Wednesday, 25 July 2018

Can excessive information mislead consumers? CJEU rules in Dyson

Earlier today the Court of Justice delivered a judgment in case C-632/16 Dyson. The judgment was a response to a request for a preliminary ruling submitted by the President of the Commercial Court in Antwerp regarding a dispute between two vacuum cleaner producers. The proceedings that gave rise to the legal dilemma appear to have been brought with predominantly competitive motives in mind. The submitted claims were nevertheless based on the national provisions implementing the European consumer acquis, namely Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market (UCPD) and Commission Delegated Regulation (EU) No 665/2013 supplementing Directive 2010/30/EU with regard to energy labelling of vacuum cleaners. The judgment of  the Court of Justice provides welcome clarification on the information to be - or not to be - provided on top of mandatory EU labelling.

Too little information?

Dyson, a producer of vacuum cleaners operating without dust bags, found it questionable that the tests required under EU law to assess the energy class of vacuum cleaners were performed with empty dust bags. As a result, in its view, the differences between energy efficiency of vacuum cleaners operating with and without dust bags were not adequately reflected by the EU energy labels. This is because energy efficiency of vacuum cleaners that operate with dust bags gradually decreases as their bags become fuller. According to Dyson, for consumers to receive all relevant information, producers of vacuum cleaners that operate with dust bags should additionally inform consumers about testing conditions, which resulted in the energy classification (i.e. that the tests were performed with empty bags). The question thus appeared, in the first place, whether an omission of such information by a competing vacuum cleaner producer - BSH - constituted a misleading omission within the meaning of Article 7 of the UCPD.

The Court did not share the view of the claimant. 

It first decisively rejected the possibility of adding any additional information on the label itself relying on Article 3(4) of Directive 2005/29/EC on conflicts between the provisions of the UCPD and other EU rules regulating specific aspects of unfair commercial practices. According to the Court, such a conflict clearly ocurred in the case at hand (providing information to consumers - even if mandatory - constitutes a commercial practice). Hence, the provisions of Directive 2010/30/EU and the Delegated Regulation No 665/2013, which explicitly prohibit the addition of other information to the EU energy label, should prevail.

The Court also swiftly dismissed the arguments of Dyson regarding the alleged omission of the contested piece of information from places other than the energy label. The decisive finding was that the UCPD proscribes only the omission of material information and the information at hand - related to the vacuum cleaners' testing conditions - could not be considered as such. This is particularly so considering the extensive list of information duties, addressed at these specific products, already in place with none of them relating to the contested matter.

Or perhaps too much?

The dispute between both producers and similarly the request for a preliminary ruling did not end here, however. According to the claimant, BSH's practices were also misleading because excessive information was provided by the company. More specifically, the defendant attached, next to the EU energy label, several labels and symbols that were not provided for in Delegated Regulation No 665/2013, for example, "a green label stating ‘Energy A’, an orange label stating ‘AAAA Best rated: A in all classes’ and a black label with the image of a carpet and stating ‘class A Performance’" (para. 49). The question was therefore whether such a practice was contrary to Delegated Regulation No 665/2013, read in the light of Directive 2010/30/EU.

The judgment does not provide a clear answer why there is no mention of the UCPD in its second part (despite the fact that the Court decided to reformulate the question referred a little bit). Presumably the reason is similar to the one raised in the context of first question - the conflict between the legal acts. Article 3(1)(b) of Directive 2010/30/EU indeed provides that "with respect to products covered by this Directive, the display of other labels, marks, symbols or inscriptions which do not comply with the requirements of this Directive and of the relevant delegated acts is prohibited, if such display is likely to mislead or confuse end-users with respect to the consumption of energy or, where relevant, other essential resources during use" - therefore covering essentially the same matter in a more specific manner than the UCPD.

The Court began its analysis by pointing to the two cumulative criteria that could be read out of the abovementioned provision. As regards the former, it swiftly concluded that the labels and symbols used by BSH did not comply with the requirements of the Directive, considering that the relevant labels and symbols were not provided for in Delegated Regulation No 665/2013. The overall assessment of the practice should therefore depend on the second yardstick: whether the display of information was likely to mislead or confuse end-users with respect to the consumption of energy or, where relevant, other essential resources during use. Here the CJEU, in line with its established practice, left the final assessment to the referring court. It did, however, provide the national court with some important guidance.

