Saturday, 2 June 2018

When does an online seller become "a trader"? AG Szpunar in Kamenova

Last Thursday the Advocate-General Szpunar delivered an opinion in case C-105/17 Kamenova, in which the Court of Justice was asked to provide interpretation of Article 2(b) and (d) of Directive 2005/29/WE on unfair business-to-consumer commercial practices (UCPD) in the context of a sale of goods via an online platform. The provisions included in the preliminary reference contain definitions of the very basic concepts used throughout the UCPD and in the European consumer law more generally. The broader relevance of the guidance to be provided has been recognised by the Advocate-General who decided to extend the the scope of the questions referred to also cover a provision of Directive 2011/83/EU on consumer rights (CRD).

Facts of the case
The defendant was offering her goods via olx.bg

The request for a preliminary ruling was submitted by a Bulgarian court adjudicating a dispute between Ms. Kamenova and the national consumer protection authority concerning a potential breach of consumer law by the former. More specifically, Ms. Kamenova, who had been engaged in the sale of goods via an online platform, and had published eight different listings at the same time, did not provide information required by the Bulgarian act on consumer rights, which implemented Directive 2011/83/EU into national law. The defendant argued that, when offering used goods via olx.bg, she was not acting in a professional capacity and, consequently, her activities remained outside the scope of that act. The consumer protection authority held an opposite view and insisted that, by acting in breach of the act on consumer rights, Kamenova engaged in an unfair business-to-consumer commercial practice.

"Trader" in the UCPD and in CRD: a uniform interpretation?

Before addressing the crux of the case, AG Szpunar considered it necessary to establish whether the notion of a trader used for purposes of Directives 2005/29/WE and 2011/83/EU is to be construed in the same way. Indeed, as observed in the opinion, the wording of respective provisions is almost identical. The AG did not stop here, however, but observed that further factors had to be considered. These included, in particular, the level of harmonisation provided by respective Directives, which, in turn, should be assessed by reference to the wording, meaning and purpose of the interpreted acts. The AG eventually responded in the affirmative, finding that both Directives aimed to fulfil the same objectives, namely to contribute to the functioning of the internal market and to ensure a high level of consumer prtoection, and that both of them established a full level of harmonisation. To ensure coherent application of the two sets of rules, according to the AG, the notion of the trader used in the UCPD and the CRD had to be interpreted uniformly.

The threshold for becoming a "trader"

The subsequent part of the opinion concerns the substantive interpretation of the trader's notion as provided in the two legal acts. In this respect, Article 2(b) of the UCPD (and similarly Article 2(2) of the CRD) defines the notion of a trader as "any natural or legal person who, in commercial practices covered by this Directive, is acting for purposes relating to his trade, business, craft or profession and anyone acting in the name of or on behalf of a trader". The opinion of the AG provides for some useful points of reference in that regard. Most notably, it does not only list the criteria to be considered in the analysis of one's activity, but also points to the deeper normative rationale of the analysed provisions - namely the weaker position of the consumer resulting in the trader's comparative advantage. 

As discussed in paragraph 51 of the opinion, assessment of the purpose of the seller's activity should depend, among others, on questions whether:
  • the sale was made as part of an organised activity and with a profit-seeking motive;
  • the sale was subject to a specific timeline and frequency;
  • the seller had a legal status which allowed him to conduct trading activity and to what extent online sale was linked to such activity;
  • the seller was a VAT taxpayer;
  • the seller was acting in the name or on behalf of another trader or through any other person acting in his name or on his behalf and obtained remuneration or a share in profit in this connection;
  • the seller had purchased new or used goods for pursposes of their resale, as a result of which his activity became organised, frequent or concurrent to his professional activity;
  • the level of profit generated from the sale confirms that the transaction belonged to the seller's trading activity;
  • all products offered for sale by the trader were of the same type and value, in particular, whether the offer concerned a limited number of products.
In formulating the aforementioned list the AG relied, among others, on the submissions of the German government and of the European Commission. The involvement of these two actors in the proceedings is not surprising - German courts have been called upon multiple times to decide on similar cases and the Commission tried to come up with a similar list in its 2016 communication on collaborative economy. According to the AG, the criteria mentioned above are neither exhaustive, nor exclusive, meaning that fulfilling one or more of them does not, in itself, determine whether a seller should be qualified as a trader. The relevant assessment should be made on a case-by-case basis, taking into account the normative rationale mentioned above. With respect to the analysed case, the AG expressed scepticism whether publication of eight listings on an online platform could be qualified as an activity of the "trader" and, consequently, a "business-to-consumer commercial practice". Which factors the AG found decisive for reaching this conclusion is not clear, which may be a point of criticism addressed at her otherwise helpful guidance. Another possible takeaway from the analysed case is that national legislators may want to think twice before establishing strict thresholds between professional and non-professional activity. As for now, it remains to be seen whether the Court of Justice will follow the opinion of its advisor and how specific the Court's judgment will be. Most likely, a case-by-case assessment - first undertaken by the sellers themselves and then verified by the courts, enjoying a wide marging of appreciation - will remain the norm for the future. This would be a rather conventional way of striking the balance between certainty and flexibility with no special treatment being granted to the digital economy. Such an assessment is also substantiated by the amendments to the CRD proposed recently by the Commission, which generally leave the allocation of responsibility for establishing the status of the contracting parties unaffected. As mentioned in our previous post (see: New Deal for Consumers...), new provisions would impose an obligation on online marketplaces to provide information whether the third party offering the goods, services or digital content is a trader or not, on the basis of the declaration of that third party. Bolder measures proposed in the literature, aimed at levaraging the potential of data collected by the operators of online platforms, as for now remain off the table.

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