Today we come
back to the judgment in C-179/21, absoluts-bikes, issued by the Court of Justice
earlier this year. The decision may have passed under many radars, particularly
as it was not preceded by the opinion of the Advocate-General. However, it is
worth taking a closer look at it, as the judgment is not just interesting at
the theoretical level, but also quite alarming in its implications.
Facts of the
case
The judgment
was triggered by a dispute between two German traders offering consumer goods
for sale online: the-trading-company and absoluts-bikes. According to the
former, the latter failed to provide sufficient information about the products
which it sold with help of Amazon. More specifically, the dispute concerned the
listing of a pocket knife of the Swiss manufacturer Victorinox. In that
listing, under the subheading labelled “Further technical information”, the
consumers could find a link described as “Operating instructions”. The link led
to a two-page information sheet, drafted by the knife’s manufacturer and referring,
among others, to the ‘Victorinox guarantee’, describing the damage covered and
the relevant time period.
The claimant
argued that the information provided by the defendant was not sufficiently
specific. In particular, absoluts-bikes failed to inform the consumers that the
manufacturer’s guarantee did not affect their statutory rights, neither did it describe
the territorial scope of the guarantee. This – following the claimant – constituted
an infringement of the German act on unfair competition. Since the relevant provisions
had their background in the EU law, namely the Consumer Rights and Consumer
Sales Directives, the national court decided to stay the proceedings and refer preliminary
questions to the Court of Justice.
Guarantees
in the Consumer Rights Directive
The Court began its analysis by turning to Directive 2011/83/EU on consumer
rights and I will also limit this blog post to this part, as it is most
developed and most consequential.
To recall, Article 6(1)(m) of the CRD requires traders to inform the
consumers before concluding distance contracts, where applicable, about “the
existence and the conditions of after sale customer assistance, after-sales
services and commercial guarantees”. The relevant question in the present case was
whether the information requirement arises “merely through the existence of
that guarantee or whether it is only in certain circumstances that the trader
is required to inform the consumer of the existence and conditions of such a
guarantee” (para. 24).
The Court began its reasoning by recalling the purpose of pre-contractual
information duties laid down in the Directive. The relevant provision, it remarked,
“seeks to ensure the communication to consumers, before the conclusion of a
contract, both of information concerning the contractual terms and the
consequences of that conclusion, allowing consumers to decide whether they wish
to be contractually bound to a trader, and of information necessary for proper
performance of that contract and, in particular, for the exercise of their
rights” (para. 26). It follows that the information duties aim to allow consumers
to, firstly, make informed decisions about the contracts they wish to enter
into and, secondly, effectively exercise their rights after contract conclusion.
These two
main functions of information duties have previously been remarked upon in the
scholarship and testify to the importance of mandatory disclosure beyond the
moment of the contract conclusion. Indeed, the paradigm of consumer protection
that focuses primarily on allowing consumers to make informed decisions has long
been questioned in the light of behavioural findings showing that consumers may
suffer from information overload and take account only of certain details communicated
to them by the traders. Such details may nonetheless prove rather valuable at a
later stage, e.g. when a problem related to the contract arises. This also
seems to be the case for the producer’s guarantees, discussed in the present context.
Against this
background, the attention paid by the Court to the two functions of information
duties is be welcomed. Unfortunately, it is not subsequently translated to the
remaining part of the judicial reasoning. Instead, the Court appears to focus primarily
on the influence of pre-contractual disclosure on consumers’ decisions to enter
into contracts, and views it through a particularly narrow lens, namely the
lens of a possible deception. This lens, however, is not an obvious one in the
context of the Consumer Rights Directive, but rather seems aligned with the
perspective of (certain provisions of) the Unfair Commercial Practices
Directive.
How then,
did the Court proceed with its analysis? First, rather typically, it attempted
the decode the meaning of Article 6(1)(m) of the CRD by looking at its wording,
context and objectives. Referring to Article 2(14) of the CRD it concluded
that the concept of a ‘commercial guarantee’, within the meaning of Directive
2011/83/EU, covers both commercial guarantees offered by traders (sellers) and by
manufacturers. The trader is thus required, at least in certain circumstances,
to provide the consumer with details concerning not only its own commercial
guarantee, but also that of the manufacturer. So far, so good.
Turning to
the objectives of the CRD the Court understandably referred to establishing “a
high level of consumer protection”, also pointing to Article 169 TFEU and
Article 38 of the Charter of Fundamental Rights (para. 38). Having said that, however, the Court went on
to emphasizing the need of ensuring “the right balance between a high level of
consumer protection and the competitiveness of enterprises, while respecting
the enterprise’s freedom to conduct a business”, as also set out in the Charter
(para. 39). The Charter was thus invoked primarily to set the scene as one in
which competing interests must be balanced.
Focusing on
the interests of traders, the judgment concluded that an unconditional
obligation to provide information about commercial guarantees, in all
circumstances, “seems to be disproportionate, in particular in the economic
context of the functioning of certain undertakings, in particular small
undertakings” (para. 40). This seems rather uncontroversial: it would indeed be
burdensome for traders to have to continuously collect and update information about
any potential guarantees, when they are not the ones providing them, nor pointing
at them in their offer. However, according to the Court, the balancing exercise
should go even one extra step in favour of the traders. And interestingly, the Court
did so by referring to the notion of legitimate consumer interests – and mobilizing
it to the consumers’ disadvantage.
To
illustrate this point consider the following passage of the judgment:
In
those circumstances, the weighing up of a high level of consumer protection and
the competitiveness of enterprises, as set out in recital 4 of Directive
2011/83, must lead to the conclusion that the trader is required to provide the
consumer with pre-contractual information on the manufacturer’s commercial
guarantee only where the legitimate interest of the average consumer, who is
reasonably well informed and reasonably observant and circumspect to a high
level of protection must prevail in the light of his or her decision whether or
not to enter into a contractual relationship with that trader. (para. 41)
As is
apparent from the cited passage, the Court seems to forget about the double
function of information duties referred to earlier in the judgment. This is additionally
harsh for consumers considering the subsequent reasoning, whereby the Court
considers a legitimate interest in being informed about producers’ guarantees to
exist “where the trader makes the manufacturer’s commercial guarantee a central
or decisive element of its offer” (para. 44). The latter is supposedly the case
“where the trader expressly draws the consumer’s attention to the existence of
a manufacturer’s commercial guarantee for sales or advertising purposes and,
accordingly, to improve the competitiveness and attractiveness of its offer in
comparison with its competitors’ offers” (para. 45). When this is not the case,
the information on the guarantee is not likely to mislead the consumer, and
thus their legitimate interest does not seem to exist.
In so doing,
the Court essentially limits consumer protection not only to the
pre-contractual phase and to the contested idea of informed decision-making,
but also to the protection from being “misled by unclear, ambiguous or
incomplete information”. As mentioned, that seems to rather be the domain of
the Unfair Commercial Practices Directive, in which a link with the CRD is
indeed established (cf. Article 7(5) UCPD). Moreover, the way in which the “average
consumer” notion is constructed in the case at hand appears at least debatable.
As a reference point for undertaking the balancing exercise the Court refers to
the consumer, “who is reasonably well informed and reasonably observant and
circumspect with respect to the different rights which he or she may exercise
under a guarantee or to the real identity of the guarantor” (operative part). However,
information about those very factors is precisely what the consumer should be
equipped with by means of mandatory disclosure. Overall, it can be questioned,
in my view, whether the reading adopted by the Court in the case at hand
corresponds with the requirement of a “high level” of consumer protection.