Tue 1st Aug 2017
What are the UK controls on misleading marketing activities in business to business sales?
There are many rules governing the sale of goods, so when selling your branded goods or services you should note that criminal liability can sometimes arise in the context of marketing materials that do not comply with these rules.
Business to business sales
In business-to-business relationships, the law seeks to deal with misleading advertising which deceives or is likely to deceive traders and, by reason of its deceptive nature, is likely to affect their economic behaviour or is likely to injure a competitor. For example, if it induces payments or sales are lost due to two competitors being confused.
The authorities consider the features of the advertising and information concerning:
- the price, or the manner in which the price is calculated;
- conditions on which it is supplied or provided;
- the nature, attributes and rights of the advertiser; and
- the characteristics of the product.
The characteristics considered include its availability, nature, execution, composition, method and date of manufacture or provision, fitness for purpose, uses, quantity, specification, geographical or commercial origin, expected results from use, results and material features of tests or checks carried out. The nature, attributes and rights of the advertiser include the advertiser's identity, assets, qualifications, ownership of rights, awards and distinctions.
How is the law enforced?
Enforcement is by Local Authority Trading Standards departments. The penalty can be a fine or imprisonment. There are certain defences, including where the advertiser can prove that there was a mistake, or they relied on information supplied by another, or there was an act or default by another or an accident, or causes beyond their control and they took all reasonable precautions and exercised all due diligence to avoid the offence.
Trading Standards may deal with the offence by referring it to regulatory bodies, such as the Advertising Standards Authority (ASA) or by seeking court injunctions or undertakings.
It is appropriate therefore to review your advertising material carefully and have proper checks in place, to ensure that there is no breach.
Misleading advertising might be selling directory advertising space to a business for a special offer price of £500 and then sending an invoice for additional monthly payments of £1,000. This would involve being misleading in relation to the price or manner in which the price is calculated.
When consumers are involved in a transaction, different regulations apply. Please note that some business transactions fall within the consumer regulations as there is a sufficiently close consumer connection. For example, if consumers are involved elsewhere in the supply chain, such as where a trader sells labelled food to a supermarket and consumers ultimately purchase those goods, the initial trader needs to be alert to the consumer regulations.
Please see our article on correct marketing practices to consumers.
For advice on brand protection and trade marks in the UK, Europe and internationally, please contact James Cornish on 44 (0) 207 831 7929 or email email@example.com.