Tuesday, 15 November 2016

Complex pricing in TV and other adverts - CJEU in Canal Digital Danmark (C-611/14)

Clearing up our backlog, on 26 October 2016 the CJEU issued a judgement on the interpretation of Art. 6 and 7 of the Unfair Commercial Practices Directive in the case Canal Digital Danmark (C-611/14).

Canal Digital provides television services to consumers in Denmark, offering them various TV packages. In many of its advertisements in 2009 promoting various TV subscriptions it could have confused consumers as to the real price for its services, considering that it separately showed the monthly price (made more visible by e.g. the use of a bigger font) and the additional six-month 'card service' charge and the full commitment period price (for one year). The last two prices were showed in smaller font, often in white against a light background, at the bottom of the advert, with consumer attention likely being drawn to the monthly price.

Misleading omission and disclosure medium 
The CJEU refers to the requirements of Art. 7(1) and (3) of the UCPD to determine whether a particular information should have been provided to consumers in order not to mislead them. It is, therefore, necessary to consider what method of communication has been used to convey information to consumers, as it could have placed limitations of time and space.  If this is the case, it is necessary to consider whether and what other means trader has used to convey material information to consumers. (par. 35) Art. 7(4) UCPD contains an exhaustive list of material information that has to be provided to consumers when inviting them to purchase, but even if all this information is provided, this does not exclude that this invitation to purchase would be considered as a misleading commercial practices either under art. 6(1) or art. 7(2) UCPD. (par. 71) It seems that the Court suggests that e.g. despite the price being a material information that needs to be provided, it could still be given to consumers in a misleading way if e.g. an important element of this price would not be mentioned or would be confusingly or in an unclear way mentioned, as in this particular case.
In case of TV adverts, consumers  cannot demand the same level of detail as with some other advertisements, and are also given a limited time to assess this information. (par. 60) If not all material information could be provided, commercial information could mention only some of it and the rest could be placed on the website. It is for the national court to ascertain what measures has the trader taken to provide material information to consumers, but it could be considered a misleading omission if the trader splits the price into two elements and only makes one of them visible in marketing materials, if this causes consumers to take transactional decisions, they would not have otherwise taken (par. 64).

Misleading pricing
Could it be consider misleading if the trader chooses a pricing strategy for a subscription that splits the charge into a monthly and six-monthly components, with only the monthly charge being highlighted in marketing, and the six-monthly charge either omitted or inconspicuously presented? Yes, as this would be likely to give average consumers false impression of a favourable price, contributing to consumers taking transactional decisions they otherwise would not have taken, which is for the national court to ascertain (but the CJEU suggests a positive answer to this test referring to the price as a determining factor in the mind of an average consumer - par. 46; esp. if the omitted price component was a significant part of the price - par. 47). The CJEU mentions that offers of TV service providers are often highly structured, both in terms of cost and content - "resulting in a significant asymmetry of information that is likely to confuse consumers." (par.41) Interestingly, for the test of misleading action, contrary to misleading omission, there is no exception made in the UCPD based on the advertisement being made through a limited as to time or space communication medium (par. 42).

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