WASHINGTON (FNS) -- The Federal Trade Commission here is weighing whether Winn-Dixie Stores' "Every Day Lower Prices" campaign runs afoul of fairness laws governing advertising by drawing erroneous comparisons of competitors' prices.
The issue has been referred to the FTC by the National Advertising Review Board, New York, a business-funded body that considers disputes between companies concerning the fairness of advertising campaigns.
Many observers predict that the issues surrounding Winn-Dixie ads could inspire a number of supermarket chains using price-comparison tactics to take a new look at their practices.
The NARB took the unusual step of referring the dispute to the FTC after Winn-Dixie, Jacksonville, Fla., accepted only one of the mediating body's two recommended changes.
Since the panel was formed in 1971 by the National Advertising Division of the Council of Better Business Bureaus, only four of the 3,400 cases reviewed have been referred to government agencies. The panel's recommendations are typically implemented.
In the current matter, Wal-Mart Stores, Bentonville, Ark., asked the NARB to rule on Winn-Dixie's weekly multimedia ad campaign, which draws product-by-product comparisons between its prices and those of competitors.
Winn-Dixie rejected one of the panel's findings, which had to do with the lag between the time Winn-Dixie collected rivals' prices and when it posted them in subsequent ads, a span of up to three months.
The panel found the time lapse to be unfair and recommended that Winn-Dixie adopt a policy of allowing no more than a week's delay. Furthermore, the panel said Winn-Dixie should disclose the date the comparison shopping occurred, and use a disclaimer to the effect that prices are subject to change.
"The very intensity of competition in the retail grocery business makes a 90-day delay extreme because many competitors such as the challenger in this case respond very quickly to advertised competitive prices by readjusting their own prices on the same products," the panel wrote.
"Price comparison advertising, when truthful and accurate, serves very important marketplace functions. It informs consumers of important choices about a critical product characteristic and it encourages price competition," the panel said. "Price comparisons that are based on inaccurate information, however, such as comparisons made stale by the passage of time, fail to accomplish these benefits."
Even a seven-day lag doesn't ensure complete accuracy in comparative advertising, the panel noted: "If it were a perfect world the panel would require comparative shopping to be perfectly current."
Winn-Dixie did accede to another panel recommendation, which called for discontinuing the supermarket's "Every Day Lower Prices" slogan.
The panel said the use of "lower" indicated to consumers the chain offered "something more than everyday 'low' prices." Winn-Dixie had initially sought a compromise on this issue, offering to discontinue the use of"lower" in references to Wal-Mart's prices.
For its part, Winn-Dixie said its advertising follows Better Business Bureau guidelines and the suggested time limit for price comparisons is unworkable.
"Due to the time period required to properly and accurately compare prices (including buying the competitors' products, recording the data, ad production and meeting media deadlines) it is not possible for Winn-Dixie to strictly adhere to the seven-day time period recommendation," the chain said in a statement.
"Future price comparative advertising will run as close to the comparison date as normal advertising production and publication allows. We will continue with conspicuous and prominent disclosure of all pertinent comparison information."