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. Last Updated: 07/27/2016

Volkswagen Runs Hot Over Ad Campaign

Foreign automakers Peugeot and Volkswagen are feuding over a promotional campaign that is drawing attention to the dangers of comparative advertising in Russia.

Peugot's Moscow dealer Armand launched a campaign in April that used the VW trademark and compared the Volkswagen Passat, Mitsubishi Carisma and Mitsubishi Galant with the Peugeot 406. Volkswagen says Peugeot didn't get permission for the comparison or for using the VW trademark in Armand's advertisements.

The case has drawn attention to the ethics and legality of comparative advertising in Russia where, unlike many countries, the practice has not been banned.

Volkswagen spokeswoman Tatyana Khalyavskaya said her company had sent a letter to one of the Peugeot dealers — she wouldn't say which — demanding an apology for the "improper" ad it published in the magazines Autoreview and Klakson. She said the apology should run in both publications.

Khalyavskaya said that Volkswagen's ultimatum expires early next week, and if it isn't met the company would take the case to court.

In April, Armand published an ad in the two motor magazines under the slogan "Peugeot isn't afraid of comparison." The ad invites those who are pondering the purchase of a mid-range sedan to come to the Armand showroom and assess three variants at the same time.

An Armand spokesman said the rival vehicles were provided by the official Volkswagen and Mitsubishi dealers — Avto Leon Art and Rolf Holding. He said an official agreement had been signed with the Volkswagen dealer and a "highly competent professional" carried out a technical comparison of the cars.

Khalyavskaya denied that VW signed any document confirming its participation in the scheme, and called the comparison published by Armand "incorrect." The Avto Leon Art company could not be contacted for comment.

Experts polled this week said that if the ultimatum expires and the case goes to court, Volkswagen would have the upper hand. Dmitry Badalov, general director of the Russian Advertising Council, said local laws do not forbid the comparison of goods in advertising, but the comparison must be authentic.

In the event of a dispute, authenticity is determined first by the Anti-Monopoly Ministry and later by court if the parties do not resolve the dispute by negotiations, Badalov said.

Badalov said the "authenticity of the comparison" is hard to prove because, under the terms of the law, the tiniest construction features of the car must be compared.

"Manufacturers, for example, believe that the interior of their car is more comfortable than that of their competitor; however, independent research based on a consumer poll could give entirely opposite results," said Badalov.

If authenticity is not proven then the advertisement is considered false and the offending party can face a maximum sentence of two years in prison. Volkswagen indicated this in its letter.

The use of the VW trademark could cause more serious problems for Armand: "If a trademark is used illegally its owner has the right to claim for damages," said Badalov. "How much moral and material harm the biggest European supplier of cars to Russia could claim can only be guessed at."