Sainsbury's Supermarkets Ltd, R (on the application of) v The Independent Reviewer of Advertising Standards Authority Adjudications [2014] EWHC 3680 (Admin)

Case No CO/17656/2013

[2014] EWHC 3680 (Admin)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date Monday 10 th November 2014

Before

MR. JUSTICE WILKIE

Between

R (SAINSBURY’S SUPERMARKETS LIMITED)Claimant

THE INDEPENDENT REVIEWERDefendant

OF ADVERTISING STANDARDS AUTHORITY ADJUDICATIONSDefendant

-and –

Between

ADVERTISING STANDARDS AUTHORITY LIMITEDInterested Parties

TESCO STORES LIMITEDInterested Parties

(Transcript of the Handed Down Judgment of

WordWave International Limited

A Merrill Communications Company

165 Fleet Street, London EC4A 2DY

Tel No: 020 7404 1400, Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

Thomas De La Mare QC and Iain Steele (instructed by Bond Dickinson) for Claimant

Tom Hickman (instructed by Bates Wells Braithwaite) for Defendant

David Anderson QC and Malcolm Birdling (instructed by Freshfields Bruckhaus Deringer LLP) for Second Interested Party

Hearing Hearing dates: 13 th and 14 th October 2014

Judgment

Mr Justice Wilkie :

Introduction

[1]This is a challenge to a decision of Sir Hayden Phillips, the Independent Reviewer of Advertising Standards Authority Adjudications (“IR”) that there was no “substantial flaw” in a decision of the Council of the Advertising Standards Authority (“ASA”).

[2]The ASA found inter alia that certain food products compared by Tesco Stores Limited (“Tesco”) in an advertising campaign met the same needs or purpose and thus could legitimately be compared under CAP Code rule 3.34. The IR reviewed that decision and found that there was no substantial flaw in the ASA’s approach. He found that the ASA had directed itself to the relevant legal tests and its judgments on the comparability of the products were, in his view, reasonable and defensible.

[3]Permission was granted by Order of Phillips J dated 28 February 2014. The claim is resisted by the IR and by Tesco as an interested party. The ASA has indicated that it does not intend to take part in the proceedings.

[4]The advertisements in question related to a price comparison scheme operated by Tesco called “Price Promise”. However, this claim for judicial review is not a challenge to the Price Promise scheme nor, directly, to the ASA’s decision.

[5]The challenge, as framed, is narrow in scope and limited to the following question: did the IR err in law in concluding that the ASA’s decision was not substantially flawed?

The Background to the claim

[6]Both Tesco and Sainsbury’s operate price comparison schemes. Sainsburys’ scheme is called “Brand Match” and is limited to branded goods. Tesco’s “Price Promise” scheme is not limited to branded goods.

[7]The essence of the Price Promise scheme as advertised is that if, within a customer’s shop of 10 or more items, there are purchases which are within the scheme and if the net comparative cost of those items at Tesco is more than the equivalent price at any of Asda, Sainsbury’s or Morrisons, the customer will receive a voucher for the difference, up to a maximum value of £10.

[8]In early 2013, a regional press advertisement for Tesco’s “Price Promise” was published featuring an aubergine, a pint of milk, a jar of Coleman’s Mustard, a bottle of Heinz Tomato Ketchup, a pot of Yeo Valley yoghurt, a jar of Marmite, a bag of plain flour and a banana. It stated:

“You won’t lose out on big brands, fresh food or own-label. If your comparable grocery shopping is cheaper at Asda, Sainsbury’s or Morrisons, we’ll give you a voucher for the difference at the checkout or online. To qualify, you need at least ten different items including one comparable item in your basket.”

[9]The small print stated:

“Max voucher value £10. Exclusions may apply due to difference in size, weight, volume, flavour or quality. Selected UK stores. Prices checked at Asda.com, Sainsburys.co.uk and Morrisons (in store). Delivery charges apply online. Full terms and conditions at tesco.com/promise.”

[10]Tesco’s website stated:

“… we identify the key characteristics of products including flavour, whether it’s organic, Fairtrade, low fat or eco-friendly. We ensure that matches are only made where there is no artificial advantage to any retailer.”

[11]The terms and conditions also stated that Tesco would only match:

“…an identical branded grocery product or a similar own label equivalent grocery product. For similar own label grocery products to be included they must meet the same needs or be intended for the same purposes.”

[12]On 8 March 2013, following correspondence with Tesco, Sainsbury’s raised a complaint with the ASA. The complaint referred to eight items identified in correspondence. The complaint was put on the bases:(i) that Tesco’s advertising was misleading, contrary to various provisions of the CAP Code, and

(ii) that it drew impermissible comparisons contrary to CAP Code rule 3.34.

[13]The complaint related to own label products and fresh food. The complaint stated that non-price elements, relating to product quality, corporate responsibility, sustainability and other ethical matters, had not been factored in by Tesco to their product comparisons and that Tesco had failed properly to weigh the non-price elements. It also made reference to Tesco’s “We are changing” campaign relating to supply chains and product origin.

[14]Eight specific product comparisons were objected to: Sainsbury’s product Tesco product compared Ground of objection to price comparison Sainsbury’s Basics Still Water 2L 2L Tesco Everyday Value still water Sainsbury’s product is spring water (although this is not stated on packaging) and Tesco’s product is not. Sainsbury’s Basics eggs 6x Tesco Everyday Value eggs 6x Sainsbury’s product is “Freedom Food” accredited; Tesco’s product is not. Sainsbury’s Chicken Korma & Basmati Rice 500g Tesco Chicken Korma & Palau Rice 550g Sainsbury’s 100% British chicken (packaging states “British chicken”) Sainsbury’s Haddock Fillets Tesco Haddock Fillets Tesco’s fish are not line caught or Marine Stewardship Council (“MSC”) accredited. (Although sourced from the same MSC recognised farm) Sainsbury’s Cod Fillets Tesco Cod Fillets Tesco’s fish are not line caught or MSC (Although sourced from the same MSC recognised farm) Sainsbury’s Basics Ham Tesco Everyday Value Ham Sainsbury’s ham is “British” as opposed to being “sourced from EU”. Sainsbury’s 12x free range Woodland eggs Tesco 12x Free Range Eggs Tesco eggs not are “Woodland” eggs or “Freedom Food” accredited (“Woodland” is a Sainsbury’s own term relating to “freedom to roam” in woodland; sales of Sainsbury’s free-range eggs include donation to Woodland Trust) Sainsbury’s Basics Fairtrade tea bags 80x Tesco Everyday value tea bags 80x Tesco tea bags are not Fairtrade.

[15]The ASA considered the complaint under CAP Code rules 3.1, 3.7, 3.33, 3.34, 3.35 and 3.39.

[16]The dispute arose from Sainsburys’ contention that Tesco’s process of comparison failed to factor in, whether at all or sufficiently and consistently, a number of key product attributes, namely the product’s objectively attested and advertised ethical and environmental characteristics and provenance. It was said that the relevant Sainsburys’ products have material differentiating features, in terms of:(i) objective ethical/environmental certification, (such as certification from the Fairtrade Foundation (“Fairtrade”), Marine Stewardship Council (“MSC”) and Freedom Food (RSPCA) schemes); or

(ii) distinct provenance or other ethical considerations. It was said that both features are used by customers as factors in the selection of products for consumption.

[17]Sainsbury’s contended that, at the ‘value’ end of product ranges, Tesco’s comparison took no account of the fact that the Sainsburys’ products are differentiated in this non price way with attendant cost consequences, with the result that the supposedly “interchangeable” items were not lawfully or fairly comparable. Thus it was said that the Tesco “Price Promise” advertising was in breach of the CAP Code.

[18]Sainsburys’ case before the ASA can be summarised in a number of propositions: i) Sainsburys’ offering contains products that are objectively differentiated by the means by which they are produced, means which seek to secure high standards of ethical, social or environmental protection. ii) There is a consequential cost attached to those higher standards, which Sainsburys’ competitors, which have chosen not to stock goods meeting those standards, do not bear. iii) This is particularly clear in relation to products (“Certified Products”) belonging to and bearing the marks of the various non-governmental accreditation schemes that exist to certify compliance with ethical and environmental standards (“Certification Schemes”). iv) Some Certification Schemes (notably Fairtrade) require the payment of higher prices and the guarantee of higher welfare standards for the farmers growing the primary products (tea, sugar, bananas, coffee) on ethical grounds. The market price for such commodities does not provide a sustainable and reasonable level of subsistence. v) Other Schemes (such as MSC, Freedom Food, Woodland Trust) involve products meeting higher environmental and ethical production standards.

[19]It was contended that, inevitably, adherence to these Schemes leads to additional costs for those making and stocking such products, which are commensurate with the additional ethical or environmental benefits the Schemes are designed to provide.

[20]Sainsbury’s considers these higher costs to be a price worth paying, both as a matter of principle and to meet what it detects to be customers’ needs: making ethical/responsible products available at fair prices.

[21]The products made to these standards are said to be differentiated from other goods in their general class because of their ethical and environmental standards. Because Certification works on objective and verifiable criteria, participation in such a Scheme results in a form of open ethical branding for those entitled, by membership, to use the trademarks associated with the Schemes.

[22]For retailer and the consumer, such trademarks provide guarantees as to the origin and mode of production of the product. Any producer or seller of such products, wishing to have the benefit of such branding, can do so by joining the Scheme and incurring the consequential costs.

[23]Sainsbury’s contended to the ASA that Tesco wrongly portrayed itself as charging the same, or less, for comparable products where Sainsburys’ product is certified, Tesco’s is not, but the comparative advertising gives no indication of this fact. The result was said to be a form of unfair competition. The legal framework The ASA and CAP Code

The legal framework

[24]The ASA is responsible for investigating and adjudicating on complaints of breaches of the UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing, drafted by the Committee of Advertising Practice (“CAP Code”). This is a well established system of self-regulation in the advertising industry. In 2012 the ASA received over 30,000 complaints and published 933 adjudications. In 2013 it received 31,136 complaints and published 1,190 adjudications. These included numerous complaints about supermarket and comparative advertising. The CAP Code is intended accurately to reflect EU and domestic consumer protection legislation in respect of misleading and unfair advertising.

