Ad description
A regional press ad for E.ON, seen on 8 February 2019, stated "10 energy companies have gone bust in the last year ... 70 years and still going strong ...".
Issue
The complainant challenged whether the claim "70 years and still going strong" was misleading and could be substantiated, because they understood that E.ON was formed in 2000.
Response
E.ON Energy Solutions Ltd t/a E.ON said the ad was intended to promote interest in E.ON as an energy supplier. They did not believe the claim was misleading because anecdotal feedback from their customers, and within their focus groups and forums, showed that consumers did understand their history, particularly that they were once a regional electricity board.
E.ON said they acknowledged that the trading name of the company providing the supply had changed over the years as a result of acquisitions and the statutory interventions that had occurred. Throughout the period since 1947, however, there had been a continued obligation to supply premises with electricity and that E.ON, as it was now, had continuously provided electricity to consumers and properties.
E.ON said the purpose of the Electricity Act 1947 was to deliver nationalisation of the electricity industry through the establishment of a British Electricity Authority and Area Electricity Board. The objectives of that Act included the “transfer to the said Authority or any such Board as aforesaid of property, rights, obligations, and liabilities of electricity undertakers and other bodies”. They said there were a number of Area Electricity Boards established as statutory corporations by the 1947 Act, which included the East Midlands Electricity Board. The Act also set out the responsibilities of the Board to supply and distribute electricity and allowed them to enter contracts with consumers. It also dealt with the assignment of liabilities to those companies at the vesting date, including pension liabilities. As a result of the Electricity Act 1989, privatisation completed on 31 March 1990 and East Midlands Electricity plc became the successor to the Board, with responsibility for the associated liabilities and responsibilities, which included the continuing obligation to supply, debts and pensions. E.ON said at that point in time, East Midlands Electricity plc supplied the same customers and properties as it did prior to privatisation, although large industrial customers became able to change their supplier. East Midlands Electricity plc was acquired by Powergen in 1988 and was subsequently re-branded to Powergen with a change of name to Powergen Energy plc in 1999. The Utilities Act 2000 required the licensed activity of supply and distribution to be split and for those activities to become subject to separate licences. Powergen Retail Ltd was the successor company and continued supplying electricity to customers and their properties. Powergen was acquired by E.ON in 2002 and the company was subsequently rebranded to E.ON in 2007 with an initial change of name to E.ON Energy Ltd and then to E.ON Energy Solutions Ltd.
E.ON said that since 1947, despite changes to their trading name, they could demonstrate that the supply of electricity had been uninterrupted.
Assessment
Upheld
The ASA considered that consumers would understand the claim “70 years and still going strong” to mean E.ON, as a private company, could demonstrate a period of continuing trade for 70 years.
We understood that E.ON calculated their trading history from 1947 and that the claim “70 years” was based on the Electricity Act of that year which nationalised the electricity industry. Under that Act, various responsibilities and liabilities were transferred to the Electricity Boards including the East Midlands Electricity Board. Later, following the Electricity Act 1989 which resulted in the privatisation of the electricity industry, East Midlands Electricity plc succeeded the East Midlands Electricity Board and was then acquired by Powergen in 1988. As a result of further statutory provisions and acquisitions the company was re-branded several times, finally becoming E.ON Energy Solutions Ltd.
We accepted that of itself, name changes or re-branding of an organisation would not prevent its being able to demonstrate a period of continuing trade. We also accepted that the same customers or properties might be retained subsequent to any such changes. However, we considered that the change from nationalisation to privatisation was a significant one, which resulted in the formation of a private company – East Midlands Electricity plc. We considered that a nationalised electricity industry would be publicly owned and have the backing of the government and therefore prior to privatisation, the East Midlands Electricity Board would have operated in a very different way to the private company it later became. In particular, it would not have had the risk of failure in the same way that a private company would have, as its longevity and stability was guaranteed because of its being nationalised. We noted that the ad made a comparison between other private energy companies that had since stopped trading and E.ON. We considered, however, that consumers would not view an Electricity Board that was part of a nationalised industry as being the same as a private company.
Therefore, we further considered that the period of time when the electricity industry was nationalised could not be included as counting towards E.ON’s trading period, because during that time it did not exist as a private company. For those reasons we did not consider that E.ON had established a period of continuing trade since 1947.
We therefore concluded that the claim had not been substantiated and was likely to mislead.
The ad breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising) and 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation).
Action
The ad must not appear again in its current form. We told E.ON Energy Solutions Ltd not to claim that they had continuously traded for 70 years if that was not the case.
