Deferred payment option as a ‘promotional offer’: CJEU in bonprix (C-100/24)

In bonprix (Case C-100/24), the CJEU was asked to clarify the meaning of ‘promotional offers’ under Art. 6(c) of the E-commerce Directive. According to this provision, any such offers must clearly outline the conditions for eligibility. The disputed practice was an advertising message that bonprix, an online trading company, put on its website: ‘Convenient purchase on invoice’. It was contested that this message is misleading as it leaves out the fact that such a payment arrangement is subject to a prior assessment of the consumer’s creditworthiness. It is thus necessary to establish whether the message on bonprix’ website is a ‘promotional offer’ in the first place – a concept that is not directly defined under the Directive.

First, according to a literal interpretation, ‘promotional offers’ can include ‘any form of communication by which a provider seeks to promote goods or services to the recipient by giving him or her an advantage’ (para 24), which is still rather broad.

Second, according to a contextual interpretation, since Art. 6(c) of the E-commerce Directive included some illustrative examples such as ‘discounts, premiums and gifts’, for ‘reasons of consistency’, ‘promotional offers’ must have ‘the characteristics common to’ these examples (para 25). The CJEU outlined three such characteristics: the conferral of an advantage that is

1. objective, i.e. not left to ‘the subjective assessment of that recipient’ (para 26),
2.  certain, i.e. ‘does not depend on chance or selection’ (para 27, per the distinction between ‘promotional offers’ under Art. 6(c) and ‘promotional competitions and games’ under Art. 6(d)), and that is
3. ‘capable of influencing that recipient’s consumption behaviour’ (para 28).

In response to bonprix’ arguments, the CJEU added that ‘promotional offers’ are neither defined by ‘the existence of a substantial monetary advantage for its recipient’ nor by ‘its exceptional nature’ (paras 29-31). The form and extent of the advantage is ‘immaterial’ and may be ‘monetary, legal or mere convenience, such as to enable the recipient to gain time’ (para 32). In the context of the disputed practice, the CJEU highlighted some potential benefits of bonprix’ offer: the deferral of payment provides the consumer with ‘a cash advance’ and represents ‘a monetary advantage, albeit minimal’ (para 43); in the event of extinguishment of the contract due to withdrawal or termination, ‘the purchaser does not need to claim reimbursement of the price’ (para 44).

Third, according to a teleological interpretation, the CJEU confirmed that subjecting the disputed practice to Art. 6(c) of the E-commerce Directive can ‘contribute to a high level of consumer protection, without, however, entailing unreasonable economic burdens for service providers’ (para 34). By informing the consumer that the deferred payment option is subject to a creditworthiness test and thereby making the consumer realise that they may be refused the option, it ensures consumer protection ‘at all stages of contact between the provider and the recipient of a service’ (para 35). Finally, the CJEU also added that its interpretation of Art. 6(c) of the E-commerce Directive is fully compatible with the Unfair Commercial Practices Directive (particularly its Art. 3(4) and its general prohibition of misleading practices) and the Consumer Rights Directive (particularly its Art. 6(8)).

The Court’s broad interpretation of ‘promotional offers’ should be welcomed as a positive move to strengthen consumer protection through information. It represents a more inclusive understanding of the factors that drive consumers’ purchase decisions, in particular convenience. Of course, it should also be borne in mind that the disputed practice in this case is in any event a ‘commercial practice’ within the scope of EU law.

Ali Express and European consumer law

Since 2010, AliExpress has been connecting consumers outside of China with Chinese sellers willing to ship their products to their countries. I have no direct experience to share, but a look at the reviews on various comparison websites suggests consumers appreciate the great variety of products offered for very low prices and complain about terms of service, quality and delivery failures. 

Some complaints must have reached the Dutch consumer authorities Autoriteit Consumenten en Markten, which launched a coordinated enforcement action aided by the Dutch consumer association and the European Commission. The result is a commitment by Ali Express to bring its offer in line with European consumer laws, in particular (quoting from the Authority's press release):

• The cooling-off period (the right of withdrawal);

  

  image from pixabay.com

• Legal guarantees: EU rules regarding guarantees must be indicated, and complied with;
• Extra costs: it must be indicated whether any taxes or other fees need to be paid, for example customs duties at the border;
• Sellers: information must be provided about the identity of the seller.
• Ranking: it must be indicated whether payments have been made in order for a seller to appear higher in the search results. 
• General terms and conditions: these no longer violate the relevant laws;
• Complaints: information must be provided about where consumers can turn to if they have any complaints or disputes (no longer the Court of First Instance in Hong Kong, but in the consumer’s own country).  

