenses in the spectacles that were being compared. (8) In this connection, the referring court is seeking essentially to ascertain, first, whether such comparative advertising is misleading and therefore not permitted under Article 3a(1)(a) of the directive and, second, whether in such a situation the provisions of Article 3a(1)(c) and (g) preclude indication of the brand names of the lenses in the spectacles that are being compared.

21. On the first point, Hartlauer contends that Article 3a(1)(a) of the directive does not require any indication of the brand names of the products that are being compared, if only because in many cases such a requirement would make comparative advertising excessively difficult, if not impossible. Pippig and the Commission maintain that, on the contrary, the brand of the lenses is one of the factors determining the consumers' choice when they come to purchase a pair of spectacles; they therefore take the view that advertising material such as the material at issue, which compares the price of spectacles without giving any indication as to the brand names of the lenses, should be held to be misleading. The Austrian Government expressed substantially the same sentiments, though not in such clear terms.

22. To my mind, the second view is certainly more convincing. Misleading advertising is defined in Article 2(2) of the directive as any advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behaviour or which, for those reasons, injures or is likely to injure a competitor. For advertising to be considered misleading within the meaning of Article 2(2), it is therefore enough that there be a likelihood that it will deceive consumers and affect (9) their economic behaviour or, for those reasons, injure a competitor. (10) The Court has therefore held that in order to determine whether advertising is misleading it is in principle necessary to take into account the presumed expectations of an average consumer who is reasonably well-informed and reasonably observant and circumspect. (11)

23. On those criteria, (12) it therefore seems to me obvious that advertising material of the kind at issue in the present case, comparing the retail price charged by two traders for a pair of spectacles and stating that the frames are the same and that the lenses have the same features but not that the lenses have different brand names, one very familiar to the public and the other not, is misleading. (13) Such advertising is in fact likely to deceive an average consumer who is reasonably well-informed and reasonably observant and circumspect, who may be led to believe that the price comparison relates to the same pair of spectacles with the same frames and the same lenses. Consequently, as the brand name of the lenses is undoubtedly one of the factors that may affect the consumers' choice when they purchase a pair of spectacles, it follows that the misleading nature of such advertising may also affect their economic behaviour and thus injure the competitor named in the material. I therefore take the view that failure to mention the brand name of the lenses makes advertising material of the kind at issue misleading.

24. Nor do I think there is any merit in Hartlauer's contention that a requirement to indicate the brand names of the products that are being compared would make comparative advertising excessively difficult, if not impossible: that, for example, it would be impossible to compare the prices of two cars of the same make if the brand names of all the accessories (tyres, stereo system, alarm system, etc.) had to be indicated. I agree that such a requirement might be excessive in cases where it meant indicating the brand names of a great number of accessories that have little bearing on the consumers' choice but that certainly cannot be said of material and crucial components of the product, which is precisely what spectacle lenses are. Also, in the present case, indicating the brand name of the lenses would obviously not have made the comparison impossible, since the brand name is clearly indicated in the advertising leaflets.

25. Having explained that, in my view, advertising of the kind at issue must be considered misleading because it gives no indication as to the brand names of the lenses in the spectacles that were being compared, in order to reply to the referring court it must also be determined whether the provisions contained in Article 3a(1)(c) and (g) preclude indication of brand names in such cases. In particular, since Article 3a(1)(c) provides that, to be permitted, comparative advertising must objectively compare one or more material, relevant, verifiable and representative features of the products in question, the referring court wants to know whether the brand name may be such a feature. It then asks whether indication of the brand name is precluded by the provision contained in Article 3a(1)(g) that the product advertised must not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor or of the designation of origin of competing products.

26. On this point, the intervening parties agree that the two provisions in question do not preclude indication of the brand names of competing products. Hartlauer and the Austrian Government observe, in particular, that the possibility of including such information in advertising material is implicitly admitted by the provisions of the directive, which state that comparative advertising is permitted on condition that it does not create confusion between the advertiser's trade marks, trade names or other distinguishing marks and those of competitors; that it does not discredit or denigrate those trade marks, trade names or other distinguishing marks; that it does not take unfair advantage of their reputation; and that it does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name (Article 3a(1)(d), (e), (g) and (h)). They also point out that the possibility of indicating the brand names of competitors' products is expressly recognised in the 14th and 15th recitals in the preamble to the directive, which state respectively that (i) it may, however, be indispensable, in order to make comparative advertising effective, to identify the goods or services of a competitor, making reference to a trade mark or trade name of which the latter is the proprietor; and (ii) such use of another's trade mark, trade name or other distinguishing marks does not breach this exclusive right in cases where it complies with the conditions laid down by this directive, the intended target being solely to distinguish between them and thus to highlight differences objectively.

