Would comparative advertising, from a country where it is allowed, in a country where it is banned, be allowed?

Question

Note: I have little to no idea about how the law behind this works, I will try to cite my claims as well as I can.

The title of the question is a bit hard to understand but I'll specify it here:

Let's imagine I live in Germany, which is part of the EU, where comparative advertisement seems to be banned^[1].

I get an ad on a platform like YouTube, which is an American company, where comparative advertising is most definitely allowed under the Federal Trade Commission Act (FTC Act)^[2].

This imaginary ad I get is some company comparing themselves to another. Both of those countries have their headquarters in countries where comparative advertising is allowed.

Would the law technically allow Youtube to serve that ad?

^{[1]: https://en.wikipedia.org/wiki/Comparative_advertising#European_Union
[2]: https://www.kelleydrye.com/getattachment/7befe471-fd7b-46a9-9177-755b5eccd246/attachment.aspx}

Answer 1

This will ultimately depend on the specific laws, but the scope of EU laws like Directive 2006/114/EC is generally restricted to the EU Single Market. Thus, we would have to consider whether the advertisement in question is directed at that market.

In your scenario, you have two US-based companies that engage in comparative advertising via an US-based platform. But where these companies are headquartered is not directly relevant, as non-EU companies can participate in the EU Single Market as well. Instead, EU rules are applicable if either:

• the comparative advertising occurred in the context of the activities of an EU establishment such as an EU-based subsidiary; or
• the advertising was directed to a country in the EU Single Market, for example by fulfilling the criteria listed in the Pammer and Alpenhof cases.

For example, lets assume that the companies do not have a direct EU presence, but that they offer goods or services to consumers in the EU and the comparative advertisement was in German and mentioned prices in Euros. If so, there would be a good argument that EU rules apply and that the comparative advertising was potentially illegal.

But as another example, lets consider two restaurants/diners in Memphis, Tennessee, US, that made unfair comparative advertisements which were distributed via YouTube. It is possible to view the advertisement from the EU. But is there any reason for this ad to be illegal in the EU? No. This ad falls out of scope of EU law as the ad is not directed towards the EU Single Market, and it is unlikely to mislead consumers in the sense of fair competition laws as there won't be any potential customers for the Memphis restaurant in the EU. National laws could take a more narrow approach though.

Does YouTube have any responsibility here? No, fair competition laws generally only address the competitors, not the platforms through which advertisements are distributed (e.g. newspapers or social media platforms). Online platforms with user-generated consent benefit from safe-harbor laws. However, there are some legal theories such as the German Störerhaftung under which it might be possible to hold an otherwise-privileged service provider responsible for acts committed by an unknown third party.

Note that while comparative marketing is quite regulated in the EU and thus rare, it is not actually illegal when done fairly. For example in Germany, § 6 UWG defines criteria to determine whether comparative advertising is unfair.