The CAP Code

[25]The CAP Code makes the following relevant provision:

“General 3.1 Marketing communications must not materially mislead or be likely to do so. … 3.3 Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner. … 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. … Comparisons with Identifiable Competitors 3.33 Marketing communications that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, the consumer about either the advertised product or the competing product. 3.34 They must compare products meeting the same need or intended for the same purpose. 3.35 They must objectively compare one or more material, relevant, verifiable and representative feature of those products, which may include price. … 3.37 Certain EU agricultural products and foods are, because of their unique geographical area and method of production, given special protection by being registered as having a “designation of origin”

. Products with a designation of origin must be compared only with other products with the same designation. … 3.39 Marketing communications that include a price comparison must make the basis of the comparison clear.” …”

[26]The requirement of CAP Code rule 3.34 that products must meet the same need or be intended for the same purpose is the provision in issue in this claim (“the SNP Test”).

[27]The CAP Code provides that a well-founded complaint alleging a breach of the CAP Code will be investigated by the ASA Executive and a recommendation made to the ASA Council.

[28]The CAP Code provides for an independent review of determinations of the ASA Council by the IR in “exceptional circumstances”. The IR’s role is limited:

“Requests may be made on two grounds: a) where additional relevant evidence comes to light … and/or b) where it is alleged that there is a substantial flaw in the Council’s adjudication or in the process by which the adjudication was made.” a) where additional relevant evidence comes to light … and/or b) where it is alleged that there is a substantial flaw in the Council’s adjudication or in the process by which the adjudication was made.”

[29]If a complaint is accepted for consideration by the IR, he will make a recommendation to the ASA Council. However, the final decision on whether to revise its decision in accordance with the IR’s recommendation rests with the Council.

[30]On 1 January 2010 Sir Hayden Phillips was appointed IR.

The EU Directives

[31]Each of the CAP Code rules cited above reflects provisions in Article 4 of EU Directive 2006/114/EC concerning misleading and comparative advertising.

[32]The Directive provides: Article 4 Comparative advertising shall, as far as the comparison is concerned, be permitted when the following conditions are met: a) it is not misleading within the meaning of Articles 2(b), 3 and 8(1) of this Directive or Articles 6 and 7 of Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market (“Unfair Commercial Practices Directive”); b) it compares goods or services meeting the same needs or intended for the same purpose; c) it objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price; … e) for products with designation of origin, it relates in each case to products with the same designation; …

[33]The predecessor provision, Article 3a(1) of Directive 84/450/EEC of 10 September 1984, concerning misleading and comparative advertising (as amended), was the provision in issue in the leading decision of the Court of Justice of the European Union (“CJEU”) Lidl v Vierzon. It was in materially the same terms.

[34]The 2006 Directive is implemented in domestic law by the Business Protection from Misleading Marketing Regulations 2008 (“the Business Protection Regulations”). Regulation 4 reproduces the relevant provisions of Article 4. In particular paragraph 4(c) reproduces Article 4(b).

The Unfair Commercial Practices Directive and the Consumer Protection Regulations

[35]A related and expressly interlinked legal regime (see Article 4(a) of the 2005 Directive) is provided for by the 2005 Directive. The 2005 Directive provides, at Article 5, that “unfair commercial practices” shall be prohibited, and that practices which are “misleading” as set out in Articles 6 and 7 shall be unfair.

[36]Articles 6 and 7, respectively, make provision on misleading actions and misleading omissions.

[37]Article 6(1) provides that a commercial practice shall be regarded as misleading if it contains false information and is therefore untruthful or in any way, including overall presentation, deceives or is likely to deceive the average consumer, even if the information is factually correct, in relation to one or more specified elements, and in either case causes or is likely to cause him to take a transactional decision that he would not have taken otherwise.

[38]The specified elements for these purposes include at Article 6(1)(b) (bold emphasis added):

“The main characteristics of the product, such as its availability, benefits, risks, execution, composition, accessories, after-sale customer assistance and complaint handling, method and date of manufacture or provision, delivery, fitness for purpose, usage, quantity, specification, geographical or commercial origin or the results to be expected from its use, or the results and material features of tests or checks carried out on the product.”

[39]Article 7(1) provides that a commercial practice shall be regarded as misleading if, in its factual context, taking account of all the features and circumstances and the limitations of the communication medium, it omits material information that the average consumer needs, according to the context, to take an informed transactional decision and thereby causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.

[40]Article 7(4) provides that, in the case of an invitation to purchase, the information that shall be regarded as material, if not already apparent from the context, includes the “main characteristics of the product”, to an extent appropriate to the medium and the product. “Invitation to purchase” is a term of art defined by Article 2 in a restrictive way. It is not suggested that it applies to the advertising complained of in this case.

[41]The 2005 Directive is implemented in domestic law by the Consumer Protection from Unfair Trading Regulations 2008 (“the Consumer Protection Regulations”), where its provisions are replicated. The case law Lidl v Vierzon

[2011] 2 CMLR 10

The case law

[42]This is the leading authority, a decision of the CJEU, in which a number of important principles were stated. The legislation being construed was Directive 84/450. Those principles, insofar as relevant, can be summarised: i) The aim of Article [4] was to stimulate competition to the consumer’s advantage by allowing competitors to highlight objectively the merits of comparable products whilst prohibiting the practices which might distort competition and have an adverse effect on consumer choice. The conditions in the Directive had to be interpreted in the sense most favourable to permitting advertisements which objectively compared the characteristics of goods or services, while ensuring at the same time that comparative advertising was not used anti-competitively or unfairly, or in a manner which affected the interests of consumers. The comparing of rival offers, particularly as regards to price, was inherent in comparative advertising. The comparison of the price only of goods and services should be possible if that comparison respected certain conditions, in particular that it not be misleading. [Judgment paras 20, 21, 23, 24] ii) Article [4] provided that, if comparative advertising was to be permitted, the comparison must relate to goods or services which met the same needs or were intended for the same purpose. That condition implied that the goods being compared had to display a sufficient degree of inter-changeability for consumers. The angle from which the comparison was made, namely price in the present case, had no bearing on whether two products met the condition provided for by the Article. [Judgment paras 25 and 27] iii) In order to prevent comparative advertising being used in an anti-competitive and unfair manner, only comparisons between competing goods and services meeting the same needs or intended for the same purpose should be permitted. The key element of comparative advertising was the identification of a competitor of the advertiser or of the goods and services which it offered. The fact that products were, to a certain extent, capable of meeting identical needs led to the conclusion that there was a certain degree of substitution for one another. However, before it could be concluded that there was a real possibility of substitution, in accordance with the Article, an individual and specific assessment of products which were specifically the subject of the comparison in the advertisement was necessary. Such a specific assessment of the degree of substitution fell within the jurisdiction of the national courts. [Judgment paras 29-30, 32-33] iv) There was nothing in the wording of Article [4b] to suggest an interpretation which would prohibit comparative advertising relating to food products unless such products were identical. Such a prohibition would lead to a considerable restriction on the scope of comparative advertising and would rule out a real possibility of comparative advertising regarding a particularly important category of consumer goods, irrespective of the angle from which the comparison was made. Such a prohibition would run counter to the court’s established case law that the conditions required of comparative advertising must be interpreted in the sense most favourable to it. [Judgment paras 34-38] v) Article [4b] was to be interpreted as meaning that the fact alone that food products differed, in terms of the extent to which the consumers would like to eat them and the pleasure to be derived from consuming them, according to the conditions and the place of production, their ingredients and who produced them, could not preclude the possibility that the comparison of such products might meet the requirement laid down in that provision that the products compared met the same needs or were intended for the same purpose, that is to say, that they displayed a sufficient degree of interchangeability. [Judgment para 39] vi) Article [4a] provided that if comparative advertising was to be permitted the comparison must not be misleading as defined by the other Articles within the Directive. [Judgment paras 41 and 44] vii) It was for the referring court to ascertain, in the circumstances of each particular case and bearing in mind the consumers to which such advertising was addressed, whether the latter might be misleading. That court must first take into account the perception of the average consumer of the products or services being advertised who is reasonably well-informed and reasonably observant and circumspect. As regards an advertisement such as that at issue, it was not disputed that it was addressed not to a specialist public but to end consumers who purchased their basic consumables in a chain of stores. In carrying out the requisite assessment, the national court must also take account of all the relevant factors in the case, having regard to the information contained in the advertisement at issue and more generally to all its features. [Judgment para 46-48] viii) An advertisement such as that at issue could also be misleading if the referring court found that, for the purposes of the price based comparison in the advertisement, food products were selected which were in fact objectively different and the differences were capable of significantly affecting the buyer’s choice. If such differences were not disclosed such advertising, where it was based solely on price, might be perceived by the average consumer as claiming, by implication, that the other characteristics of the products in question, which might also have a significant effect on the choices made by such a consumer, were equivalent. In such cases, the fact that the consumer was not informed of the differences between the products being compared in terms of price alone might deceive the consumer as to the reasons for the difference in prices claimed and the financial advantage that could in fact be obtained by the consumer by buying his goods from the advertiser rather than from a given competitor and have a corresponding effect on the consumer’s economic behaviour. The latter might just be led to believe that he would in fact obtain an economic advantage because of the competitive nature of the advertisers offer and not because of objective differences between the products being compared. [Judgment paras 51-52 and 55]

[43]I have been referred to a number of decisions of the CJEU which predate the Lidl case.

[44]In my Judgment, there is nothing in the case of Pippig v Hartlauer

[2004] 1 CMLR 39

which adds to the comprehensive treatment of the issues in Lidl.

[45]The Claimant places some reliance on passages in the judgment in the Landtsheer case

[2007] 2 CMLR 43

. In particular, at paragraph 48, reference is made to certain criteria identified in paragraphs 36-41 of the judgment as applying “mutatis mutandis” to [Article 4b] of the Directive. Those criteria include the need to consider not only the present state of the market but the possibilities for development of the market, not limited to consumer habits in a particular member state or given region, and to have regard to the likely evolution of purchasing decisions of customers in step with consumer recognition of the merits of the goods or services, their specific characteristics which the advertising is seeking to promote.

[46]I am reminded that there is a difference between different provisions in the Directive (for example Article 2(2A) and Article 3a(1)(b)) though they are obviously close. In particular, at paragraph 47 of the judgment, it says:

“… whilst the definition of comparative advertising given in Article 2(2a) assumes that there is a competitive relationship between undertakings proving, for that purpose, sufficient to ascertain whether the products they offer generally display a certain degree of substitutability for one another, the condition laid down in Article 3a(1)(b) requires an individual and specific assessment of the products which are specifically the subject of the comparison in the advertisement before it can be concluded that there is a real possibility of substitution.”

[47]It is also pointed out that, whilst paragraph 48 notes that the criteria in paragraph 36-41 apply “mutatis mutandis”, nonetheless, the criteria for establishing the existence of a competitive relationship within Article 2(2a) of the Directive are not identical to those for determining whether the comparison fulfils the condition in Article 3a(1)(b) of the same Directive.

