When you compare products and services to your competitors you must make sure the comparisons are clear and accurate.
Making your comparisons accurate
Comparisons can help consumers judge the merits of competing products so they can choose the one which best suits their needs and budgets.
Advertising can be comparative even if the advertisement does not mention the competitor's name or products if the comparison with those products is obviously implied. As with all advertising, comparative advertising must not mislead or deceive. The comparisons you make must be accurate, should clearly indicate what comparison is being made, and must be about 'like' products or services available in the same market.
Inaccurate comparisons risk misleading consumers and breaking the law. Consumers also do not get the bargain they believed they had got and it is unfair to other retailers who are offering genuine discounts.
Example: A furniture manufacturing company made a comparison between its product, which was finished in plain custom wood, and that of a competitor. The competitor's product was laminated, and the court decided that the comparison was misleading. The competitor obtained an injunction stopping the advertisements being run.
Tell the full story
Your business is in the best position to know whether your product can reasonably be compared to a competitor. If comparisons are used in advertising, they must tell the full story and not leave out information that is necessary for a true and fair comparison to be made. For example you must be able to identify where your customers can readily purchase the goods at the 'elsewhere' price you use (eg at a nearby store or online).
Do not exaggerate discounts
The law does not prohibit 'puffery' – exaggerations which are so obvious that they are unlikely to mislead anyone. That said, businesses should be careful when using exaggerated statements about quality or price that appear to relate to facts rather than opinion, such as that a product is 'the fastest' or 'the most economical'. Representations such as these will breach the Fair Trading Act if they are not accurate.
If you use a product or competitor's name in your advertising, and it is a registered trade mark, you must be careful not to infringe the trade mark under the Trade Marks Act 2002. Generally, comparative advertising will not be infringing so long as it is not misleading or inaccurate, and it does not take unfair advantage of, or is damaging to, the reputation of the competitor or the product.