Introduction
How high can a fine be?
Under what conditions can a fine be imposed?
What violations trigger a fine?
Who will the fines affect?
When do the new regulations come into force?
What should airlines and travel entities do?
The German legislature is implementing the requirements of the EU Enforcement and Modernisation Directive,(1) which modernises various older EU consumer protection directives and seeks to improve consumer protection enforcement.
To implement the EU Enforcement and Modernisation Directive, the German legislature is introducing a provision on fines in the Introductory Act to the German Civil Code, which in turn places various violations by traders of consumer protection provisions in the German Civil Code (BGB) under fine. This will have an impact on airlines and other entities in the travel industry (eg, tour operators, travel agents, and platforms for selling flights, hotels and other travel services).
For airlines and other entities in the travel industry that have achieved more than €1,250,000 in annual sales in the EU member states affected by an infringement in the financial year preceding the decision imposing the fine, a fine of up to 4% of annual sales can be imposed. For other entities, a fine of up to €50,000 can be imposed.
Under what conditions can a fine be imposed?
A fine can only be imposed if the infringement also has an impact in EU member states other than Germany.
Thus, there must be either a so-called "widespread infringement" or a "widespread infringement with a Union dimension". For a widespread infringement, the infringement must harm the collective interests of consumers who are resident in at least two EU member states other than the EU member state in which:
- the harmful act or omission originated or occurred;
- the airline or travel entity responsible for the act or omission is established; or
- there is evidence or property of the airline or travel entity that has a connection with the infringement.
A widespread infringement also exists when such consumer-harming acts or omissions by the same airline or travel entity occur simultaneously in at least three EU member states, and share common characteristics.
A widespread infringement with a Union dimension occurs when a widespread infringement affects at least two-thirds of the EU member states, which together account for at least two-thirds of the population of the European Union, and harms the collective interests of consumers.
What violations trigger a fine?
There must be a violation of certain consumer protection provisions of the BGB set out in the new provision of law. For example, a violation of the obligation that:
- no claims can be based on unordered services;
- charges in excess of the charge for the main service can only be agreed with consumers expressly;
- in e-commerce, certain information must be provided to consumers in accordance with the statutory requirements; or
- fees shall not be claimed for the use of a certain means of payment if the fee agreed exceeds the cost borne by the airline trader for the use of such means of payment.
Additionally, a violation of certain provisions of the BGB on standard business terms can also trigger a fine. For example, the use of standard business terms that:
- exclude or restrict certain rights to refuse performance or rights of retention of consumers;
- deprive the consumer of the right to set off against an undisputed claim or a claim that has become res judicata;
- exempt the entity from the legal obligation to send the consumer a reminder or to set a deadline for performance or subsequent performance;
- provide for certain exclusions or limitations of liability contrary to the statutory provisions of German law on standard business terms; or
- reverse the burden of proof to the detriment of the consumer.
Since the violation to trigger the fine must affect not only Germany but also other EU member states, the German regulation provides that a violation of consumer interests also exists if the affected provisions of the BGB are violated and the national law of another EU member state provides regulation that corresponds to the affected German provision.
Many of the German regulations for which a fine can be imposed are based on EU directives, so it is to be expected that other EU member states will also have similar legal regulations.
First, the fines will affect companies that operate in other EU countries in addition to Germany, which is usually the case with airlines. In addition, however, fines can also affect the employees of companies that are involved in the violation, as well as owners or bodies of companies that intentionally or negligently fail to take supervisory measures that would have prevented the breach or would have made it significantly more difficult.
When do the new regulations come into force?
The fine regulations take effect on 28 May 2022.
What should airlines and travel entities do?
Airlines and entities in the travel industry that offer their services in various EU member states should urgently examine both their sales processes regarding consumers and their contractual agreements – in particular, the standard terms and conditions they use with consumers, such as:
- conditions of carriage;
- terms of use for their websites;
- any terms for frequent traveller programmes; and
- other standard terms used for marketing instruments.
Otherwise, airlines and entities in the travel industry may face fines from 28 May 2022.
For further information on this topic please contact Claudia Hamm at Arnecke Sibeth Dabelstein by telephone (+49 69 97 98 85 0) or email ([email protected]). The Arnecke Sibeth Dabelstein website can be accessed at www.asd-law.com.
Endnotes