Countdown has been censured for misleading customers by claiming it has cheaper prices than rival Pak'n Save.
The Advertising Standards Authority decision is the latest volley in a supermarket price war which has also sparked a Commerce Commission investigation into Pak'n Save's price comparison claims.
Pak'n Save owner Foodstuffs complained to the ASA after Countdown ran an in-store basket comparison campaign at its Sunnynook store on Auckland's North Shore over two days in April.
The campaign display featured two shopping trolleys, filled with goods and wrapped with cling film, along with receipts from the stores where the items were bought - Countdown Sunnynook and the nearby Pak'n Save on Wairau Rd.
The total bill on the Countdown receipt was cheaper, with both receipts accompanied by the phrase: "Who really is the cheapest!"
Foodstuffs complained the campaign was "ambiguous and generally misleading" because it implied Countdown's prices were cheaper overall, rather than cheaper for specific items on a given day.
It said the campaign failed to spell out what methodology had been used in selecting the goods, noting that 27 of the 38 items compared were on special.
Some of the items were deeply discounted and most were convenience items which Foodstuffs said did not reflect a typical grocery shop.
Countdown owner Progressive Enterprises denied the campaign was misleading and refuted Foodstuffs' claim over the methodology it used.
It noted Foodstuffs continued to screen nationwide comparative television ads, even though Foodstuffs' own comparison was done at one supermarket on a specific day, two months before the complaint.
Progressive said that was highly misleading, given the daily fluctuation in grocery process. It also noted the Commerce Commission was currently investigating Foodstuffs' basket comparisons under the Fair Trading Act.
The ASA upheld the complaint, saying the lack of context in the campaign was likely to mislead customers about which store had generally lower prices.
It said that breached the code on comparative advertising, as well as the advertising code of ethics.
"Even though the till receipt attached to the Countdown trolley explicitly showed the items from Countdown were cheaper than the items from Pak'n Save, the overall consumer take-out was likely to be misleading as there was no context around the comparison."
The ASA said basket comparisons were allowed but there needed to be clear context for the comparison.
A Countdown spokeswoman said the ASA had alerted it to a "technical point" about the comparison. She said price comparisons could be "fraught" given daily competition and fluctuation in grocery prices.
"Our aim is to be transparent with our customers and make sure they have all the information they need when they shop with us, and we accept we needed to be more clear on this occasion."
Foodstuffs group marketing manager Steve Bayliss said it had previously complained successfully to the ASA about similar basket comparisons at Countdown supermarkets in Rotorua, and Hornby and Moorhouse in Christchurch.
He said Foodstuffs approved of comparative advertising if it was fair and used the correct methodology.
"However, if we are targeted in comparison advertising which is not consistent with the codes of advertising then we would take action to defend our brands."