Firstly, the Court clearly stressed that the criterion referred to in Article 3(1)(b) of Directive 2010/30/EU was to be interpreted strictly "so as to protect the final consumer against any risk of error or confusion related to the energy consumption during the use of the electric device in question". Interestingly, the Court further observed that "the strict application of that criterion is borne out by that directive’s objective of environmental protection" (para. 55). 

Secondly, the Court decided to extend the benchmark of an average consumer - one who is reasonably well-informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors - from the UCPD to Directive 2010/30/EU on energy labelling. This is particularly interesting considering that the latter Directive (later repealed and replaced by Regulation (EU) 2017/1369) did not use a traditional status-related concept of a consumer in its normative part, but rather referred to a broader notion of an "end-user". Nevertheless, according to the Court, "the inextricable link between the issues [addressed in the UCPD and Directive 2010/30/EU] justifies the use of that same criterion" (para. 56).

Finally, the judgment also hinted at the Court's view on the likelihood of an average end-user (sic!) being misled in the case at hand. According to the Court, "the mere fact that the labels or the symbols displayed by BSH refer to information already present on the energy label cannot suffice to rule out the existence of such a risk". Quite the contrary, excessive information can be misleading. This is particularly because the symbols used by BSH, while essentially conveying the same message, were not graphically identical to those used on the energy label and could, therefore, "give the impression that they convey different information each time" (para. 58). To what extent this conclusion can be transferred outside the specific context of mandatory labelling is still an open question.

Tuesday, 24 July 2018

The role of consumers in supporting sustainable finance

The EU Commission recently took up the task of joining international efforts (the UN 2030 Agenda and Sustainable Development Goals, and the Paris Climate Agreement) in taking due account of environmental (ie. climate change mitigation and natural disasters) and social considerations (inequality, inclusiveness, and investment in local communities) in investment decision-making, with an aim of leading to increased investments in longer-term and sustainable activities- this process is generally referred to as ‘sustainable finance’.

In order to integrate sustainable finance into its law and policy making, the EU Commission established a High Level Expert Group on Sustainable Finance in 2016 and based on their recommendations adopted the Action Plan: Financing Sustainable Growth in March 2018.

The Action Plan sets out an ambitious plan to transform the EU economy into a greener, more resilient and circular system that will reduce its environmental footprint and address existing inequalities. This entails a holistic transformation of the relationship of the economic agents i.e. public and private institutions, small and large businesses and consumers with the environment.

The primary aim is to orientate capital flows to a more sustainable economy.  To this end, the EU Commission first proposes to clarify what is meant by ‘sustainable’ finance via the creation of EU taxonomy of sustainable activities; than building on the taxonomy, to develop standards and labels for sustainable financial product. Businesses are encouraged to design their business models and to develop strategies and technologies that support the long term effects of their investment. Investment fund managers will be obliged to take sustainability considerations into account when acting in the best interest of their clients, and to inform the end investors about the impact of sustainability considerations on their decision and the investors exposure to sustainability risk, for example, climate related risks. The EU Commission also considers factoring in sustainability risks into calculating capital adequacy of banks and insurance companies. The final really interesting addition is a ‘sustainability benchmark’ that will properly measure the performance of sustainable investments. While benchmarks play a central role in the formation of prices of financial instruments (see our report here), the current benchmarks are not designed to reflect on sustainability considerations.

Following the Action Plan in May 2018 the EU Commission adopted a package of measures implementing several key actions laid down in the Action Plan: 1) To create a unified system of classification of sustainable activities it adopted the Proposal for a regulation; 2) To introduce disclosure obligations of investment fund managers it proposed a Regulation amending Directive 2016/2341; 3) Finally, to create a new category of low carbon and positive carbon impact benchmarks it proposed a Regulation amending the Benchmark Regulation.

Naturally, most of the measures set out in the Action Plan are designed to be addressed by private and public businesses. However, the EU Commission has also seen consumers as part of the picture. So what are the role consumers in channelling financial assets towards a sustainable growth?

Well, just as businesses, consumers can also consider the sustainability of their investment decisions. To this end, the above mentioned taxonomy of sustainable activities and labeling of financial products as sustainable could help consumers in their decision making. These are however not specially designed consumer information tools. It seems that the EU Commission did not envisaged independent decision making by consumers. The Action Plan only foresees the regulation of financial advice for investment and insurance products. The Commission (perhaps rightly) assumes that we will not be able to make smart investment decisions on sustainability considerations without financial advice. Do you agree with this approach? Are we incapable to make independent decisions on complex matters such as the sustainability of investment?

