CJEU in EIS (C‑266/19) – Reasonable expectation prevails over proportionality concerns in duties to inform

Case C‑266/19 (not yet available in English; in French here) concerns EIS and TO, who are competitors in the business of online sales of erotic products. The relevant claim was that EIS did not clearly inform consumers about its phone number in the right of withdrawal model form (annexed to the Consumer Rights Directive) and about the fact that consumers can use that phone number to exercise their right of withdrawal, even though EIS had one and mentioned it in a clear and legible manner on the bottom of its website. One interesting aspect about this case is that it is originally a competition law case that, in the referring court’s perspective, depends on an answer to a consumer law problem. Providing wrong or incomplete information on the right of withdrawal in consumer contracts (and therefore breaching consumer law) is considered to be unfair competition according to German law (para 21). So, even though there are no consumers directly involved in the dispute, the CJEU was called to interpret a provision of the Consumer Rights Directive.

The Consumer Rights Directive regulates the pre-contractual disclosure of available means of communication to consumers in several provisions. Article 6(1)(c) states that the trader must inform the consumer on means of communication ‘where available’. Article 6(1)(h) states that the trader must inform the consumer on the conditions, time limit and procedures for exercising the right of withdrawal (which, according to Article 6(4), can be done through the model form annexed to the Directive). The dispute, in this case, lied here: is a phone number used by a trader for professional purposes and shown in the homepage of the trader’s website considered an 'available' means of communication? Moreover, should Article 6(1)(c) and (h) and 6(4) – together with annex I point A – be interpreted as imposing a duty on the trader to explicitly inform the consumer on a phone number that can be used to exercise his right of withdrawal?

This case builds on Amazon EU (see our report on it here), where the CJEU interpreted partly the same provisions and established that an unconditional obligation to have a phone number available to consumers is not proportional, considering the economic context of some traders’ business model. Following the guidelines set out in Amazon EU, the CJEU clarified, in the present case, that the professional party who concludes a contract with a consumer via a website and that, logically, does not use a phone number for the process of concluding that contract (even though it has one available for other professional purposes), is not obliged to communicate it to the consumer in the context of the model form in annex I part A (para 36). However, interestingly, the CJEU established an exception to this rule. According to the CJEU, if the phone number is publicly displayed on the trader’s website in such a way that it would lead the average consumer to think that the trader uses that phone number to communicate with consumers in general, then it must be considered that that phone number is available within the meaning of Article 6(1)(c) (para 37). That is the case, for example, when the phone number is available on the trader’s website under the heading ‘contact’. Therefore, it must also be considered that a phone number is ‘available’ in the meaning of annex I part A and must be consequently included in the model instructions on the right of withdrawal (para 38). In this way, and even though the CJEU does not explicitly say it, it appears to have privileged the protection of the reasonable expectations of consumers over proportionality concerns.

Facebook ventures further into social commerce: implications for consumer protection

GUEST POST BY

Dr Christine Riefa, Reader, Brunel University

@cyberchristine

Facebook has announced the launch of Facebook Shops on 19 May 2020, a feature primarily aimed at small businesses wanting to sell online. While this is announced as a solution to help during the pandemic, the move had been on the cards for a while (starting with the launch of libra, as a cryptocurrency in 2019). Yet, this launch comes at a time where many shops had to close during the pandemic and are trying to find viable solutions to continue sales. This also comes amid the backdrop of a surge in the uptake of online commerce during lockdowns around the world.

So far, sales on Facebook were limited to the use of marketplace. The Facebook marketplace only enabled users to post adverts and sellers to send direct messages with a view to conclude a sale but it did not support online payments. Marketplace was primarily built for C2C sales (although it was also used by some small businesses). Facebook Shops will drastically change this. It is billed to rival amazon and Etsy in capturing the online e-commerce market. This follows on from other social commerce ventures by Facebook on other platforms it owns, notably on Instagram. On Instagram, users can make use of a ‘shop now’ button (although this functionality is reserved to a small selection of partners). The ‘shoppable posts’ allow consumers to click on featured items and purchase without leaving the Instagram platform.

The Facebook Shops feature will enable payments to be taken and retailers to set up shops available from both Facebook and Instagram. The service will be free for businesses to use as Facebook relies on advert sales to make the venture profitable. The system also allows retailers to link to third party platforms to manage inventories. It promises to make social commerce seamless, a quality it has so far lacked, mostly because payment solutions did not exist to integrate with this new selling method.

