R (on the application of Cityfibre Ltd) v The Advertising Standards Authority Ltd [2019] EWHC 950 (Admin)

R (on the application of Cityfibre Ltd) v The Advertising Standards Authority Ltd [2019] EWHC 950 (Admin) concerned a judicial review challenge by the claimant to the decision of the Advertising Standards Authority that advertisements describing part-fibre broadband services simply as “fibre” are unlikely to mislead consumers; Mr Justice Murray dismissed the claim, holding that the ASA had applied the correct legal test and that its decision was rational.

CityFibre Limited, the largest alternative builder and operator of wholesale full-fibre infrastructure in the UK, challenged the ASA’s decision dated 21 November 2017 that the unqualified use of “fibre” in advertisements for part-fibre broadband services was unlikely to mislead. The intervener, Hyperoptic Ltd, which provides full-fibre broadband to blocks of flats and other multi-dwelling buildings, supported the claimant’s case. The claim was brought on six grounds, but by the hearing the claimant abandoned two grounds concerning the transactional decision test and consolidated its criticisms of the Define Report into its principal grounds that the ASA had erred in law in its understanding and application of the average consumer test, and that the decision was irrational on the evidence before the ASA.

The factual background concerned the four main technologies used to deliver broadband services in the UK. ADSL uses only copper cable from the exchange to the user’s premises and is the slowest technology. Fibre-to-the-cabinet (FTTC) uses optical fibre from the exchange to a street cabinet, then copper wire to the premises. Cable uses fibre to the cabinet, then copper coaxial cable to the premises. Both FTTC and cable are part-fibre technologies. Fibre-to-the-premises (FTTP, also called full-fibre or pure-fibre) uses optical fibre throughout, sometimes with a short Ethernet connection within the building. Full-fibre is objectively superior to part-fibre in several respects: higher and more consistent speeds, symmetrical download and upload speeds, greater reliability, and future-proofing against anticipated demand increases. At the time of the decision, only 1.7 per cent of UK premises had access to full-fibre, but the UK government had announced ambitions to expand full-fibre coverage and stated that only full-fibre solutions should be described using the term “fibre”.

Following correspondence from CityFibre and others raising concerns about misleading broadband advertising, the ASA announced in April 2017 that it would review how it interprets the CAP Code and BCAP Code when judging the use of “fibre” to describe broadband services. The ASA sought evidence from stakeholders. CityFibre provided a report by Opinion Leader Research showing that, once educated about the differences between part-fibre and full-fibre, consumers considered fibre content important. The ASA had reservations about this research, considering that participants had been “primed” through education and that the sample was modest. The ASA therefore commissioned independent research from Define Research & Insight Ltd. The Define Report, completed in November 2017, was based on 109 interviews with consumers selected to be representative of the broadband market. The research aimed to establish what consumers understood by “fibre” and whether its inclusion shaped their views of broadband packages. The Define Report summarised its principal conclusions in three bullet points: the term “fibre” was not a priority when choosing broadband; it was not spontaneously identified in advertisements and did not trigger action; and once educated about fibre, participants did not believe they would have changed previous purchasing decisions.

The ASA Councils met on 10 November 2017 and decided that advertisements referring to part-fibre services as “fibre” were unlikely to mislead consumers. However, the ASA set out key principles including that non-fibre services should not be described as “fibre”, that performance claims should be appropriate for the technology delivering the service, that speed should be described appropriately, and that advertisements should not state or imply a part-fibre service is the most technologically advanced. The Decision acknowledged performance differences between part-fibre and full-fibre but concluded that consumers were not likely to be misled by unqualified use of “fibre” in advertisements for part-fibre services.

The legal framework involved the CAP Code and BCAP Code, which reflect the Consumer Protection from Unfair Trading Regulations 2008 implementing EU Directive 2005/29/EC on unfair commercial practices. Rule 3.1 of the CAP Code provides that marketing communications must not materially mislead or be likely to do so. Rule 3.3 addresses misleading omissions. The Codes are intended to reflect the Directive, which prohibits misleading actions and omissions likely to cause the average consumer to take a transactional decision he would not otherwise have taken. The “average consumer” is defined in the Directive and the case law as reasonably well-informed, reasonably observant and circumspect. Recital 18 to the Directive emphasises that the average consumer test is not a statistical test and that national courts and authorities must exercise their own faculty of judgement to determine the typical reaction of the average consumer in a given case. The case law, including Gut Springenheide and Estée Lauder, confirms that the decision-maker must take into account the presumed expectations of the average consumer but may have recourse to consumer research or expert evidence for guidance.

On the first ground, the claimant argued that the ASA erred in law by failing to focus on whether a notional reasonably well-informed consumer would be misled. The claimant contended that the ASA should have considered consumers who were reasonably well-informed about the “features” of broadband services, including the distinction between full-fibre and part-fibre. The claimant submitted that the ASA impermissibly took a statistical approach by seeking an “approximate mid-point” of actual consumers’ knowledge, rather than constructing a hypothetical reasonably well-informed consumer as required by law. The claimant argued that the participants in the Define research were largely ignorant about fibre and that their views were therefore legally irrelevant.