Given that financial advice is seen as having a central role in the EU Commissions regulatory approach, we may wonder whether sufficient safeguards are taken into account against mis-selling of sustainable financial products (see our report here). Prior to providing financial advice, the advisers are obliged to assess the consumers risk appetite and investment objectives, including their alignment with sustainability (i.e. environmental, social and business governance factors). However, without proper safeguards consumers may be offered more risky or more expensive sustainable products to invest than they would expect. The EU Commission must make sure that appropriate safeguards are in place, that only those consumers willing to pay more for a moral satisfaction of investing into sustainable projects  are being offered such products, and that these products conform to the individual consumers risk appetite. This is a factor that should be taken into account in formulating the amended rules for MiFiD 2 and Insurance Distribution Directive (IDD) (on which the EU Commission is currently working on).

The other aspect that could be taken into in formulating the rules and policy approach is account is whether consumers need sustainable products, whether there is demand for them. European states are likely to be divided on this aspect. In some Member States consumers may be willing to investment in more risky or more expensive products to support the causes they believe in, whereas in other Member States consumers will only care about the price of the product and the security of their investment. Probably the higher the living standard is the more consumers are inclined to pay attention at sustainability goals. Should the EU Commission direct its activities towards Member States where consumers are more receptive to sustainable finance, or is the phrase ‘think global, act local’ equally applicable here?

Finally, it strikes me that the current approach is somewhat limited to certain investment products, to those provided by investment firms (regulated under MiFID2) and insurance distributors (regulated under the IDD). Any wider effort of engaging (or at least attempting to) on sustainability goals is not attempted.  We are not for example expected to choose our bank based on their ethical policy or the pension fund that we pay into. Should the EU Commission have a more systematic approach, make a wider appeal to sustainable finance that goes be beyond amending the MiFID 2 and the IDD?

Ryanair seeks to kick out claims intermediaries via T&Cs

Dear readers, 
you may have not noticed - who reads standard terms anyway? - or may not be directly affected if you do not fly Ryanair, but there are interesting developments to be observed. 

Since some time, Ryanair has included the following clauses in its terms and conditions (visited on 24 July 2018):
15.2.2 Passengers must submit claims directly to Ryanair and allow Ryanair 28 days or such time as prescribed by applicable law (whichever is the lesser) to respond directly to them before engaging third parties to claim on their behalf. Claims may be submitted here

15.2.3 Ryanair will not process claims submitted by a third party if the passenger concerned has not submitted the claim directly to Ryanair and allowed Ryanair time to respond, in accordance with Article 15.2.2 above.
This is meant to preempt the intervention of intermediaries, such as, offering disappointed passengers assistance in pursuing their claims for compensation, in particular under the provisions of the passenger rights regulation.

In order to give effect to the terms (which passengers unsurprisingly may ignore), it has emerged this week, the company has sent a number of claim agents a cease-and-desist request. They essentially claim that the intermediaries are inducing contractual breach on the side of the consumers, who are invited to skip direct contact with the airline. Also, the airline maintains that consumers are in this way deprived of a substantive part of the compensation they would be entitled to (EUclaim, for instance, withholds 29% of the compensation paid, plus administrative fees). 

The Dutch consumer association Consumentenbond is not persuaded by Ryanair's good faith in the dispute, recalling the company's bad reputation qua claims management. 

For us, the interesting legal question would be whether courts would uphold the clause allowing Ryanair to ignore claims submitted by third parties without prior consumer request. This may or may not depend on the concerned country's implementation of Directive 93/13. A look at the directive's annex suggests that, while the term may not be a proper impairment in the sense of point q) in the list, it may be an inappropriate limitation of the consumer's rights to the effects of point b). It will be interesting to see whether any consumer associations will be willing and able to challenge the terms in court, or anyway whether pressure will be made on the company to get rid of them. We shall keep an eye open for future developments!

Friday, 20 July 2018

Record fine for Google for breaching EU antitrust rules: is there anything for consumers?

Earlier this week, on the 18th of July, the European Commission fined Google €4.34 billion for breaching EU antitrust rules. This is so far the largest fine ever imposed for such violations.

It is now evident that since 2011 Google imposed illegal restrictions on other Android device manufacturers and mobile network operators abusing their dominant position on the markets of: general internet search serviceslicensable smart mobile operating systems and app stores for the Android mobile operating system.

