Office of Fair Trading v The Officers Club Ltd & Anor

Compliance with an approved price-indications code does not prevent an advertisement from being misleading under the Control of Misleading Advertisements Regulations 1988. The court must assess the overall impression conveyed to the ordinary, reasonable consumer characteristic of the relevant class. An advertisement may mislead through implication even where its express words are accurate. A former-price comparison implies that the higher price was genuine, that significant quantities were offered at that price, and that the trader honestly believed the goods could be sold at it. The comparison may also imply that the goods were offered for a sufficient period to constitute a genuine offer. Whether the advertisement is misleading is assessed objectively from the advertisement and surrounding circumstances. Foreign legislation and guidance cannot determine the meaning of the domestic Regulations.

The Office of Fair Trading sought enforcement orders and injunctive relief against The Officers Club Ltd and its director, David Charlton. The claim concerned advertisements promoting a permanent “70% off” strategy, under which goods were generally sold at discounted prices after only very small quantities had been offered at substantially higher “Red Star” prices.

The defendants argued that the strategy complied with the approved Code of Practice for Traders on Price Indications, that the advertisements were accurate, and that enforcement would unjustifiably interfere with commercial freedom of expression. The central issues were whether the advertisements were misleading under regulation 2(2), whether compliance with the Code was determinative, and whether the conduct constituted a Community infringement under Part 8 of the Enterprise Act 2002.

1. The claim succeeded on liability. The court found that the advertisements were misleading advertisements under regulation 2(2) of the Control of Misleading Advertisements Regulations 1988 and constituted a Community infringement under Part 8 of the Enterprise Act 2002.

2. Compliance with the Code was not legally determinative. Section 25(2) of the Consumer Protection Act 1987 gave the Code specific relevance in proceedings for an offence under section 20, but neither compliance with nor breach of the Code automatically determined those proceedings. Nothing in the Regulations made their meaning subject to the Code.

3. The advertisements were to be assessed by asking what impression they conveyed to the ordinary, reasonable consumer characteristic of the class addressed. Actual consumer evidence was unnecessary. Accurate express statements could nevertheless mislead where their presentation conveyed false implications.

4. The “70% off” notices implied that the higher price was genuine rather than artificial; that significant quantities of the goods had been offered for sale at that price; and that the trader honestly believed the goods could be sold at that price. The notices also implied that the goods had been offered at the higher price for a period sufficient to constitute a genuine offer of sale. The court rejected the further suggested implication that the higher price had not been set with the overriding purpose of claiming the later discount.

5. The evidence established that the implied representations were false. Only very small quantities had been offered at the higher price, the higher prices were often fixed without an honest belief that significant quantities could be sold at them, and the discounted prices were in reality the standard prices. The advertisements were therefore deceptive and likely to affect consumers’ economic behaviour.

6. The court rejected the argument based on article 10 of the Convention. Regulation 2(2), although expressed in general language, was sufficiently accessible and precise to constitute a restriction prescribed by law. The court found liability but deferred submissions on the appropriate injunction and its terms to a further hearing.

First-instance decision. The judgment records no prior appellate decision.