The Products

[48]Sainsburys’ marketing director Sarah Warby first raised Sainsburys’ concerns in respect of the advertising of Tesco’s Price Promise scheme, in a letter to Tesco’s marketing director David Wood on 18 January 2013. Correspondence in respect of Sainsburys’ concerns continued between Sainsburys’ and Tesco’s legal and marketing teams until the beginning of March 2013.

[49]Having been unable to resolve the matter through correspondence, Sainsbury’s complained to the ASA by letter dated 8 March 2013.

[50]The following disputed comparisons were identified: i) Sainsbury’s Basics Fairtrade tea bags (80x), compared with Tesco Everyday Value tea bags (80x). Sainsburys’ product is “Fairtrade” Certified, Tesco’s product is not. ii) Sainsbury’s Basics eggs (6x), compared with Tesco Everyday Value eggs (6x). Sainsburys’ product is “Freedom Food” Certified, Tesco’s product is not. Tesco has accepted that these products should not be compared by its letter dated 1 February 2013. It has done so, it says, as a gesture of good will. iii) Sainsbury’s free range Woodland eggs (12x), compared to Tesco Free Range eggs (12x). Sainsburys’ product is “Woodland” and “Freedom Food” Certified, Tesco’s product is neither. iv) Sainsbury’s Haddock Fillets, compared with Tesco Haddock Fillets. Sainsburys’ product is 100% line caught and “MSC” Certified, Tesco’s product is not. v) Sainsbury’s Cod Fillets, compared with Tesco Cod Fillets. Sainsburys’ product is 100% line caught and “MSC” Certified, Tesco’s product is not. vi) Sainsbury’s Chicken Korma & Basmati Rice (500g), compared with Tesco Chicken Korma & Pilau Rice (550g). Sainsburys’ product is 100% British chicken, Tesco’s product is not. vii) Sainsbury’s Basics Ham, compared with Tesco Everyday Value Ham. Sainsburys’ product is British, whereas Tesco’s product is “sourced from EU”.

The ASA adjudication

[51]The adjudication identified the issue as follows:

“Sainsbury’s challenged whether the claim “You won’t lose out on big brands, own label, or fresh food” was misleading in relation to own label and fresh food as important product attributes had not been taken into account. Sainsbury’s considered that some of the products compared were not comparable and, furthermore, considered that the basis of the price match policy had not been made clear.”

[52]The adjudication then set out a full summary of Tesco’s response. This account included a number of lines of argument, which I summarise as follows: i) Branded products could be matched on an identical basis. When identifying comparable products for own label goods, Tesco began matching products according to “brand hierarchy”, eg. Sainsbury’s Basics with Tesco Everyday Value products. As part of that matching process, they checked if there was an exact match. Where a match for own label products and fresh products could not be found, those products were matched with ones which met the same need and/or were intended for the same purpose. In addition, they might match own label products if the product was not the same but there was a minor difference in the pack size (within 10%). ii) Tesco explained that, where there was some difference in relation to non-price elements of an own label or fresh produce, e.g. provenance or ethics, they would still match those products provided the difference was not key in a customer’s decision making process and it was not sufficient to make it a non-match, e.g. Sainsbury’s Basics Teabags x 80 Fairtrade to Tesco Everyday Value Teabags x 80. Where that non-price element was a key factor, e.g. provenance, in a customer’s purchasing decision for own label and fresh produce, then they only matched on a like-for-like basis, e.g. Sainsbury’s Melton Mowbray mini pork pies x 6 (300g) to Tesco Melton Mowbray mini pork pies x 6 (300g). iii) All other products were not matched. That included own label products where there was a significant difference in relation to non-price elements, e.g. provenance, ethics, quality, flavour and size. (Some examples were given). iv) Tesco’s website stated:

“… we identify the key characteristics of products including: flavour; whether it’s organic; Fairtrade; low-fat; or eco-friendly. We ensure that matches are only made where there is no artificial advantage to any retailer.”

Tesco said that if the fact that the product is Fairtrade was the key characteristic of that product they did not match it against a non Fairtrade product. Likewise, they did not match organic food with non-organic food. v) Tesco confirmed that where a non-price element was key, they only matched where both products had that element. (They gave an example) vi) Tesco stated they did not match products where the non-price element did not match and where that element was the determining factor for the customer. (They then gave an example where there was a substantial difference in fat content) vii) Where the sourcing of ingredients for a particular product in the British Isles was the key factor, Tesco reflected that in their matches. They had regard for the results of their own customer research when determining whether an ingredient’s provenance would preclude them from identifying a match under the Price Promise. However, they did not consider that, as a matter of principle, products containing British and Irish ingredients could only be matched with competitor products of the same provenance. They did not believe customers would consider that to be the correct comparison to make. For the majority of customers, the product’s country of origin would only be a minor factor in a customer’s decision making. viii) Tesco believed if a product had a certain certification, e.g. Fairtrade, that was not always the determining factor in a customer’s decision making process, especially where the retailer has taken a decision only to stock products with that certification, as was the case with Sainsbury’s. For example, Sainsbury’s Basic 80 teabags Fairtrade would always be matched with Tesco everyday value 80 teabags. They believed the Fairtrade element was not the determining factor and that the two products were comparable and interchangeable. The products were comparable in every way other than the certification.

The ASA assessment

[53]In its assessment, the ASA summarised Sainsburys’ first argument that: i) a concurrent advertising campaign by Tesco entitled “We are changing” reflected Tesco’s recognition of customer interest in non-pricing ethical considerations. The more they worked with British farmers the better. Sainsbury’s argued that this contradicted the approach taken by Tesco in concluding that certain items were comparable, even though Sainsburys’ were sourced in Britain and Tesco’s were not.

[54]The ASA concluded that consumers were unlikely to see those statements as part of the same campaign. It said:

“The ads had different commercial messages and there was nothing in either ad to lead consumers to believe they were part of the same campaign. One ad was about Tesco’s supply chain and what changes they were making to it. [It] was likely to be seen in that way, while the other … was likely to have been seen as one about a promise to compare prices.”

[55]The ASA then dealt with whether the respective products were properly regarded as comparable. It noted Tesco’s guidelines for identifying matches for the Price Promise. It understood that, where no matches could be found, those products were excluded from the comparison. The small print in the ad stated that products may be excluded on the grounds of difference in size, weight, volume, flavour, or quality. The ASA recognised that products were excluded when there was a difference of more than 10% in size, weight, or volume but that, where that difference was less than 10%, the products were included in the comparison. On the evidence, the ASA concluded that such an approach resulted in an even split as between advantaging or disadvantaging Tesco.

[56]Sainsbury’s were concerned that non-price elements of “own label” products had not been taken into account or given sufficient weight by Tesco when identifying matches for comparison. Sainsbury’s maintained that those elements were important to consumers and that this reflected the outcome of their own consumer research. Sainsbury’s had highlighted a few products for which they believed the differences in provenance, of ingredients, and certification were of such significance that the products could not be considered as meeting “the same need or intended purpose” and, therefore, they could not be matched with a Tesco equivalent product.

[57]The ASA considered two individual items: i) Chicken Korma Curry, where Sainsburys’ was made with 100% British chicken but Tesco’s was sourced outside the UK. ii) Similarly, with Tesco’s Everyday Value Ham and Sainsburys’ Basic Ham.

[58]In respect of these items, Tesco had said that, based on the findings of its own research, “provenance of ingredients was not a key factor for their consumers”. Consequently, Tesco had identified and matched those products under the Price Promise.

[59]The ASA concluded that it: “agreed with Tesco that provenance was unlikely to be a key factor for those two products; a ready meal chicken korma curry and the budget choice ham”.

[60]Other items the subject of the complaint were cod and haddock fillets. Sainsburys’ products were Marine Stewardship Council (MSC) certified, whereas Tesco’s were not. Similarly, Sainsbury’s complained in respect of free-range eggs where Sainsburys’ were free-range “Woodland” eggs.

[61]The ASA recorded that: “Tesco confirmed that all their fish came from MSC accredited fisheries. They understood that the “Woodland” eggs label was exclusive to Sainsbury’s and that it meant the free-range chickens had been reared in woodland sponsored by the Woodland Trust. Tesco confirmed that their eggs came from Freedom Food accredited farms, however, Tesco did not label their products “MSC certified”, or “Freedom Food accredited” because doing so involved paying for a licence”, which Tesco had chosen not to do.

[62]The ASA concluded that “it considered these products were comparable”.

[63]The adjudication then summarised the essence of the contentions of both parties in the following terms:

“Tesco confirmed that, where a non-priced element led to a difference but they believed it was not the determining factor in a purchasing decision, they did identify and match products. However, where that element was significant and likely to affect a customer’s decision to buy that product, no match was identified for the Tesco product…. Tesco also had regard to the findings of its own and independent, supplier-led research in respect of provenance and certification for fish.” “Sainsbury’s believed that own label products which were different, on the grounds of animal welfare or provenance of the ingredients for example, were incomparable and could not be considered as meeting the same need. The code required advertisers to compare goods which met the same need or intended purposes.”

[64]The ASA then said:

“We considered the “same need” test had been met under the Code, given that foods, such as meat, eggs, or fish were interchangeable and were intended for the same purpose. While we acknowledged there would be differences in animal welfare and country of origin for the ingredients, we were satisfied that Tesco had taken those elements into account when identifying and matching products and had compared on the basis of them meeting the same need.”

[65]The ASA recorded that Sainsbury’s were concerned that own label products and fresh foods could not be compared because of a difference in quality. The ASA said:

“However, the small print stated that products may be excluded from the comparison on the grounds of quality and Tesco provided examples of products which had been excluded for that reason. Furthermore, Tesco compared within the same “tier” of produce, i.e. Tesco everyday value to Sainsbury’s basics … to help ensure products of different qualities were not matched.”

[66]The ASA went on to say:

“The Code allowed advertisers to objectively compare one or more material, relevant, verifiable, and representative feature of products which could include price. We considered that Tesco had objectively compared price and the ad made clear that Tesco were comparing their own prices against brands, own labels, and fresh produce prices at Sainsbury’s, Asda, and Morrisons and that some products would be excluded from the comparison. While we noted Sainsbury’s concerns, in the context of an ad which explained clearly the basis of Tesco’s pricing comparison we concluded the claim “You won’t lose out on big brands, own label or fresh food” had been substantiated and was not misleading. In addition, we concluded the basis of the comparison was clear and did not breach the Code.”

[67]The adjudication indicated that the advertisement had been investigated under the CAP Code, rules 3.1 (misleading advertising) 3.7 (substantiation) 3.33, 3.34, 3.35, and 3.39 (comparisons with identifiable competitors) but did not find it to be in breach.