In particular Google 1) required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google's app store (the Play Store), engaging in the so called illegal practice of ‘tying’: 2) made illegal payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices; and 3) illegally prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google. Google's conduct prevented a number of large manufacturers from developing and selling devices based on Amazon's Android fork called "Fire OS".

The antitrust decision requires Google to bring its illegal conduct to an end in within 90 days of the decision. At a minimum, Google has to stop any of the above three types of illegal practices. The decision also requires Google to refrain from any measure that has the same or an equivalent object or effect as these practices. The Commission will monitor compliance with the decision, and in the event of failure to comply, Google can face payment of a fine of up to 5% of its average daily worldwide turnover.

This decision is beneficial for consumers in two ways. First, by stopping the abuse of dominant position, the decision is likely to result in increased competition in the given markets that brings better products and lower prices for consumers. Second, harmed consumers are able to claim compensation in civil actions for damages in their national courts based on the new EU Antitrust Damages Directive.

Thursday, 19 July 2018

EU Commission cracks down on Airbnb to comply with EU consumer protection

On 16th July, the EU Commission published a press release calling on Airbnb to comply with EU consumer law, especially with regard to price transparency.

Airbnb's innovative sharing economy model has been very successful and has won a large part of the short term rental market; yet, that has not been without its share of controversy.

The press release focuses on the following issues:

1) Price transparency

The EU Commission points out that current Airbnb practices contravene the Unfair Commercial Practices Directive. More specifically, Airbnb should clarify on its platform whether the renter is a private person or a professional. As more and more traditional businesses, such as hotels, apartments and bed and breakfasts, are listed on Airbnb, consumers must be aware in a clear manner as to whether they are renting from a professional. If they do rent from a professional, the increased protection of EU consumer law applies.

Furthermore, Airbnb should present the total price for a rental on the initial search of the consumer, as at the moment, obligatory charges such as cleaning and service are added on in later steps, thus making it more difficult for consumers to compare offers.

2) Clarification or removal of unfair contract terms 

The terms and conditions of Airbnb should be amended in order not to create a significant imbalance between the parties. Also, the terms should be more transparent, presented in a clear and intelligible language in order to allow consumers to be better informed. However, even if the terms are presented in a more transparent manner, as they should, it does not ensure that consumers will be more likely to actually read them.

Some of the problematic terms highlighted in the press release include:
  • that the company should not mislead consumers by going to a court in a country different from the one in their Member State of residence;
  • Airbnb cannot decide unilaterally and without justification which terms may remain in effect in case of termination of a contract;
  • Airbnb cannot deprive consumers from their basic legal rights to sue a host in case of personal harm or other damages;
  • Airbnb cannot unilaterally change the terms and conditions without clearly informing consumers in advance and without giving them the possibility to cancel the contract.
Finally, in terms of redress, Airbnb should comply with art. 14(1) of  Regulation 524/2013 (the ODR Regulation) to display the link to the ODR platform. However, traders are not obliged to participate in the ODR platform scheme.

Now the ball is in the court of Airbnb, who has a deadline until the end of August to submit solutions to the Commission on how they intend to comply with EU consumer law. These suggestions will be discussed in a meeting between the Commission and the national authorities in September, and should they be found to be unsatisfactory, national authorities will use their enforcement powers.

It will be interesting to see how this story develops and whether this is the start of a new more consumer-friendly sharing economy.

Tuesday, 17 July 2018

Mis-selling of financial products: is there a need for a systematic approach?

