A commercial practice that misleads consumers is unfair and hence illegal in terms of EU consumer law. In such cases, there is no need to consider whether the trader acted diligently or not, the Court of Justice of the European Union recently asserted.
The objective of the EU’s Unfair Commercial Practices Directive is to ensure that consumers are not misled or exposed to aggressive marketing strategies and that any claim made by traders is clear, accurate and substantiated. In this way, consumers are able to make informed choices. In terms of the law, unfair commercial practices are deemed to be those which do not comply with the principle of professional diligence and may influence consumers’ transactional decisions. On the other hand, a practice is deemed to be misleading if it contains false or untrue information or is likely to deceive the consumer, even though the information given may be correct.
The facts of this particular case were briefly as follows. Team4 Travel, a travel agency established in Austria stated in its English-language brochure that various hotels could be booked for certain dates exclusively through its services. In fact, the hotels concerned had, by contract, guaranteed such exclusivity for Team4 Travel. Nonetheless, the hotels concerned did not honour such exclusivity and granted quotas for the same dates to a competing travel agency, CHS, also located in Austria. Team4 Travel was not aware of this fact at the time that its brochures were distributed.
Even if a trader does his utmost to ensure that he is acting diligently, he could still very well be found to be in breach of the law
CHS considered the exclusivity statement contained in Team4 Travel’s brochures to be an unfair commercial practice and it asked the Austrian courts to prohibit Team4 Travel from using the statement. The Austrian Court of Appeal observed that the exclusivity clause contained in Team4 Travel’s brochures was objectively incorrect. It opined that, in terms of the EU’s Unfair Commercial Practices Directive, such information constituted, from the viewpoint of the average consumer, a misleading commercial practice. However, the national court wanted further guidance from the CJEU as to whether, before considering a practice to be misleading, it was necessary to determine whether such practice was contrary to the requirements of professional diligence. If this was the case, then Team4 Travel could not be found to be in breach of the law since it had done everything to secure the exclusivity it claimed in its brochures.
To this end, the national court made a preliminary reference to the CJEU requesting guidance on the matter in terms of the relevant EU Directive.
The CJEU declared that, if a commercial practice satisfies all the criteria expressly set out in those provisions of the directive which deal with misleading practices in relation to the consumer, it is not necessary to determine whether such a practice is also contrary to the requirements of professional diligence for it to be considered as illegal.
The court affirmed that, in terms of the law, the misleading nature of a commercial practice derives solely from the fact that it is untruthful inasmuch as it contains false information. Similarly, a practice must be considered to be misleading if it is likely to deceive the average consumer in relation to the nature or main characteristics of a product or a service and which is likely to lead the consumer to enter into a transaction which he would otherwise not have entered into. The CJEU asserted that the components of a misleading commercial practice are expressed with reference to the consumer. When such components are present, the practice must be regarded as misleading and, therefore, unfair and prohibited, and it is not necessary to verify whether the trader acted diligently or not from a professional point of view.
Such a strict interpretation of the law on unfair commercial practices sends a clear signal to entrepreneurs to tread carefully when engaging in certain practices in the course of their trade or business. As this ruling clearly shows, even in cases where a trader does his utmost to ensure that he is acting diligently, he could still very well be found to be in breach of the law if a particular practice conveys untruthful information. What seems to be of paramount importance is the high level of protection that must be awarded to consumers in order to ensure that they are not misled into entering into transactions because of unfair commercial practices engaged into by a trader.
mariosa@vellacardona.com
Mariosa Vella Cardona is a freelance legal consultant specialising in European law, competition law, consumer law and intellectual property law.