Wednesday, 7 September 2016

Computers sold exclusively with pre-installed software not unfair - CJEU in Deroo-Blanquart (C-310/15)

The CJEU is back from its holidays and today a first consumer law case has been resolved. Mr Deroo-Blanquart purchased a Sony laptop in France that, unsurprisingly, came with pre-installed Windows software and various applications. During the first use of the computer, more unusually, the consumer refused to sign the EULA (End-user licence agreement), displayed on the computer screen. Subsequently, and exceptionally, the consumer requested Sony to reimburse him for part of the purchase price of the laptop that would correspond to the cost of the pre-installed software, that he would never use. Sony claimed in return that the pre-installed software and the laptop 'form part of a single and non-separable offer', thus no discount was possible. Sony offered, however, to cancel the sale and to reimburse the consumer for the purchase price (549 Euro) upon return of the purchased laptop. While it might not have been a bad deal, it is likely that it would not satisfy the consumer since he would not easily be able to purchase a laptop without pre-installed software elsewhere. It doesn't come as a surprise then that Mr Deroo-Blanquart rejected this offer and started proceedings claiming payment of 450 Euro for the pre-installed software, as well as 2500 Euro damage suffered as a result of unfair commercial practices. His claims were dismissed by the district court and court of appeals, but the Cour de cassation decided to stay proceedings and turned to the CJEU with the following questions.

1. Is it a misleading commercial practice when a combined offer of sale of a computer with a pre-installed software does not specify the cost of each individual component, when listing each item of pre-installed software? (Art. 5 & 7 UCPD)
2. Is it an unfair commercial practice when a combined offer of sale of a computer with a pre-installed software leaves the consumer only two choices: to accept the software or to cancel (not engage in) the whole sale? (Art. 5 UCPD)
3. Is it an unfair commercial practice when a manufacturer offers only combined offers of sale of a computer with a pre-installed software, without allowing consumers to obtain a computer which is not equipped with pre-installed software?

The CJEU considered the last two questions together and came to the conclusion that on its own it is not an unfair commercial practice pursuant to Art. 5 UCPD if the manufacturer offers for sale a computer with a pre-installed software without any option for the consumer to purchase the same computer model without this software. However, it is for the national court to decide whether this practice was also pursuant to the requirements of professional diligence and did not materially distort or was likely to distort the economic behaviour of the average consumer with regard to the product.

As combined offers are not included in the list of prohibited commercial practices that is included in the Annex to the UCPD, unfairness of such practices could only be evaluated on the basis of general clauses. The requirements for unfairness are thus that the practice has to be contrary to professional diligence and materially distort average consumer's behaviour. While the CJEU leaves it to the national court to assert whether these requirements have been met, it states that:

"it is clear from the order for reference that, inter alia, the sale by Sony of computers with pre-installed software meets the expectations, as revealed by an analysis of the market concerned, of a significant proportion of consumers who prefer to purchase a computer already equipped and ready for immediate use, rather than to purchase a computer and software separately. Moreover, as is also apparent from the order for reference, prior to the purchase of the computer at issue in the main proceedings, Mr Deroo-Blanquart, as a consumer, was duly informed via Sony’s retailer of the existence of pre-installed software on that computer and the specific nature of each of those items of software. Finally, subsequent to the purchase, when using that computer for the first time, Sony offered Mr Deroo-Blanquart the possibility of either subscribing to the ‘end-user licence agreement’ in order to be able to use that software or cancelling the sale." (Par. 35)

Providing consumers with correct information on combined offers is perceived by the CJEU as satisfying the conditions of fairness (Par. 36). Moreover, since the consumer was offered a possibility to cancel the sale, it suggests that the commercial practice was an honest market practice, "the trader thereby demonstrating care towards the consumer". (Par. 37) The CJEU also hints at the commercial practice being unlikely to materially distort consumer's behaviour, as "the consumer has been duly informed, prior to the purchase, that the model of computer that is the subject matter of the sale was not marketed without pre-installed software and that he was therefore, in principle, free to choose another model of computer, or another brand, with similar technical specifications, sold without software or used with different software...". (Par. 41)

The CJEU also doesn't consider the lack of indication of individual prices of each software item as a misleading commercial practice. While the lack of overall price indication would constitute a misleading omission, as material information for the consumer would not be disclosed, the same reasoning does not apply to the components of this overall price. Especially, since the computer is not sold without the pre-installed software, the CJEU considered that it would not impact consumer's transactional decision-making, if he had price information on all individual software applications (Par. 48-51).

Generally, based on past case law, we could not expect the CJEU to consider combined offers to be unfair commercial practices under all circumstances. However, the CJEU seems to give very detailed guidance to national courts in this case, directing them to consider the combined offer under the given circumstances as a fair commercial practice. While an informed consumer has definitely more capability to assess the value of the transaction he is entering into, that does not necessarily give him as much market power as the trader has and may not prevent an unfair commercial practice from occurring. The Court mentions that this consumer could have decided to purchase a different computer, of a different brand, e.g., instead. This presumes the existence of certain market conditions, consumer's familiarity with them, as well as consumer's sharpness in exploitation of these. Is this the continuity of the average consumer's high benchmark or has it just been raised even higher?

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