The arrival of this new offering seems to cement the rise of social commerce as a new retail channel. Up to date, social commerce (i.e., social media tools and interactive technologies used in an electronic commerce setting) was developing but remained embryonic. Facebook’s move may well finally launch social commerce for good.

This raises some important questions for consumer protection. Most of the legislation adopted to frame online purchases has focuses on electronic commerce. As social commerce is not simply transactional, and it also builds on a rich social, interactive and collaborative shopping experience (see Yang (2015) 24 Retailing Consumer Serv.) many of the rules in place may not totally be adapted. After all the Facebook Shops is looking for people to ‘experience the joy of shopping versus the chore of buying’ (see https://about.fb.com/news/2020/05/introducing-facebook-shops/). Yet, consumer law has primarily developed based on the information paradigm. This implies that buying is more akin to a chore where the ‘average consumer’ is expected to do his homework and arrive at sound purchasing decision. It requires time spent on the small print, on studying the suitably of a product to ones’ need. As a result, this shift of emphasis as announced by Facebook for its new social commerce offering comes to question some of the underlying rationale for legislation and established policy direction. Besides, consumers will be able to easily share posts about products they are interested in or have purchased, signaling their preferences to their social networks. While Facebook promises this sharing will be at the discretion of the users, other aggregated data on browsing will be collated and shared with the businesses, as well as influence the selection of adverts a consumer may see (https://about.fb.com/news/2020/05/privacy-matters-facebook-shops/). This raises some questions relating to freedom of choice, when big data effectively comes to frame those choices and may also lead to some framing of prices (through price personalization).

This leads to reflect on whether or not, consumer law in its current form is fit for purpose and can serve consumers in their social commerce experiences. There are currently a number of pervasive legal issues associated with social commerce:

-       Legal identification of traders in a social commerce context;

-       Online reviews and notably fake reviews and endorsements.

-       Personalised advertising based on data gathered on social media

-       Potential for personalised pricing that may prove discriminatory and/or cause detriment by artificially raising the price of goods offered

-       Control of digital influencer marketing

-       Sale of fake and/or dangerous products on social media platforms

-       Controlling sales and enforcement of the law across geographical boundaries

-       Regulation of liability on social commerce platforms.

As social commerce becomes more mainstream, those questions will need to find an urgent answer. The danger is of course that while consumers may have learnt to be weary of retailers’ ability to inflate the truth about their product they are less suspicious and potentially more easily influenced in situations where a product is marketed and sold via the intermediary of influencers, or when a product is posted by someone in their social network. In this context, already failing underpinnings of information as a shortcut for protection, inflated expectations placed on consumers to behave as rational economic agents, underperforming public enforcement alongside an absence of platform liability may well all line up to create consumer detriment on a large scale.

Notes:

This blog post builds on previous research published by the author. Notably, see C. Riefa, Beyond e-commerce: Beyond e-commerce: some thoughts on regulating the disruptive effect of social (media) commerce (Alèm do comércio eletrônico: algumas reflexōes sobre a regulação dos efeitos maléficos do comércio social (mídia), Revista de dereito do consumidor RDC (Brazil) 127 (Jan-Feb 2020), 281-304, available at SSRN: <http://ssrn.com/abstract=3608016>; C. Riefa, ‘Consumer Protection on Social Media Platforms: Tackling the Challenges of Social Commerce’ in T. Synodinou, Ph. Jougleux, Ch. Markou., Th. Prastitou, EU Internet Law in the Digital Era (Springer, 2019);

C. Riefa, L. Clausen, Towards Fairness in Digital Influencers’ Marketing Practices 8 (2019) 2 EuCML 64-74, available at SSRN: <https://ssrn.com/abstract=3364251>.

From Karlsruhe with love: landmark Dieselgate decision

In these days of turmoil, it's sometimes difficult to keep one's mind to the same subject for a longer time - especially for those who, like many of the contributors to this blog, are juggling worries for parents in a different country or childcare or finishing a dissertation with ongoing administrative and teaching tasks. 

