The CJEU recently clarified in CHS Tour Services GmbH v Team4 Travel GmbH (Case 435/11), that there is automatically an infringement of the obligation of professional diligence when the criteria for a misleading practice, or an aggressive practice, as set out in Articles 6 and 7, and in Articles 8 and 9, respectively, of the Unfair Commercial Practices Directive (2005/20/EC) (the Directive) is satisfied.
Accordingly, it will not be a defence to an allegation of a misleading or aggressive commercial practice for a trader to establish that he has complied with his duty of professional diligence.
Team4 Travel, an Austrian travel agency, stated in its sales brochures that certain hotels could be booked for specified dates exclusively through its services. The hotels had a fixed contractual relationship with Team4 Travel, and could not, on the specified dates, be offered by another tour operator.
However another Austrian travel agency, CHS, subsequently block-booked beds in the same hotels and for the same dates, as Team4 Travel. The hotels in question were, therefore, in breach of their contractual obligations to Team4 Travel.
CHS claimed that the exclusivity statement contained in Team4 Travel's brochures infringed the prohibition of unfair commercial practices, and asked the Austrian courts to prohibit Team4 Travel, by interim injunction, from using the statement. In response, Team4 Travel contended that it had acted with the professional diligence required when drawing up its brochures. Until the date the brochures were sent out, Team4 Travel had not been aware of the contracts concluded between CHS and the hotels in question, and therefore claimed it was not guilty of any unfair commercial practice.
The two lower Austrian Courts rejected CHS's application, on the ground that there was no unfair practice, as Team4 Travel had complied with the requirements of professional diligence and were entitled to expect that the hotels would honour their contractual commitments.
Article 5(2) provides that a commercial practice is unfair, if two cumulative conditions are met: (a) the practice is contrary to the requirements of professional diligence (defined as "the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers, commensurate with honest market practice and/or the general principle of good faith in the trader’s field of activity"), and (b) it materially distorts, or is likely to materially distort, the economic behaviour of the average consumer in relation to a product.
CHS appealed to the Austrian Supreme Court. The Supreme Court stated that the information relating to exclusivity, contained in the brochures distributed by Team4 Travel, was objectively incorrect, and therefore constituted, from the viewpoint of the average consumer, a misleading commercial practice, as defined in Article 6(1) of the Directive. Under Article 6(1) a commercial practice is misleading "if it contains false information and is therefore untruthful or in any way, including overall presentation, deceives or is likely to deceive the average consumer, even if the information is factually correct."
The referring Court raised the question as to whether it was sufficient to examine Team4 Travel's practice in the light of the criteria specified in Article 6(1) alone, which were all met in the present case, or whether, on the contrary, it was necessary to determine, in addition, whether the requirement of professional diligence was also satisfied, which would not be the case in this instance as Team4 Travel had done everything possible to secure the exclusivity it claimed in its sales brochure.
The CJEU held that the Directive must be interpreted as meaning that, if a commercial practice satisfies all the criteria set out in Article 6(1) of the Directive, which governs misleading practices in relation to the consumer, then it is not necessary to determine whether such a practice is also contrary to the requirements of professional diligence, as referred to in Article 5(2) (a) of the Directive, in order for it legitimately to be regarded as unfair, and therefore prohibited.
The CJEU pointed out that Article 5(4) of the Directive provides that commercial practices are unfair where it is established they are misleading or aggressive ‘as set out in’, Articles 6 and 7 and Articles 8 and 9, respectively, of that Directive. It stated that that expression means that the determination of whether the practice concerned is misleading or aggressive depends only on the assessment of the practice in the light of the criteria set out in those latter articles alone. That interpretation is supported by the fact that Article 5(4) does not contain any reference to the more general criteria set out in Article 5(2).
The CJEU stated that its interpretation was supported by the objective pursued by the Unfair Commercial Practices Directive of providing a high level of consumer protection in unfair business-to-consumer commercial practices.
This decision helpfully clarifies the criteria to be satisfied in order to show a misleading or an aggressive commercial practice. However it also serves as a warning to businesses that operating with professional diligence will not be enough to defeat an allegation of an unfair commercial practice.