While many of these past violations are substantive, the enforcement action apparently framed them as a  series of misleading commercial practices - probably because this is the easiest way for an enforcement authority to intervene. 

The above does not necessarily mean that you should now go and fill your home with 1-eur plastic unicorns - emotional spending in the pandemic is still more of a current threat than being unable to litigate in Hong Kong over your shopping misfits -, but in case you do, know that EU consumer rights now ostensibly apply on AliExpress too (when your counterparts is a professional, etc etc). 

Have a great week!

CJEU agrees with the AG in the Uber follow-up case - Star Taxi App

Last week the Court of Justice delivered its judgment in another case highly relevant to the platform economy - C-62/19 Star Taxi App. The English version of the judgment is not available at the time of this writing, yet the analysis of other language versions shows that the Court largely followed the opinion of the Advocate General Szpunar, on which we reported earlier this year (see AG opinion in Star Taxi App...). Like in several other judgments on online platforms analysed on this blog - from Uber Spain and Uber France to Airbnb Ireland - the focus remained on the classification of services provided by platform operators and its regulatory implications. The Court continued to rely on the analytical framework developed in the Uber cases, but - similarly to the Airbnb ruling - applied it more favourably to the platform provider. The judgment confirms that the classification of services of platform operators as activities falling outside of the scope of Directive 2000/31/EC on electronic commerce is not to be made too promptly. Moreover, the judgment addressed several other aspects of the EU regulatory framework - in a way which was not as favourable to the platform providers as they may have hoped.

Facts of the case and the questions referred

As we recounted in our previous post, the case involved a provider of a mobile application connecting drivers and passengers in urban transport. The business model of Star Taxi App was, however, not identical to the Uber platform. Firstly, the provider did not automatically select two parties for a ride, but rather displayed a list of drivers available for a journey, from whom the passenger was free to choose a party. Secondly, the fare was not set by and collected through the app, but was paid directly to the driver. Thirdly, only taxi drivers authorised and licensed to provide taxi services were allowed on the platform and no additional steps were taken to control the quality of the vehicles and drivers. Finally, unlike Uber, Star Taxi App was a Romanian platform, operating on the Romanian market.

The operation of the platform was considered to be in violation of applicable national rules, most notably as regards prior authorisation. The provider contested the sanctions imposed on him, arguing that the relevant norms were contrary to the EU law. Against this background, the Regional Court in Bucharest decided to stay the proceedings and ask the Court of Justice for an interpretation of the notions of "information society services" under Directive 2000/31/EC and "technical regulations" under Directive 2015/1535 on the provision of information in the field of technical regulations. Moreover, the reference provided the Court with an opportunity to clarify specific norms on freedom of establishment, contained in Directive 2000/31/EC (principle excluding prior authorisation) and Directive 2006/123/EC on services (conditions for establishing authorisation schemes and for granting authorisations).

Judgment of the Court

Finding 1: Star Taxi App provides information society services

Like the AG, the Court found that services provided Star Taxi App fulfil the criteria of "information society services", to which Directive 2000/31/EC applies (para. 42-48), and cannot be seen as "inherently linked" to the underlying transport services. Key to the latter finding was the fact that Star Taxi App did not create a new market for non-professional drivers, but was limited to licensed taxi drivers, i.e. a market for services which existed before (para. 52), and did not organise the general functioning of underlying transport services, as it did not select the drivers, set or charge prices or control vehicles or drivers (para. 53). Consequently, unlike in Uber cases, classification as "information society services" remained available.

Finding 2: Notification requirements under Directive 2015/1535 do not apply

The Court then reversed the order of the questions referred and moved to the assessment of notification requirements under Directive 2015/1535. Like the AG, the Court concluded that the Romanian requirements imposed on operators of taxi "dispatching" services did not constitue technical regulations as they were not specifically aimed at information society services. Whether or not this finding remains in line with the Court's previous case law can be a matter of debate. To recall, the Court was not equally generous to the national regulator in VG Media, where it found that the German copyright rules (introducing publisher rights) were aimed, at least in part, at regulating information society services (the use of snippets on search engines). In Star Taxi App, the Court was satisfied with the fact that "taxi dispatching" have long been defined more broadly and referred to the activity consisting in receiving customer bookings by telephone "or other means" and forwarding them to a taxi driver. The fact that more recent local rules in Bucharest explicitly mentioned "IT applications" among those "other means" was deemed irrelevant. To support this conclusion the Court observed that the analysed requirements, for example to obtain a two-way radio, applied equally to all types of dispatching services (para. 65). The latter argument seems rather shaky, considering that the Court later (rightly) argues that such a requirement, applied to the providers of information society services, could, in fact, be contrary to Directive 2006/123/EC. An alternative reading of Directive 2015/1535 could, however, be difficult to reconcile with the subsequent interpretation of Article 4(2) of Directive 2000/31/EC, which was likely a consideration in this part of judgment.

