Curry’s takes on Comet on price claims in the High Court

United Kingdom
Comment:
In recent years the English High Court has been reluctant to entertain disputes relating to comparative advertising, and claims for malicious falsehood in such circumstances have rarely succeeded. In this case, however, the Court found clear evidence that Comet’s advertisements where false and were known by Comet to be false when published. Owen J. decided that it was appropriate to continue an interim injunction, although he also said that it was “to be regretted that the matter could not be resolved without recourse to litigation. Further details about the judgment are set out below. Note that it relates only to the continuation of an interim injunction, and that the full hearing is still to come, unless the parties pay heed to the judge’s hint that the matter should not be litigated.

Facts:
Currys and Comet are both well-known high street retailers of consumer electrical and electronic goods. Both have a large number of stores across the UK, often in retail parks and in close proximity to each other. The two are intensely competitive on price, and constantly monitor the other’s prices and promotional activities.

Currys began a promotion in November 2001 in which they offered 10% off their marked prices for short periods. Later that month, they launched a further promotion in which individual stores offered to beat any price offered by a Comet store in the same retail park by £10. In response, Comet displayed poster advertisements in their stores which stated “The Comet price is lower than competitors 10% off promotions and £10 price cuts. That’s Comet sense. Other posters read “Today and every day Comet prices will be lower than local competitors in [name of town inserted] and “We even beat competitors 10% off and £10 off weekend promotions. In some stores, Currys advertisements were taped to the bottom of these posters.

In December 2001, Currys obtained an interim injunction on the basis of the tort of malicious falsehood, restraining Comet from displaying the posters or making any statements with a like effect. Currys sought continuation of the injunction in February 2002.

Decision:
In a judgment given on 8 February 2002, Owen J considered the following issues and continued the injunction for the following reasons:

1. Were the statements complained of directed at Currys?

There was no doubt that this was the case. Even though the posters did not refer to Currys by name, they made clear reference to current promotions operated by Currys.

2. What was their meaning, and was it false?

It was clear that the posters meant that Comet’s marked prices were lower than their competitor’s marked prices less 10%. The claim that their marked prices were lower than Currys “£10 off promotional prices was nonsensical, since the Currys promotional prices were by their nature dependent on Comet prices, but a reasonable customer would understand the claim to mean that Comet’s marked prices were less than Currys special promotions including the £10 off promotion. A footnote in very small print which referred to the “Comet Price Promise did not override the clear main message of the posters.

The evidence showed that the claims were false, and that Comet must have known this when the claims were made. At the time in question, Comet’s prices were not lower than Curry’s promotional prices. There was evidence that Comet staff were instructed by email that Currys were offering 10% off some goods but that they should offer 10% off Comet’s marked prices only if challenged by customers to do so.

3. Were the statements actionable in the sense that they were by their nature intended to be and likely to be taken seriously?

Comet had argued that the statements were “mere puff and that they would be seen as such by consumers. The Court rejected this argument, and decided there was a clear distinction between mere puff such as “my goods are better than X’s and a verifiable price statement such as “I charge less than X for the same goods. Such a statement as to price was plainly intended to be, and likely to be, taken seriously.

4. Were the statements published maliciously and was there a likelihood of Currys sustaining actual damage as a consequence of their publication?

In this context “malicious means with knowledge or recklessness as to the falsity of the statements. The Court was satisfied that Comet were aware that the statements were false at the time they were made, based partly on the internal emails which were circulated to Comet stores regarding the Currys promotion. Currys argued that the whole purpose of the posters was to lure customers to Comet at what was the busiest trading period for both, and this was accepted by the Court. There was a likelihood of actual damage.

For further information please contact Susan Barty (telephone 0207 367 2542, susan.barty@cms-cmck.com) or Victoria Baker (telephone 0207 367 3451, victoria.baker@cms-cmck.com)