As we are more and more expected to take control of our financial affairs e.g. to save for our retirement or to take up a mortgage loan to finance our house, financial decision-making is increasingly becoming part of our lives. Yet, at the same time, financial products are becoming overly complex, markets too diverse, and our financial decisions ever more important. Given the importance of these decisions, many of us would decide to get help from a financial adviser rather than to making an independent decision. We tend to trust financial advisers, trust that they are going to select the right product for us, the one that is the best fit for our needs and preferences. But are we really getting the right product? The financial mis-selling scandals suggest that we are not.
Unfortunately, mis-selling scandals because of bad advice are too common in Europe. Many of these scandals will be (too) familiar to our readers, such as the PPI scandal in the UK, the foreign currency loans in several Member States e.g. Spain, Greece, Hungary, Poland, or risky investment products in e.g. Belgium (see the map of major mis-selling scandals, including videos of testimonies here). More recently financial advice also got the attention of EU law-makers. In June 2018 the EU Parliament published a series of five studies on Mis-selling of Financial Products: 1) Marketing, Sale and Distribution, 2) Subordinated Debt and Self-Placement, 3) Consumer Credit, 4) Mortgage Credit, and 5) Compensation of Investors in Belgium. These studies pointed out the weaknesses in the current EU regulatory framework and its enforcement. In addition, in April 2018 the EU Commission published a study on the Distribution of retail investment products across the EU, concluding that consumers face significant challenges in making informed decisions (see our report here).
In the light of the above, BEUC launched a campaign for a real change in the financial advice sector. A change that needs to affect: sales incentives, regulatory framework and supervision and enforcement.
  • Mis-alignment of sales incentives is a real problem in the financial advice sector. Commissions create a conflict of interest, steering advisors in a direction of offering risky products instead of acting in the best interest of consumers.
  • According to BEUC, the current, patchy legal framework is not fit for purpose. As we know, the majority of legislative instruments, especially those adopted in the aftermath of the financial crisis, will regulate at least some aspect of financial advice. However, this approach creates inconsistency, for example, the regulation of issues like independence and qualifications are approached differently in various instruments, without even having common definitions of what they are referring to.
  • Finally, many of the current rules is difficult to enforce, for example, the requirement in MiFID2 that the investment meets the needs of the consumer.
To improve the financial advise sector, BEUC suggests to: 
  • ban commissions;
  • create common definitions and rules for advisors, rules that set standards of professionalism and that are easy to comply with;
  • better enforcement, enforcement coordinated by the EU supervisors (EBA, ESMA and EIOPA) and adequate powers of national supervisors.
Whilst it is not specially raised, it could be implied that that the above aims would be the best achieved by a separate, independent act such as a Directive on Financial Advice. What do you think?  Is there a need for a systematic approach? Is it viable to regulate financial advice independently from the underlying product that it relates to?

Friday, 13 July 2018

EU Parliament votes on dual quality products

On the 12th of July the EU Parliament’s Committee on the Internal Market and Consumer Protection (IMCO), voted on the report by Olga SEHNALOVÁ (S&D, CZ) on dual quality of products in the Single Market and endorsed it along with its suggestions for amendments. 

Dual quality of food products between eastern and western states in the EU has come to the attention of the EU Commission since 2009, following complaints from Member States, with President Juncker underlining the need to take action to combat this phenomenon in 2017. 

What exactly is the problem of dual quality of products? The Report which collected evidence from Slovakia, Hungary, Czech Republic and Croatia showed that there are differences in the composition of some products otherwise identical in packaging and brand between western and eastern Member States. While all products were found to be safe to consume, the products sold in Eastern Member States were of lower quality. For example, fish sticks with a lower percentage of fish, biscuits with a lower percentage of chocolate etc. This means that these products were also more unhealthy than their western counterparts. The issue was not unique to food products but similar incidents were reported for cosmetics, pet food and cleaning products.

The Rapporteur underlined that although it is not illegal for brands to customise their products from member state to member state, consumer should be made aware of that and provided with clear information. This phenomenon undermines the trust of consumers in the internal market and creates a divide between west and east and old and new Member States.

The measures suggested to tackle this issue are three-fold.  
  1. Improving cross border cooperation and data sharing between national authorities as well as consumer organisations.
  2.  Further clarifying the UCPD on ‘dual quality products’, as it is to be amended according to the New Deal for Consumers.
  3.  The creation of a new logo by manufacturers to show that their products are the same throughout the EU.
The report will also be put to a vote at the plenary session of the EU Parliament in September and may also have an impact on the reform of the UCPD. The EU needs to send a strong message that there are not two tiers of consumers within the EU.

Thursday, 12 July 2018

Product safety pledge by online marketplaces

The European Commission has recently liaised with four biggest online marketplaces (Alibaba, Amazon, eBay and Rakuten) to have them agree on taking faster action to remove dangerous products from among their listings. The commitment is to act within 2 working days upon a notification by authorities of the Member States, and within 5 working days - if the notification comes from customers (see further European Commission and four online marketplaces sign a Product Safety Pledge to remove dangerous products). This new arrangement specifies the general 'speedy' notion for removal of such dangerous products that was set in the e-Commerce Directive.

Monday, 9 July 2018

EU Commission on its way to place barriers to the ban of harmful substances from cosmetics

On 22nd June, the EU Standing Committee on Cosmetic Products met to discuss amendments on Regulation (EC) No 1223/2009 of the European Parliament and of the Council on cosmetic products. The Commission is required to submit its proposed measures to the Committee for scrutiny, as per art.32 of Regulation 1223/2009.