Sainsbury’s reference to the Independent Reviewer

[68]Sainsbury’s wrote to the IR on 5th August 2013 requesting an independent review on the ground that there were substantial flaws in the Council’s adjudication.

[69]They summarised the background. They had challenged whether Tesco’s Price Promise was misleading in relation to own label and fresh food, as important product attributes had not been taken into account for the purposes of making comparisons. Some of the products compared were, in Sainsburys’ view, not comparable and the basis of the price match policy had not been made clear.

[70]Reference was made to a detailed letter to the ASA on 28th June 2013, after receipt of a draft ASA recommendation. They referred to the contents of that letter as fully setting out their position.

[71]They identified several, allegedly, substantial flaws: i) The ASA had not applied the correct test, or had incorrectly applied the correct test. The test applied by the ASA appeared to have been the “same need” test, set out in paragraph 3.34 of the CAP Code. Sainsbury’s did not dispute that “the same need” test was the correct test to apply, but contended that it should be read in the context of CJEU case law, which required that products used be “sufficiently interchangeable” (Lidl v Vierzon). Thus, although an egg not sourced from a Freedom Food accredited farm could be said to meet the same need as one which is sourced from a Freedom Food accredited farm, it could not be said to be “sufficiently interchangeable” because the fact that one was a Freedom Food accredited egg, the other not, was a significant factor in a consumer’s purchasing decision. ii) They referred to overwhelming customer and stake holder response since publication of the ASA adjudication as strongly supporting that view. They referred to point 1 of their letter of 28th June. They had stated that the “sufficiently interchangeable” test meant that the non-price elements were(1) capable of being objectively established and

(2) material factors or considerations for a reasonable proportion of customers. iii) They considered that the fact that a product had obtained an objective accredited status in a certification scheme open to all, such as “Freedom Food,” or MSC certified, or Fairtrade, attested to that product attaining objective and audited welfare or sustainability standards, or the trader having accepted additional obligations to suppliers. That fact was self-evidently indicative that customers were asked to treat and would, in substantial numbers, treat the product differently to those products not bearing such certification or their equivalent. iv) Sainsbury’s contended that the success of such schemes was testament to the fact that customers do treat such standards as relevant to their purchasing decisions. Sainsbury’s contended that Tesco’s argument, accepted by the ASA, amounted to a conclusion that products meeting those additional standards and obligations were “sufficiently interchangeable” with those that had not. v) Sainsbury’s also contended that the ASA’s adjudication was flawed in that the test it applied allowed Tesco an unreasonable amount of discretion to decide as and when important non-price attributes were to be taken into account and that the points, made at point 3 in their letter of 28th June, had largely been ignored. vi) The ASA adjudication had considered the interrelationship between Tesco’s “We are changing” advertisement of 3rd March 2013, and their Price Promise advertisement. The ASA concluded that those two advertisements were not to be linked; they had different commercial messages and that there was nothing to lead consumers to believe they were part of the same campaign. Sainsbury’s contended that the ASA conclusion did not fall within the ambit of a reasonable decision and was substantially flawed.

The IR Decision

[72]The IR concluded that Sainsbury’s had made a persuasive case about the changing assumptions of many consumers and the value that they increasingly place on provenance and other ethical issues when considering food purchases.

[73]Nonetheless, he concluded that the ASA had interpreted rule 3.34, that marketing communications “must compare products meeting the same need or intended for the same purpose” in a defensible way such that it was difficult to argue that the ASA ruling was substantially flawed.

[74]The IR noted that there was no dispute that the test identified was the correct one but that Sainsbury’s argued that it had not been applied correctly in the light of CJEU case law. In the light of their customer and stakeholder response, the needs test, as applied by the ASA, was not in the customer’s interests.

[75]The IR stated that he was unable to conclude that the ASA had ignored or misinterpreted Lidl v Vierzon. He said it was clear that the issue of products being “sufficiently interchangeable” was central to the consideration by the ASA. He emphasised the word “sufficiently”. The adjudication reflected the conclusion that the essential feature being compared was price, not quality, provenance, or ethical treatment. Tesco’s comparison rules for their Price Promise provided for the relevant matching of items by type. He said:

“they can and do compare like for like on non price related features where that is clearly a key element relevant to the comparison.”

[76]IR stated that Sainsburys’ wish, that non-price elements be given greater centrality in comparisons, was understandable. He agreed that an increasing number of customers would take non-price factors into account and that they were material to those people. He concluded, however, that that did not necessarily mean that the council had interpreted the “sufficiently interchangeable” aspect of the “same needs” test in an unreasonable way.

[77]He stated that the ASA’s conclusion was:

“that non-price features, such as provenance, were not covered by that test in relation to a price comparison except where those features were essential features of the products under comparison.”

[78]He said that if the Directive is meant to be administered in a way that is most permissive, rather than most restrictive, to comparisons, then he was unable to conclude that he could reasonably find that the ASA decision was either irrational or perverse on this central element. Sainsbury’s may be right, that non-price elements are material to many customers, but that does not mean that ASA was wrong to conclude that they were not material, or essential, or important to this particular comparison.

[79]On the second issue, that the ASA allowed Tesco an unreasonable amount of discretion to decide as and when important non-price attributes were to be taken into account, the IR concluded that the judgment of the ASA, in relation to the provenance of chicken in the ready meal or ham in the value ham, that price and functionality were the key issues was defensible. The fact that it was supported by Tesco’s own research might bolster that view but did not determine ASA’s view.

[80]On the third issue, the alleged contradiction between the “We are changing” campaign and the “Price Promise” advertisement, the IR agreed that there was a tension between the logic of Tesco’s position in respect of these two campaigns. However, ASA had taken the view that the campaigns had different commercial messages; one being about the resilience of supply chains, the latter about price promises.

[81]The IR concluded that that was a logical and defensible distinction likely to be understood by consumers. The tension, though not in IR’s view a contradiction, was, he concluded, a future issue for Tesco to grapple with rather than representing a substantial flaw in the ASA adjudication on price comparison.

[82]The IR also considered the contention of Sainsbury’s that the ASA had not taken into account the fact that Tesco had confirmed that their fish came from accredited MSC producers, but did not advertise their fish as MSC certified because they chose not to pay the licence for the certification.

[83]The IR said:

“one can make a judgment about whether this is a fair practice on their part or not, but the products being compared are indeed pieces of fish both … sourced from the same form of (MSC) farming practice. On the face of it this suggests that they are sufficiently interchangeable to meet the same consumer needs to allow a comparison on price.”

[84]The IR concluded that, whilst there may be an issue for MSC to take up with Tesco, it did not seem to him to affect the adjudication which, in that respect, seemed defensible.

[85]The IR summarised his decision in the following terms:

“Given your company’s sourcing, accreditation, and labelling policies, I can fully understand your sense of frustration that your complaint was not upheld. Provenance and ethical considerations around food are increasingly important to some (some would say many) customers but, on a like-for-like comparison between big brands, fresh food, and own label, it seems to me it was reasonable for the Council to conclude that Tesco has applied an acceptable policy of matching items to ensure they are sufficiently interchangeable for the purposes of this price comparison.”

[86]The IR concluded by explaining his role. It is not to substitute his own judgment for that of the ASA even though, from time to time, he might be tempted to do so. He concluded that he could not reasonably find that the ASA interpretation of the “same needs test” in the light of Lidl v Veirzon was indefensible and, therefore, substantially flawed. Accordingly, he did not uphold the complaint.

The Claimant’s case

[87]It is Sainsburys’ case that the ASA and the IR erred in law in permitting Tesco to engage in a comparison between the relevant products and the Tesco comparators. The non price attributes, whether in terms of certification or provenance, are or may be sufficiently material in terms of their significance to the purchasing decisions of a reasonable proportion of customers so as to differentiate these products and make them non-comparable. However, because of the erroneous stance adopted by the ASA, this issue was never properly investigated. Applying the EU and domestic legislation and the provisions of the CAP Code, it is contended that the ASA and the IR: i) should have concluded that the relevant products could not lawfully be compared at all, or without any form of qualification or clarification of the basis of comparison, or, alternatively; ii) should at least have carried out further investigation before reaching their conclusions on the issue of comparability rather than adopting what is said to be Tesco’s irrebuttable presumption about price being the only relevant factor for budget or ready meal customers.

[88]It is contended that the central reasoning in the ASA’s decision was that the products were comparable notwithstanding the fact that the Tesco products were materially different in terms of certification or provenance.

[89]It is said that, in reaching this conclusion, the ASA made the following erroneous findings: i) The ASA agreed with Tesco that the test was whether the non-price element was “the determining factor” in a customer’s purchasing decision in relation to a given product, or, put another way, whether the factor was “significant and likely to affect a customer’s decision to buy that product” (the determining factor issue). ii) The ASA accepted that it was for Tesco to apply that test on a product by product basis in order to decide whether a difference in a non-price element would preclude it from identifying a match under the Price Promise, by reference to results of its own customer research. Sainsbury’s contend that the test applied was not objective but depended on the subjective assessment of the party conducting the comparison (the subjective assessment issue). iii) The ASA concluded that Tesco’s approach of comparing within the same “tier” of produce (e.g. Tesco Everyday Value with Sainsbury’s Basics, or Tesco own label with Sainsbury’s own label) helped to ensure that products of different qualities were not matched. Thus, even when Sainsbury’s had decided to stock only products of British provenance or having an ethical certification, a Tesco product from the same “tier” nevertheless met the “same need” of customers (the irrebuttable presumption issue). iv) The ASA accepted Tesco’s argument that products without certification could fairly be compared to products with certification if, in fact, the products were sourced from suppliers/farms whose products were within the schemes and met their standards, even if that was not made clear to consumers (the free ride issue). v) The ASA concluded that Tesco’s “We are changing” campaign was irrelevant to the significance of differences in product provenance. “We are changing” was distinct from “Price Promise”, notwithstanding that the two campaigns ran concurrently (the “We are changing” issue).

[90]On “the determining factor” issue, the Claimant contends that the ASA required the non-price element to be “the determining element” in a customer’s decision to purchase and that this approach is wrong in law, and/or amounts to a misdirection in law in applying the test of “sufficient interchangeability”.