The defendant responded that it had correctly understood and applied the average consumer test. The ASA submitted that the average consumer is a hypothetical person but that the decision-maker is entitled to have regard to research involving real consumers to illuminate how the theoretical average consumer would understand advertising claims. The defendant argued that the average consumer must be reasonably well-informed about the product or service in question (broadband services generally), not about specific features such as the delivery mechanism. The ASA maintained that the Define Report participants were properly representative of the range of consumers in the broadband market, from which the average consumer could be constructed.

Mr Justice Murray held that the ASA did not make an error of law. There was no authority for the proposition that the average consumer must be reasonably well-informed about particular “features” of a product as distinct from being reasonably well-informed about the product generally. Introducing such a requirement would create conceptual and practical difficulties, including defining what constitutes a “feature” and determining which features are sufficiently important. The court held that the decision-maker must make a qualitative judgement about whether the average member of the group at whom advertising is targeted would be misled. The starting point is consideration of the characteristics and level of knowledge of that actual group of consumers, excluding those who are ignorant, careless or lacking in circumspection. The decision-maker must exercise its judgement, informed by its expertise and experience, to determine how well-informed a theoretical consumer must be to be “reasonably well-informed” in the context. The court held that it was permissible for the ASA to commission research on a sample representative of actual broadband consumers and to have regard to that research in reaching its decision. The ASA was required to judge the level of knowledge of the theoretical average consumer before education about fibre, because after such education a consumer is better-informed than average. The court rejected the suggestion that the phrase “approximate mid-point” indicated an impermissible statistical approach; it meant only that the ASA started from consideration of the actual group of consumers to construct the theoretical average consumer.

On the second ground, the claimant argued that the decision was irrational because the ASA failed to have regard to the recognised benefits of full-fibre, relied on conclusions from ill-informed consumers, misunderstood the Define Report, and failed to take account of the Opinion Leader Report. The claimant submitted that the three bullet-point summary of the Define Report misstated or omitted key findings. In particular, the claimant argued that some Define participants had said fibre was a priority because of its link to speed, that “fibre” was mentioned at least “rarely” in advertisements (contradicting the assertion that it was not spontaneously identified), and that some participants indicated they would have changed purchasing decisions or would in future choose full-fibre if available at acceptable cost. The claimant also criticised how pricing information was presented to participants and argued that the ASA should have asked whether consumers would choose full-fibre over part-fibre if price were equal.

The defendant responded that the ASA had properly had regard to a range of evidence and was entitled to give limited weight to the Opinion Leader Report and the polls due to their flaws, and to place weight on the Define Report, which was based on sound methodology. The ASA was aware of the performance advantages of full-fibre but rationally concluded that those advantages were not relevant to the question of what consumers understood by “fibre” in advertisements. The Define participants were properly representative of broadband consumers. The three Define bullet points accurately summarised the research: fibre was not a priority for participants (speed and cost were the primary concerns); fibre was rarely mentioned spontaneously when participants viewed advertisements; and participants did not say they would have changed past purchasing decisions after being educated about fibre. Some expressions of interest in future purchases of full-fibre at acceptable prices did not undermine the conclusion that consumers were not misled by current advertising. The ASA’s focus was on what consumers understood before education, not on what they might do in future or whether they would prefer full-fibre at the same price, which was irrelevant to the question of whether advertising was misleading.

Mr Justice Murray held that the decision was not irrational. The ASA had plainly had regard to the recognised benefits of full-fibre, as evidenced by the guidelines set out in the Decision requiring appropriate performance claims and prohibiting claims that part-fibre is the most technologically advanced technology. The technical superiority of full-fibre was not directly relevant to the question of what consumers understood by the term “fibre” in advertisements. It was not irrational to draw conclusions from the Define participants’ views; the selection criteria were a matter for the expert judgement of the ASA in determining the characteristics of the average consumer. The court held that the claimant’s approach, which started by asking what a theoretical consumer needs to know to be reasonably well-informed, was wrong. The correct approach is to start by asking what the actual level of knowledge is among the group of consumers targeted by the advertising, excluding those not reasonably observant or circumspect. The ASA was entitled to give less weight to the Opinion Leader Report because it relied on the participants’ views after education about fibre, by which point they were better-informed than the average consumer. The court found no basis to conclude that the ASA misunderstood the Define Report or that the bullet-point summary was inaccurate, though it might have been better qualified. The bullet points were a high-level summary of trends, and the evidence showed the ASA had regard to the whole report. The third bullet point, concerning post-education views, was in any event less relevant to the core question of what the average consumer understood by “fibre” before education.

In short, the High Court held that the Advertising Standards Authority applied the correct legal test and did not act irrationally in concluding that the average consumer would not be misled by unqualified use of “fibre” in advertisements for part-fibre broadband services, and the claim for judicial review was dismissed.

Buxton v ASA [2002] EWHC 2433
R (Coys of Kensington) v ASA [2012] EWHC 902
Skills v PLT Anti -Marketing Ltd [2015] EWCA Civ 76; [2015] Bus LR 959
Co OHG v Lancaster Group GmbH [2000] 1 CMLR 515

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