CJEU rules on comparative advertising and online comparison services

The question

Does an online comparison service fall within the remit of the comparative advertising rules contained in the Misleading and Comparative Advertising Directive (2006/114/EC)?

The key takeaway

The Court of Justice of the European Union (CJEU) has ruled that restrictions on comparative advertising as defined under Article 2(c) Directive 2006/114 (the Directive) do not apply to online comparison services for goods or services provided by businesses which cannot be considered "competitors", as they do not offer the same goods or services that are compared and thus do not operate in the same market.

The background

HUK-Coburg, the parent company of a large German insurance group, initially brought proceedings in November 2020 at the Regional Court in Cologne against Check24 Vergleichsportal, a company responsible for assuring the availability of Check24's online comparison website to customers. The case was then referred to the Regional Court in Munich in March 2021 before its referral to the Ninth Chamber of the CJEU. In September 2021, the action was extended to Check24, a group of companies which operate an online comparison website enabling users to compare products and services, including insurance products. 

HUK-Coburg's complaint related to specific infringements, including the grade system displayed on Check24's comparison results page. Check24 assigns points to insurance products for the product's ability to satisfy various criteria and then adds these points together to produce an overall score, or "grade". The grade is expressed as a numerical value between 1.0 and 4.0 and through the terms "very good", "good", "satisfactory" and "sufficient". HUK-Coburg opined that the graded approach constituted a form of comparative advertising which was not permitted under German law.

The referring court considered that, in order to determine the point under national law, it was first necessary to determine the meaning of Article 4(c) of the Directive. The question referred to the CJEU was: "Is Article 4(c) of the Directive to be interpreted as meaning that the conditions of permitted comparative advertising under that provision may also be satisfied where the comparison is performed by means of a grading or points system"?

The development

The CJEU began by looking at Article 2(c) of the Directive which defines "comparative advertising" as "any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor". The Court considered that Check24 must therefore be considered a competitor of HUK-Coburg in order for Check24's practice to be considered "comparative advertising" within the meaning of Article 2(c).

As the Directive does not define "competitor", the Court turned to Article 4(b) in an attempt to define this term. Article 4(b) states that one condition for permitting comparative advertising is that the goods or services compared must meet the same needs or be intended for the same person. In the earlier decision of De Landtsheer Emmanuel C-381/05 EU:C:2007:230, the Court held that if products are capable of "meeting the same needs", there is a degree of substitution involved which may indicate a "competitive relationship". This indicates that, if the online comparison service is also a provider of products or services which may be substituted with the products or services of a business which is listed on its comparison website, it is likely to be in a competitive relationship these businesses.

HUK-Coburg provides insurance services to customers, whilst Check24 provides customers with an online tool through which to compare insurance services offered by external providers through a grade system. Check24 is not an insurance service provider itself, despite acting as an intermediary between customers and insurance providers. Therefore, the Court concluded that a "competitive relationship" cannot be established between the parties, and thus Check24's online comparison services do not fall within the remit of the comparative advertising rules contained in the Directive.

Why is this important?

Misleading and unlawful comparative advertising can distort competition within the market. The Directive aims to balance the different laws of Member States by providing a framework which can be upheld by the CJEU and interpreted in the event of disagreement, assisting in the free circulation of goods and provision of services across borders.

This case confirms that "comparative advertising" under the Directive does not include online comparison services for goods or services provided by businesses which cannot be considered "competitors" as they do not offer the same goods or services that are compared. Even if the online comparison service provider also acts as an intermediary, directing consumers to other providers of services or products, the position remains the same as long as the business is not acting as a competitor.

Any practical tips?

Owners of businesses that offer online comparison services should consider whether they also are involved in the sale of products or services which "meet the same needs" as, or could be considered to be effective "substitutes" for, the products or services that are listed on their comparison site. This would indicate a competitive relationship that may bring the business under the scrutiny of the Directive and national law.

The UK is not bound by the decision of the CJEU, but the Directive is implemented in the UK through the Business Protection from Misleading Marketing Regulations 2008 and the Court's decision may be taken into account when making a determination under the domestic legislation.