In competitive markets, the gloves often come off in order to entice away customers from competitors. This also includes advertising that discount tickets or vouchers of competitors can also be redeemed at one’s own business. The BGH (Federal Court of Justice) has now ruled that such advertising campaigns are also part of effective competition and must not be prohibited as a matter of principle.
Facts of the Case
In 2014, a drugstore was advertising with a campaign stating that it would also redeem competitors’ vouchers for a discount of 10% in its own shop. The Wettbewerbszentrale (German Centre for Protection against Unfair Competition) complained about this advertising campaign (presumably on the initiative of a competitor who issued these discount vouchers) as being unfair since it would impede competitors and mislead consumers. The two previous instances had rejected the claim of the Wettbewerbszentrale.
The appeal of the Wettbewerbszentrale to the BGH did not succeed. The advertising campaign of the drugstore does not constitute concerted obstruction of competitors within the meaning of Section 4 no. 4 of the Gesetz gegen den unlauteren Wettbewerb (Act Against Unfair Competition). The offense of concerted obstruction is coined by many groups of cases formed by the courts. However, according to the BGH, the advertising campaign which was contested is not governed by any of those groups of cases and therefore permitted.
In particular, the campaign does not constitute unfair intrusion into a third party circle of customers since, in principle, the soliciting of customers is an essential part of effective competition. The holders of discount vouchers are no more to be seen as already being customers of the issuing company than the holders of discount or customer cards. Moreover, there is no undue influencing of customers, since they continue to be free to redeem the discount vouchers at the issuing company.
Further, the advertising of the company issuing the discount vouchers is not affected in an unlawful manner. If a customer redeems the discount voucher at a competitor, the campaign of the company issuing the vouchers is solely affected by the customer’s free decision, and not by the advertising campaign which was contested. This is comparable to companies mirroring price reductions of their competitors, which is also a permissible consequence of a desired effective competition.
Finally, the promotional campaign is not unlawful with respect to unfairly taking advantage of foreign facilities. This group of cases which was originally developed for the telecommunication industry is not relevant here since the advertising campaign does not impede an imminent business transaction. The holders of discount vouchers are not yet to be regarded as customers of the issuing company. Moreover, they continue to be free to redeem the discount vouchers at the issuing company. After all, it is also part of effective competition that such links to the campaigns of competitors might realize cost benefits, since printing and distribution of own vouchers is not necessary.
The decision ofthe Federal Court is a continuation of the liberal course of legislation influenced by European law. Already in the past, similar campaigns such as lowest-price guarantees were deemed to be permissible. The boundary to inadmissibility is only crossed if the campaign is specifically aimed at the destruction of advertising materials of the competitor. With that, the decision is another expression of the general interest in an undistorted competition codified in Section 1 UWG. The consumer will be glad to hear this.
(BGH, decision of 23 June 2016, Az. I ZR 137/15 – – “Fremdcoupon-Einlösung” [redeeming third-party vouchers])
Dr. Christian Triebe, Attorney at Law, Accredited Specialist in Intellectual Property Rights, Accredited Specialist in Copyright and Media Law