Thursday, 29 June 2017

Can CJEU interpret UCPD in relation to a B2B practice? Bold opinion of Advocate-General in C-295/16

Earlier today the Advocate-General Saugmandsgaard Øe delivered a very interesting (if not to say contestable) opinion in case C-295/16 Europamur Alimentación. At first sight the case deals with a rather unoriginal question: can national legislation establish a general prohibition on certain commercial practices irrespective of the black list laid down in the Annex I of Directive 2005/29/EC (hereinafter UCPD). Nevertheless, the importance of the case goes well beyond the actual questions referred.

Background of the case

The contested Spanish provision, set out in the Law 7/1996 regulating retail commerce, provided that "selling or offering to sell to the public at a loss shall be prohibited" unless two exceptional circumstances occur. The act did not seem to clarify if the said prohibition referred to B2B transactions only, or to B2C sales alike. What was clear from a further part of the provision, however, was that it also applied "to entities engaging in wholesaling, whatever their legal nature". 

If the law applied to a B2C transaction, there would be no doubts about its non-compliance with the UCPD (see AG's opinion in paras. 53-65 supported by the earlier case law of the CJEU: C-304/08 Plus WarenhandelsgesellschaftC-540/08 Mediaprint Zeitungs- und ZeitschriftenverlagC-288/10 Wamo and, particularly, C-343/12 Euronics Belgium). What made the commented case stand out was the character of the underlying dispute: it did not relate to direct consumer sales, but rather to sales by a wholesaler, Europamur, to a number of small retailers, who were themselves reselling household and food products to consumers. This, reportedly, allowed small retailers to compete against superstores and large distribution chains. Based on the applicable Spanish law the Europamur was nevertheless fined EUR 3 001 on account of having sold certain products marketed by it at a loss thus infringing the interests of competitors and consumers. The question appeared: can the CJEU interpret UCPD in relation to a business-to-business practice like the one at hand? 

Admissibility of the request

Not surprisingly, the main part of the opinion concerned the admissibility of the request for a preliminary ruling. Doubts stemmed from the fact that consumer protection was one of the objectives pursued by the national provisions applicable to the main proceedings. This was clear from the preamble of the contested measure, national case law and administrative provisions according to which the amount of the fine was to be set. As mentioned above, if applied to a business-to-consumer transaction, the provision would certainly have fallen within the scope of the UCPD. However, as seen among others from recital 6, Article 2(d) and Article 3(1) of the directive, as well as existing case law of the CJEU and the updated Guidance document (though not cited by the AG), the scope of that directive does not extend to commercial practices which relate to a business-to-business transaction. This well-established reading of the directive was reasserted by the Advocate-General in para. 42 of the opinion. So far so good.

The Advocate-General nevertheless went on to argue that the request should be admissible. Critical from this point of view is paragraph 43 of the opinion which reads as follows:

"43. However, according to settled case-law, the Court may find that it has jurisdiction to answer questions referred to it for a preliminary ruling even if the provisions of EU law in respect of which an interpretation is sought do not apply to the facts in the main proceedings, where those provisions have been directly and unconditionally rendered applicable by domestic law. Where, in regulating situations outside the scope of the EU measure concerned, national legislation seeks to adopt the same solutions as those adopted in that measure, it is clearly in the interest of the European Union that, in order to forestall future differences of interpretation, provisions taken from that measure should be interpreted uniformly. Accordingly, the Court is required to ascertain whether there are sufficiently precise indications to enable that reference to EU law to be established, in the light of the information provided in that regard in the request for a preliminary ruling". 

This may be true, yet the ensuing interpretation of the relevant domestic legislation carried out by the AG failed to convince me that the concept cited above (perhaps arguable in itself) should be applied to the case at hand. In particular, the Advocate-General inferred, despite the assertions of the Spanish government to the contrary, that the fact that contested national provisions were not amended by the subsequent Spanish act implementing Directive 2005/29/EC was a "conscious decision" aimed to transpose that directive into the domestic legal order. This conclusion was reached irrespective of the fact that, in the said transposition process, amendments to a different national act prohibiting sales at a loss, Law 3/1991 on unfair competition, were introduced. Ironically enough, the AG even went as far as to say that, in his view, transposition of the UCPD in the contested Law on retail commerce, in consequence of which provisions of the Directive were supposedly rendered applicable to situations which did not fall within its scope, occurred "mistakenly" (para. 45). As a result, the Advocate-General concluded that provisions of the UCPD "were, at least in part, reproduced in the relevant rules of Spanish law" and "should be given a uniform interpretation by the Court, in order to forestall possible differences of interpretation in that regard and given that the reply to the questions referred seems to be decisive for the resolution of the dispute in the main proceedings" (para. 51). The request should therefore, in his view, be admissible. As to the proposed ruling on the substance the AG concluded, unsurprisingly, that UCPD should be interpreted as precluding national legislation such as that at issue in the main proceedings.

Concluding remark

The Advocate-General Saugmandsgaard Øe certainly deserves credit for not shying away from bolder interpretations. After all, this is what protects the European case law from the dangers of path dependence. However, the stakes in the case at hand are particularly high - following the advice of the AG could be seen as a serious encroachment of the Luxembourg court on the competence of national legislator. It remains to be seen if the CJEU follows the proposed line of reasoning or rather goes against its advisor as it has already done before (see e.g. our earlier comment on case C-119/15 Biuro podróży Partner). One thing is certain: case C-295/16 Europamur Alimentación is definitely worth following. 

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