Thursday, 17 January 2013

ECJ in Köck: More on maximum harmonisation in the Unfair Commercial Practices Directive

Today the ECJ published its judgment in the Köck case, on the maximum harmonisation of the Unfair Commercial Practices Directive. Cases like VTB-VAB and Mediaprint already showed us, without much surprise, that Member States are not allowed to go further in protecting consumers from unfair commercial practices than provided by the Directive itself. In particular, this means that Member States cannot prohibit certain trade practices (such as combined sales, see VTB-VAB) as such. The Directive has a black list with a limited number of trade practices that are prohibited, and apart from this list, trade practices can only be forbidden if they are unfair in the meaning of the Directive's general provisions.

The Köck case very much follows the reasoning of VTB-VAB and Mediaprint. The Köck case deals with specific rules on shops' "clearance sales" in the Austrian UWG (Gesetz gegen den Unlauteren Wettbewerb; Austrian Unfair Competition Law). According to Articles 33a-d of this law, Austrian shop owners need to obtain a permit if they want to have a clearance sale. Mr. Köck had a clearance sale without filing for a permit, and was subsequently brought before the court by an organisation safeguarding fair competition. The question before the ECJ is whether the Austrian law breaches Directive's maximum harmonisation, by requiring the permit.

The ECJ firstly determines that "clearance sales" can be seen as "commercial practices", and thus clearance sales fall within the material scope of the Directive (25-57). Secondly, the Austrian rule falls within the scope of the Directive in terms of its objective, as it is meant to offer consumers protection against unfair practices (28-33). Finally, it is determined that the rule offers more protection than provided by the Directive, as it gives a general prohibition on "clearance sales" without having a permit, while these are not generally forbidden by the Directive. In some cases, however, Member States are allowed to have a system of ex ante control with permits, but this does nor apply for the present case:

45 Given that anticipatory or preventive measures on the part of the Member State may in certain circumstances prove more adequate and more appropriate than subsequent measures ordering the cessation of a commercial practice that has already been carried out or is imminent, those national measures may consist inter alia in providing for a system of prior authorisation, with penalties for non compliance, of certain practices whose nature makes such measures necessary with a view to combating unfair commercial practices.
46 However, the system laid down by those national measures, which constitutes the transposition of the Directive, cannot result in a commercial practice being prohibited solely because prior authorisation has not been granted by the competent authority, without there having been an assessment of the practice’s unfairness.
47 First, the Directive precludes national legislation which excludes the review against the criteria set out in Articles 5 to 9 of the Directive of a commercial practice not listed in Annex I to the Directive.
48 Secondly, national legislation under which it is not until after the prohibition laid down for failure to comply with the prior authorisation requirement that the commercial practice is examined as to its unfairness is incompatible with the system established by the Directive, as that practice, because of its nature and in particular because of the time factor involved, is thus deprived of economic sense for the trader.
49 National legislation such as that referred to in the preceding paragraph would amount to enacting a general prohibition of the commercial practices made use of in a particular system even though the possible unfairness of those practices has not even been assessed, in accordance with the case-law referred to in paragraph 35 above, against the criteria set out in Articles 5 to 9 of the Directive.

The case is in line with the previous judgments, but it also raises questions. Most importantly, the question now is: under what circumstances and with what kind of procedures can Member States make use of preventive measures?


Click here for the judgment



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