In the European Union, the rules relating to unfair business-to-consumer commercial practices are subject to national law; however, the Unfair Commercial Practices Directive (UCPD) fully harmonizes this field. Hence, Member States are not allowed to implement or apply either less or more restrictive or prescriptive measures. The UCPD states that fair commercial practices shall be prohibited (Article 5 Para. 1). By way of example, a commercial practice is considered unfair if it is deemed to be misleading (Article 5 Para. 4 lit. a) of the UCPD).
On April 16, 2015, the European Court of Justice (ECJ) ruled that an undertaking that provides a consumer with erroneous information in the context of after-sales services – in this case regarding the termination date of the consumer-contract – undertakes a misleading commercial practice. This applies even if the false information concerns only one single customer in one single case, if the false information was provided in an allegedly unintentional manner and if the consumer could himself have obtained the correct information.
Facts of the Case
The case – which took place in Hungary – is based on the following facts.
The undertaking is a provider of cable television services. The consumer was a long-term subscriber with the undertaking and wished to terminate his contract with it. The consumer wished to ensure that the end of the contract would coincide with the last day of his service, which he had prepaid. Therefore, the consumer requested that the undertaking inform him of the date of termination of service. The undertaking confirmed that this was February 10, 2011. Upon receipt of this information, the consumer terminated the contract effective February 10, 2011. The services however, were not terminated until February 14, 2011. On March 12, 2011 the undertaking requested payment for the period from February 12 to February 14, 2011. Hence, the consumer received requests for payment from two different service providers for the same period even though the relevant services were of a type that could not have been received from both providers at the same time.
The consumer lodged a complaint with the national consumer protection authority "Consumer Protection Inspectorate under the Governmental Administration of Budapest" (CPIGAB). The CPIGAB inspectorate ordered the undertaking to pay a fine in respect of an unfair commercial practice in accordance with the Hungarian law prohibiting unfair commercial practices in relation to consumers. The undertaking filed a court action against the decision of the CPIGAB and the court (2nd Instance) stayed the proceedings and referred to the ECJ.
Referral to and Decision of the ECJ
The national court referred to the ECJ with a number of questions, including whether the communication of false information to a single consumer may be regarded as an unfair commercial practice within the meaning of the UCPD.
The ECJ explained that the UCPD seeks to ensure a high level of consumer protection by carrying out a complete harmonization of the rules relating to unfair business-to-consumer commercial practices, and that the UCPD is characterized by a particularly wide scope of ratione materiae. In this light, the communication of information, as in this proceeding, made by an undertaking in the context of the after-sales service relating to a subscription to cable television services by an individual must be regarded as coming within the concept of ‘commercial practice'.
This commercial practice was misleading, i.e. unfair, within the meaning of the UCPD, the ECJ continued. As is apparent from the actual wording of Article 6 para. 1 of the UCPD, a commercial practice shall be regarded as misleading if:
…it contains false information and is therefore untruthful or in any way deceives, or is likely to deceive, the average consumer, in relation to, inter alia, the main characteristics of a product or service, including after-sales service, the price or the manner in which the price is calculated and consumer rights, and if it causes, or is likely to cause, the consumer to take a commercial decision that he would otherwise not have taken.
The ECJ found that these criteria were not satisfied, because:
- the consumer received from a professional, following his request to exercise his right to terminate a contract for services concluded with that professional, erroneous information about the duration of the relationship between the two parties, and
- the mistake made by the undertaking prevented the individual from making an informed choice and, moreover, occasioned him additional costs.
The ECJ stated that it was immaterial in this context that the action of the professional concerned took place on only one occasion and affected only one single consumer. The same principle applied to the fact that the professional acted in an allegedly unintentional manner. It was also considered irrelevant that the consumer could himself have obtained the correct information.
Although the rules relating to unfair business-to-consumer commercial practices are fully harmonized by the UCPD, this does not apply for sanctions of unfair competition behavior. The UCPD only rules that unfair commercial practices ‘shall be prohibited' and it is for the Member States to provide an appropriate system of sanctions against professionals who employ unfair commercial practices (Article 13 of the UCPD). The Member States must ensure that those sanctions comply, in particular, with the principle of proportionality. It is in this context that due account should be taken of factors such as the frequency of the practice complained of, whether or not it is intentional, and the degree of harm caused to the consumer.
Therefore, the sanctions depend on the applicable national law. For example, under German law an unfair commercial practice may result in claims for cease and desist asserted by competitors, consumer protection organizations, competition organizations or chambers of commerce (Sec. 8 Para. 1 and Para. 3 of the German Unfair Competition Act). Competitors may also claim reimbursement for damages (Sec. 9 of the German Unfair Competition Act).