[91]The Claimant contends that if a significant proportion of customers call for a product to have such a non-price element then the test of “sufficient interchangeability” has to be measured against the needs of that cohort of customers. The Claimant contends that the presence of such an ethical dimension may be properly described as a “main characteristic” of the product so as to be primarily informative of a decision whether the products being compared are “sufficiently interchangeable”. The Claimant says that concepts such as “the main characteristics”, though not explicit in Article 4b, must have an impact on the decision made pursuant to Article 4b and are not to be artificially eliminated from consideration because they feature as an explicit element in relation to other provisions in the Directive, concerning whether the advertising is “misleading”. By adopting the outcome of Tesco’s consideration of the issue of comparability, the ASA failed to conduct the appropriate objective investigation but permitted Tesco to be the judge in its own cause.

[92]On “the free ride” issue the Claimant also criticises the ASA decision as having had regard to the fact that certain of the products (the fish products) were in fact sourced identically to the Sainsbury’s MSC products, but Tesco was unable to state the fact to its consumers because it was unwilling to pay the fees required for certification.

[93]On “the irrebuttable presumption” issue, the Claimant contends that the ASA unlawfully accepted arguments, said by the Claimant to have been present in the Tesco submission, that products, being part of a “budget” offering, cannot ever have non-price factors which are material to consumers and so there is an irrebuttable presumption that all budget products are comparable, whatever their non-price characteristics may be. It is contended that the ASA erred in accepting the Tesco argument that because all the relevant Sainsburys’ “Basics” items were offered by Sainsbury’s to their customers as Fairtrade products, so that there was no choice for their customers to purchase a non Fairtrade product as part of its “Basics” offering, it was, therefore, appropriate for Tesco to decide that they were comparable to the Tesco products in their value range which did not have any “ethical” dimension.

[94]The Claimant contends that the IR misdirected himself in failing to recognise that the ASA had misdirected itself in these ways and in concluding that its conclusions were “defensible”.

[95]It is said that the IR misdirected himself when he identified as a defensible test applied by the ASA, that products with non-price features were properly comparable except where those features were “essential features” of the products under comparison. The Claimant contends that, by expressing himself thus, the IR accepted as lawful the ASA’s the “determining factor” test.

[96]The Claimant contends that its complaint that the ASA applied the wrong “determining factor” test was a hard-edged question of law. It was inappropriate for the IR to consider whether the ASA was irrational or perverse in applying it.

[97]The Claimant contends that the IR was wrong to conclude that the ASA had not allowed Tesco to decide for itself whether a difference in a non-price element would preclude comparison for a particular product and that the IR erred by failing to conclude that the ASA erred in failing to conduct any analysis or investigation in relation to the importance of non-price elements to customers for these products, but accepted Tesco’s submissions.

[98]The Claimant complains that the IR, in dealing with the “free ride” point, erred in law by concluding that the information made available to the ASA, but not to consumers, suggested that the products were “sufficiently interchangeable” to allow a comparison on price. By adopting the same approach as the ASA, the IR erred in law by failing to identify a substantial flaw in the ASA’s decision.

[99]The Claimant contends that the IR was wrong in law to conclude that the tension between Tesco’s two advertising campaigns did not amount to a contradiction and that the ASA’s failure so to recognise was a substantial flaw in the ASA’s decision.

The IR’s case

[100]Applying conventional judicial review principles, the only grounds on which the IR’s decision could be found to be unlawful are: i) If the IR failed to identify and address the correct legal test, imposed by CAP Code rule 3.34 and Article 4(b) of the 2006 Directive – the SNP Test; or ii) If the SNP Test inevitably precludes marketing that compares foodstuffs, which differ in terms of their ethical credentials, or provenance, in which case there would have been no legal basis on which the ASA could have found the items to be capable of comparison; or iii) If (as is the case) the SNP Test does not preclude such comparative marketing, the IR’s decision could only be impugned on grounds of irrationality. It would have to be shown that, in deciding that the ASA’s conclusion was reasonable and defensible, the IR had, himself, reached a conclusion that was Wednesbury unreasonable.

[101]The IR contends that his decision cannot be impugned in any of these three ways: i) As to the first, the IR applied the SNP Test and was well aware of and had regard to the guidance given by the CJEU in Lidl v Vierzon as to the meaning of that test. ii) As to the second, Code rule 3.34 and Article 4(b) of the Directive do not preclude price comparison of foodstuffs differing in terms of their ethical credential or accreditation or country of origin. Whether such products are comparable will depend on the importance of the non-price element in relation to a particular product. Lidl v Vierzon makes clear that in order to determine whether objective differences between foodstuffs render them non-comparable, “an individual and specific assessment of the products which are specifically the subject of comparison” must be undertaken, in order to assess “the degree of substitution” of the products. This is a question of fact in respect of each product comparison (Lidl v Vierzon, §33 ). iii) Therefore the question whether the SNP Test was satisfied was a question of fact and degree in relation to each individual product comparison. The IR was not only right to ask whether the ASA’s conclusions were reasonable and defensible, but his decision that they were cannot be said to be Wednesbury unreasonable. Indeed, Sainsbury’s made no attempt to demonstrate irrationality on the part of the IR.

[102]Sainsburys’ second point is said to be its “central point”. For the reasons summarised above its contention is said to be wrong: i) The argument is said to elide the questions of whether the products are properly comparable with whether the particular comparison is misleading. Comparability is the gateway to comparative advertising and is to be interpreted broadly so as to permit retailers to compare goods and products. If comparable, then comparisons made remain subject to the requirement that the advertisement is not misleading and that the comparative claim can be verified. This is a separate question and not the subject of the complaint to the IR against the ASA decision. ii) The ASA had rejected Sainsburys’ complaints under CAP Code rules 3.1 and 3.33 (on “misleading”). The IR’s review was limited to CAP Code rule 3.34. It is the IR’s approach to this rule which is the subject of this judicial review. iii) If Sainsburys’ argument was correct it would never be possible to compare two items that differed in their ethical credentials, or provenance, whether on grounds of price or for any other reason. Reliance is made on the passage in Lidl v Vierzon that, “the angle from which the comparison is made, being in this case price, can have no bearing on whether the two products meet the same need or are intended for the same purpose within the meaning of [Article 4(b)]”. The consequence of Sainsburys’ argument would be greatly to restrict the ability of food retailers to engage in advertising.

[103]This judicial review must focus on the IR’s decision. It cannot consider points that did not form part of the request to the IR or which did not form part of the reasons he gave for refusing to recommend a change to the ASA’s adjudication.

[104]The letter of complaint to the IR advanced four arguments: i) the ASA had not correctly understood or applied the SNP Test when assessing the advertisement because the ASA had not applied the requirement that products be “sufficiently interchangeable”. Food accreditation was “self-evidently indicative of the fact that customers are asked to treat and will in substantial numbers treat this product differently”. ii) the ASA’s approach to the SNP Test left “an unreasonable amount of discretion” to Tesco. Complaint was made of Tesco’s use of its own findings and customer research. iii) Sainsbury’s objected to Tesco’s comparison of cod and haddock fillets because, whilst the fish products were sourced from the same farms, Tesco had not paid for MSC certification and, for this reason, the products were not comparable. iv) Sainsbury’s objected to the ASA’s conclusion that Tesco’s “We are changing” advertisements would not be understood by consumers as part of the same advertising campaign was not “within the ambit of any reasonable decision”.

The IR’s contentions on applying the right test

[105]The IR applied the right test. The IR identified the SNP Test, was satisfied that the ASA had applied it, and was satisfied that the ASA had taken into account the guidance given by the CJEU in Lidl v Vierzon.

[106]The contention that the IR fell into error in applying a different test of “determining factor” which, it is said, was carried-over from the ASA’s adjudication is wrong for two reasons: i) having regard to whether a feature is “the determining factor” for consumers would not constitute an error of law; and ii) The contention misreads both the ASA’s and the IR’s adjudications.

[107]The IR contends that were Sainsbury’s correct, it would preclude retailers from referring in advertisements to products of rival retailers wherever their products differed in any of the very many different ways set out in Article 6 of the 2005 Directive. “Reading across” the notion of “main characteristics” into Article 4(b) of the Directive would restrict the permissible scope for comparative advertising. It would be contrary to the approach that Article 4 should be interpreted “in the sense most favourable” to such advertising (Landtsheer Emmanuel SA §63, §71; Lidl v Vierzon,§20-21 & §35-38.

[108]The IR did not apply any rigid requirement that a non-price element had to be the determining characteristic. He recognised that the question was one of fact and degree. His reasons are encapsulated in the passage in his decision that, “Sainsbury’s can be right that increasingly non-price elements are material to many customers but that does not mean that the Council are wrong to conclude that they were not material or essential or indeed important to this particular comparison”. Thus, even if non-price elements are material to some customers, the ASA was entitled to conclude that the Price Promise compared items that were sufficiently interchangeable to mean that that they met the SNP Test.

[109]The reference by the IR to the “essential features” of a product in assessing degree of substitutability did not constitute an error of law. In any event, this phrase was used as a compressed summary of the ASA decision. A fair reading of the decision, elucidated by his evidence, makes it clear that he regarded the question of comparability as a question of fact and degree for individual assessment and that he fully appreciated that the Lidl v Vierzon test was the test to apply.

[110]The IR was entitled to reject the contention that the ASA had applied a rigid test of “key characteristic”. The ASA expressly applied the SNP Test as articulated in Lidl v Vierzon:

“We considered the “same need” test had been met under the Code given that food such as meat, eggs or fish were interchangeable and were intended for the same purposes”

. The ASA decision, read as a whole, makes it clear that Tesco’s approach was also one of degree and individual assessment. Thus, the ASA stated:

“Tesco explained where there was a difference in relation to non-price elements of an own label or fresh produce e.g. provenance or ethics, they would still match those products, provided that difference was not key in a customer’s decision making process and it was not sufficient to make it a non-match e.g. Sainsbury’s Basic Tea Bags x80 Fairtrade to Tesco Everyday Value Tea Bags x80. However, where that non-price element was a key factor, e.g. provenance, in a customer’s purchasing decision for own label and fresh produce, they matched on a like-for-like basis e.g. Sainsbury’s Melton Mowbray Mini Pork Pies x 6 (300g) to Tesco Melton Mowbray Mini Pork Pies x 6 (300g).”

[111]In Lidl v Vierzon the CJEU was specifically asked whether Article 4(b) should be interpreted to mean that it is necessarily unlawful to compare products on the basis of price where, in regard to food products, consumers would find them different depending on non-price elements. The answer given was “no” §39. The question is one of fact and degree for the individual assessment of national authorities §33. Moreover, the CJEU emphasised that, in the case of any doubt, the law must be interpreted in the manner that permits, rather than restricts, comparative advertising.

