Comparative advertising – where businesses promote their products by comparing them to competitors – is a bold and often effective marketing tool. However, under Australian law, it comes with strict rules. Businesses that cross the legal line risk action from the Australian Competition and Consumer Commission (ACCC), costly litigation, and serious reputational damage.
This guide, prepared by our eCommerce lawyers, explains what comparative advertising is, how it’s regulated under Section 18 of the Australian Consumer Law (ACL), and what Australian businesses must do to stay compliant.
Key Takeaways
Comparative advertising is legal in Australia – but only if it does not mislead or deceive consumers.
The main legal benchmark is Section 18 of the ACL, which prohibits misleading or deceptive conduct.
The ACCC enforces these rules and can pursue legal action in the Federal Court.
Comparisons must be fair, accurate, and clear, especially when products differ in quality or type.
Courts judge ads based on how a “reasonable consumer” is likely to interpret them.
What is Comparative Advertising?
Comparative advertising promotes a product by comparing it with another, often a competitor’s. These comparisons may relate to price, performance, quality, or other features. Although effective, this form of advertising is only lawful if it does not mislead the audience.
For example, comparing two internet plans may be legitimate – unless key differences like data limits or contract terms are left out.
Legal Framework: Section 18 of the ACL
The central law governing comparative advertising is section 18 of the Australian Consumer Law (ACL), found in Schedule 2 of the Competition and Consumer Act 2010 (Cth). This section states:
“A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
This applies to all forms of advertising, including TV, digital, print, and social media. Enforcement lies with the ACCC, which monitors compliance and can initiate proceedings against businesses that breach these laws.
Even if the advertiser does not intend to mislead, the impression left on the audience is what matters.
Find out if the ACL applies to your online business in our article.
Key Legal Principles in Comparative Advertising
Comparative Advertising Standards
To remain compliant with Section 18, businesses should follow these principles:
Avoid misleading impressions, even if the information is technically correct.
Don’t rely on consumers to “read the fine print” to clarify a misleading claim.
Ensure context is clear, focusing only on one favourable feature can mislead if other relevant facts are omitted.
The "Apples with Apples" Principle
Comparative ads must compare like with like. This means similar products or services in terms of type, category, and relevant features. Comparing items of different quality levels, price points, or technical capabilities without clarification may create a misleading impression, even if factual elements are technically accurate.
This principle is not just about fairness, it’s about how a reasonable consumer might interpret the ad. If the comparison could unfairly favour your product, it’s time to revisit the messaging.
A precedent Federal Court case demonstrates how failing to apply this principle led to serious legal consequences (see our Case Study below).
Consumer Expectations and Fairness
Businesses must consider how consumers will perceive their advertisements. For example:
It is unfair to suggest that a lower-quality product is equal to a premium product without clear context.
Courts may find that omissions. such as not disclosing differences in warranty or durability. can mislead.
The Consumer Understanding Test
When disputes arise, courts consider whether the average consumer would be misled. However, the legal standard isn’t always consistent:
Some courts apply a “reasonable consumer” test (assumes some market knowledge).
Others apply an “ordinary consumer” test (less informed).
Due to this variation, advertisers should err on the side of caution and focus on clear and transparent messaging.
Regulatory Oversight and Enforcement
The ACCC is responsible for enforcing the ACL’s misleading and deceptive conduct provisions. It monitors advertising practices and can:
Investigate potential breaches.
Initiate Federal Court proceedings.
Secure penalties, injunctions, and corrective orders.
For example, the ACCC has successfully acted against advertisers making exaggerated claims in property investment, healthcare, and financial services marketing.
Best Practices for Businesses
When planning comparative advertising campaigns, businesses should keep these considerations in mind:
- Ensure comparisons are between similar products (same category, performance level, and features).
- Disclose material differences clearly and prominently.
- Back up all claims with verifiable evidence.
- Avoid cherry-picking data or selectively presenting facts.
- Review all advertising regularly for compliance with the ACL and ACCC guidance.
It’s also good practice to have marketing campaigns reviewed by a commercial or advertising lawyer before launch.
Case Study: Energizer v Gillette
The Energizer v Gillette case remains a leading authority on comparative advertising in Australia. Key lessons from this decision include:
- Comparative claims must be accurate and not omit key information
- The overall impression on the target audience is critical
- Courts are continuing to refine the standard for assessing whether an advertisement is misleading
Businesses should take this case as a clear warning: even technical accuracy won’t save you if the consumer takeaway is deceptive.
If your business is considering comparative advertising or needs advice on compliance with the Australian Consumer Law, contact our experienced team for tailored guidance. Book a consultation today to protect your brand and minimise legal risk.
Frequently Asked Questions
What is comparative advertising?
Comparative advertising is a marketing strategy when a business compares its products or services with those of a competitor, either directly or indirectly, often highlighting differences in features, price, or quality.
Is comparative advertising legal in Australia?
Yes, comparative advertising is legal in Australia as long as it does not mislead or deceive consumers in breach of section 18 of the Australian Consumer Law.
What are the risks of comparative advertising?
Risks include potential ACCC enforcement action, litigation by competitors, reputational damage, and court orders for corrective advertising or penalties if found to be misleading.
How can businesses ensure their comparative advertising is compliant?
Businesses should ensure all claims are truthful, comparisons are fair and like-for-like, material differences are disclosed, and advertisements do not create a false impression.
What happens if an advertisement is found to be misleading?
If an advertisement is found to breach section 18 of the ACL, the business may face ACCC action, court-ordered penalties, injunctions, or requirements to issue corrective statements.
