Tied offers have traditionally been prohibited under the Belgian Fair Trade Practices Act (hereinafter the “FTPA”), except in the very limited number of cases enumerated in the FTPA. A tied offer shall be found whenever the acquisition, free of charge or for a fee, of goods, services or any other advantage is tied to the acquisition of other goods or services.
This prohibition was challenged on the ground that it is incompatible with Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market (the “Directive”). In this respect, the Antwerp Commercial Court referred two requests for a preliminary ruling to the European Court of Justice (ECJ) in 2007. The question was whether the Directive precludes national which fundamentally prohibits tied offers.
The ECJ rendered its decision today and ruled that, it is first necessary to determine whether tied offers constitute commercial practices within the meaning of the Directive.
As the Advocate-General observed on 21 October 2008, tied offers constitute commercial acts which clearly form part of an operator’s commercial strategy and relate directly to the promotion thereof and the operator’s sales development. Therefore, they fall within the scope of the Directive.
The ECJ recalled that the Directive aims to harmonize rules on unfair business-to-consumer practices and to achieve a higher level of consumer protection. Thus, the Member States may not adopt stricter rules than those provided for in the Directive.
The Directive considers that “unfair commercial practices” are unfair and prohibited:
- if contrary to the requirements of professional diligence and if it distorts or is likely to distort the economic behaviour of the average consumer;
- if misleading or aggressive (Articles 6 to 9 of the Directive define what should be considered misleading or aggressive);
- if included in Annex I to the Directive, which contains a list of commercial practices that shall in all circumstances be regarded as unfair.
Consequently, only a commercial practice which appears on the list set forth in Annex I can be deemed unfair without a case-by-case assessment pursuant to both (i) and (ii) above.
The ECJ held that by generally and pre-emptively prohibiting tied offers, notwithstanding the fact that such practices are not referred to in Annex I to the Directive, the Belgian legislation does not meet the requirements of the Directive.
Due to their limited and pre-defined nature, the exceptions laid down in Articles 55 to 57 of the FTPA, cannot replace a case-by-case analysis of the (un)fairness of a commercial practice.
In light of the ECJ's decision, it is clear that the FTPA will have to be amended. Of course, tied offers that are (i) contrary to the requirements of professional diligence and distort the economic behaviour of the average customer or which are (ii) misleading or aggressive shall continue to be prohibited.
Pending amendment of the FTPA by the Belgian Parliament, the Belgian courts and authorities are obliged to give full effect to the ECJ's ruling. This means that the courts and authorities will have to set aside the general prohibition on tied offers.
Other provisions of the FTPA that could also be considered contrary to the Directive may have a similar fate in store for them.