Act II of 2008 introduced various initiatives to enhance consumer protection. For example, it established an effective way to deter those who ignored decisions by the Consumer’s Claims Tribunal.
Businesses are bound not to omit information consumers need to make informed decisions
This was, however, short lived and removed by Act VI in April 2011.
The 2008 amendments were also the instrument that transposed the Unfair Commercial Practices Directive (2005/29/EC) into Maltese law.
This is a so-called ‘maximum harmonisation’ directive, meaning that EU members would not be able to apply higher standards.
In our case, this is hardly a worry because, to date, when it came to consumer protection matters the legislator was never bold enough to go significantly beyond the minimum standards set by EU legislation.
Luckily for Maltese consumers, the legislator could not deviate from the Unfair Commercial Practices Directive and was required to transpose the standards set in full. These provisions had their baptism of fire in 2009, barely one year after their transposition.
The decisions taken in 2009 were recently confirmed by the Competition and Consumer Appeals Tribunal.
On February 6, 2009, just a few days after Melita Mobile ventured in the mobile telephony market, the then Consumer and Competition Division issued a press release informing “the public that the advertisement and the promotion in relation to the new mobile service launched by Melita Mobile Ltd would appear to contain elements that might potentially mislead consumers”.
This notice concerned adverts promoting Melita’s new mobile service, which stated that rates were “up to 30 per cent cheaper”.
The division was concerned that the way Melita’s adverts were presented “would lead eventually the consumer to take a transactional decision which he would not have taken otherwise”.
Indeed, it argued that consumers might be confused and would not understand that “a full minute is charged for a call lasting even a few seconds for the first minute”.
Following the publication of this press release, further investigations were carried out.
Eventually, on July 17, 2009, the director general, in the function of Director for Consumer Affairs, decided that Melita’s promotional campaign was tantamount to an unfair commercial practice.
An administrative fine was also imposed.
Melita appealed the decision. Its arguments were three. First and foremost, the director should have consulted it prior to issuing the press release and, therefore, this was unjust and, consequently, illegal.
Secondly, Melita claimed that the director made an erroneous evaluation of the facts. It argued that the advertised tariffs were lower than those of its competitors.
Finally, the company argued that in an advert it was not possible, in a few words, to provide details on the terms and conditions. It explained that the terms and conditions were provided to consumers on leaflets, from shops and on its website.
Therefore, according to Melita, there was an erroneous interpretation of the law.
The tribunal threw out Melita’s argument regarding the press release issued by the division.
It argued that this was neither part of the decision nor was it a procedural requisite which the director was legally bound to follow when administrative proceedings are initiated.
The tribunal disregarded the thesis that the press release was a decision.
Indeed, it noted that the words contained in the press release were a clear sign that an investigation was being undertaken and one could not argue that, at that stage, the director had decided.
The tribunal opined that Melita’s adverts did, in fact, mislead consumers because, effectively, not all of its calls were 30 per cent cheaper than those of its competitors and this due to the fact that the end user had to pay for a whole minute even though a call would have lasted a few seconds. This fact was not conspicuously displayed on the advert and was only indicated in small print at the very bottom of the publicity brochure.
Furthermore, the words “every second” were printed conspicuously in bold whereas the phrase “after the first minute” appeared in normal print.
The tribunal also noted that there was no indication of what were the terms and conditions. There was no doubt, it added, that the consumer was not in a position to make an informed transactional decision.
The tribunal observed that, undoubtedly, the way the promotional material was designed and used by Melita was to attract the consumer’s attention through the possibility of saving money by being charged on a per second basis.
However, the advert did not indicate clearly, and with the same prominence, that the consumer would still have to pay for a whole minute even if a call would last a few seconds. The tribunal also noted that advertised discounts should be genuine.
Although the tribunal’s decision concerns facts that took place in 2009, it establishes a set of principles for consumers, traders and regulators that still remain valid today in that: (1) advertising takes various forms and may mislead; (2) there is a duty on businesses not to omit information that consumers need to make informed decisions; (3) information should not be hidden or provided in an unclear or ambiguous manner; and (4) what is advertised should be genuine.
Antoine Grima is legal counsel and council member of the Consumers’ Association.