[112]The result is that there can be no rule that products which differ in terms of ethical credentials or provenance cannot be compared: the question is one of fact and degree to be considered in relation to each particular product comparison. Furthermore, the SNP Test is to be interpreted in a way that permits comparisons, with the control on such comparisons being primarily the requirement that the comparison be verifiable and that the advertisement not be misleading.

The IR’s contentions on the alleged “per-se” rule argument

[113]Such a complaint was never made to the IR and therefore his decision letter did not address it. His decision cannot be criticised and found to be unlawful for not upholding a complaint that was never made to him.

[114]Sainsbury’s did raise a complaint before the IR about an alleged lack of objective basis in Tesco’s assessments and Tesco’s reliance on its own research for price comparisons. It was in this context that consideration was given to the value items, chicken korma ready meals and value ham.

[115]The IR considered these comparisons to be justified on common sense grounds, having regard to the price and functionality of these items, the nature of the products, their ingredients, description and appearance. This was a conclusion that the IR was entitled to reach in respect of these items and it cannot be said to be Wednesbury unreasonable.

The IR’s contentions on the alleged failure of the ASA to carry out market research

[116]This issue was not raised before the IR; the complaint was that Tesco had impermissibly relied upon its own market research. In any event the task of the ASA is to bring to bear its own expert judgement, not to engage in market research. Reference is made to the evidence submitted by Guy Parker, the CEO of the ASA. Reliance is also placed on the 2005 Directive which, at Recital 18, states:

“The average consumer test is not a statistical test. National courts and authorities will have to exercise their own faculty of judgement, having regard to the case-law of the Court of Justice, to determine the typical reaction of the average consumer in a given case.”

The Second Interested Party’s submissions In summary

The Second Interested Party’s submissions

[117]The claim ought to be dismissed because: i) The IR properly directed himself on the correct legal principles governing the regulation of comparative advertising. ii) In accordance with these principles, the ASA was required to make factual determinations on matters within its unique regulatory expertise, which includes significant past experience in comparative advertising. The IR was required to consider whether the ASA’s decision in relation to the Claimant’s complaint was substantially flawed, and not to reconsider the ASA’s decision de novo. He judged that it was not. iii) The IR’s conclusion that there was no substantial flaw was both reasonable and lawful. It is not for this Court to substitute its own judgment for that of the IR or the ASA on these factual matters. iv) To the extent that the Claimant seeks to impugn the IR’s decision on the basis of matters which were not in issue before him, such as complaints about the ASA’s decision not to commission market research, or the ASA’s assessment of whether or not the advertisements were ‘misleading’, these contentions cannot now be the subject of the complaint.

[118]The Claimant’s principal allegations were(i) that the IR has acted unlawfully by failing to identify that “[t]he certification and provenance characteristics of products are or may be sufficiently material (in terms of their significance to the purchasing decisions of a reasonable proportion of consumers) as to differentiate the products or to make them non-comparable”;

(ii) that the ASA should “at least have carried out further investigation… rather than

(iii) adopting Tesco’s irrebuttable presumption about price being the only factor of relevance to budget or ready meal customers.”

[119]The claim ought to be dismissed because: i) The ASA and IR properly directed themselves in law as to the circumstances in which products may lawfully be compared in accordance with the 2006 Directive and CAP Code. ii) The questions for the ASA were matters of fact and degree. It could not be said that the IR acted unreasonably or unlawfully by declining to set aside the ASA’s conclusions.

The Second Interested Party’s detailed submissions

[120]The ASA and the IR followed the guidance of the CJEU in Lidl. The Claimant suggests that the IR nonetheless erred by: i) concluding that it was permissible to compare products which differ in terms of their country of origin or certification as such features are a ‘main characteristic’ of the products; ii) considering the validity of the comparisons from the viewpoint of an average consumer, as opposed to ‘from the perspective of an ethical or environmentally conscious consumer’, or from the viewpoint ‘of the customers whom Tesco is targeting, such as Sainsburys’ customers, as distinct from Tesco’s existing customers’.

[121]The Claimant suggests that the 2006 Directive falls to be interpreted in the light of the 2005 Directive and requires that the 2006 Directive prohibits price comparisons of products whenever they differ in terms of certification or geographical origin. If correct, that would cut across the scheme of the 2006 Directive, which is intended to facilitate comparative advertising and would be inconsistent with the CJEU’s conclusions in Lidl.

[122]If correct, a trader could not engage in comparative advertising where there were any differences in the third party certification of the products being considered.

[123]On geographical origin, the Claimant’s contention is inconsistent with Article 4(e) of the 2006 Directive which only offers protection to EU agricultural products carrying a protected designation of origin.

[124]In Lidl, the CJEU considered whether it was unlawful to compare food products due to “the fact alone that food products differ in terms of the extent to which consumers would like to eat them and the pleasure to be derived from consuming them, according to the conditions and place of production, their ingredients and who produced them” and answered that question in the negative. The deciding factor was whether the “products compared meet the same needs or are intended for the same purpose, that is to say, that they display a sufficient degree of interchangeability” (at §39).

[125]The ASA considered these matters: i) It addressed the Claimant’s complaints about the matches complained of; ii) It identified, in language which maps the relevant passage in Lidl, that Tesco’s approach was that where “an element was significant and likely to affect a customer’s decision to buy that product, no match was identified for the Tesco product”; iii) It concluded that the advertising claim complained of, i.e. “You won’t lose out on big brands, own-label or fresh food” was not misleading.

[126]The IR was not asked by the Claimant to find that the ASA’s decision was ‘substantially flawed’ on the basis of its conclusions on whether the advertisements were ‘misleading’. The IR’s decision not to upset the ASA’s decision on a question of fact and degree discloses no error.

The “Average Consumer”

[127]A further suggested error is that the IR erred in failing to conclude that the ASA erred in not adopting a more selective approach, by considering the validity of the comparisons, “from the perspective of an ethical or environmentally conscious consumer”, or “the customers whom Tesco is targeting, such as Sainsburys’ customers, as distinct from Tesco’s existing customers”. i) This is inconsistent with the approach prescribed by the CJEU in Lidl, which (in the context of the ‘misleading’ criterion) held that this fell to be determined by reference to ‘an average consumer of the products or services being advertised who is reasonably well informed and reasonably observant and circumspect’ (§47). This reflects the well understood concept of an ‘average consumer’ in EU competition and consumer law. The assessment whether an ‘average consumer’ may be misled by a particular action is for the expert decision maker, acting as a ‘notional juror’. ii) The challenge is not to the Price Promise scheme itself, but to the advertisements for the scheme, which – as in Lidl – were ‘addressed not to a specialist public but to end consumers who purchase their basic consumables in a chain of stores’. As in Lidl, these advertisements appeared in general circulation newspapers. iii) If the Claimant’s proposed approach were adopted, it would significantly restrict the scope for comparative advertising, contrary to CJEU’s ‘settled case law that the conditions required of comparative advertising must be interpreted in the sense most favourable to it’: Lidl at §38.

No Requirement to Commission Research

[128]This element of the challenge is said to be misconceived and should not be considered: i) It formed no part of the Claimant’s complaint to the IR, so the Claimant cannot now contend that this alleged error renders the IR’s decision unlawful; ii) The Claimant does not identify any legal basis on which it is contended that the ASA was under an obligation to carry out ‘further investigation’, or indeed what form it ought to have taken. Lidl (at §47) states that what is required is that the domestic authorities “take into account the perception of an average consumer of the products or services being advertised who is reasonably well informed and reasonably observant and circumspect”. This is what the ASA did; iii) The ASA could, consistently with EU law, have decided to conduct further research but there was no requirement for it to do so. Reliance is placed on what Lewison LJ said in Marks & Spencer Plc v Interflora Inc and Interflora British Unit

[2012] EWCA Civ 1501

at §50, in the context of assessing whether an ‘average consumer’ could be misled in an action for trade mark infringement: that it is a matter on which the fact-finder: iv) “... can reach a conclusion in the absence of evidence from consumers. He or she is in the position of a notional juror, using his or her own common sense and experience of the world.” v) The ASA was entitled to proceed as it did, and the IR did not err in discerning no substantial flaw in the ASA’s approach; vi) The Claimant’s case rests on an assertion that the ASA adopted “Tesco’s irrebuttable presumption about price being the only factor of relevance to budget or ready meal customers.” This is incorrect. Tesco did not employ any such “irrebuttable presumption”. Rather, it reviewed products for matching on an individual basis although, in practice, for purchasers of products from Tesco's "Everyday Value" range, price was likely to be more important than other characteristics. Accordingly, as the ASA Decision records, Tesco explained (by reference to an item from its ‘Everyday Value’ range), that: vii) “where there was some difference in relation to non-price elements of an own label or fresh produce, e.g. provenance or ethics, they would still match those products, provided that difference was not key in a customer's decision making process and it was not sufficient to make it a non-match”. viii) There is nothing to suggest that the ASA or the IR were of the view that Tesco employed any such presumption, let alone an irrebuttable one. Rather, the ASA decision engages with the specific products which Sainsbury’s referred to in its complaint, alongside Tesco’s explanation for its decision to match these individual products. It stated: ix) “We agreed with Tesco that provenance was unlikely to be a key factor for these two products, a ready meal (chicken korma curry) and a budget choice food (ham).” x) the IR’s decision summed up the position: xi) “In other words, Sainsbury’s can be right that non-price elements of products are material to many customers but that does not mean that the Council are wrong to conclude they were not material or essential or indeed important to this particular comparison.” Discussion and conclusions The application for disclosure

Discussion and conclusions

[129]On 10th July 2014, the Claimant applied for specific disclosure of correspondence passing between the ASA and Tesco between 8th March and 18th July 2013, such application to be determined at the beginning of the hearing of the claim.

[130]The Claimant considered that disclosure of this correspondence was necessary to resolve the matter fairly and justly on the basis that, at its heart, was the issue how Tesco conducted the comparison exercise and why it decided products were comparable, notwithstanding differences in non-price characteristics. It was said that the full, contemporaneous, explanation to the ASA by Tesco was highly relevant in understanding the reasoning of the ASA’s decision and its acceptance of the legitimacy of Tesco’s comparison. It was said to be both proportionate and fair for the Claimant and the court to have access to this correspondence and that any issues of commercial confidentiality could be controlled by the court on appropriate undertakings given by the Claimant.

[131]The IR contends that the disclosure sought does not meet the requirements identified in Tweed v Parades Commission for Northern Ireland

[2007] 1 AC 650

. The IR’s evidence is that he did not place reliance on that correspondence in reaching his decision, although that correspondence was placed before him. It is contended that is determinative of the issue of disclosure, the ASA’s reasoning was set out in its adjudication. It is unnecessary to go beyond that. The judicial review is against the IR’s decision, not that of the ASA. The material is unnecessary to understanding his decision, as he did not place reliance on it.