Finding 3: Article 4 of Directive 2000/31/EC does not apply to the scheme at hand, but Articles 9 and 10 of Directice 2006/123/EC do

The last part of the judgment concerns the applicability of the principle excluding prior authorisation in Article 4(1) of Directive 2000/31/EC to the case at hand. Similarly to the AG, the Court found that the analysed scheme was not covered by this provision and instead fell under the exception set out in the subsequent paragraph. To recall, pursuant to Article 4(2) of Directive 2000/31/EC, the principle excluding prior authorisations for information society services remains without prejudice to authorisation schemes which are not specifically and exclusively targeted at such services. Like the AG, the Court observed that a mere clarification (extension?) of the scope of pre-existing rules to dispatching services relying on IT applications does not consistute an authorisation scheme which is specifically and exclusively targeted at such services (paras. 81-82). Accordingly, a conflict between Directives 2000/31/EC and 2006/123/EC did not arise and provisions of the latter were deemed applicable.

The Court then moved to the interpretation of Articles 9 and 10 of Directive 2006/123/EC on freedom of establishment, referring numerously to its recent judgment in Cali Apartments. Like in the Cali case, the Court underlined that a separate and consecutive assessments must be made of, firstly, whether the very principle of establishing that scheme is justified, and, secondly, the criteria for granting the authorisations provided for by that scheme (para. 87). Since the information provided by the referring court in this regard was not sufficient (e.g. so as to assess if the scheme could be justified by reasons of consumer protection), the Court limited itself only to brief observations regarding the criteria apparent from the file. Most notably, it shared the view expressed by the AG that an obligation, imposed on service providers, to comply with technical requirements which are not appropriate for the service in question and thus generate unjustified burdens and costs for service providers could not be deemed compatible with Article 10(2) of Directive 2006/123/EC (para. 90). This could be the case for the requirement to obtain a two-way radio, which was nonetheless for the referring court to verify (paras. 91-92).

Concluding thoughts

Overall, the judgment in Star Taxi App is a reasonable ruling, seeking to strike a balance between the internal market goals and the public interest goals pursued by national regulators. One cannot fail to note, however, that the Court has taken a long way to arrive at this outcome. As apparent from the Star Taxi case, the EU rules at hand provide for significant safety vaults, which Members States can rely upon to regulate the provision of information society services in the public interest. The principle excluding prior authorisation in Article 4(1) of Directive 2000/31/EC does not apply to authorisation schemes which are not specifically and exclusively targeted at information society services and notification requirements in Directive 2015/1535 do not apply to rules which are not specifically aimed at this kind of services. Also the country of origin principle, which is laid down in Article 3(1) of Directive 2000/31/EC and was analysed in the Airbnb Ireland case, is not without limitaitons. Admittedly, the development of the platform economy has pushed some of these norms to its boundaries and a case could be made, for example, for making Article 4(1) of Directive 2000/31/EC less categorical. This, however, is a task for the EU legislature and a potential subject for the Digital Services Act. For the time being, the judgment in Star Taxi App shows, together with Airbnb Ireland, that classification of services of platform operators as activities falling outside of the scope of Directive 2000/31/EC should not be made too lightly and that EU free movement rules are to be reckoned with.

* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.

AG opinion in Star Taxi App and the limits of the principle excluding prior authorisation: was Uber Spain really necessary?

Last week brought a very interesting opinion of the Advocate General Szpunar in case C-62/19 Star Taxi App. The case constitutes a follow-up to a range of preliminary rulings on the platform economy, most notably the judgments in the two Uber cases (see our comments, respectively, on Uber Spain and Uber France) and in Airbnb Ireland, as well as the pending case Cali Apartments. It is worth noting that it was also AG Szpunar who successfully advised the Court in the first three of them, while on the fourth pending case, in which AG Bobek delivered the opinion, the Court is about to rule later this month.