This said, it should not escape our readers' attention that yesterday the German Bundesgerichtshof likely injected considerable momentum in the Dieselgate redress movement by establishing that VolksWagen is in principle required to accept that disappointed buyers of a "defeat" product cheating on emissions can return their car and get a reimbursement and damages - even as the company will be able to charge them something for use of the vehicle.

This could well trigger a wave of settlements as it is estimated that roughly 60 000 cases are still pending in Germany. An interesting question is whether the judgment will also have effects beyond the German borders, inspiring other courts and regulators on how to approach some of the legal hurdles that have swamped court proceedings so far. What a start of the week!

Here reporting on a well-regarded newspaper. And here the full text.

Vouchers everywhere? News from Germany

While the Commission clashes with Member States over airlines' vouchers-in-lieu-of-reimbursement policies (see our blog), similar approaches seem to be taking hold also in other areas of economic life and contracting.

Yesterday, remarkably, the German Parliament has passed legislation retroactively depriving buyers of event tickets and service subscribers of the possibility to claim a reimbursement in case the event or service provision they paid for are cancelled as a consequence of the pandemic. The rules apply to tickets sold before 8 March.

Exceptions are provided for consumers who can prove that the restriction would be unbearable for them due to personal circumstances. Furthermore, reimbursement will be possible when the voucher has not been spent by 31 December 2021.

Consumers will be able to use the vouchers for the same show/event or, when possible, for different ones. The idea behind the German legislator's intervention is to protect event organisers and service providers, who are known to be struggling at the moment and for whom, of course, reimbursements would entail serious liquidity issues.

The Verbraucherzentrale has criticised the choice to force vouchers upon consumers and in particular the retroactive effect of the law.

Architects obligations under the CRD - CJEU in NK (C-208/19)

Yesterday, the CJEU issued a judgment in the case NK (C-208/19) regarding the scope of application of the Consumer Rights Directive. The contract was concluded off-premises in the given case between two consumers and NK - an architect and a businessman - for the design of a family house, which would then be built based on this design. The consumers were dissatisfied with the quality of the delivered design and decided to use their right of withdrawal from the contract, claiming that NK never notified them of their right of withdrawal, which meant they could use it within 12 months from the date of conclusion of the off-premises contract pursuant to the measures implementing the CRD in Austria. There was no doubt that the contract concluded in the case was B2C and was concluded off-premises. However, NK tried to claim that the type of the concluded contract excluded it either fully from the scope of application of CRD or from the applicability of the right of withdrawal, as regulated in it.

The first question that Austrian courts brought to the CJEU pertained to the scope of the exception provided for in Article 3(3)(f) CRD, which excludes from the applicability of the CRD contracts concluded for 'the construction of new buildings'. If, however, the contract for the design of a family house cannot be qualified as a contract for the construction of a new building, then the further question arises whether this contract could be perceived as a contract for the supply of goods made to consumer's specification, and thus to which the right of withdrawal does not apply, pursuant to Article 16(c) CRD.

Construction vs design of a new building

The CJEU does not consider a contract concluded for the supply of the design for a new building the same as the contract for the construction of a new building, explaining that the exception needs to be applied narrowly (para. 41). This means that design contracts fall within the scope of the CRD, as they would be performed a few stages before the construction of a new building can even occur and are too remote then to fall within the scope of the exception (para. 43). 

Design contract is not a contract for the supply of 'goods made to consumer's specification'

NK tried to further claim in this case that consumers did not have the right of withdrawal, as he has supplied them with personalised design plans, which should qualify as goods made to consumer's specification. Contracts for the supply of such personalised goods are excluded from the applicability of the right of withdrawal pursuant to Article 16(c) CRD. The CJEU emphasis, however, that pursuant to Article 2(3) and (4) CRD the notion of goods made to consumer's specification applies to non-prefabricated, tangible movable items made on the basis of an individual choice of the consumer. Whilst design plans for a building could be made based on instructions provided by consumers and could be provided to consumers in a tangible movable form, e.g. on paper (para. 58), the main object of the contract is for the architect to provide a service - an intellectual, design service - and the delivery of the design plans is only subsidiary to this (para. 59). This means that the exception from Article 16(c) CRD does not apply, but the service provider - the architect - could invoke the exception from Article 16(a) CRD. If the design service has been fully performed with the performance having begun with the consumer's prior express consent and acknowledgement of the fact that they will lose their right of withdrawal upon full performance of the service, the right of withdrawal does not apply. It is, however, unlikely that in the given case NK could invoke this exception, as the facts suggest that consumers were not informed about their right of withdrawal and have not expressly acknowledged relinquishing it (para. 64).

