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Misleading Price Comparisons.

This article looks at a misleading decision on misleading price comparisons. First published in the Solicitors Journal (2002) 146 Sol Jo 540.

In determining whether a price indication is misleading for the purpose of the offence provision in s 20 of the Consumer Protection Act 1987 (“CPA”), it has been established that it is sufficient if only a minority of consumers might reasonably have been misled by the price indication.  The value of that proposition in encouraging traders to ensure that their advertisements as to the price of goods are unambiguous has been eroded by Suffolk County Council v Hillarys Blinds Ltd [2002] EWHC 87 Admin.  In that case the prosecution, somewhat curiously, accepted that where a price indication is alleged to involve a price comparison, there can be no offence unless the fact that there is a price comparison is the only construction that can be given to the wording of the price indication.

Doble v David Greig Ltd

In Doble v David Greig Ltd [1972] 2 All ER 195 the defendant company had displayed bottles of Ribena on their supermarket shelves which, by virtue of s 6 of the Trade Descriptions Act (“TDA”), were therefore offered for supply.  The price given on the bottle top was 5/9d.  A label on the bottles said: “The deposit on this bottle is 4d refundable on return.”  A customer was charged 5/9d even though the company would not give any refund on the bottle.  The company was prosecuted under s 11 TDA for offering to supply the Ribena having given an indication likely to be taken as an indication that the goods were being offered at a price less than in fact they were.  The company had a sign at the checkout which said: “We do not accept the return of empty bottles.  No deposit is charged by us at the time of purchase.”  By the time the customer read that sign, however, the company had already “offered” the Ribena for sale at a price which might be taken to include a refundable 4d.  Forbes J said: “The words ‘the deposit on this bottle is 4d refundable on return’ are equivocal: they might be interpreted to mean that the price marked on the bottles included 4d earmarked as a deposit; alternatively that an additional 4d over and above the price marked would be asked for as a deposit.  Speaking for myself, I would prefer the latter interpretation, but the former is quite clearly a possible one.  The offence is giving an indication likely to be taken as an indication of the kind described in the Act.  If it is reasonably possible that some customers might interpret the label as an indication of that kind, it seems to me that an offence is committed, even though many more customers might in fact take the opposite view.  In other words the Act requires a shopkeeper ... to take pains to resolve possible ambiguities of this kind, and if they are not adequately resolved an offence is committed.”

 MGN Ltd v Northamptonshire County Council

Doble v David Greig Ltd was followed in a number of cases including Richards v Westminster Motors Ltd [1976] RTR 88 and Sweeting v Northern Upholstery Ltd (1982) 90 ITSA MR 206.  S 11 TDA has been repealed and misleading price indications are now dealt with by s 20 of the CPA.  S 20(3)(c) CPA provides that it is immaterial whether a price indication is misleading in relation to all the customers to whom it is given or only in relation to some of them.  Moreover, s 21 CPA defines “misleading” in terms of what “consumers might reasonably be expected to infer” from a price indication. 

In MGN Ltd v Northamptonshire County Council (1997) 161 JP 735, the defendant company published an advertisement stating “£50 watch for just £4.99”.  Such watches were not available (otherwise than through the advertisement) until two weeks later and even then, only a few were available and some at much less than £50.  The company was charged with giving an indication which was misleading as to the price at which the goods were generally available.  During the course of his judgment Simon Brown LJ said: “It is, I should note, sufficient for the prosecutor’s purpose to establish that some readers might reasonably interpret the advertisement as an indication that the watches are being sold elsewhere at a price approximating to their stated value, even though many more readers might, in fact, take a contrary view.”  In so saying Simon Brown LJ was paraphrasing the words of Forbes J in Doble v David Greig Ltd and in so doing applying his s 11 TDA proposition to s 20 CPA.

Suffolk County Council v Hillarys Blinds Ltd

S 20 CPA makes it an offence for a person in the course of his business to give consumers an indication which is misleading as to the price at which goods or services are available.  S 21(1) provides that “an indication given to any consumers is misleading as to a price if what is conveyed by the indication, or what those consumers might reasonably be expected to infer from the indication or any omission from it, includes any of the following, that is to say ... (e) that the facts or circumstances by reference to which the consumers might reasonably be expected to judge the validity of any relevant comparison made or implied by the indication are not what in fact they are.”

In Suffolk County Council v Hillarys Blinds Ltd the defendant company distributed leaflets in which it advertised: “Summer Blind sale, vertical blinds, 2 for 1 special price, any size, £125 in our special clouds fabric.”  The prosecution alleged that this was misleading contrary to s 20 read together with s 21(1)(e) CPA because a consumer would read the words “2 for 1 special price” as meaning “two for the price of one” and would therefore expect two blinds for the (normal) cost of one blind.  The company argued that an ordinary shopper would read the leaflet as saying that a consumer could buy two blinds of any size for one special price, namely £125 if the “clouds” fabric was chosen.  They maintained that there was no comparison as required by section 21(1)(e).  The magistrates dismissed the case, being of the opinion that the wording of the leaflet indicated that for particular blinds two could be bought for one special price and that there was no direct or implied price comparison.

