Requirement to disclose rivals' product details to consumers will only apply in 'exceptional' cases, says expert

Commercial contracts expert Rami Labib of Pinsent Masons, the law firm behind Out-Law.com, said the judgment of the Court of Appeal in London would be unlikely to impact on most businesses.

"Although it remains to be seen how the principles established by the Court of Appeal will be applied in future cases, our interpretation is that businesses will only need to notify consumers about the availability of alternative products and services on the market in exceptional cases," Labib said. "For most businesses, the ruling will not demand a change to marketing materials or business practices."

In its ruling, the Court of Appeal considered to what extent businesses would need to disclose information about the availability, quality and price of rival products and services to consumers to comply with consumer protection laws.

The Court said that the disclosure of such information will be necessary in some situations to ensure businesses do not fall foul of rules that prohibit companies from making 'misleading omissions' when selling their own goods or services to consumers.

Whether or not disclosure of rivals' product details is necessary will depend on whether the 'average consumer' needs to obtain that information direct from the business proposing to sell them goods or services. In some cases, the average consumer can be relied upon to "shop around" for such information, therefore removing the disclosure obligations from traders, the Court said.

The 'average consumer', for the purposes of the EU's Unfair Commercial Practices Directive (UCPD), can be defined as a consumer that is "reasonably well-informed, reasonably observant and circumspect", Lord Justice Briggs said in the leading judgment of the Court.

"In my judgment, the critical question, particularly in the context of information about alternative products, is whether the average consumer can be said to need to obtain that information from the trader in question, rather than obtain it (for example) by shopping around, and finding out for himself whether something better, or cheaper, is on offer," the judge said.

"Generally, inward-facing information is likely to be available only from the trader in question, because it is information about that trader, or its goods or services. By contrast, information about alternative or competing products may generally be supposed to be available in the marketplace, to the extent that a particular consumer wishes to obtain it before deciding whether to make a purchase from the trader in question. In short, shopping around for information about alternative products (whether goods or services) is characteristic of the reasonably well-informed, observant and circumspect consumer," he said.

Lord Justice Briggs said, though, that it should be "no more than a general assumption or starting point" that the average consumer will "make his or her own enquiries about alternative competing products". Therefore, there could be cases in which a failure by a business to provide details about rival products would constitute a misleading omission by that company, in breach of the UCPD and Consumer Protection from Unfair Trading Regulations which implement the UCPD in the UK, he said.

The judge confirmed, though, that businesses do not need to disclose to consumers the amount of profit they are "seeking to make from selling to him" to comply with those consumer protection rules.

The Court of Appeal's findings were outlined in a case in which the Court considered whether a company was required to notify consumers that the services it offered for a charge could be obtained by the consumers acting directly for free. PLT Anti-Marketing Limited (PLT) offered to register consumers' names and contact details with the Telephone Preference Service (TPS) and the Mail Preference Service (MPS) in return for £4 monthly subscription, but consumers are able to carry out the registration with the TPS and MPS for free.