Germany will shortly implement the Directive 2005/29 EC on the Protection Against Unfair Commercial Practices, thereby amending many aspects of the current regulations of the Act on Unfair Competition. The new regulations mostly concern the B2C relationship, i.e., the relations between businesses and consumers. The term “commercial activity” (geschäftliche Handlung) takes up a prominent spot. This term encompasses any behavior of a person for his own company or a third party company before, during or after a business transaction that is objectively connected with the promotion of the sale or supply of a product or service, or with the closing of a contract on products or services. Thus the new Act on Unfair Competition also addresses after-contractual practices. Furthermore, this may also include actions, omissions, behavior and commercial communications, particularly advertising and marketing, which directly serve the merchandising, the sale or the supply of a product to a consumer. It is therefore vital to consider these new rules prior to implementation of advertising campaigns and marketing measures addressed to consumers.  

As an example, the misleading commercial activities with regard to  

  • The advantages and risks of goods and services,
  • The existence of a special price advantage,
  • Statements or symbols in connection with direct or indirect sponsoring, or
  • The need for a service, part, replacement or repair will now also be considered unfair.  

“Misleading Omissions”

In addition, the new Act on Unfair Competition now provides for regulations on misleading omissions. According to the relevant provision, traders may not deprive the consumer of the material information that the average consumer needs. The main characteristics of a product or service, the identity and address of the trader, the ultimate price or the manner in which the price is calculated, the arrangements for payment, delivery and performance, as well as the existence of a right to withdrawal or cancellation, are considered material information.  

“Black List”

The new law also implements a list of commercial activities that will be deemed unfair in any circumstances.

  • This list includes 30 unfair practices, inter alia:
  • The untrue claim by a trader that he belongs to the signatories to a code of conduct
  • Statements that certain goods or services are available for a short term only to induce the consumer to make an immediate decision
  • The untrue claim or the raising of the untrue impression that rights given to consumers in law are a distinctive feature of the trader’s offer
  • Advertisement disguised as information
  • “Bait and Switch” activities
  • Misleading practices regarding the used language, i.e., the services are provided in a different language than the one used in the negotiations
  • Offering something “for free,” “at no cost,” “gratis,” “free of charge” or in a like fashion, if the purchaser is indeed required to bear costs (except for the inevitable transportation costs)
  • The direct exhortation, included in an advertisement, to children to buy advertised products or to persuade their parents or other adults to buy advertised products from them  

EU Harmonization

Since the Directive has to be implemented in all Member States of the EU, and in some states it already has been implemented, it creates harmonization in this area to this extent. It is, however, apparent that the new regulations will give rise to a multitude of new questions.