Vouchers for cancelled flights should be an (attractive) alternative to a cash refund – EU Commission’s Recommendation

The reimbursement of cancelled flights due to the coronavirus has been a hot topic in recent weeks. Several airlines have been obscure regarding their refund policies, not providing the relevant consumer information on their websites, providing conflicting information or even refusing to provide any refunds. For example, in the case of Ryanair, there have already been at least 3 different approaches to this issue between the 25^th of March and today. Ryanair initially allowed for a choice between a refund and the re-booking of the ticket. Then, Ryanair emailed all passengers asking whether the passengers would accept a voucher instead of a refund and that, in any case, the refund would only be paid after ‘the COVID-19 emergency has passed’. Finally, Ryanair emailed all passengers again informing them that a voucher had been issued (without the passenger’s active choice in that sense, and after the passenger had explicitly asked for a refund). While this email mentioned the apparent option for the consumer to re-submit her refund request, Ryanair re-directed the consumer to their FAQ on how to use the voucher, without any actual means of contact or any form to re-submit the consumer’s claim (this account is based on personal experience and on reports by the media, e.g. https://www.bbc.com/news/business-52370158).

According to the very clear Article 8 of Regulation 261/2004, in case of a flight cancellation all passengers are entitled to a choice between a refund or rebooking of their ticket (reimbursement or re-routing). It therefore appears that a mandatory voucher goes against the rights of the passengers. The airlines can, however, offer a voucher to the passengers as long as this remains voluntary, that is, as long as passengers can alternatively opt for (and receive) a refund. This is also the official position of the European Commission, who has announced earlier today that it has adopted a recommendation on vouchers for cancelled flights, based on the EU’s plan on ‘Tourism and transport in 2020 and beyond’ (here). These guidelines and recommendations follow the interpretative guidelines on EU Passenger Rights Regulations from the 18^th of March (here). The Commission wants voluntary vouchers to be a ‘viable and attractive alternative to reimbursement for cancelled trips’ and therefore wishes to provide incentives for passengers to accept vouches instead of a refund. The Commission’s goal is to encourage consumers to accept voluntary vouchers in order to prevent the insolvency of several airlines heavily operating in Europe. The Commission highlights, however, that consumers retain their right to be given the possibility to receive a cash refund. Furthermore, the Commission states that the vouchers should be protected against insolvency, should be reimbursable after one year, and should provide adequate flexibility for consumers who wish to use them (e.g. regarding their transferability). It is important to highlight that this applies only when the airline cancels the flight – situations where passengers cannot travel or want to cancel a flight on their own initiative do not fall under EU’s passenger rights regulations. It is now up to the Member States to adjust their laws accordingly.

Interest rate modifications in credit contracts should be covered by Directive 2002/65/EC- AG Sharpston in C-639/18 Sparkasse Südholstein

On the 12th of March 2020 Advocate General Sharpston delivered her Opinion in C-639/18 KH v Sparkasse Südholstein on the interpretation of Article 2(a) of Directive 2002/65/EC on Distance Marketing of Financial Services.

The facts

This case involves the German Sparkasse Südholstein regional bank. While mortgage contracts are only concluded face to face in its branches, in some cases, in the context of ongoing banker-customer relationship, additions or amendments to these contracts can also be made with the use of distance communication.

In the period of 1994-99 the parties concluded 3 contracts. Two in July 1994 for purchase of immovable property and one in 1999 for personal loan. All three contracts were concluded with an initial fixed interest rate that would switch to a variable rate following the expiry of the period for which the interest rate was initially fixed. As it is usually the case, before the end of this fixed period, the contract was open for negotiation, and a new fixed rate for a newly agreed period could have been agreed between the parties. The present parties negotiated new interest rates in 2008, 2009 and 2010 respectively.

However, in 2015 KH withdraw from the above three contracts setting out the new interest rate claiming that these contracts involved distance selling thus entitling KH for a right to withdrawal under the national provision implementing Directive 2002/65/EC.