Facts of the case

Similarly to Uber references, case C-62/19 Star Taxi App involved a provider of a mobile application connecting drivers and passengers in urban transport. Furthermore, the doubts raised equally concerned the legal qualification of the service provider (as a provider of information society services or not) as well as the scope of Member States' regulatory discretion concerned. More specifically, in the case at hand the question was whether the provider of Star Taxi App could be subjected to the Romanian requirements imposed on operators of taxi 'dispatching' services, including the requirement to obtain prior authorisation.

At this stage, it is necessary to note that the business model of Star Taxi App was not merely a copy of the (in)famous Uber platform. Like Uber, the application helped passengers to establish contact with providers of urban transport services. However, the provider did not automatically select two parties for a ride, but rather displayed a list of drivers available for a journey, from whom the passenger was free to choose a party. Secondly, the application provider did not set the fare, which was rather paid directly to the driver. Finally, only taxi drivers authorised and licensed to provide taxi services were allowed on the platform and no additional steps were taken to control the quality of the vehicles and their drivers or the drivers' conduct.

Not unlike the Uber France case, the provider of Star Taxi App, operating without authorisation, was eventually fined for having infringed the applicable Romanian norms. The provider appealed, arguing that the legal provisions applied to it were contrary to the EU law. Against this background, the Regional Court in Bucharest decided to stay the proceedings and refer a number of questions to the Court of Justice.

Opinion of the AG 

The questions referred concerned, firstly, the notion of the information society service, secondly, the scope of regulatory discretion of the Member States under the E-Commerce Directive and the Services Directive and, thirdly, the notification requirements laid down in Directive 2015/1535.

Finding 1: Star Taxi App provides information society services

The Advocate General began his response to the first question by reitering the notion of information society service defined in Article 2(a) of the E-Commerce Directive by reference to Article 1(1)(b) of Directive 2015/1535. To recall, an information society service is "any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services". According to the AG, the service consisting in putting taxi passengers directly in touch, via an electronic application, with taxi drivers, such as the one considered in the main proceedings, fell under that definition. Most notably, the AG did not consider the business model of Star Taxi App to be "inherently linked" to the underlying transport services, as it did in the Uber cases. In his view, the service was merely an adjunct to a pre-existing and organised taxi transport service (considering it was offered to licensed drivers only), while its provider did not exercise control or decisive influence over the conditions under which transport services were provided by the taxi drivers (paras. 45, 49). Hence, unlike in the case of Uber, the E-Commerce Directive should be considered applicable to the analysed services.

Finding 2: National rules are not precluded by the principle excluding prior authorisation in the E-Commerce Directive

The key part of the opinion in Star Taxi App is linked to the second question, concerning the interpretation of the principle excluding prior authorisation in the E-Commerce Directive. To recall, pursuant to its Article 4(1), Member States shall ensure that the taking up and pursuit of the activity of an information society service provider may not be made subject to prior authorisation or any other requirement having equivalent effect. Most importantly for the present case, the subsequent paragraph specifies that the principle mentioned above "shall be without prejudice to authorisation schemes which are not specifically and exclusively targeted at information society services". Focusing on the latter, AG Szpunar argued that a national provision, such as the one in the case at hand, which extends the requirement to obtain prior authorisation - with which providers of economically equivalent services already have to comply (cf. para. 74) - to the providers of information society services does not constitute an authorisation scheme specifically and exclusively targeted at providers of the second category of services. In order words, providers of information society services can, in such case, be subject to an authorisation scheme.

The arguments brought by the AG in support of this reasoning appear broadly convincing. According to the AG, while the EU legislature's aim in adopting the E-Commerce Directive was to encourage the development of information society services, its intention was not to enable economic operators to evade legal obligations solely because they operate 'online' (para. 25). The rationale for Article 4(2) of the E-Commerce Directive can thus be linked to the prevention of unequal treatment between information society services and similar services which do not fall within that concept. Indeed, with the growth of the digital economy, providers of information society services may enter markets in which 'traditional' service providers had previously played a central role. Following the AG, legislative or administrative action, which makes providers of such services subject to existing rules, does not amount to the creation of a new authorisation scheme specifically and exclusively targeting those services, but rather constitutes an adjustment of the existing scheme to take account of new circumstances (para. 69). 