On appeal Elias J (sitting alone in the Divisional Court) noted that the prosecution “accepts that in order for this appeal to succeed [they have] to establish that the only construction that could be given to this advertisement was one that implied some comparison.  If it is open to the justices to take the view that it need not involve a comparison then [the prosecution] accepts that the appeal is bound to fail.”  That concession by the prosecution was to prove fatal.  The magistrates had rejected the prosecution’s case that the advertisement meant that a customer could get two blinds for the price of one.  Even if the magistrates were right in that conclusion, the prosecution argued that the use of the term “special price” presupposed that there was some other non­special price to compare it with and hence that there was still a price comparison within s 21(1)(e).  The defence responded that “‘special price’ was capable of meaning that it was special because there was a common price which was to be charged irrespective of the particular size of blind that was chosen.”  Elias J held that even though other magistrates might have reached a different conclusion, the conclusion they had reached was open to them and hence that it was not perverse and should stand.

In support of its assertion that the advertisement meant that a customer should get two for the price of one, the prosecution relied on the fact that the leaflet in which it appeared was bordered by the words “save up to 50%” which were also stated in the body of the leaflet.  The company accepted that “reference to savings of up to 50 per cent plainly did involve a price comparison.”  However, Elias J noted the words “save up to 50%” were starred and specifically said that that 50 per cent saving would be off current prices and on specifically selected ranges.  It might have been added that if the offer was two for the price of one then that offer would have been exactly 50% off and not “up to” 50% off.

In relation to the company’s stance that the price was “special” because it was a common price, which was to be charged irrespective of the particular size of blind that was chosen, Elias J suggested that “that might involve an implication, namely that in normal circumstances there would be different prices depending upon the different sizes of the blinds.”  He did, therefore, (almost) find that, even on the company’s construction of the wording there was a price comparison.  He went on, however, to effectively dismiss that as irrelevant because it “was not the way in which the case was put before the justices and they did not have to consider that particular potential comparison.”  That was a somewhat harsh conclusion given that the prosecution had always maintained that the words “special price” of themselves indicated a price comparison.

A Flawed Decision

The appeal in the Hillarys Blinds case was decided on the premise, accepted by the prosecution, that if a construction could be put on the words of the advertisement which did not involve a price comparison (within the meaning of s 21(1)(e) CPA) then the offence, alleged under s 20 CPA, was not made out.  It is submitted that such a premise was flawed and that the prosecution was wrong to have conceded it.  Furthermore it was unwise, for the prosecution to have agreed, as it did, that the court should first consider whether there was a price comparison and then, only if there was, go on to consider whether that price indication was misleading.  S 21(1) sets out the possible circumstances under which a price indication is to be regarded as misleading for the purposes of s 20.  If the prosecution establishes that there was a price comparison as defined in s 21(1)(e) then it has already started to prove that the price indication is misleading.  The need to prove that there was a price comparison is not a prerequisite but an integral part of (one of the ways of) establishing that a price description is misleading.

There is nothing in s 21(1)(e) to support the contention that a price comparison must be emphatic or that it must be unequivocally a price comparison.  On the contrary, the provision is quite explicit in saying that what has to be considered  is what “customers might reasonably be expected to infer” and, in particular, that a relevant comparison may be express “or implied”.  A price indication may well have more than one possible meaning.  One such meaning may involve a price comparison, another may not.  If, however, any possible meaning might reasonably imply a price comparison then that should suffice.  As in Doble v David Greig Ltd and MGN Ltd v Northamptonshire County Council the magistrates should have considered what the price indication might mean to a reasonable minority of consumers as well as to the majority.  They should have addressed their minds to the question whether some readers might reasonably have interpreted the advertisement as indicating “two for the price of one” and whether some readers might reasonably have taken the words “special price” (bearing in mind that this was a Summer Blind “sale”) to mean that a comparison was being made with an undisclosed lower price.

Consequences of Hillarys Blinds

It can be envisaged that the Hillarys Blinds case will be cited in due course as authority for the proposition that what is said to be a price comparison cannot be a true price comparison unless it is unequivocally so.  However, as that proposition was conceded it meant that Elias J heard no argument on it, gave no judicial consideration to it and made no finding in respect of it.  It does not follow from the concession that the proposition is right or that it should be made in future cases.  Furthermore, Elias J took pains to point out, that he was merely holding that the decision of the justices was one they were entitled, rather than bound, to reach.  A future case on all fours with Hillarys Blinds could properly result in a conviction even if the same concession is made.  Furthermore the justices had not been asked to consider, as doubtless they would in a similar future case, whether, if a price was “special” because it applied to all goods of a kind regardless of size, there must therefore be a comparison with the former respective prices of the various sizes of those goods.

[Note: S 20 CPA was, on 26th May 2008, repealed and effectively replaced by the criminal regime in the Consumer protection from Unfair Trading Regulations 2008.  A misleading price indication may give rise to an offence under regulations 8, 9, or 10.  Regulation 9, which deals with misleading actions, specifically covers representations made by a trader which contain false information or which are deceiving in relation to “the price or the manner in which the price is calculated” and “the existence of a specific price advantage”.  It is sufficient if the “overall presentation in any way deceives or is likely to deceive the average consumer”.  It follows that, if it was the case that for a price indication to be misleading, the “only construction” that could be given to an advertisement or other commercial practice was that it implied some comparison that is no longer the test. 

See, re the average consumer, Case C-210/96 Gut Springenheide GmbH and Tusky v Oberkreisdirektor des Kreises Steinfurt - Amt für Lebensmittelüberwachung [1998] ECR I-04657.)]

VICTOR SMITH

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