The legal problem

The legal issue in this case was whether KH had a right of withdrawal, and this depended on the interpretation of Art. 2(a) of Directive 2002/65/EC, whether the transactions setting out the new interest rates where covered with the concept of a 'contract concerning financial services' and a contract 'concluded under an organized distance sale or service-provision scheme.' In other words, whether the newly agreed interest rates were considered to be new distance contracts or merely 'operations' of the initially concluded credit contracts.

The analysis: a 'contract concerning financial services'

After careful analysis, AG Sharpston answered the first question positively, holding, that a 'contract concerning financial services' in Art. 2(a) of Directive 2002/65/EC indeed includes contracts for the modification of the interest rate that makes no other (substantial) changes to the contract, it neither extends the term of the contract nor modifies the amount of the loan. 

In her interpretation AG Sharpston relaid on the wording of the provision, the purpose of the Directive and the explanations of the aims of the provisions of the Directive contained in the recitals of the Directive. 

First of all, AG Sharpston highlighted the purpose of the Directive to give a number of rights to consumers in distance financial services contacts that is important for the provision of a high level of consumer protection and the increase of consumer confidence in the internal market.

It follows, that the concept of a 'distance contract' must be interpreted broadly, because Art. 2(a) refers to 'any' contract concerning financial services. The same approach would be suggested by recital 14 that suggest the Directive covers 'all' financial services.

Further, AG Sharpston discarded Sparkasse Südholstein's argument that the subsequent contracts for the modification of the interest rate are only 'operations' within the meaning of the Directive that follow the initial service agreement, according to which, the subsequent contracts for the modification of the interest rate are not self-standing, separate contracts, i.e. 'contracts concerning financial services'. Following Article 1(2) of the Directive, a contract that is comprised by an initial service agreement followed by successive operations or series of separate operations of the same nature performed over time, would not fall within the scope of the Directive. Referring to Recitals 15-17 AG Sharpston explained the difference between an 'operation' of an existing contract and a new contract, emphasizing that adding new elements to an existing service agreement is not an operation of the existing contract but a new contract. Relying on Recital 15 that defines distance contracts as those where the offer, negotiation and conclusion are done at distance, AG Sharpston concludes that  constitutive elements of contract formation under the Directive are the offer, the acceptance and the meeting of the minds. While this conclusion seems somewhat unsubstantiated without at least some reference to national jurisdictions where these requirements are applied, her overall analysis seems to be well supported. Thus a key element for a 'contract' to exist under Article 2(a) of the Directive is that there is an agreement between the parties. An 'agreement' can be defined by contrast to an 'operation'. An operation is 'an act of executing agreement without adding elements for which a new meeting of minds would be required' (para. 51). The AG rightly asserts that in the context of a credit contract, an operation would thus cover transactions such as payments reducing the total amount owed to the bank. Further on, an 'agreement' can also be defined by looking at the conclusive elements of a contract. AG Sharpshon explains that a 'characteristic obligation' or essential element of the contract is the granting of the sum borrowed (lenders obligation), the repayment of the sum borrowed (borrowers obligation), agreement on the structure and the duration of the repayment period and the interest rate. The interest rate can be fixed or variable, and as this case also shows, the usual banking practices when concluding contracts with a fixed rate is that this fixed rate is only for  fixed period of time, following which, if no agreement on a new fixed rate is agreed, the banks variable rate will apply. Thus without an agreement on a new fixed rate, the initial contact would not remain unchanged, AG Sharpston emphasizes that it would change substantially, as one of the main elements of the contract would change, i.e. the interest rate. AG Sharpston then concludes that since the importance of this element, an agreement on the new fixed interest rate cannot be a mere operation of the existing contract but it is rather a new contract between the same parties.

The analysis: a contract 'concluded under an organized distance sale or service-provision scheme' 

This case also involved the interpretation of a phrase 'concluded under an organized distance sale or service-provision scheme' given that the bank did not solely use distance communication for contract conclusion. The AG concluded again positively, establishing the necessary elements. According to AG Sharpston, contacts are concluded under an organized distance sale or service-provision scheme 'where a supplier, in order to conclude a subsequent interest rate agreement, makes exclusive use of means of distance communication, where the use of those means in exclusive and not strictly occasional but forms part of a framework set by that supplier, in terms of its commercial structure, including staffing and resources, allowing it to conclude contracts without the simultaneous physical presence of the parties'.