[132]In the event, I was not invited to deal with the disclosure application at the outset of the hearing. The parties were content for me to hear the claim for judicial review without that material and, in the light of that, to determine the disclosure application.

[133]In the event, the application has all but been abandoned. I was not addressed at any length about it initially by the Claimant and not at all in response to the submissions made by the other parties.

[134]I do not accede to this application. The approach said to have been adopted by Tesco in conducting its comparison was fully summarised in the ASA adjudication. Furthermore, Mr. Wood, in his evidence for the Interested Party, has elaborated on that approach. There has been no suggestion in evidence from the IR that Mr. Wood’s evidence in any way contradicts any material placed before the IR. The Claimant has been able to refer me to the Tesco Price Promise terms and conditions which describe what is meant by “comparable grocery product”, including the words “we identify the key characteristics of products including flavour, whether it is organic, fair-trade, low-fat, or eco-friendly …”. I also have had access to the Tesco “matching principles” which include rules for matching brands, and comparability rules in respect of own, or private label, products.

[135]In my judgment, the material which is presently before me is sufficient to determine the issues between the parties. The fact that the correspondence in issue is explicitly said by the IR not to have been relied on in taking his decision, which is the subject of this challenge, points very strongly against the need for its disclosure. I have no hesitation in concluding that this correspondence is not disclosable.

[136]I, therefore, refuse the application for specific disclosure. The claim for Judicial Review Some general principles

The claim for Judicial Review

[137]The claim is for judicial review of the IR’s decision. His decision was to consider whether to accede to the request of Sainsbury’s that he ask the ASA Council to reconsider its adjudication on the grounds that there was a substantial flaw or flaws in the Council’s adjudication, or the process by which it was made.

[138]The challenge to the IR’s decision can only be brought in respect of those matters, upon which he was asked to decide. Accordingly, his decision cannot be the subject of a judicial review in respect of matters which were not referred to him and upon which, as a result, he made no determination.

[139]The limits of my review of his decision must, therefore, be the matters raised explicitly, or by necessary implication, in the letter of 5th August 2013. That letter expressly referred, by way of amplification of those issues, to the letter of 28th June 2013. That letter had addressed what were contended to be flaws in the draft recommendation prepared by the ASA Executive, before the final adjudication was placed before the ASA Council.

[140]In my judgment, in their letter of 5th August 2013, Sainsbury’s identified four “substantial flaws” in the ASA’s adjudication which are the matters upon which I must decide this claim for judicial review. I deal with them in turn.

(i) The rule of law/determining factor issues

[141]It was accepted by Sainsbury’s that the ASA had identified:(i) the “same need” test; and

(ii) that Lidl required that the products be “sufficiently interchangeable.” It was also accepted by Sainsbury’s that, for example, an egg, not sourced from a Freedom Food accredited farm, could be said to meet the same need or be intended for the same purpose as one which was not sourced from such a farm. Nonetheless, Sainsbury’s contended that such a product could not be said to be a “sufficiently interchangeable” product. That was because the fact that one is Freedom Food accredited, whilst the other is not, is a significant factor in the consumer’s purchasing decision. Sainsbury’s contended that the “sufficiently interchangeable” test meant that, if the non-price elements between products were: (i) capable of being objectively established and (ii) were material factors or considerations for a reasonable proportion of customers, then the “sufficiently interchangeable” test could not be satisfied (the rule of law issue).

[142]Sainsbury’s contended that, in respect of the relevant products, the overwhelming evidence, from various sources, established that each of these two criteria was established. It followed, therefore, that the ASA’s acceptance of Tesco’s argument, that the products, which satisfied these two elements, were, nonetheless, “sufficiently interchangeable” with those which had not, was erroneous and constituted a substantial flaw in the ASA’s adjudication.

[143]In dealing with this argument, the IR accepted that an increasing number of customers would take such non-price factors into account and that those factors would be material to these people. He did not, however, accept that this meant that the ASA had interpreted “sufficiently interchangeable” in an unreasonable way.

[144]He identified the ASA’s conclusion in the following terms:

“That non-price features, such as provenance, were not covered by that test in relation to a price comparison except where those features were essential features of the products under comparison.”

[145]The IR, in his evidence, responds to the criticism that, by expressing himself in that way, he was accepting that the ASA Council had applied a test of “determining factor.” If he had, it would follow, in Sainsburys’ submission, that the ASA had erred in law and that the IR had also erred in law in failing so to conclude (the determinative factor issue).

[146]The IR explains and elucidates that passage in his witness statement, in particular at paragraph 65, where he says:

“I did not therefore consider that the ASA Council was itself applying a test of “key characteristic”

. I considered that the ASA Council looked whether the degree of interchangeability in relation to particular comparisons rendered the products not fairly comparable. I accept that with hindsight I could and should have expressed myself more clearly.”

[147]These were two, linked, arguments in play before the IR. The main argument was the rule of law issue: that, where the two elements described above were satisfied then there could not be a lawful finding of “sufficient interchangeability”. Sainsbury’s were saying that the ASA should have accepted it as obvious that both elements were satisfied. The ASA had, therefore, misdirected itself by finding that the products were nonetheless “sufficiently interchangeable”. This was said by Sainsbury’s to have been a hard edged issue for the ASA. In the judicial review, Sainsbury’s argue that the IR misdirected himself in failing to uphold that complaint.

[148]The secondary argument was that, by the way Tesco had expressed itself in describing its decision making to the ASA, and in the way the ASA had expressed itself in its decision, each of them had erred in law by applying the “determining factor” test, requiring the non-price element to be the determining factor in the decision to purchase before there would be a finding that the two products were not sufficiently interchangeable so as to preclude lawful comparison. That too was said to be a hard edged misdirection by the ASA which the IR should have identified as a substantial flaw.

[149]The IR, supported by Tesco, argues that the correctness of the IR’s decision on these connected issues is a question whether the IR could, within the bounds of “Wednesbury” reasonableness, or short of irrationality, have concluded that the ASA adjudication was not substantially flawed in either of these ways.

[150]I accept, on the question whether the ASA, in its decision, did or did not conclude that Tesco’s had applied a “determining factor” test, that it is a matter whether the IR could, rationally, have read the ASA decision in that way on this issue.

[151]However, if the IR had concluded that Tesco and the ASA did apply a “determining factor”test, or if the only rational reading of the ASA’s decision is that the IR should have so concluded, then, in my judgment, the question whether the “determining factor”test was a lawful one for Tesco to have applied, in deciding whether products were “sufficiently interchangeable” is a hard edged question of law and not a matter to be determined on a “Wednesbury reasonable” basis. In my judgment, what was being said on these issues about the ASA decision was that it had misdirected itself by accepting that Tesco had applied that test and by further concluding that this did not make the ASA decision substantially flawed. If that was correct, the IR, in accepting or rejecting that argument, would be making a decision of law. He either got that decision right or he got it wrong.

[152]I have similarly concluded that Sainsburys’ rule of law question is a hard edged question of law and not one which is susceptible to being reviewed by the application of a “Wednesbury” approach.

[153]Sainsburys’ argument on the main, rule of law, question was that, provided the non-price factors were capable of being objectively established and were material factors or considerations for a reasonable proportion of customers, then the “sufficiently interchangeable” test could not be found by the ASA to have been satisfied. The fact that the ASA found that the test was satisfied is said by Sainsbury’s to amount to be a substantial flaw in the ASA adjudication. The IR is said to have erred in law in failing to recognise this substantial flaw.

[154]In my judgment, Sainsburys’ contention requires the inflexible application of the rule it describes and is unsustainable by virtue of the judgment in Lidl at paragraph 39.

[155]It is clear that the IR understood that this was the nature of Sainsburys’ argument. He rejected it. He concluded that the decision of the ASA, that the products were, nonetheless, sufficiently interchangeable so as to be properly comparable, was open to it as a matter of its assessment on matters of fact and degree, specifically reserved to it as the national decision making body. He expressed it clearly in the following terms:

“In other words, Sainsbury’s can be right, that non-price elements of products are material to many customers, but that does not mean that the Council are wrong to conclude that they were not material or essential or indeed important to this particular comparison.”

[156]In my judgment no criticism can be made of the IR’s decision in this respect. In the absence of any hard edged rule, such as Sainsbury’s were arguing for, the question for the IR was to judge whether the decision of the ASA was open to it in conventional judicial review terms. In my judgment his conclusion that it was, cannot be criticised. It comes nowhere near being irrational or “Wednesbury” unreasonable.

[157]I now turn to the narrower, determining factor, issue: whether the ASA misdirected itself by applying the determining factor test and whether the IR erred in law by failing so to decide.

[158]The IR considered how the ASA had come to the conclusion that it had. He has made clear in his evidence, if it was not already clear, what he understood to have been the ASA’s reasoning, in the following terms at paragraph 66 of his evidence:

“I should also add that the ASA’s own assessment is set out in the section of its adjudication entitled “assessment”

. In that section, whilst Tesco were said to have referred to “the determining factor” in making their comparisons, in the same passage … the ASA concluded that Tesco did not match products where “that element was significant and likely to affect a consumer’s decision to buy the product”. Therefore I myself did not understand the ASA to be applying some form of rigid “determiningfactor” test as Sainsbury’s has suggested.”

[159]I am satisfied that I am entitled to admit and consider this evidence to elucidate the reasons for the decision contained in the adjudication which is the subject of review (The Queen (on the application of P and G Richards) v Pembrokeshire County Council

[2004] EWCA Civ 1000

at para 56(2)).

[160]On the determining factor issue, in my judgment, a fair and proper reading of the ASA’s adjudication is reflected in the understanding of the IR, as explained in paragraph 66 of his evidence. It was open to the IR to conclude that the ASA had concluded that Tesco did not apply the determining factor test. Rather, the ASA concluded, as a matter of fact and degree, that the test applied by Tesco was that “no match” was identified wherever the non-price element was “significant and likely to affect a customer’s decision to buy that product”.

[161]It was also open to the IR to conclude that this was a proper and lawful basis on which the ASA could conclude that the scheme was lawful in the following terms:

“We were satisfied that Tesco had taken those elements into account when identifying and matching products andhave compared on the basis of them meeting the same need.”

[162]This was an approach which the IR was entitled to conclude was not substantially flawed. (ii). The subjective assessment issue

[163]The second issue raised in the Sainsbury’s complaint to the IR was that the test the ASA had applied allowed Tesco an unreasonable amount of discretion to decide when non-price attributes did, or did not, cause the products to be comparable. The letter of 28th June amplified the point. In that letter, reference was made to the recognition in the ASA’s adjudication that Tesco had regard to the results of their own customer research when determining whether an ingredient’s provenance would preclude them from identifying a match and that, based on the findings of its own research, Tesco had concluded that the provenance of an ingredient was not a key factor for their consumers on certain products:- a ready meal and value ham.