Regulation No 1223/2009 is designed to harmonise the rules as well as terminology on cosmetics in the EU with the double objective of promoting the internal market while ensuring a high level of protection of human health. The Regulation has been revised multiple times; what are the changes brought by this draft regulation and what dangers do they hide for consumers?

One of the proposed changes is on the use of carcinogenic, mutagenic or toxic for reproduction (CMR) substances. CMR substances are highly toxic and present lasting dangers for human health (for more info on CMR see OSH wiki). Relaxing the protection against CMR substances can have profoundly negative effects on the health of consumers, especially in the case of cosmetics which are everyday widely used products.

Art 15 of Regulation 1223/2009 prohibits the use of substances classified as CMR, as those are listed in ANNEX VI of the Regulation with some exceptions, as for example when there is no other suitable alternative or when the substance complies with food safety requirements. As stated in minutes of the Working Group on Cosmetic Products, the Commission now considers that adding a new substance to the CMR list requires amendment of the annex of the regulation via a new act. This presents a departure from the previous position where the ban was automatic as soon as the substance was placed on the list by the European Chemicals Agency.

The opinion of the Committee on the issue is not yet made available; yet BEUC in one of its press releases has drawn attention to the matter and the potential harm for consumers from such a reform. It is not an easy task to balance between innovation and protection of human health, hopefully the EU Commission will in this case demonstrate its commitment to maintaining a high level of protection by not allowing delays in the banning of harmful substances.

Thursday, 5 July 2018

EP against increasing sharing platforms obligations regarding copyright protection

The European Parliament rejected today the Legal Affairs Committee's proposal regarding new European copyright laws - Copyright Directive (Parliament to review copyright rules in September), which aimed at adjusting the current legislation to the digital market. The next vote will occur in September, likely after some amendments are introduced. 

The rejected proposal was a result of heavy lobbying by artists and journalists, as it aimed to ensure they receive fair pay for their work, by strengthening content protection against sharing platforms and news aggregators. For example, in order to motivate sharing platforms to block internet users from uploading and sharing copyright-protected content, such platforms would be required to pay fees to rightholders whose content would be found to be uploaded and shared on their platforms. This means that platforms would need to apply more sophisticated content-screening software, especially since the measures adopted by them would need to allow for uploading of non-infringing copyright content, as well as provide an opportunity to internet users for an appeal from a decision to block a particular upload. This way the freedom of expression could be preserved, but of course this further complicates online platforms' obligations and makes them more expensive (see more: MEPs update rules for the digital age).

Wednesday, 4 July 2018

Who is an operating air carrier? - CJEU in Wirth and Others (C-532/17)

CJEU issued a judgment today in the case Wirth and Others (C-532/17), which concerned interpretation of the notion of the 'operating air carrier' from Regulation 261/2004. It is the operating air carrier that has obligations towards the passengers, pursuant this Regulation, thus it is crucial to have clarity on who qualifies as such. 

The complexity in the given case arose due to the flight reservations being made by passengers with an air carrier TUIFly, but the aircraft and crew of the pertinent flight belonging to another air carrier - Thomson Airways. TUIFly used the resources of Thomson Airways under a 'wet lease' agreement and stated on the booking confirmation to the passengers that the flight is being 'operated' by Thomson Airways. When passengers proceeded to claim compensation for a delayed flight from Thomson Airways it refused to pay out on the grounds of TUIFly bearing the operational responsibility for the performance of the flight.

The CJEU agrees with Thomson Airways. An operating air carrier is therefore that air carrier which decides to perform a particular flight, fixes its itinerary and concludes contracts of air carriage with passengers, either himself or on behalf of another company (in casu TUIFly). The conditions of performing a flight and concluding a contract with passengers are cumulative in art. 2b) of the Regulation (para 18). As Thomson Airways only leased its aircraft and crew, and had no input on the operational decision regarding the flight, it could not be considered an operating air carrier. This means that the information provided to the passengers, as to who the operating air carrier is, is not decisive.

This decision could be beneficial to passengers, as it would not allow air carriers based in the EU to escape their liability by concluding wet lease agreements with air carriers registered in third countries in case of flights departing from airports located outside the EU (as pursuant art. 3 of the Regulation its provisions apply only to Community air carriers in such cases). However, in order to increase legal certainty of passengers this judgment should be followed by enforcement authorities finding that providing incorrect information to passengers on who the operating air carrier is qualifies as a misleading commercial practice.