Aldi Stores Ireland Ltd v Dunnes Stores

• Jurisdiction: Ireland
• Court: Supreme Court
• Judge: O'Donnell J.
• Judgment Date: 28 May 2019
• Neutral Citation: [2019] IESC 41
• Docket Number: [S:AP:IE:2017:000115],[S.C. No. 115 of 2017]
• Date: 28 May 2019

Between/

Aldi Stores (Ireland) Limited

and

Aldi GmbH & Co. KG

Plaintiffs/Appellants

AND

Dunnes Stores

Defendant/Respondent

[2019] IESC 41

[S:AP:IE:2017:000115]

AN CHÚIRT UACHTARACH

THE SUPREME COURT

Comparative advertising – Injunction – Costs – Appellants seeking a declaration that the advertising carried out by the respondent was not permitted comparative advertising – Whether the advertising campaign was illegal by reference to the European Communities (Misleading and Comparative Marketing Communications) Regulations 2007

Facts: The defendant/respondent, Dunnes Stores, launched an advertising campaign which ran during the months of June, July and August 2013. The campaign sought to draw comparisons between products sold by Dunnes, and those of its competitors, Lidl, SuperValu, Tesco and Aldi. The first plaintiff/appellant, Aldi Stores (Ireland) Ltd, was the Irish subsidiary of the second plaintiff/appellant, Aldi GmbH & Co. KG, which owned the trade marks at issue in the proceedings. Aldi complained that the advertising campaign was illegal by reference to the European Communities (Misleading and Comparative Marketing Communications) Regulations 2007, and commenced proceedings. The judgment of the High Court (Cregan J) was delivered on 9 June 2015. Aldi succeeded in the High Court on almost every aspect of the case. The issue of injunctive relief was dealt with in a further judgment on 21 July 2015. The decision of the High Court was subsequently reversed in a judgment of the Court of Appeal (Ryan P; Peart and Hogan JJ concurring) delivered on 6 April 2017. The issues arising in the appeal to the Supreme Court were the following: (i) Whether, accepting that the High Court’s findings that both the comparison shelf-edge labels (SCLs) and other shelf-edge labels (SELs) did not comply with Regulation 4(2)(d) were based on a flawed interpretation of that provision, the High Court finding that the SELs and SCLs were not permitted comparative advertising could nevertheless be sustained either on the grounds that the SELs did not comply with Regulation 4(2)(d), or because both the SELs and the SCLs were misleading, and thus did not comply with Regulation 4(2)(b)? (ii) If the court concluded that an appellate court could not itself sustain the finding of impermissible comparative advertising on the ground that it was misleading, but that equally, such a finding could not be excluded as a possibility as a matter of law, whether the Court of Appeal ought to have ordered a retrial on that issue, and, if so, whether the court should do so? (iii) If the finding of impermissible comparative advertising was upheld in any respect, should the court grant an injunction, and, if so, in what terms? (iv) Even if the Court of Appeal’s finding was correct, and the only breach of Aldi’s rights was that in relation to the use of the banners, was the Court of Appeal correct not to grant an injunction, and, if not, should the court do so? (v) In the light of the conclusions to the foregoing, what was the correct order in respect of costs?

Held by O’Donnell J that he would uphold the Court of Appeal decision, save that in two respects, namely the toilet tissue and the day cream, he would hold that the Dunnes SCLs were misleading under Regulation 4(2)(b), and therefore were not permissible comparative advertising under the 2007 Regulations; accordingly, there being no appeal against the Court of Appeal decision in respect of the banners and toblerones, Aldi succeeded on those two additional specific issues, but failed in respect of the SELs and the remaining 13 SCLs.

O’Donnell J held that it was not necessary to grant a permanent injunction restraining a repetition of the limited breaches of the 2007 Regulations which had been found. He held that the issue of costs had been superseded by the fact that the outcome in the court was somewhat different from that in the Court of Appeal, and accordingly the issue may require to be reconsidered in that light. Regulations.

Appeal allowed in part.

Judgment of O'Donnell J. delivered the 28th day of May, 2019.