In her analysis, AG Sharpston referred back to Article 2(a) and the necessary elements there for a distance contracts. First, that the two parties must not be physically and simultaneously present when the contract is prepared and concluded but rather they exclusively used some means of distance communication such as phone, email, etc. Importantly, the AG asserts that any prior face to face contact between the parties for the purposes other than the conclusion of the contract in question are of no relevance. The second and the more disputed element here is that the transactions much be carried out under an organised distance sale or service provision scheme run by the supplier, who makes exclusive use of distance communication. Apart from Recital 18 that excludes services provided on occasional basis and without a dedicated commercial structure, the Directive does not give any further guidance. However, relying on the wording of Article 2(a) AG Sharpston determined that the scheme must fulfill several criteria. First, it must be an organized scheme, the supplier must have the necessary commercial structure including staffing and resources to conclude contracts at distance. Second, the scheme must be run by the supplier. The supplier must set up the framework to offer the conclusion of distance contracts. Third, running such a scheme must be exclusive for the purpose of the contract in question, that is, it must cover the offer, the negotiation and the conclusion of the contract. Finally, the conclusion of a distance contract should be a normal or regular possibility when concluding contacts. Importantly, the AG clarifies, that once the system is set up, it does not have to be used frequently or systematically, as all the Directive requires is that it is not used 'strictly occasionally'.

Discussing the particular case, AH Sharpston asserted that Sparkasse Südholstein seems equipped both with staffing and resources to run an organized scheme of distance selling, and the fact that Sparkasse Südholstein concludes certain types of contracts exclusively at its branches should not be an obstacle for also running an organized distance selling scheme. Looking at the particular contracts concluded with KH, the AG emphasized that it should be of no relevance for the present analysis that the initial credit contracts were concluded at a branch, as the Directive does not require every single contract to be concluded at distance when there is an ongoing banker customer relationship between the parties. The application of Article 2(a) of the Directive should be observed independently from the rest of the relationship, taking into account only the particular contract, i.e. the contract setting out the new interest rate.

Concluding thoughts

This case involves a 'typical' legal problem in long term contracts where following the initial contact several other agreements are reached throughout the time that raises the question of the status of these new agreements: are they separate, independent contracts or are they just the operation of the initially concluded contract. The AG's conclusion seems to be correct as having these agreements as independent contracts provides a higher level of protection of consumers as if they were not separate contracts. In particular in regard to the right of withdrawal- this important right would not exist if the new agreement on the interest rate is not an independent contract. This case arose in the context of credit contracts. However, AG Sharpston's overall conclusion and the important message on the need to set out the Directive's scope of application broadly for achieving a high level of consumer protection is an important one. It could have far reaching implications, given that the Directive relates to all financial services and similar problems might arise in the context of other long term financial contracts such as life insurance or personal pensions.

Adequacy of travel documents - CJEU in Blue Air - Airlines Management Solutions (C-584/18)

On 29 April the CJEU decided the case of Blue Air - Airline Management Solutions (C-584/18), the facts of which were a bit unusual for cases in which Regulation No 261/2004 applies. The passenger in the given case was a citizen of Kazakhstan, trying to fly from Larnaca (Cyprus) to Bucharest (Romania) with a Romanian air carrier Blue Air. The passenger had the following travel documents: passport, temporary residence permit in Cyprus, application for a visa to Romania and the answer of the Foreign Affairs Ministry of Romania to that application assuring that no such visa was required if he had a residence permit in Cyprus already. The personnel of Blue Air denied boarding to this passenger, however, based on the fact that he did not have a valid visa. 

In this comment we will only focus on the questions referred to the CJEU which pertained to the applicability of Regulation No 261/2004 to this situation (questions four and five). Namely, whether passengers have the rights from Regulation No 261/2004 when the air carriers denies them boarding claiming that inadequate travel documents have been provided by the passengers. Article 2(j) Regulation 261/2004 states that the air carrier does not have to provide passengers with assistance or compensation in case of a denied boarding justified by 'reasonable grounds' such as e.g. inadequate travel documents. The CJEU emphasises whilst interpreting this provision that the EU legislator did not intend to give the air carriers discretion in evaluating whether the travel documents were adequate (paras 92-94). The national court is, therefore, competent to assess the adequacy of the passenger's travel documents, if the passenger contests the air carrier's decision to deny them boarding (para 95). Based on the circumstance of the given case the CJEU advises the referring national court to assess the denied boarding as not justified by reasonable grounds (paras 96-97). It does not matter that the air carrier tried to exclude or limit its liability for denied boarding through its terms and conditions, regardless whether that term was part of the concluded contract between the parties. Article 15 Regulation 261/2004 clearly prohibits such exclusions or limitations of liability from being enforced (para 102).

