Monday, 16 May 2011

Musings on an invitation to purchase in ECJ case C-122/10 Ving Sverige

12 May 2011: ECJ case C-122/10 Ving Sverige

This Swedish (for a change) case concerns new issues that arose in the process of interpretation of the Directive 2005/29/EC on unfair commercial practices that concern the definition of an invitation to purchase (art. 2(i)) as well as information duties of the trader that need to be fulfilled while issuing an invitation to purchase (ar. 7(4)). 

Ving Sverige is a travel agency which not only arranges charter and package holidays but also sells individual tickets and hotel accommodation. They sell holidays via internet, by telephone, in their agencies and in selected travel agencies throughout Sweden. What made the Swedish consumer organization start a case against them was an advertisement that they had published in a daily Swedish newspaper. In the ad they had offered trips to New York, in the period Sep-Dec 2008, "from SEK 7820". The advertisement also added: "in smaller letters below that wording, ‘Flight from Arlanda with British Airways and 2 nights in the Bedford Hotel – Price per person in double room including airport taxes. Extra nights from SEK 1 320. Applies to selected trips from September to December. Limited number of places’ and, at the very bottom left side of the advertisement, ‘Vingflex.se Tel. 0771-995995’." (Par. 16)

The consumer organisation thought that this sort of advertisement constituted an unfair commercial practice, taking into account that there was no sufficient information on the main characteristics of the trip, inter alia the price (misleading omission, thus). The consumer organisation claimed that instead of entry-level prices, fixed prices should be given in such adverts, and that more main characteristics of the trip should be named that might influence the entry-level price given, e.g. departure time. Ving claimed, firstly that their advertisement was not an invitation to purchase, which means that the provisions of the Unfair Commercial Practices Directive should not apply to it. As alternative they claimed that the main characteristics of the product and the price were stated appropriately to the medium of communication used and the product concerned. (Par. 18)

ECJ was asked a few important questions by the Swedish court. Firstly, interpretation of the definition of 'invitation to purchase' was needed. Article 2(i) of the Directive states:
" "invitation to purchase" means a commercial communication which indicates characteristics of the product and the price in a way appropriate to the means of the commercial communication used and thereby enables the consumer to make a purchase"
The Swedish court asked whether the part 'thereby enables the consumer to make a purchase' had to mean that there is no invitation to purchase unless there exists an actual opportunity to purchase the product advertised. The AG and the ECJ categorised the invitation to purchase as:
" a specific form of advertising to which is attached a stricter obligation to provide information under Article 7(4) of Directive 2005/2" (Par. 28)
Since there are strict requirements to be observed to protect consumers from unfair invitation to purchase, according to the ECJ this concept needs to be understood broadly. (Par. 29) Using as a tool the literal and teleological interpretation, the ECJ stated that:
"it is not necessary for it to include an actual opportunity to purchase or for it to appear in proximity to and at the same time as such an opportunity" (Par. 32)
 in order to constitute an invitation to purchase.
This means that on the facts of the given case Ving issued an invitation to purchase to its consumers by placing that advertisement and had to thus comply with other rules of the Unfair Commercial Practices Directive.

The ECJ needed to define 'invitation to purchase' even more precisely by giving an answer to the next question: whether 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 while they are available in various versions. (Par. 35)
Article 2(i) of the Directive, as we could see, refers just to a 'price', which means it does not per se demand identification of final price. Moreover, this provision predicts that the identification of the price might differ, taking into account various methods of communication used. This seems to suggest that it might be difficult to state the price of the product corresponding to each of the versions in which this product might be available. (Par. 37) Additionally, even Art. 7(4)(c) of the Directive states that sometimes, due to the nature of the product, the trader may not reasonably be able to communicate, in advance, the final price. Finally, ECJ reminded that if entry-level price was not sufficient to be considered as 'price' for the purpose of the advertisement to be defined as an invitation to purchase, then traders could escape having to comply with stricter requirements provided for invitations to purchase by always giving only entry-level prices instead of final prices. (Par. 39) All in all, entry-level price could be seen as meeting the requirement relating to the reference to the price of the product within the meaning of Article 2(i) 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. (Par. 40)

Finally, as far as the definition of the invitation to purchase is concerned, the ECJ was asked whether Article 2(i) of the Directive covers situations in which product's characteristics are indicated by verbal or visual reference to the product, including when a product is offered in various forms. (Par. 42)
The ECJ notices that:
"The information relating to the characteristics of the product may, however, vary considerably according to the nature of that product." (Par. 44)
Additionally, various medium of communication used might allow for various degree of detail as to the product. (Par. 45)
"A verbal or visual reference may enable the consumer to form an opinion on the nature and characteristics of the product for the purpose of taking a transactional decision, and that includes a situation where such a reference designates a product which is offered in many versions." (Par. 46)
Even the entry-level price mentioned in the advertisement might indicate to consumers that the product exists in many versions, that he will be able to customize. (Par. 47)
This means that it's left to the national courts to ascertain, taking into account the nature and characteristics of the product and the medium of communication used, whether the consumer has sufficient information to identify and distinguish he product for the purpose of taking a transactional decision.

