OLG Frankfurt: Permissibility of Advertising Long Company Tradition Despite Insolvency
Advertising many years of company tradition may be permissible and not anti-competitive despite a temporary state of insolvency. That was the decision of the OLG [Oberlandesgericht] Frankfurt (Higher Regional Court of Frankfurt) (Az.: 6 U 69/15).
In its ruling of September 7, 2015, the Oberlandesgericht Frankfurt am Main held that advertising a company tradition going back 100 years may be permissible, even if the business was insolvent in the interim. It stated that this kind of advertising would not be deemed misleading to consumers if, notwithstanding the insolvency proceedings, the business was continued with no essential changes to its economic situation. The Court went on to say that the advertising was permissible even though the firm had expanded over the years into additional fields of business which could still be attributed to the core business of the company.
A firm had advertised, among other things, its 100 years of company tradition on its website. However, the plaintiff considered the firmís ongoing insolvency proceedings to represent an interruption in the continuity of the company. Moreover, it claimed that one of the advertised fields of business had not been established until the 1950s. The plaintiff thus took the view that the advertising was misleading and violated competition law, yet its action for an injunction was dismissed by the OLG Frankfurt as well as the court of first instance.
The OLG held that the advertising which was subject to this challenge did not create a misleading impression for consumers regarding the commercial circumstances. It went on to say that the insolvency did not represent an interruption in the continuity of the company, as the insolvency had not changed the character of the company in the present case. The Court stated that the expansion of the scope of the business in the 1950s did not render the promotional message misleading either. According to the OLG, today the average consumer who is reasonably well-informed expects the scope of a more than one-hundred-year-old business to change over time and therefore merely expects to be able to view the current business as identical in character to its previous form.
Advertising is essential for a lot of businesses. However, it cannot infringe statutory regulations, e.g. the Gesetz gegen den unlauteren Wettbewerb (German Unfair Competition Act). That being said, there is always the potential for perceived or real infringements of competition law. A lawyer who is qualified in the field of competition law ought to be sought out to fend off demands and enforce claims.
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