Friday, 14 June 2013

Opinion AG Wahl in CHS Tour Services on Unfair Commercial Practices

Yesterday, the Opinion of Advocate General Wahl was published in the CHS Tour Services case. The question addressed in this case is whether the requirements of Article 5 of the Unfair Commercial Practices Directive on professional diligence also have to be met in applying the clause on misleading practices (Article 6).

The case was referred to by the Austrian Oberste Gerichtshof. The original case is between two tour operators, Team4 Travel and CHS Tour services. Team4 Travel complains that CHS is misleading consumers by promising in its advertising materials that it offers accomodation that is exclusively available for CHS. CHS has indeed agreed with accomodations that they will be excusively available for CHS, but in practice some of the accomodations still offer accomodation to others, including Team4 Travel. Team4 Travel is therefore arguing that the advertising materials of CHS are misleading, as the promises made are not lived up to.

According to Article 6 of the Unfair Commercial Practices Directive, a practice is misleading 'if it contains false information and is therefore untruthful or in any way, including overall presentation, deceives or is likely to deceive the average consumer, even if the information is factually correct, in relation to one or more of the following elements, and in either case causes or is likely to cause him to take a transactional decision that he would not have taken otherwise.'

The lower Austrian courts were of the opinion that although this provision may be satisfied, the practice is still not misleading because it was thought not to breach the requirement of professional diligence of the general clause of Article 5 of the Directive. The question referred to the CJEU is whether Article 5 indeed plays an independent role, in the sense that in the application of Article 6 it should still be tested whether the trader has acted contrary to professional diligence.

Advocate General Wahl argues that this is not the case: as soon as the requirements of the clause on misleading practices are met, the practice is unfair, and the practice does not also have to be tested against the requirements of Article 5.

AG Wahl comes to this decision based on the wording and structure of the Directive:

19. As regards the structure of the Directive, it is clear from the Court’s case-law that the notion of ‘unfair commercial practices’, which are prohibited under Article 5(1), covers three categories: (i) practices which fulfil the two cumulative requirements laid down in Article 5(2); (ii) pursuant to Article 5(4), misleading or aggressive practices as set out in Articles 6 to 9; and (iii) pursuant to Article 5(5), the practices referred to in Annex I to the Directive (‘the blacklist’). (3) Unlike the first two categories, however, the commercial practices on the blacklist are automatically to be considered unfair, without any need for an individual appraisal of all the relevant circumstances. (4)

20. Article 5(4) of the Directive, by its very wording, elaborates on and clarifies that structure. In accordance with that provision, commercial practices which are misleading (Articles 6 and 7) or aggressive (Articles 8 and 9) are, ‘in particular’, unfair. The phrase ‘in particular’ shows not only that misleading and aggressive practices are specific sub-types (‘precise categories’) of unfair commercial practices (5) but, more importantly, that they also constitute, in themselves, unfair commercial practices. (6)

21. Thus, on the basis of a structural as well as a literal analysis, I do not share the view that Articles 6 and 7 (or Articles 8 and 9) of the Directive merely provide specific examples of the element referred to in Article 5(2)(b) of distortion of a consumer’s economic behaviour, with the effect that Article 5(2)(a) remains applicable, as would follow from the second interpretation put forward by the national court.

22. Next, on examining the background and objective of the Directive, it appears that firm support for the above analysis of its structure and wording is to be found, furthermore, in the legislative history leading to its adoption. Indeed, the observations contained in the Commission proposal (7) regarding misleading and aggressive commercial practices unequivocally spell out that the criterion relating to professional diligence under Article 5(2)(a) of the Directive does not play a separate role. This is in stark contrast to the inferences that the Polish Government seems to draw from that very same document. (8)

23. On a more basic level, however, the fulfilment of additional criteria in order to trigger the operation of Article 6 would be at odds with the very terms of that latter provision. Indeed, Article 6 appears – at least in certain circumstances – to embrace a no-fault approach as regards the trader. (9) It would be contrary to that approach if, in the absence of any reference to Article 5(2)(a), traders were entitled to rely on the defence that they had acted in compliance with their duty of professional diligence. (10) As mentioned in the travaux préparatoires, infringement of Article 6 constitutes, per se, a breach of the duty of professional diligence.

24. By the same token, to allow additional requirements to be taken into account under Article 6 would be difficult to reconcile with the spirit and objective of the Directive itself. Indeed, it would lower rather than raise the high level of consumer protection which the Directive aims to achieve; (11) a level which, it must be recalled, is subject to full harmonisation across the European Union. (12)

25. In the light of the foregoing considerations, the fact that a trader may have complied with the duty of professional diligence under Article 5(2)(a) of the Directive is of no significance in the presence of misleading (or aggressive) commercial practices. CHS and the Austrian, German, Hungarian, Swedish and UK Governments all share this view, as does the Commission; moreover, that view is also consistent with the first interpretation proffered by the national court. (13)

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