[164]Sainsbury’s argued to the IR that this was an unreasonable approach as it looked at matters only from the perspective of Tesco and their existing customers, whereas the campaign was directed at Sainsburys’ customers and those of Asda and Morrisons. It suggested that the lack of any obvious substantiation of Tesco’s account begged the question how they could be allowed to decide what was and was not key.

[165]The IR, in considering this particular complaint, focused on the examples given in the 28th June letter:- ready meals and value hams. The IR noted that the ASA conclusion, in respect of these items, was that provenance was unlikely to be a key factor for those two products. The IR concluded that this was the ASA’s judgment and that it seemed to him to be defensible. He explicitly stated that the fact that it was supported by Tesco’s own research might bolster that view but did not determine the ASA view.

[166]In his evidence the IR has explained that, in his view, the ASA, applying its expertise in this area, was entitled to make a common sense judgment based on the information provided to it about these products and that he could see no substantial flaw in ASA’s approach. He also stated that it was unnecessary to have regard to consumer research to reach this decision.

[167]In his evidence, Guy Parker, the CEO of the ASA, dealt with the use of consumer attitude surveys when judging complaints, at paragraphs 18–21 of his witness statement. He stated that the ASA does not generally give much weight to consumer attitude surveys when judging complaints. The ASA would closely analyse survey findings if an advertisement referenced and relied on one, but, where it was simply offered in broad support of claims, the ASA placed little reliance on them for reasons which he explained. In such cases, The ASA usually relied on its accumulated experience in assessing claims and underlying evidence and on common sense. He confirmed that the ASA does not carry out its own consumer attitude surveys in respect of complaints; it does, on occasion, seek advice from independent experts where substantiation evidence for marketing claims involves the assessment of highly technical, scientific, or medical material. The ASA budget for such external expert advice is about £25,000 per annum, indicative of how rarely such experts are instructed.

[168]The Directive, at Article 4b, provides no guidance on how the decision maker, tasked with deciding whether comparative advertising shall be permitted, is to make the decision whether products meet the same needs or are intended for the same purpose so as to be the permissible subjects of comparative advertising. On the contrary, in Lidl, the CJEU states:

“The fact that products were to a certain extent capable of meeting identical needs led to the conclusion that there was a certain degree of substitution for one another. However, before it could be concluded that was a real possibility of substitution in accordance with Article [4b] … an individual and specific assessment of the products which were specifically the subject of the comparison in the advertisement was necessary. Such a specific assessment of the degree of substitution fell within the jurisdiction of the national courts.”

[169]In my judgment, there is no proper basis upon which the IR could have concluded that the ASA misdirected itself as a matter of law, or was Wednesbury unreasonable, in the conclusion to which it came on this issue.

[170]There is no unlawfulness in the ASA taking the position it does in relation to consumer attitude surveys, as explained by Mr. Parker. It is clear from the terms of the adjudication that the assessment it made, in respect of provenance, was its own. It was made by the body with significant experience in such matters which is tasked with making such assessments. The IR identified that the view in the decision on this issue was that of ASA, not that of Tesco, and concluded that it was within the range lawful decisions for ASA to take. The IR, accordingly, was not wrong in law or “Wednesbury” unreasonable in concluding that this aspect of the ASA decision was not substantially flawed. (iii). The free ride issue

[171]This argument focused on the fish products, namely cod and haddock fillets.

[172]ASA had sent to Sainsbury’s, on 16th May 2013, a draft recommendation, proposed to be placed before the ASA Council, for Sainsburys’ comments. In that initial draft the ASA Executive considered Sainsburys’ contention that own label products, which were different on the grounds of animal welfare or provenance of the ingredients, were incomparable and could not be considered as meeting the same need as those which did not have that characteristic. That draft contained the following passage:

“We considered the “same need” test had been met in terms of the Code given that food such as meat, eggs, or fish were interchangeable and were intended for the same purpose. While we acknowledged that there would be differences in animal welfare and country of origin for the ingredients, we were satisfied that Tesco had taken those elements into account when identifying and matching products and had compared on the basis of them meeting the same need.”

[173]This assessment was based on the ASA’s judgment, having received information from Tesco as to how it went about identifying products for comparison. That material was fully described in this draft and was replicated in the final adjudication. So too was, the paragraph referred to above.

[174]On 21st June 2013, a revised draft was sent to Sainsbury’s for comment. Included within that draft was the following paragraph:

“Sainsbury’s also had concerns about Tesco comparing their cod and haddock fillets to Sainsbury’s equivalent products which were MSC … certified, whereas Tesco’s were not. They had similar concerns about Tesco comparing a dozen free-range eggs to Sainsbury’s free-range woodland eggs. In relation to the cod and haddock fillets, Tesco confirmed that all their fish came from MSC accredited fisheries. They understood that the Woodland eggs label was exclusive to Sainsbury’s and that it meant that the free-range chickens had been reared in woodland sponsored by the Woodland Trust. Tesco confirmed that all their eggs came from Freedom Food accredited farms, however, Tesco did not label their MSC certified or Freedom Food accredited because to do so involved paying for a licence to do so, something which they chose not to do. We considered these products were comparable.”

[175]In its response to that draft, Sainsburys, on 28th June 2013, complained about the fact that Tesco were now claiming that their free-range eggs and fish fillets were effectively interchangeable because, although not the subject of certification, they came from the same sources with the same welfare standards. Sainsbury’s pointed out that only products which had borne the full costs in terms of standard raising and financial support to schemes, such as Freedom Food and MSC certification, should be able to gain the competitive advantage that flows from such accreditation. It pointed out that the attempt to compare certified with uncertified products was inherently unsafe, unfair, encouraged free riding, abuse and error.

[176]In its adjudication, the ASA repeated the paragraph cited above without alteration. Although not expressly raised in the letter of 5th August 2013 to the IR, the IR nonetheless considered this issue because it had been identified in the letter of 28th June.

[177]The IR stated that one could make a judgment whether what Tesco had done was a fair practice on their part, but concluded that the products being compared were pieces of fish, both of which were sourced from the same form of farming practice (MSC). The IR then said:

“On the face of it this suggests that they are sufficiently interchangeable and meet the same consumer needs to allow a comparison on price. Again, there may be an issue here for MSC to take up with Tesco, but that does not seem to me to affect the adjudication which in this respect too seems to me defensible.”

[178]In his evidence, at paragraph 88, the IR repeated that this was his judgment. Sainsburys’ position appeared to be that what rendered the products non-comparable was whether they bore a logo, rather than whether the substance of the products differed. The ASA Council was, in the IR’s view, entitled to take a different view.

[179]The Claimant’s argument is that it is common ground that the question of “sufficient interchangeability” is one which must be addressed from the point of view of the consumer. It argues that it was an error for ASA to have had regard to a factor, which was not known to and could not be made known to the consumer because, in this case, Tesco has disentitled itself from making that factor known to the consumer by its commercial decision not to make the payments so as to be able to claim that its products are certificated.

[180]If, therefore, a true reading of the ASA’s adjudication was that it had regard to the fact that Tesco’s fish fillets were farmed in an MSC compliant way as affecting its judgment that the products were sufficiently interchangeable, then, taking such a factor into account, would constitute a misdirection on the part of the ASA on the proper approach to the assessment whether the respective products were “sufficiently interchangeable”. It would follow that the IR would have misdirected himself in failing to identify that misdirection and that it constituted a substantial flaw in the ASA decision.

[181]I can see much force in that argument. If, therefore, the IR had identified that this was the ASA’s approach and yet had concluded that it did not amount to a substantial flaw, then I would have concluded that the IR had misdirected himself in law in this respect.

[182]In my judgment, however, that would be a misreading of the ASA’s adjudication. It is clear, from looking at the earlier draft, that the ASA had already concluded that the cod and haddock fillets were comparable, without the benefit of that further information from Tesco. That conclusion was reached on a basis which, I have already concluded, was not unlawful or substantially flawed.

[183]The additional information, provided by Tesco, is set out in the final draft of the adjudication and repeated in the final adjudication but, upon a proper reading of these documents, the ASA did not use that information to reach its decision that these products were “sufficiently interchangeable”. It merely stated that it considered that these products were comparable. That is a conclusion which it had already reached and recorded earlier in the decision and it reflected the prior decision reflected in the initial draft.

[184]In my judgment, therefore, upon a proper reading of the ASA adjudication and in the light of the earlier drafts, it could not be said to be substantially flawed in this respect. Accordingly the conclusion of the IR that it was not substantially flawed remains lawful. (iv). The “We are changing” issue

[185]This issue concerned the suggestion that two, concurrent, campaigns being run by Tesco, the “Price Promise” and the “We are changing” campaigns, were contradictory, such that the comparisons made in the price promise scheme are undermined by the assertions made in the “We are changing” campaign.

[186]In its adjudication the ASA acknowledged that the two campaigns were conducted at similar times but concluded that consumers would not regard them as part of the same campaign. Their commercial focuses were different. One was about the supply chain and the changes being made to it, the other was to do with a promise to compare prices. It followed that there was nothing unlawful in the advertising campaign in respect of the price promise scheme.

[187]The IR concluded that the ASA was entitled, as a matter of its judgment, to view the two campaigns as separate and to conclude that consumers would similarly view them. On that basis, it was entitled to conclude that the coexistence of the “We are changing” campaign did not render the “Price Promise” scheme impermissible.

[188]The IR recognised the logical force of Sainsburys’ argument but, ultimately, it was a matter for ASA’s judgment and not a decision for the IR. The ASA judgment was not such as to make its adjudication substantially flawed and, therefore, the IR declined to review the ASA adjudication on that ground.

[189]In my judgment, there is no error of law in the IR’s approach to this issue or his decision. These were matters of judgment for the experienced body which had been tasked with making them. They were matters of fact and degree. The ASA adjudication comes nowhere near being Wednesbury unreasonable or irrational. The IR did not, therefore, err in law or act irrationally in failing to conclude that the ASA adjudication was, in this respect, substantially flawed.

Conclusion

[190]For these reasons, in my judgment, the claim of Sainsbury’s for judicial review of the Independent Reviewer’s decision does not succeed and its claim for judicial review is dismissed.

Cited in 1 later judgment

Actegy Ltd, R (on the application of) v The Advertising Standards Authority Ltd & Anor 2019