Ads & Brands Law Digest: October 2024

Ofcom renews co-regulatory arrangements with ASA

Ofcom has officially renewed its co-regulatory arrangement with the Advertising Standards Authority. This means that the ASA will continue to oversee the day-to-day regulation of broadcast, on-demand programme services and video-sharing platform advertising until October 2034.

With the rapid growth of digital platforms, this renewal emphasises the importance of robust advertising regulation aimed at protecting consumers and ensuring fairness in advertising.

UK government consults on draft legislation to regulate Buy-Now, Pay-Later arrangements

Following a previous consultation, the UK government is consulting about its plans for regulating the BNPL market. It wants to ensure people using BNPL products receive clear information, avoid unaffordable borrowing, and have strong rights when issues arise. The government’s approach aims to maintain access to a popular product while adding safeguards.

The consultation ends on 29 November.

BCAP introduces new rules restricting broadcast ads for qualifying cryptoassets

Following consultation (to which it didn’t receive any responses), the Broadcast Committee of Advertising Practice (BCAP) has introduced a new rule that explicitly bans ads for certain types of cryptoasset products from being broadcast to mainstream, non-specialist audiences.

These products were already restricted under rule 14.5.4 of the BCAP Code, as they are not regulated by the Financial Conduct Authority (FCA). However, in October 2023 the FCA began regulating the advertising of fungible and transferable cryptoassets, including cryptocurrencies and utility (fan) tokens.

These ‘qualifying cryptoassets’ are classified as Restricted Mass Market Investments.  This means that they can be marketed to the public, but with restrictions that recognise their risk level and require investors to undergo pre-vetting.

BCAP’s update to the BCAP Code maintains the existing restrictions on advertising these products to appropriate specialised broadcast audiences. It also makes the rule more precise, acknowledging the broad and widespread category of investments that did not exist when the rule was first created. It also serves to remind broadcasters about the statutory restrictions on advertising these products.

Cryptoassets not included under the ‘qualifying cryptoassets’ category will continue to be caught under rule 14.5.4, which covers unregulated investments more generally. The rule adds clarity for industry and consumers, but does not alter existing policy on advertising these products. The change has now been approved by Ofcom and takes immediate effect.

CJEU clarifies basis of calculating discount claims

The EU’s Court of Justice has ruled that a price reduction in an advertisement must be calculated on the basis of the lowest price charged in the last 30 days. It is not sufficient simply to provide the lowest price in the last 30 days somewhere in the advert.

The case concerned the German consumers’ association taking Aldi Süd to court in Case C-330/23  Aldi Süd over how the retailer advertises its price reductions or “price highlights” in its weekly brochures, particularly for items like bananas and pineapples.

The position in the EU contrasts with the UK approach which is set out in the Chartered Trading Standards Institute (CTSI)’s “Guidance for Traders on Pricing Practices” This guidance removed a rule like the EU position in favour of a list of non-exhaustive factors to consider in determining whether a price reduction is genuine.  These include considering how long the product was on sale for at the higher price compared with the lower price and whether significant sales were made at the higher price before the price comparison was made. 

The CMA is currently reviewing pricing in retailers, especially loyalty card pricing, and has said that it will publish new guidance in November. 

UK government makes new Price Marking Amendment Order

The Price Marking Order took effect in Great Britain in 2004.  Its aim was to provide greater transparency to consumers of the prices of goods.  Unless an exemption applies, the PMO requires that both the selling price and the unit price should be displayed in a way that is unambiguous, easily identifiable, and clearly legible. prices of goods.

The spotlight was placed on the PMO in July 2023 when, as part of the Competition and Markets Authority’s investigation into unit pricing, the CMA recommended some changes to the PMO.  The CMA wanted to make the display of unit pricing more helpful to consumers including ensuring the PMO covered products which have more than one price due to price reductions and making the display of the pricing information clearer. 

The new PMO, which was agreed in October 2034, comes into force on 1 October 2025. It mandates the consistency of units for unit pricing, bolsters requirements on legibility, ensures loyalty pricing is covered, deals with price reductions and “deposits” under the Deposit Return Scheme.

CAP issues updated guidance note on green claims in the fashion industry

The CMA has (finally) issued an updated guidance note which is ‘tailored’ to retailers in the fashion industry. While the guide focuses on retailers, the CMA makes clear that it is also relevant to those who manufacture or distribute products in this sector.

This follows the CMA's protracted investigation into the fashion industry - specifically into ‘eco’ ranges by George at ASDA, Boohoo, and ASOS. 

The guidance is designed specifically to help retailers (and others) in the fashion industry comply with their obligations under consumer legislation to avoid creating misleading environmental claims. It relates to clothing, footwear, fashion accessories and related services, for example packaging, delivery and returns.

As well as issuing the new guidance, the CMA has written to 17 well-known fashion brands to review their business practices. These letters highlight areas of concern regarding their green claims, such as the use of broad or general terms and whether certain products are being wrongly included in ‘eco’ ranges. If you are involved in the fashion industry, now is a good time to take stock of the green claims your business makes.

Legislation passed to ban sale and supply of single use vapes in Great Britain from 1 June 2025

The UK and devolved governments have confirmed that single use vapes will be banned from 1 June 2025. The UK government has laid legislation to introduce the ban and, subject to parliamentary approval, businesses will have until 1 June 2025 to sell any remaining stock they hold and prepare for the ban coming into force.

