Misleading Advertising

Whilst the recent law on misleading advertising has not helped to clarify the already complicated position on the subject in Italy, it may prove useful to those seeking to bring unfair competition cases based on misleading advertising.

The recent law introduced in Italy on the subject of misleading advertising (D.Lgs. 25.1.92 n° 74), which implemented the EC Directive n° 84/450, has failed to provide any real consolidation in an already complicated area, but has merely supplemented the existing provisions and added an additional body, the Autorità Garante della Concorrenza e del Mercato (the Italian antitrust authority - the "Garante") to the various bodies who already have jurisdiction in this area.

As the law stands at the moment, a piece of misleading advertising could give rise at the same time to the following:
- a civil action for unfair competition pursuant to art. 2598 of the Italian civil code;
- an action before the Garante pursuant to the above-mentioned law n° 74 of 25.1.92;
- an action before the jury of the advertising industry's self- regulatory body, the Autodisciplina Pubblicitaria, on the basis of their code of practice;
- where the advertising is by way of radio or television, an action before the specific controlling body for those media, the Garante dell'Editoria e della Radiotelediffusione;
- in relation to certain products, such as food products, there could also be a criminal action or an administrative action brought by other State authorities.

It should also be noted that in some cases approval for the advert may also be required in advance of diffusion. For example, in the advertising of securities approval is required from CONSOB (the body controlling the Stock Exchange and certain aspects of the securities market).

The novelty of the new law is that it seeks to give protection to both consumers and competitors with the same law. Unlawful conduct will arise under the law when the advertising in question misleads, or could mislead, those to whom it is addressed, thus prejudicing their economic behaviour, or which, for this reason, is prejudicial to a competitor.

The result in practice is that the same allegedly misleading piece of advertising may constitute different types of illegal conduct, provided by different laws and regulations, penalised in different ways (or indeed in some cases penalised and in others not) by different adjudicating bodies, and interpreted according to different criteria.

A recent court case, which linked the law on unfair competition and that of misleading advertising, went some way towards recognising the need for more standardisation in the area.

The case was based on unfair competition under art. 2598 of the Italian civil code, and revolved around the use of allegedly "scientific" data in adverts. A well-known manufacturer had claimed that such data proved the superiority of the ingredients in its product over the ingredients used in competing products. In considering the burden of proof the court made reference to the 1992 law on misleading advertising. Pursuant to that law, where the advertiser uses data in his advertising, he may be required by the Garante to prove the accuracy of that data. Where he fails to provide such proof, then the advert will be considered misleading. The burden of proof is therefore on the advertiser.

The court then found that it was bound to apply the same burden of proof, unlike the usual position in unfair competition cases where it is for the plaintiff to prove that his competitors' practices are wrongful and unfair. In the court's reasoning, applying a different standard of proof would lead to disparity of treatment in breach of art.3 of the Italian Constitution (which provides for equal treatment before the law). If the same principle is applied in subsequent cases it could have considerable impact on the law of unfair competition.

Practical Pointer: When advertising, it is necessary to be certain that the advantages claimed of a product over those of a competitor can be objectively proved.