27. I agree that those provisions of Article 3a(1) of the directive presuppose the possibility of indicating the brand names of the products that are being compared; that is precisely why, as we have seen, those provisions make the permissibility of comparative advertising subject to a number of conditions designed to prevent it from giving rise to unfair competition. I also agree that the possibility of indicating the brand names of competing products is clearly confirmed in the 14th and 15th recitals in the preamble to the directive, which are at pains to emphasise that in some cases reference to a trade mark or trade name is actually indispensable in order to make comparative advertising effective and that, so long as such reference complies with the conditions laid down by the directive, it is not contrary to the rules on the protection of exclusive rights.

28. It must also be pointed out that the possibility of indicating the distinguishing marks of the products in question in comparative advertising was expressly admitted by Advocate General Léger in his Opinion in Toshiba , where he stated that in order to be effective and fair, comparative advertising must permit the target group to identify the products presented and to distinguish those made by one undertaking from those of its competitor. One cannot therefore exclude every reference by an operator to distinguishing marks used by its competitors.  (14) That argument was implicitly confirmed by the Court in its judgment, in which it essentially acknowledged the distinguishing marks of a competitor may be indicated in comparative advertising on certain conditions. (15) The Court was also careful to point out that it is apparent from Article 6(1)(c) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks (OJ 1989 L 40, p. 1) and the case-law of the Court (Case C-63/97 BMW [1999] ECR I-905, paragraphs 58 to 60) that the use of another person's trade mark may be legitimate where it is necessary to inform the public of the nature of the products or the intended purpose of the services offered . (16)

29. Turning now more specifically to the question whether the brand name of a product may be considered to be a material, relevant, verifiable and representative feature of that product and consequently a feature susceptible of comparison within the meaning of Article 3a(1)(c) of the directive, I must point out that the Austrian court appears to be labouring under a misapprehension in this connection. Its question seems to be based on the idea that indication of the brand names of the products mentioned in advertising of the kind at issue may give rise to a comparison between the different brands, which may then become the actual subject of the comparative advertising. It is however clear that, on the contrary, the comparison in such advertising turns essentially on the price of the products (and possibly on their quality, which is assumed to be equivalent) and that the proposed indication of the brand names of the products serves simply to identify them, as stated in the 14th recital in the preamble to the directive. That being so, I do not think Article 3a(1)(c) of the directive can be held to preclude indication of the products in question in advertising of the kind at issue.

30. Lastly, as to Article 3a(1)(g), which provides that the product that is being advertised must not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor, it seems obvious to me that that provision does not, generally speaking, preclude indication of the brand name of competitors' products (indeed it even implicitly admits it) but merely seeks to prevent possible abuses.

31. I should point out in this connection that the Court stated in its judgment in Toshiba , cited above, that it would in any event be necessary, when assessing whether the condition laid down in that provision had been observed, to have regard to the 15th recital in the preamble to Directive 97/55, which states that the use of a trade mark or distinguishing mark does not breach the right to the mark where it complies with the conditions laid down by Directive 84/450 as amended, the aim being solely to distinguish between the products and services of the advertiser and those of his competitor and thus to highlight differences objectively. (17) On that basis, it held that an advertiser cannot be considered as taking unfair advantage of the reputation attached to distinguishing marks of his competitor if effective competition on the relevant market is conditional upon a reference to those marks. (18) The Court went on to say that an indication of the distinguishing marks of a competitor in comparative advertising enables the advertiser to take unfair advantage of the reputation attached to those marks only if the effect of the reference to them is to create, in the mind of the persons at whom the advertising is directed, an association between the manufacturer whose products are identified and the competing supplier, in that those persons associate the reputation of the manufacturer's products with the products of the competing supplier. In order to determine whether that condition is satisfied, account should be taken of the overall presentation of the advertising at issue and the type of persons for whom the advertisi