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Eco 'virtue signals' breach competition law in Italy

In a landmark decision, an Italian court has upheld a company's request for an interim injunction against a competitor, ordering it to stop making "vague, false, and non-verifiable green claims,”  Clifford Chance lawyers have written.

The case was brought before the local court of Gorizia in Friuli-Venezia Giulia in Italy’s north-east.

Alcantara, a manufacturer of a micro-fibre product used in car manufacturing, took action against competitor Miko, which makes a suede-like microfibre product, which the firm claims to have green features.

Alcantara argued that Miko's "green claims" constituted an act of unfair competition under the Italian Civil Code in the form of misleading advertising, alleging that the claims were vague, false, non-verified or non-verifiable.

Injunction

On that basis, Alcantara requested an interim injunction preventing its competitor from continuing to make such environmental claims.

Among the "green claims" made by Miko included statements such as:

• Made of recycled polyester,
• Environmentally friendly,
• Natural choice,
• Eco-friendly microfibre,
• First and only microfiber that guarantees environmental sustainability throughout the productive cycle,
• First sustainable and recyclable microfibre,
• 100% recyclable,
• 100% recyclable at the end of its lifecycle,
• Reduction of energy consumption and GHG emissions by 80%,
• Reduction of carbon footprint through polyester recycling,
• Absence of harmful substances,
• Use of non-harmful dyes, and,
• Use of neutral and non-toxic dyes.

The court ruled that these statements were vague, generic, false, and non-verifiable and needed to be immediately removed from any website, social media platform, TV advertisement, magazines, and other promotional material.

The court also ordered Miko to publish the court's decision on its website for 60 days.

Noteworthy decision

Clifford Chance points out that the decision is particularly noteworthy because the court specifically discussed the unfair competitive advantages to be gained from greenwashing given today's heightened awareness of environmental issues. 

The court commented that the ecological virtues claimed by a company or for a product can influence the average consumer’s purchasing choices.

To pass the unfair commercial practices test, the Italian Court applied the 2016 guidelines issued by the European Commission that green environmental statements must be:

• Clear,
• True,
• Accurate,
• Not misleading,
• Based on robust, independent, verifiable, and generally recognized evidence, and,
• Must consider updated scientific findings and methods.

Burden of proof

The burden of proof rests on the trader, which must show evidence as to the accuracy of any factual claims in relation to a commercial practice. 

According to the court, Miko's "green claims" did not meet these requirements.

This is the first time that an ordinary civil court in Italy has ordered a business to stop making "green claims" at the request of one of its competitors.

The Gorizia decision could signal the extension of greenwashing cases beyond the realm of consumer protection investigations, becoming a battleground between competing businesses, Clifford Chance has said.

This could prove particularly attractive to businesses which can demonstrate that they have lost market share to greenwashing competitors, given that the directive contemplates that damages can also be awarded in such cases.

Unfair practice

In January 2021, a European Commission and national consumer authorities survey found that in 42% of 344 websites examined, green and environmental claims were false or deceptive and could amount to unfair commercial practice under the Unfair Commercial Practices Directive.

If the approach upheld in the Gorizia case spreads elsewhere, corporates – and not just consumer activists or watchdog authorities – will have a very simple tool to use against competitors making unrealistic environmental claims products or services.