While this generally seems well-founded, the focus of the AG on the extension of already existing rules is not entirely clear. In my view, such an emphasis should simply be linked to the circumstances of the case. Specifically, the fact that the analysed Romanian provisions were extended to cover information society services makes it potentially more difficult for the national legislator to argue that its action was not "specifically and exclusively" targeted at information society services. AG's focus on this context is thus meant to show that, even in those circumstances, conditions of Article 4(2) of the E-Commerce Directive can be fulfilled. The temporal/technical aspect (extension of already existing rules) is not crucial to the interpretation, however. Also newly adopted rules, targeted at providers of information society services and other services equivalent in economic terms, can potentially fall under Article 4(2). Seen through this lens, one can wonder whether the complex reasoning on the notion of information society service, initiated by the AG in Uber Spain opinion, was indeed necessary?

Finding 3: Also Services Directive applies to the case at hand

Having analysed the E-Commerce Directive, the Adovocate General moved to the discussion of other harmonised provisions, most notably of Directive 2006/123/EC on services in the internal market. Most notably, the AG found that the Services Directive also applies to the case at hand. According to the AG, the relation between the two directives is defined by the principle of lex specialis derogat legi generali, laid down in Article 3(1) of Services Directive. Pursuant to this provision, in the event of a conflict, the provisions of specific acts of EU law governing access to and the exercise of services in specific sectors take precedence over those of Directive 2006/123/EC. As argued by the AG, in the case at hand a conflict of this kind did not arise. Consequently, authorisation schemes, introduced in accordance with Article 4(2) of the E-Commerce Directive, should comply with the rules laid down in Articles 9 and 10 of the Services Directive.

The subsequent analysis of AG Szpunar essentially falls in line with the recent opinion of AG Bobek in Cali Apartments. In particular, a distinction is made between the benchmark for evaluating the need for establishing an authorisation scheme in the first place (Article 9) and more specific conditions of such a scheme (Article 10). According to AG Szpunar, the preliminary reference did not contain sufficient information to give extensive guidance on the two provisions in the analysed context. It is worth highlighting, however, that, in view of the AG, the requirement of consumer protection cannot be invoked as the valid objective of the scheme, as it is already satisfied by the obligations imposed on drivers (para. 97). To what extent such a broad-brush conclusion is indeed justified can be a subject of debate. By contrast, observation made in relation to the following provision, according to which an authorisation scheme is not based on criteria justified by an overriding reason relating to the public interest when the grant of authorisation is subject to requirements that are technologically unsuited to the applicant's intended service (para. 101), appears to be well-founded.

Finding 4: Notification requirements under Directive 2015/1535 do not apply

The last part of the opinion involved the interpretation of Directive 2015/1535 laying down a procedure for the provision of information in the field of technical regulations and of rules on information society services. The key question raised in this context was whether the national provisions at hand constituted technical regulation. Somewhat surprisingly, the AG did not refer in this part of the judgment to his previous argument concerning the consistent case law finding that provisions on authorisation schemes do not constitute technical regulations (cf. para. 72). The AG may thus himself recognize the weakness of this reasoning in relation to the rules on services (cf. recital 18 of Directive 98/48/EC, which introduced the notion). Still, after a rather brief reasoning, the AG similarly concludes that provisions at issue did not constitue technical regulations. Considering the rather expansive interpretation of the notification requirements in the prior case law, e.g. in VG Media and Airbnb Ireland, one can wonder whether this part of the opinion will indeed find support of the Court.

* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.

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>.

Airbnb scores a victory before the Court of Justice

Earlier today the Court of Justice delivered a judgment in case C-390/18 Airbnb Irelend. The ruling largely follows the earlier opinion of Advocate General Szpunar, on which we reported in a previous post. Similarly to the widely discussed judgment in Uber Spain and Uber France, the commented case concerned the applicability of E-Commerce Directive to services provided by operators of the so-called collaborative platforms. In the judgment issued today the Court drew upon the criteria developed in Uber, yet the factual context in the case at hand ultimately led it to a very different conclusion. Most importantly, following the judgment, services such as those provided by Airbnb do fall within the scope of Directive 2000/31/EC on electronic commerce. Consequently, free movement of such services from other Member States can only be restricted under national law if substantive and procedural conditions laid down in that Directive are fulfilled. While the judgment, of course, comes in the context of preliminary ruling procedure, the interpretation provided by the Court is clearly favourable to the platform provider - at least with respect to its core market segment (and not eg Airbnb Plus). 

