Contests are fair game - opinion of AG in ECJ case Mediaprint (C-540/08)

24 March 2010: ECJ Advocate General's opinion in case C-540/08 Mediaprint

An opinion of AG in the ECJ case C-540/08 - Mediaprint - has been published today. This is another case concerning not only the interpretation of the Directive 2005/29/EC on unfair commercial practices but also the subject of combined offers.

The parties in these proceedings are two competing Austrian newspaper/magazine publishers. The defendant published an article in his newspaper announcing the election of 'Best Footballer of the Year'. Readers who would buy the newspaper, cut out a coupon and send it with their vote, would participate in the contest to win a dinner with the winner of this election. However, there was also an option not to go online and cast a vote online (without having to buy the newspaper). (Par. 11)

The Austrian law contains a general prohibition of advertising, offering and giving away of gifts by newspapers and magazines. On the basis of this provision, the practice such as described above - offering a chance to play in a contest with purchase of a newspaper - would be prohibited. Two questions have been asked by the Austrian court:
1. Whether the general prohibition in Austrian law is compatible with the regulation of the Directive on unfair commercial practices?
2. In case the Austrian law was not compatible with the provisions of the Directive on unfair commercial practices - can a commercial practice of combining a possibility to take part in a contest with a sale of a newspaper be seen as unfair because even if it is not the only reason it is definitely one of the decisive reasons to buy this newspaper?

In the opinion of the Advocate General, the Austrian law is indeed not compatible with the provisions of the Directive on unfair commercial practices.

Firstly, the scope of the Directive concerns not only the B2C practices which affect consumers but also those which might affect competitors as long as they remain a threat to the protection of consumers. The only exclusion from the scope of the application of the Directive is for practices which harm only economic interests of the competitors and do not influence consumers at all. (Par. 47, 51, 54) This means that the prohibition in Austrian law, even if it's aim is to protect free media and fair competition at the newspapers market, when it influences consumers has to be in accordance with the provisions of the Directive on unfair commercial practices. (Par. 54)

The AG considered then the character of the prohibition in Austrian law and whether it could be compatible with the provisions of the Directive. The Directive assumes that commercial practices are fair and accepts the freedom of conducting business that should not be limited unless the requirements for such a limitation as described in the Directive are fulfilled. (Par. 74) The Austrian law, however, prohibits all combined offers for two separate products or services that could raise the sale of one of them. (Par. 71) While the Directive assumes that a practice is fair until proved otherwise, the Austrian law takes a contrary stand. This general prohibition knows its exceptions in Austrian law, these exceptions are not so broad, however, as to justify the prohibition on the basis of the Directive on unfair commercial practices. (Par. 76-77)

Already in the previous judgments of ECJ it has been stated that combined offers are not blacklisted in the Directive on unfair commercial practices and therefore should not be prohibited in all circumstances. They may be seen as unfair only on a case by case basis and when all the requirements listed in the Directive on unfair commercial practices are fulfilled. (Par. 83 ff)

Having established the lack of compliance of the Austrian provision, the AG turned to the second question: whether contests offered by newspapers should be seen as unfair commercial practices since they influence the decision of the consumer to buy the newspaper? The AG stated here, that more conditions would have to be fulfilled to see such commercial practices as unfair - from Article 5 sub 2 of the Directive. Firstly, one would have to look at an average consumer and whether he would be moved to buying a newspaper in case it gave him a possibility to participate in a contest. (Par. 131-132). Secondly, the commercial practice would have to be contrary to the requirements of professional diligence. (Par. 133) The AG concluded that there are no grounds to see such commercial practices as unfair in any circumstances. (Par. 134)

If ECJ follows the same reasoning that would be good news to all us consumers enjoying participation in a contest every now and then...

Targeted and not full harmonization

Vivianne Reding, Vice-President of the European Commission responsible for Justice, Fundamental Rights and Citizenship spoke in Madrid on 15th of March 2010 on: "An ambitious Consumer Rights Directive: boosting consumers' protection and helping businesses".

The main message of her speech is that the European Commision seems to be ready to give up the idea of maximum harmonization and instead focus on the targeted harmonization. This means that the degree of harmonization would depend in each case on the benefit of consumers. That means that the maximum harmonization could still be an option but not for every transaction regulated in the directive, but only for those where it is seen as really needed, e.g. by transaction concluded online, where security for consumers and legal clarity for service providers and sellers are crucial. For direct transactions in which protection of the consumers is not needed to such a big extent, targeted solutions would be used.

Further comment may be found on the website of the European Parliament.

To settle or not to settle? - ECJ says: Settle! C-317/08 Alassini

18 March 2010: ECJ case C-317/08, C-318/08, C-319/08 and C-320/08 Alassini

The ECJ gave a judgment today in the Alassini case (ECJ C-317/08, C-318/08, C-319/08 and C-320/08) concerning interpretation of Article 34 of the Universal Service Directive. The Universal Service Directive concerns the provision of electronic communications networks and services to end-users.

