Advertising can boost any business. Creating an effective advert to attract consumers’ attention may prove to be tricky with the mass of adverts hurled our way; creating an effective advert in line with EU legislation may prove to be even trickier.
Ving Sverige, a travel agency in Sweden, was engaged in the business of arranging charter and package holidays, selling individual tickets and hotel accommodation. As part of its normal advertising campaign, it published in a daily local newspaper a commercial communication offering trips to New York, “from SEK 7820”, where SEK refers to the Swedish kronor. The advertisement also included an indication of the destination, the hotel, the number of nights covered and that the price applied to one person staying in a double room.
On account of this advert, the Swedish consumer organisation filed court proceedings, claiming this advertisement to constitute an unfair commercial practice as it did not contain sufficient information on the main characteristics of the trip, particularly arguing against entry-level prices. The travel agency on the other hand claimed that its advertisement was not an invitation to purchase, and therefore the provisions of the Unfair Commercial Practices Directive should not apply to it.
In its decision, the Court of Justice of the European Union categorised the communication appearing on the Swedish newspaper as an invitation to purchase to consumers, rather than a simple advertisment. An invitation to purchase exists as soon as the information on the product advertised and its price are sufficient for the consumer to be able to make a transactional decision. On this basis, the court concluded that the commercial communication had to be analysed in accordance with the strict requirements of the Unfair Commercial Practices Directive.
The question therefore arose whether the indication of price in the invitation to purchase could be only by means of an entry-level price, that is the lowest price for which the advertised product or category of products can be bought. The directive refers to price without demanding the identification of a final price, and it envisages instances where a trader may not reasonably be able to communicate, in advance, the final price.
In view of this, the court concluded that entry-level prices could be seen as meeting the requirement within the meaning of the directive, if, on the basis of the nature and characteristics of the product and the commercial medium of communication used, that reference enabled consumers to take transactional decisions. A reference only to an entry-level price may be justified also in situations where the price cannot reasonably be calculated in advance.
Thus, a reference only to an entry-level price in an invitation to purchase cannot be regarded, in itself, as constituting a misleading omission in an advert. Yet, the court considered that providing the consumer just with an entry-level price might constitute a misleading omission, when for instance the medium of communication used allows the trader to give more details on how the total price will be calculated or the trader did not make an effort to provide this information by other means.
The court also pointed out that the communication must include material information that allows the consumer to take an informed transactional decision. Depending on the medium of communication used, space may either be limited to allow for the provision of all information that might be seen as desirable or comes at a hefty price. Hence traders normally refer consumers to their website from where to obtain additional information.
In this respect, the court held that it may be sufficient for only selected characteristics of a product to be given and for the trader to refer to its website, provided however that on that site there is essential information on the product’s main characteristics, price and other terms in accordance with the requirements in the directive.
In its conclusion, the court ruled that it is for the national courts to assess, on a case-by-case basis, taking into consideration the context of the invitation to purchase, the medium of communication used and the nature and characteristics of the product, the actual implementation of the directive’s rules. It reminded national courts to look beyond just the provisions of the Unfair Commercial Practices Directive and to pay attention to all other information duties that have been established under EU consumer law that traders are required to comply with.
Dr Grech is an associate with Guido de Marco & Associates and heads its European law division.