Thursday, 24 January 2019

Disclosure duties versus freedom to conduct a business: CJEU partially departs from AG's opinion in C-430/17 Walbusch Walter Busch

Today, the Court of Justice issued a judgment in case C-430/17 Walbusch Walter Busch, concerning the interpretation of certain provisions in the Consumer Rights Directive (2011/83/EC, CRD). The judgment sheds interesting new light on the limits of disclosure duties under the said Directive, balancing consumer rights with the traders' fundamental freedoms.

Facts of the case

As we reported in the previous post about AG's opinion, what led to the dispute in the case at hand was an advertising leaflet distributed by Walbusch in several magazines. The leaflet contained a detachable mail order coupon and, next to the advertising space, presented a quantum of the relevant pre-contractual information - including on the existence of a right of withdrawal. The leaflet did not elaborate on how and under which conditions the right of withdrawal could be exercised - all details being available on the seller's website, whose address was mentioned in the leaflet. 

A German consumer organisation, Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main eV, sought an order to prevent the leaflet's dissemination, complaining that the respective material did not include sufficient information on the right of withdrawal, nor did it include a standard form through which consumers could exercise such right. Both extensive information and the model form must be provided to consumers before the conclusion of a distance contract under Article 6 (h) of the CRD.

Under the same Directive, certain required pre-contractual information may be omitted when the means of distance communication involved in the contract provide for limited time or space. The questions the Court had to answer, in this context, were as follows:

1) how should national courts assess the question whether in a certain case the means used do, indeed, provide for limited space?

2) should it be ascertained that, in a certain communication, space was indeed an issue, what are the consequences? In particular
  • does limited space mean that traders can just mention the existence of the right of withdrawal, without including any information on the contents and exercise of that right?
  • does limited space mean that the model form through which consumers may (but by no means must) exercise the right of withdrawal can be omitted in this communication?

Judgment of the Court

Limited space

As to the first question, the referring court mentioned two possible approaches: either considering whether in abstracto a certain means of distance communication allowed for limited space, given its nature; or assessing whether the concrete instrument chosen had enough space for providing all information without being deprived of all utility for the trader. In the first case, the "type" of instrument - eg paper vs. mobile phone screen - would count; in the latter, courts would decide on a case-by-case basis. The readers may recall that AG Tanchev sided with the former view.

The CJEU, however, followed a somewhat different path. According to the Court, a limitation of time and space falling within the scope of 8(4) of the Directive can occur "as a result of either the inherent characteristics of the means concerned or limitations arising from the trader’s economic choice relating, in particular, to the duration and space of the marketing communication" (para. 38, cf. para. 62 of AG's opinion). The relevant assessment must be carried out "having regard to all of the technical features of the trader’s marketing communication". This suggests that the trader does not necessarily need to increase the size of a paper leaflet purchased, up to the point he is able to provide consumers with full information required under Article 6(1) of the CRD. An assessment should rather be made with respect to the type (size etc) of the leaflet chosen, without regard, however, to his specific choices on the development and use of the available space and time (para. 39).

The readers may also recall an interesting reference to vulnerable consumers in AG's opinion. Specifically, the Advocate-General argued that "advertising media produced in traditional forms of communications ... are often directed at societal groups, such as older people, who are unaccustomed to going to the internet to acquire access to the supplementary terms of the contract proposed" (para. 73). The Court did not entirely ignore this part of AG's reasoning, but considered it to be of a somewhat different relevance. More specifically, so the Court, an assessment from the point of view of the "average consumer targeted by the communication" should be carried out to establish whether, having regard to the space and time occupied by the communication and the minimum size of the typeface which is appropriate for such (potentially vulnerable) consumers, all information set out in Article 6(1) of the CRD may objectively be displayed.

Should this not be the case, the trader would be required to only disclose in the communication the minimum set of information laid down in Article 8(4) (e.g. about the right to withdraw - see below) and provide consumers with other mandatory information by another source in plain and intelligible language.

Overall, given the need to balance the importance, for consumers, of getting all the relevant information and, for traders, the ability to make use of distance communication mechanisms without disproportionate limitations, the court ruled that

"the assessment of whether, in a specific case, the means of communication allows limited space or time to display the information, in accordance with Article 8(4) of Directive 2011/83, must be carried out having regard to all of the technical features of the trader’s marketing communication; in that regard, it falls to the national court to ascertain whether, having regard to the space and time occupied by the communication and the minimum size of the typeface which is appropriate for the average consumer targeted by that communication, all the information set out in Article 6(1) of that directive may objectively be displayed within that communication."

Limited information duty

The second question concerned the precise scope of the limited disclosure duty. In that regard, Article 8(4) specifies that at least "pre-contractual information regarding ... the right of withdrawal" should be provided in the original communication.

Also in this respect the Court sought a balanced solution (this time in line with the response proposed by the AG in the alternative). In particular, the Court required not only information about the existence of the right to be provided to consumers beforehand, but also about "the conditions, time limit and procedures for exercising the right of withdrawal" (para. 46). The trader, however, should not be required to provide the model withdrawal form in his original communication. In that respect, it suffices to provide that model form by another source, in plain and intelligible language.

Concluding thought

In the commented judgement, the Court clearly tries to find a balance between a high level of consumer protection and the competitiveness of undertakings, or else Articles 38, 11 and 16 of the EU Charter of Fundamental Rights. Less restrictive interpretation from the perspective of the traders (compared to the one proposed by the AG) is not unfounded; also the scope of information about the right to withdraw to be provided to consumers within and outside the original communication is understandable. One could nonetheless argue that still more attention could have been devoted to the needs of vulnerable consumers, particularly as regards the communication of other mandatory information by another source. On the positive side, the Court makes sure that vulnerable consumers receive at least minimum information in a way that they are able to process it. As regards the remaining part of information, the judgment (and the CRD) merely underlines that it's provided elsewhere "in plain and intelligible language". It would not have been a very long stretch, perhaps, to also require such information to be communicated via a means appropriate for the average consumer targeted by the original message.

Candida Leone contributed to this reporting.

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