Final destination counts - CJEU in Air Nostrum (C-191/19)

In another air transport case - Air Nostrum (C-191/19) decided last Thursday, on 30 April, the CJEU adjudicated whether a passenger could apply for the compensation from Regulation No 261/2004 in case they have been denied boarding against their will on the first of their two connecting flights, but were then placed on another flight that still allowed them to make the second connecting flight and reach their final destination timely. Unsurprisingly, the answer is that the passenger may in such a situation NOT claim the compensation. This is a short judgment, as the reasoning is very much in line with the previous case law perceiving connecting flights as a single unit and the CJEU looking at consumers' detriment (loss of time) in reaching the final destination (para 29). In a case at hand this loss did not occur, thus any inconvenience suffered by the passenger due to the time change of the first connecting flight was not considered sufficiently serious to award the right to compensation (para 32). 

Flight price supplements explained - CJEU in Ryanair (C-28/19)

On 23 April the CJEU issued a judgment in the case Ryanair (C-28/19) discussing how airlines structure and present their flight prices. Specifically, the Italian Competition and Market Authority (AGCM) found Ryanair guilty of various unfair commercial practices regarding presentation of price charges and imposed fines on Ryanair. The question was whether Ryanair needed to include in the prices published on its website certain costs, which it considered optional, such as online check-in fees, the VAT, administrative fees for payments with a credit card. The AGCM did not find these fees optional, but rather compulsory, which would change the way Ryanair had to present them to passengers (para 9). 

Regulation No 1008/2008 on common rules for operation of air services determines in its Article 23 what elements of air fare, fees, surcharges should be presented to passengers, as well as when and how these should be shown. The CJEU previously decided in Air Berlin case (C-290/16, see our comment) that the additional, compulsory fees and surcharges should be presented to passengers from the first time the price for air services is shown, although they should not be included in the air fare (para 18). ebookers.com Deutschland case (C-112/11, see our comment) illustrated how to differentiate between compulsory and optional price supplements (para 20). Optional fees may be displayed to consumers at the very beginning of the booking process (thus later than when the price is shown for the first time to passengers)  (para 21).

In the given case, the CJEU decides that online check-in fees might be considered compulsory only if the air carrier does not provide another method of check-in to passengers (e.g. at the airport) OR if all check-in methods (whether online or offline) must be paid for (para 25). The required moment of the display of the VAT is more complex, as it depends on the service to which the VAT applies. The VAT on air fares is compulsory, and thus should be shown to passengers from the first time the price is displayed, but in a separate way, whilst the VAT applicable to optional services is unforeseeable (depends on whether passengers choose these services) and thus may only be shown during the booking process, when the optional service is selected (paras 30-31). These rulings are quite straightforward and not unexpected. 

A bit more exciting was the decision regarding fees applicable to passengers paying with a credit card. Whilst undoubtedly foreseeable, the question was whether they could be seen as unavoidable and therefore qualify as compulsory fees. Ryanair provided passengers with an option to pay by Mastercard prepaid without the need to incur additional charges, thus they could claim that the administrative fee was avoidable if consumers chose a different payment method (para 33). The CJEU does not accept, however, this reasoning, as 'the option offered to the consumer is subject to a condition imposed by the air carrier, by reserving the free nature of the service in question for the benefit of a restricted class of privileged consumers and by requiring, de facto, the consumers who do not form part of that class to either refuse the service that is free of charge, or not to proceed with their purchase immediately and to undertake steps that may entail costs in order to satisfy the condition required, at the risk, once those steps have been completed, of no longer being able to benefit from the offer or of no longer being able to benefit from the price originally indicated' (para 33). It does not matter also whether the majority of consumers have Mastercard prepaid cards (para 35). To clarify, this does not prohibit air carriers from charging administrative fees for credit card payments, but rather forces them to disclose such additional charges from the very first moment the flight price is shown to consumers.