After having indicated that Ving's advertisement might be seen as an invitation to purchase, the ECJ considered questions as to the interpretation of Article 7(4)(a) and 7(4)(c) of the Directive:
"In the case of an invitation to purchase, the following information shall be regarded as material, if not already apparent from the context:
(a) the main characteristics of the product, to an extent appropriate to the medium and the product;(...)
(c) the price inclusive of taxes, or where the nature of the product means that the price cannot reasonably be calculated in advance, the manner in which the price is calculated, as well as, where appropriate, all additional freight, delivery or postal charges or, where these charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable;"

Firstly, the ECJ had to decide whether it is sufficient for only certain of a product's main characteristics to be given and for the trader to refer in addition to its website, on condition that on that site there is essential information on the product's main characteristics, price and other terms. The ECJ stresses that there is no definition of what constitutes main characteristics, nor an exhaustive list thereof given in the Directive.
"...it is however stated that account must be taken, first, of the medium of communication used and, secondly, of the product." (Par. 52)
Other sections of Article 7 of this Directive also specifically refer to the possibility that limited space of the medium of communication used would not allow for provision of all information that might be seen as desirable. This means that:
"the extent of the information relating to the main characteristics of a product which has to be communicated, by a trader, in an invitation to purchase, must be assessed on the basis of the context of that invitation, the nature and characteristics of the product and the medium of communication used.
It follows from the foregoing that Article 7(4)(a) of Directive 2005/29 does not preclude a reference to only certain of a product’s main characteristics if the trader refers in addition to its website, on condition that on that site there is essential information on the product’s main characteristics, price and other terms in accordance with the requirements in Article 7 of that directive." (Par. 55 and 56)
However, after having stated that the ECJ decided to remind the national court about Article 7(5) of the Directive, which requires that also information requirements set by other EU regulations and directives should be considered as material, i.e. to be included among the information that needs to be given in an invitation to purchase. Among these provisions there is Article 3 par 2 of the Directive 90/314 on package travel, which sets out a certain number of information which a brochure relating to that kind of travel must contain. (Par. 57) It seems that although the ECJ has to concede that the trader will not always be able to give all information that the consumer might want/need to receive about a product in an invitation to purchase, does not accept it when the traders significantly limit the information given to consumers, and therefore it reminds the national court to look beyond just the provisions of the Unfair Commercial Practices Directive and pay attention to all other information duties that have been established in EU consumer law that the traders need to comply with.

Finally the question was asked whether enough information is given to consumers if only an entry-level price is identified, pursuant to Article 7(4)(c) of the Directive. The ECJ had to consider here whether entry-level price might be considered as material information.
"A reference only to an entry-level price may, therefore, be justified in situations where the price cannot reasonably be calculated in advance, having regard, inter alia, to the nature and characteristics of the product. It is apparent from the information in the documents before the court that, in order to establish the final price of a trip, a certain number of variable factors may be taken into consideration, inter alia the point at which a booking is made; the interest in the destination on account of the existence of religious, artistic or sports events; the particular characteristics of seasonal conditions; and the dates and times of travel." (Par. 64)
Still, the ECJ considered that providing the consumer just with an entry-level price might constitute a misleading omission, when e.g. 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, e.g. on his website that he refers to in original commercial communication. (Par. 65-66)
"The extent of the information relating to the price will be established on the basis of the nature and characteristics of the product, but also on the basis of the medium of communication used for the invitation to purchase and having regard to additional information possibly provided by the trader.
A reference only to an entry-level price in an invitation to purchase cannot therefore be regarded, in itself, as constituting a misleading omission.
It is for the national court to ascertain whether a reference to an entry-level price is sufficient for the requirements concerning the reference to a price, such as those set out in Article 7(4)(c) of Directive 2005/29, to be considered to be met.
The national court will have, inter alia, to ascertain whether the omission of the detailed rules for calculating the final price prevents the consumer from taking an informed transactional decision and, consequently, leads him to take a transactional decision which he would not otherwise have taken. It is also for the national court to take into consideration the limitations forming an integral part of the medium of communication used; the nature and the characteristics of the product and the other measures that the trader has actually taken to make the information available to consumers." (Par. 68-71)

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