Introduction

1 In June 2013, the defendant, Dunnes Stores (‘Dunnes’), launched a comparatively small, and, if they are to be believed, largely unsuccessful advertising campaign, which ran during the months of June, July and August 2013. The campaign sought to draw comparisons between products sold by Dunnes, and those of its competitors, Lidl, SuperValu, Tesco and Aldi. It was therefore explicitly comparative advertising, which in principle is permitted if it complies with the relevant statutory provisions in Irish law, in particular S.I. No. 774/2007 – European Communities (Misleading and Comparative Marketing Communications) Regulations 2007 (‘the 2007 Regulations’). The first plaintiff is the Irish subsidiary of the second plaintiff, which owns the trade marks at issue in the proceedings. For the purposes of this appeal, both entities can be referred to as ‘Aldi’ without distinguishing between them. The promotional material which is the subject of the proceedings was threefold in nature:-

(i) 15 specific comparison shelf-edge labels (‘SCLs’), by which Dunnes drew specific comparisons with Aldi products, accompanied by the words ‘Aldi match’;

(ii) Banners which were used in store, containing the words ‘lower price guarantee’, ‘guaranteed lower prices on all your family essentials every week’, and ‘Aldi match’. Versions of those banners referred to as ‘toblerones’ (one panel of a banner displayed as a freestanding advertising stand) were also displayed;

(iii) A large number of other shelf-edge labels (‘SELs’) which used the slogans ‘lower price guarantee’ and ‘always better value’, together with a downward arrow, and accompanied by the words ‘Aldi match’. A standard example read ‘Dunnes rich and creamy yoghurt, 4 x 125g’, under which a sticker with the price €1.99 and a positive tick was displayed, alongside a further sticker stating ‘Aldi €1.99’. At the bottom of the sticker were the words ‘Price correct at time of print. Aldi price checked in a Dublin Aldi store on 19/06/2013’.

2 These materials did not form part of a large-scale, sophisticated advertising campaign. The evidence on behalf of Dunnes was that the marketing spend on the campaign across all its stores was €22,000 per week for nine weeks. By way of comparison, the much more elaborate ‘Back to School’ campaign that followed it had a marketing spend of €200,000 per week. Aldi complained, however, that this was an illegal advertising campaign by reference to the 2007 Regulations, and commenced these proceedings. Although the items involved were familiar household items, the advertising materials were quite standard, and the issues required consideration of a limited number of legislative provisions and relevant decided cases, the litigation in respect of the Dunnes campaign took more than 17 days in the High Court, and has now occupied the attention of three courts, already generating two very substantial judgments. Regrettably, what follows is also unavoidably lengthy.

3 It is probable that this case was so hotly contested because the supermarket business is highly competitive. Heavy advertising is the norm, and comparative advertising is potentially a key battleground. Both parties had an interest, therefore, in understanding what is and is not permitted under the 2007 Regulations, and thus the importance of the case both to the parties and to the market more generally probably transcends the detail of a small and relatively unsuccessful campaign carried out in the low summer months of 2013. Even so, the length of time and effort involved in the determination of this case is quite disproportionate to the significance and intrinsic complexity of the cause of action involved, and it will, I hope, be possible to offer some guidance to permit speedier, more streamlined, and efficient determination of claims under the 2007 Regulations in the future.

4 A detailed consideration of the facts in these proceedings is to be found in a thorough and comprehensive judgment of the High Court (Cregan J.) delivered on 9 June 2015, which runs to 141 pages (see [2015] IEHC 495). Aldi succeeded in the High Court on almost every aspect of the case. The issue of injunctive relief was dealt with in a further judgment on 21 July 2015 (see [2015] IEHC 551). The decision of the High Court was subsequently reversed in a judgment of the Court of Appeal (Ryan P.; Peart and Hogan JJ. concurring) delivered on 6 April 2017 (see [2017] IECA 116). In the light of the detailed accounts given in the judgments delivered in the courts below, it will, I hope, be sufficient to set out a relatively truncated account of the facts and law relevant to the issues which arise on this appeal. In that regard, however, the dispute between the parties extends to the proper characterisation of the proceedings. Aldi assert that this is an action for breach of their trade marks, while Dunnes argues that it is a case of lawful comparative advertising. Both are, to some extent, correct. A neutral starting point is therefore the relevant legal provisions.

The legal framework

5 The source of the legal obligations at issue in these proceedings is to be found primarily in the 2007 Regulations, which implement the provisions of Directive 2006/114/EC concerning misleading and comparative advertising (‘the 2006 Directive’).

The 2006 Directive

6 The 2006 Directive requires Member States, on the one hand, to prohibit misleading and unlawful comparative advertising, because it is considered that it can lead to distortion of competition within the internal market. On the other hand, Recital 8 of the same directive recognises that ‘[c]omparative advertising, when it compares material, relevant, verifiable and representative features and is not misleading, may be a legitimate means of informing consumers of their...