ECJ rules on Application of Unfair Commercial Practices Directive to Consumer Promotions

Author:Ms Susan Barty and Stuart Helmer
Profession:CMS Cameron McKenna LLP

The ECJ has held that national legislation which prohibits, in all circumstances, the offering of "bonuses", such as a sample, a free gift, a sum of money or a competition entry, in order to promote the purchase of goods or services, is incompatible with the Unfair Commercial Practices Directive. Article 4 of the Directive expressly provides that Member States may not adopt stricter rules than those provided for in the Directive (so-called "maximum harmonisation"), even in order to achieve a higher level of consumer protection. Austrian law on unfair competition stipulates a blanket presumption of unlawfulness in respect of the offering of bonuses to promote the purchase of goods, in this case a daily newspaper. However, this commercial practice does not fall within the exhaustive list of 31 practices presumed unfair in all circumstances under the Directive. The ECJ therefore held that it should be assessed for unfairness on a case-by-case basis. On the facts, the ECJ held that while entry into the competition acted as an incentive to buy the newspaper for some people, that did not make it an automatically unfair commercial practice. This does not mean that promoting the sale of products with bonuses will always be lawful. However, the case highlights the maximum harmonisation provisions of the Directive. Member States should not ban outright practices that could be acceptable in certain circumstances.

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The Unfair Commercial Practices Directive

The Directive established a single pan-European regulatory framework to govern unfair commercial practices, harmonising unfair trading laws in all EU Member States. The UK has implemented the Directive by way of the Consumer Protection from Unfair Trading Regulations 2008.

Article 3(1) of the Directive states:

"This Directive shall apply to unfair business-to-consumer commercial practices, as laid down in Article 5, before, during and after a commercial transaction in relation to a product". Article 5(2) of the Directive states: "A commercial practice shall be unfair if: (a) it is contrary to the requirements of professional diligence, and (b) it materially distorts or is likely to materially distort the economic behaviour with regard to the product of the average consumer whom it reaches or to whom it is addressed, or of the average member of the group when a commercial practice is directed to a particular group of consumers."

Article 5(5)...

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