Article 34 of the Universal Service Directive states:

‘1. Member States shall ensure that transparent, simple and inexpensive out-of-court procedures are available for dealing with unresolved disputes, involving consumers, relating to issues covered by this Directive. Member States shall adopt measures to ensure that such procedures enable disputes to be settled fairly and promptly and may, where warranted, adopt a system of reimbursement and/or compensation. Member States may extend these obligations to cover disputes involving other end-users.
2. Member States shall ensure that their legislation does not hamper the establishment of complaints offices and the provision of on-line services at the appropriate territorial level to facilitate access to dispute resolution by consumers and end-users.
3. Where such disputes involve parties in different Member States, Member States shall coordinate their efforts with a view to bringing about a resolution of the dispute.
4. This Article is without prejudice to national court procedures.’

The Italian government while implementing this Directive adopted mandatory settlement procedure that had to be followed by the parties in the dispute prior to instigating court procedures. In the given case the defendants have argued that the actions against them were inadmissible because the applicants (consumers) had not first initiated the mandatory attempt to settle the dispute before the settlement bodies, as required under the Italian law. The question referred by the Italian court to the ECJ was (Par. 37):

'whether Article 34 of the Universal Service Directive and the principle of effective judicial protection must be interpreted as precluding legislation of a Member State under which the admissibility before the courts of actions relating to electronic communications services between end-users and providers of those services, concerning the rights conferred by that directive, is conditional upon an attempt to settle the dispute out of court.'

The ECJ considered that matter and adjudicated that the provision of the Universal Service Directive have not been infringed by the Italian law.

The Universal Service Directive requires Member States to ensure that (Par. 38):

'transparent, simple and inexpensive out-of-court procedures are available, enabling disputes involving consumers and relating to issues covered by that directive to be settled fairly and promptly. Those procedures are always to be without prejudice to national court procedures.'

Since the Universal Service Directive does not prescribe specific nature of the out-of-court procedures which have to be introduced, it has to be concluded that Member States are not limited in making out-of-court procedures for the settlement of disputes mandatory (Par. 42). To the contrary (Par. 45):

the fact that national legislation such as that at issue in the main proceedings has not only put in place an out-of-court settlement procedure, but has also made it mandatory to have recourse to that procedure before bringing an action before a judicial body, is not such as to jeopardise the attainment of that objective. On the contrary, such legislation, in so far as it ensures that out-of-court procedures are systematically used for settling disputes, is designed to strengthen the effectiveness of the Universal Service Directive.

Further, the ECJ considered whether the Italian legislation did not infringe the principles of equivalence, effectiveness and the principle of effective judicial protection. It has been concluded that these principles aren't breached provided that (Par. 53-58):

that procedure does not result in a decision which is binding on the parties, that it does not cause a substantial delay for the purposes of bringing legal proceedings, that it suspends the period for the time-barring of claims and that it does not give rise to costs – or gives rise to very low costs – for the parties, and only if electronic means is not the only means by which the settlement procedure may be accessed and interim measures are possible in exceptional cases where the urgency of the situation so requires.

It is for the national court to determine whether in the given cases these conditions had been fulfilled.

Protecting Consumers Worldwide

A new International Consumer Protection and Enforcement Network website was launched on 15th of March. This organization composes of representatives of consumer protection authorites from almost 40 countries and aims at protecting consumers' interests all around the world. There is information to be found there that could be of relevance for both: the consumers and the consumer experts.

A Legal System for Irrational Beings

Interesting talk on how behavioural sciences might influence law, also consumer law, from a perspective of Jon Hanson who used to be a legal economist and who realized that rational actor model is not perfect.

A Legal System for Irrational Beings Jon Hanson Big Think

Cross-border dispute resolution

Denmark, Poland, Italy and UK prepared together a report (published in December 2009) about a use of various mechanisms of cross-border dispute resolution within EU.

Cross-border trade within the EU is growing and there is a general consensus that this is a positive development since it means a wider choice of products and services as well as lower prices for consumers. But as cross-border trade is growing so are cross-border complaints.

If consumers are to have trust in cross-border trade they need to know that it is safe to shop in other EU-countries. And different remedies are already in place to help consumers solve their cross-border complaints, one of these being the European Consumer Centres Network (The ECC-Network).

The ECC-Network is an EU-wide network consisting of 29 centres, one in each EU member state together with a centre in both Iceland and Norway. The Network is co-financed by the Health and Consumer Protection Directorate General of the European Commission and by the member states. The main aim of the ECC-Network is to create consumer confidence in the Internal Market and assisting consumers with cross-border complaints is one of the key objectives of the network.

Since 2007 the ECC-Network has systematically been registering complaints received in an online case handling system and data shows that the number of complaints has grown from 5,000 in 2007 to 6,500 in 2008 to estimated 8,000 in 2009. In other words an increase in the number of complaints of 60 % from 2007 to 2009.

With this network report we want to have a look at how likely consumers are to have their cross-border complaints solved today and which role alternative dispute resolution mechanisms (ADR) play in this. ADR we define as complaint handling mechanisms dealing with consumer complaints without involving the traditional court system.