Unfair Commercial Practices Directive, Chapter 2, Article 5, 2., (b) Unfair Commercial Practices Directive, Chapter 2, Section 1, Article 6, 1., (b) Unfair Commercial Practices Directive, Annex I, 17.

Ascribing positive physical effects to a product, whereas in reality a lack of scientific evidence for such effect is established and the trader cannot prove the claimed effect, constitutes a misleading commercial practice.

The present case concerned a product, which was advertised as having positive physical effects. On 2 August 2010 the Italian Competition Authority decided to start an investigation regarding the distributors Power Balance Italy S.r.l. and Sport Town S.r.l. concerning alleged misleading advertising put on the internet, in press and on products' packaging.

The advertisements concerned several neoprene and silicon products branded "Power Balance" to which the defendents attributed positive effects on balance, force and endurance. Conversely, the Italian Competition Authority that launched the investigation held that these products did not have the characteristics as advertised.

Defendant Power Balance Italy held that it did not claim any scientific basis for the alleged effects in its advertisements and, therefore, did not mislead consumers. Instead, the success of the product represented a fashion phenomenon. Regarding the alleged negative effects of the product on consumers' safety, the defendant argued that only materials that were natural and non toxic were used in manufacturing the product.

Defendant Sport Town added that, as an exclusive Italian distributor of the product, it only advertised the information provided by the producer.



On 26 August 2010 the Italian Competition Authority asked the Istituto Superiore di Sanità (National Health Institute) and the Italian Ministry of Health for a technical analysis of the product and its alleged effects. On 28 September 2010 the ISS delivered expert analysis to the Authority. The analysis was subsequently completed on the basis of the defendants' remarks.

On 26 October 2010 defendant Power Balance Italy offered commitments to correct the unfair commercial practice that was the subject of the investigation.

On 10 November 2010 the Italian Competition Authority assessed the suitability of such commitments and within the limits of EU law, did not make them binding.

The Italian Competition Authority established an unfair commercial practice regarding the advertising of neoprene and silicon products to which the defendants attributed positive effects. According to expert analysis, these effects did not exist and such advertising, therefore, qualified as a misleading commercial practice. 

Moreover, the Authority held, the defendants were not able to prove the positive effects of the products as advertised.

In a short reasoning, the Authority established that the expressions used in the advertisements were clearly meant to make consumers believe that they could achieve physical benefits through the use of the products branded "Power Balance".

According to the Authority, the opinion of an average consumer was further deceived by continuous references to alleged medical tests. In this respect, the Authority pointed out the responsibility of both defendants. Power Balance Italy put these advertisings on internet, in brochures, in press and on products' packaging. Sport Town put the advertising on its website.

Regarding the alleged negative effects, the Authority concluded that the products concerned were not particularly dangerous for consumer safety. In this respect, the passive nature of hologram and the existence of tests that excluded presence of lead or radiation in used materials proved decisive.

As a result, taking into account the gravity and duration of the commercial practice, the Authority concluded that the defendants had breached the prohibition on unfair commercial practices.

 

Does ascribing positive physical effects to a product, whereas in reality a lack of scientific evidence for such effect is established and the trader cannot prove the claimed effect, constitute a misleading commercial practice?

URL: http://www.agcm.it/ricerca-avanzata/open/C12560D000291394/40007BD049176250C1257815004CA755.html

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The Italian Competition Authority decided to fine both traders and it issued a cease-and-desist order regarding the criticized practices. The fines imposed:

- Power Balance Italy S.r.l. - EUR 300.000;

- Sport Town S.r.l. - EUR 50.000.



 The Italian Competition Authority also ordered defendants to publish a specific corrective statement to ensure that the unfair commercial practices did not continue to procure any effects.