Facts of the case 

The case focused on the activities of Airbnb Ireland, a company established in Dublin under Irish law, offering an electronic platform which allows hosts with accommodation to rent and prospective guests to establish contact with one another. The company also offers host and guests a number of additional services, such as a format for setting out the content of an offer, photography services, civil liability insurance, a guarantee against damages, an optional tool for estimating the rental price and a reputational feedback system. The monetization occurs primarily via commission, collected from guests by Airbnb Payments UK Ltd along with other charges.

The business model of Airbnb has met with criticism of the incumbent players in the travel sector. In the present context, the Association for professional tourism and accommodation in France (AHTOP) argued that activities of Airbnb violated the applicable national rules regulating certain transactions concerning real property and financial goodwill (Hoguet Law). Pursuant to this law, mediation and management of buildings and businesses could only be undertaken after having obtained a professional licence. Airbnb did not have the relevant license, but contested the AHTOP’s claims, arguing that the Hoguet Law was in any case not enforceable against it, as it did not comply with requirements set out in Article 3(4) of the E-Commerce Directive. 

Judgment of the Court 

Qualification of services provided by Airbnb 

The judgment issued today appears to be a big win for Airbnb. Most importantly, according to the Court, its business model is to be distinguished from activities of Uber, which were qualified not as information society services, but rather as services in the field of transport. Importantly, in reaching that conclusion the Court did not distance itself from the Uber judgments. On the contrary, the test to be undertaken in order to establish whether an intermediation service, which prima facie qualifies as an information society service, forms an integral part of an overall service whose main component is a service of a different kind (transport service, accommodation service), has also been applied in the present case. In this regard, particular attention is to be paid to the ‘market maker’ and ‘decisive influence’ criteria. According to the Court, neither of these criteria has been fulfilled with respect to Airbnb.

In Airbnb Ireland, the Court found that the essential feature of the analysed platform was the creation of a list of offers for the benefit of hosts and guests. Services of this kind, provided by the operator, were not considered indispensable to the provision of accommodation services. The Court further found that Airbnb did not exercise decisive influence over the conditions under which accommodation services were provided, in particular it did not determine (directly or indirectly) the rental price charged. Also the provision of ancillary services did not call into question the separate nature of the intermediation service provided by that company and therefore its classification as an ‘information society service’. Consequently, services provided by Airbnb assessed in the present judgment qualified as ‘information society services’ and could benefit from the liberalisation framework laid down in the E-Commerce Directive. 

Unenforceability of free movement restrictions 

In the second part of the judgment the Court analysed whether an individual, such as Airbnb, may oppose the application to him or her of measures of a Member State restricting the freedom to provide an information society service which that individual provides from another Member State, where those measures do not satisfy all the conditions laid down in Article 3(4) of Directive 2000/31. Also in this regard, the Court responded in the affirmative, finding that free movement restrictions which, among others, have not been duty notified to the Commission are to be considered unenforceable against the provider in question. A similar conclusion had previously been reached by the Court with respect to the notification of technical rules under Directive 2015/1535. This line of case law is now explicitly extended to the E-Commerce Directive.

The conclusion reached by the Court in the commented part of the judgment was supported by a number of arguments. Firstly, the notification requirement set out in Article 3(4)(b) of Directive 2000/31 was considered to be sufficiently clear, precise and unconditional to confer on it direct effect and, therefore, it may be invoked by individuals before the national courts. What is more, despite certain differences between Directives 2015/1535 and 2000/31, in both cases the notification obligation was characterised not as a mere requirement to provide information, but rather an essential procedural requirement, which in turn justified the unenforceability of non-notified measures restricting the freedom to provide an information society service against individuals. Importantly, the fact that contested national law predated the entry into force of Directive 2000/31 had no bearing on this assessment. 

Concluding thought 

The commented judgment is another major building block to the EU legal framework in the so-called collaborative economy. The Court attempts to draw a line between particular business models of platform operators, following the previously developed ‘market maker’ and ‘decisive influence’ criteria. In the case at hand the effects of that reasoning have been clearly favourable to the platform provider. Accordingly, Member States’ freedom to regulate services of this kind, provided from other Member States, is limited by substantive and procedural conditions laid down in Article 3(4) of the E-Commerce Directive. This, however, does not mean that no independent national regulation of services like the ones provided by Airbnb is possible. One can well imagine national rules, which fulfil both sets of criteria, including the substantive ones related to consumer protection. Whether or not Member States will further attempt to regulate services provided by collaborative platforms – or particular components thereof, like rating or insurance – is still an open question. Further regulatory tendencies in that direction may ultimately strengthen a case for a targeted harmonisation at the EU level.

* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.