ASA Adjudication on British Gas Trading Ltd

Ad

1. An e-mail, for British Gas, stated "Good news - our prices are falling, on average by £160 ... From 12th March 2007 we will cut our standard tariffs for: gas by 17% electricity by 11% That means the average dual fuel bill will fall by £160 and we'll be the cheapest major gas supplier ...".

2. An ad for British Gas, on the side of buses, stated "The lowest gas price of any major supplier is arriving” Small print stated “From 12/3/07 …”.

Issue

One complainant thought the claim "we'll be the cheapest major gas supplier" was misleading and the other thought the claim "The lowest gas price of any major supplier is arriving" was misleading; they both argued that British Gas could not accurately predict what other gas suppliers would be charging a number of weeks in the future.

CAP Code (Edition 11)

Response

British Gas (BG) stated that, although the complainants referred to two ads, the statements which were the subject of the complaint were effectively the same in both ads: that BG would be the cheapest gas supplier from 12 March. They announced on 8 February that they would be reducing their prices on 12 March and, at that time, their information indicated that they would have the lowest standard gas price of all major suppliers from 12 March. BG provided the ASA with a spreadsheet which showed the price charged for gas, in each region of the country, by each major supplier on 8 February, compared with the price BG would charge for gas in each region of the country after 12 March; it showed that, in each region, BGs post 12 March prices were the lowest.

BG explained that, at the time the ads appeared, they had no means of knowing whether any of their competitors would respond by decreasing their prices. They believed that advertisers should not be forced to speculate on what competitors would do in the future; they said that would encourage suppliers to exchange information, which would be in breach of competition law. They added that, if advertisers were to assume that their competitors prices could change, that would mean advertisers would not be able to make price comparisons. BG argued that the comparison of marketers future prices with competitors current prices was standard practice within the energy industry.

BG stated that, after 8 February, three of their competitors announced price decreases that were implemented after 12 March, but, on 28 February, one of their competitors announced a price decrease that was implemented on 1 March. They explained that, for customers of that competitor who were billed between 1and 12 March, the competitors prices were lower than BGs. However, customers billed after 12 March were charged a higher gas price by the competitor than that charged by BG until they received their bill, at which point the competitors price became cheaper. They believed the latter situation applied to the majority of that competitors customers.

Because their competitors started to announce price reductions, BG explained that they chose to withdraw the ads from 18 February. However, it was not possible to withdraw all of the bus advertising on 18 February. They said they had instructed their agency to ensure it was removed by 25 February.

BG said they consulted the CAP Copy Advice team before the ads appeared.

Assessment

Upheld

The ASA noted that, at the time BG announced their price cut, they were in a position to state that they would be the cheapest gas supplier on 12 March if all their competitors' prices remained the same. However, it transpired that they were not the cheapest gas supplier on 12 March, because one of their competitors decreased their prices between BG's announcement of their price cut and 12 March.

We noted BG had discussed the claims "The lowest gas price of any major supplier is arriving ..." and "We'll have the lowest gas price of any major supplier" with the CAP Copy Advice team, who had advised that the claims were likely to be acceptable, provided that BG would definitely be the cheapest gas provider on 12 March. We also noted the team had advised that, if circumstances changed and a competitor dropped their prices in response to the ad, BG should amend the claims accordingly. We acknowledged that BG had difficulty removing the ad on the side of buses promptly but that all ads were removed before any of their competitors implemented reduced prices. Nevertheless, we noted the claims that BG would be the cheapest gas supplier on 12 March had proved to be incorrect. We noted BG had compared their future prices with their competitors current prices but considered the ads suggested that BG were comparing their future prices with their competitors future prices: we therefore considered that consumers were likely to interpret the claims as a promise that BG would be the cheapest gas supplier from 12 March. We concluded that BG had made claims they could not substantiate, because they had no way of knowing what other gas suppliers would be charging a number of weeks in the future, and that they were likely to have misled consumers.

The ads breached CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness) and 19.1 (Other comparisons).

Action

We told BG not to make definitive, objective claims about future prices if those claims depended on circumstances that were out of their control.

Adjudication of the ASA Council (Non-broadcast)