In relation to Purely Creative Ltd v The Office of Fair Trading (OFT) [2011] EWCA Civ 920, the Court of Appeal of England and Wales has referred the OFT’s unfair commercial practices case against promoters of prize draw competitions to the Court of Justice of the European Union.

Background

The OFT sought injunctions for alleged breaches by Purely Creative of the Consumer Protection from Unfair Trading Regulations 2008 (CPUTRs) in relation to five promotions. To claim a prize, the consumer had to call a premium rate number. The consumer was told the cost per minute and the maximum duration of the call, but not that the minimum time within which he would obtain the information was seconds short of the maximum. Nor was he told that from the cost per minute of £1.50 the promoter took £1.21.

At first instance, Briggs J accepted undertakings in lieu, one of which addressed the prohibition in the CPUTRs based on paragraph 31 of the Annex of the Unfair Commercial Practices Directive (2005/29/EC) against creating the “false impression” that the consumer has won a prize when in fact he has to incur a cost to claim it.

Questions to the CJEU

Before the Court of Appeal, the promoters challenged that undertaking insofar as it prohibited requiring payment from the consumer which was “a substantial proportion of the unit cost to the [promoter]” of providing the prize. The OFT crossappealed to the effect that the undertaking was not broad enough and should be replaced with an undertaking that stipulated that the consumer should not incur any cost whatsoever, or at most a de minimis cost.

The Court of Appeal considered that the OFT’s cross-appeal raised an important issue upon which divergence of approach by EU Member States in implementing Paragraph 31 was “indicative of doubt”. The Court therefore decided to refer this and related issues to the CJEU.

The questions referred are summarised below:

  1. Does the banned practice prohibit traders from informing consumers that they have won a prize or equivalent benefit when in fact the consumer is invited to incur any cost, including a de minimis cost, in relation to claiming the prize or equivalent benefit?
  2. If the trader offers the consumer a variety of possible methods of claiming the prize or equivalent benefit, is Paragraph 31 of Annex 1 breached if taking any action in relation to any of the methods of claiming is subject to the consumer incurring a cost, including a de minimis cost?
  3. If Paragraph 31 of Annex 1 is not breached where the method of claiming involves the consumer in incurring de minimis costs only, how is the national court to judge whether such costs are de minimis? In particular, must such costs be wholly necessary
  • In order for the promoter to identify the consumer as the winner of the prize, and/or
  • For the consumer to take possession of the prize, and/or
  • For the consumer to enjoy the experience described as the prize?
  1. Does the use of the words “false impression” in Paragraph 31 impose some requirement additional to the requirement that the consumer pays money or incurs a cost in relation to claiming the prize, in order for the national court to find that the provisions of Paragraph 31 have been contravened?
  2. If so, how is the national court to determine whether such a “false impression” has been created? In particular, is the national court required to consider the relative value of the prize as compared with the cost of claiming it in deciding whether a “false impression” has been created? If so, should that “relative value” be assessed by reference to
  • The unit cost to the promoter in acquiring the prize?
  • Or to the unit cost to the promoter in providing the prize to the consumer?
  • Or to the value that the consumer may attribute to the prize by reference to an assessment of the “market value” of an equivalent item for purchase?

Comment

There is real potential now for an important clarification in this area of law.