The UK government and devolved administrations have been working together and are aligning the dates on which their respective bans come into force. The Welsh government said that The Environmental Protection (Single-use Vapes) (Wales) Regulations 2024 would be laid.

The Scottish government had laid draft regulations which foresaw a date of 1 April 2025 for them to come into force in Scotland. However, the Times has reported that Scottish health secretary Neil Gray announced that the Scottish government would now lay further regulations to amend the date to be in line with England and Wales.

Six telecoms companies investigated over unclear price rise information

The ASA has upheld complaints about adverts from six telecommunications companies promoting broadband or mobile data products for failing to be sufficiently transparent over pricing. The ASA considered that the ads were misleading under the CAP Code because they promoted headline price claims without clearly displaying information about mid-contract price increases.

Each ad was displayed on the advertiser's own website. It featured a headline price and information about different product packages and their initial pricing. Qualifying information about mid-contract price rises was also shown on each webpage (usually at the top or bottom) but away from the price claims and often in smaller text. Because qualifying information was not located close to the price claims or given equal prominence to them, the ASA held that it was not clearly displayed to consumers and the ads were therefore misleading.

CAP issued guidance about the presentation of mid-contract price increases in telecoms which took effect on 15 December 2023.  It states that the presence and nature of mid-contract price increases are material information that consumers need to make informed transactional decisions. Therefore, marketers must present it clearly and prominently to avoid ads being misleading.

European Commission publishes long-awaited Digital Fitness Check

The European Commission says that consumers are losing time and money – various harmful commercial practices online cost EU consumers at least €7.9 billion per year. 

It has now published the findings of its Fitness Check of EU Consumer Law on Digital Fairness, which aimed to discover if current EU consumer protection laws are fit for purpose to ensure a high level of protection in the digital environment. It says that consumer laws need to be better adapted to the specific practices and challenges that consumers face online. It says that the key challenges are:

• dark patterns in online interfaces that can unfairly influence consumers’ decisions, for example, by putting unnecessary pressure on consumers through false urgency claims;
• addictive design of digital services that pushes consumers to keep using the service or spending more money, such as, gambling-like features in video games;
• personalised targeting that takes advantage of consumers' vulnerabilities, such as showing targeted advertising that exploits personal problems, financial challenges or negative mental states;
• difficulties with managing digital subscriptions, for example, when companies make it excessively hard to unsubscribe; and
• problematic commercial practices by social media influencers.

Following the Digital Fitness Check, the Commission says that it will deal with the most harmful practices such as dark patterns. It takes the view that increased legal certainty could prevent regulatory fragmentation and promote fair growth. There is scope for simplifying existing rules, without compromising the level of protection as well as making sure that consumer and digital regulation work together.

UK government unveils significant reforms to employment rights

The UK government has published its Employment Rights Bill, which will have an impact on employers and employees in every sector, including the advertising and brands sectors.

Trade Marks

Court of Appeal illustrates correct approach to similarity of trade marks and likelihood of confusion

In October 2023 a judgment of the High Court ruled that the use of the sign PETSURE for pet insurance (and its registration in class 36) did not infringe the earlier trade mark VETSURE registered for the same services in the same class, and that the later registration of PETSURE was not invalid. In a judgment handed down almost exactly a year later, the Court of Appeal has now reversed those findings, the leading judgment being given by Lord Justice Arnold. His reasoning provides some useful clarification of the principles to be applied when assessing the alleged similarity of two marks, and whether such similarity could lead to a likelihood of confusion (and thus infringement under section 10(2) of the Trade Marks Act 1994, and potential invalidity under section 5(2)).

When it came to comparing the similarity (or otherwise) of PETSURE and VETSURE, Arnold LJ accepted the High Court’s finding that the two terms were “similar” in visual and aural terms, but disagreed with its finding that they were not conceptually similar. While pets and vets are different things, in the context of pet insurance both were implicitly covering the cost of veterinary services, and thus there was considerable conceptual similarity. Even without that conceptual similarity, it would only be in exceptional cases – where the concept of one of the marks is so clearly distinct as to counteract any visual/aural similarity – that the potential for confusion could be excluded. 

Likelihood of confusion (and potential invalidity of the later PETSURE mark) would also depend upon how distinctive the earlier VETSURE mark was found to be. The High Court had called the VETSURE mark “descriptive”, but Arnold LJ criticised the reasoning involved, which seemed to leap from the idea that the VET and SURE elements were descriptive to the conclusion that their combination was also descriptive. In the Court of Appeal’s view, the portmanteau word created by combining the two elements was inventive and thus inherently of low-to-moderate distinctiveness, while its use in business meant that it also had some acquired distinctiveness.

Lord Justice Arnold also criticised the High Court’s assessment of likelihood of confusion between VETSURE and PETSURE. The judge in the High Court had been rather dismissive of the evidence submitted of veterinary customers displaying confusion between the two policy names, calling them “mistakes” or “administrative errors”, whereas Arnold LJ found some of the examples cited to be illustrations of actual confusion. Moreover the examples tended to show that the customers understood the names to be brand-names, rather than purely descriptive. This was not the kind of case in which the earlier mark was so descriptive that just small differences would be sufficient to avoid confusion.

Taking into account all of these points of difference with the conclusions in the High Court, the Court of Appeal’s overall assessment was that there was indeed a likelihood of confusion. In light of the earlier VETSURE registration, the later registration of the PETSURE mark was invalid, and the use of PETSURE had infringed the VETSURE mark.