In a highly competitive market environment, companies often resort to advertising claims that highlight their unique position in relation to competitors. Claims such as “market leader” or “No. 1” help set them apart, generate attention and, where applicable, boost sales. However, claims of a leading market position are subject to strict legal requirements under German Unfair Competition Act (UWG). Inaccurate or unverifiable statements can quickly lead to warnings and, subsequently, to injunctions and even claims for damages. This article provides an initial overview of the legal framework for advertising with a leading position.

What is meant by a claim of market leadership?

Advertising involving a claim of market leadership occurs when a company asserts in its advertising that it holds a leading or outstanding position compared to its competitors. Typical examples of such claims of market leadership are:

• “Market leader in Germany”
• “No. 1 in customer service”
• “The best product in its class”

Such statements aim to highlight a company’s own performance or market position in the retail sector or among consumers, thereby distinguishing itself from competitors or their products. 

The legal standard for ‘market leader’ advertising – Unfair Competition Law 

The legal standard for permissible ‘market leader’ claims is set out in the German Unfair Competition Act (UWG). According to Section 5 UWG, a commercial practice is unfair if it is misleading. Misleading conduct occurs in particular where untrue or deceptive statements are made regarding the essential characteristics of the goods or services. This also includes a company’s market position or the market position or characteristics of a product.

For claims of market leadership, this means:

• The claimed position in the market must exist.
• The market position must be objectively verifiable and thus substantiable.
• The claimed market position must be of a certain duration, i.e. it must not be merely temporary, although the circumstances of the individual case are relevant here.
• The claim regarding the leading position must still be current at the time of the advertisement or be regarded as up to date.

If any of these conditions are not met, the advertisement may be classified as misleading and therefore unlawful.

Requirements regarding provability

The company advertising with the claim bears the burden of proof for it. This means that, in the event of a dispute, the company must also be able to prove that the claimed leading position is accurate. The following applies:

• The leading position must demonstrate a significant advantage over competitors.
• The data underlying the claim must be reliable in order to substantiate the factual statement in question. Here too, the circumstances of the individual case and the specific leading position in question are relevant. Market leadership can, for example, be substantiated by independent studies or market analyses.

Generalised or overly vague statements regarding a leading position are problematic. General statements such as ‘the best’ or ‘leading’ are open to interpretation and may give rise to differing expectations among consumers. Particularly problematic are unclear points of reference (e.g. ‘No. 1’ – in which sector?) or the failure to take regional differences into account (e.g. German-wide vs. local). In such cases, it is advisable to clarify the statement with explanatory additions to avoid misunderstandings.

Legal consequences of infringing claims

Unauthorised advertising claiming a top position can have significant legal consequences:

• Warning letters from competitors or trade associations
• Claims for undertakings and removal of the infringing advertisements, as well as claims for damages
• Legal proceedings with associated financial risks

Furthermore, a company that advertises its top ranking in an unauthorised manner may suffer reputational damage, which in the long term often weighs more heavily than the immediate legal consequences. 

Conclusion: Advertising a top ranking is an effective marketing tool. However, it carries legal risks. Under the provisions of the German Unfair Competition Act (UWG), such claims are only permissible if they are factually accurate, unambiguous and verifiable. Companies should therefore exercise particular care and scrutinise their advertising claims thoroughly in advance. A legally compliant approach not only protects against costly disputes but also strengthens consumer confidence in the brand.