Sponsored publications NOT to be seen as commercial practices - CJEU in RLvS (C-391/12)

17 October 2013: CJEU judgment in case RLvS (C-391/12)

Today the CJEU decided not to follow the AG's opinion in the RLvS case which examines the character of sponsored publications in a newspaper with regards to their potential misleading effect on consumers (for facts of this case see our earlier post: Sponsored publications as unfair commercial practices...)

The CJEU agrees with the AG Wathelet that German law may not prohibit or more severely restrict commercial practices than what the Unfair Commercial Practices Directive requires, even if such restrictions could be justified as an attempt to protect pluralism of the press. (Par. 33) At the same time, however, the judges do not share the AG's conviction that a publication of editorial content by a newspaper publisher could be perceived as a commercial practice. This would mean that it would not fall under the scope of the Directive and could be separately regulated by national laws. (Par. 34-35) 

It is the Court's opinion that a commercial practice must originate from a trader and be directly connected with the promotion, sale or supply of his products, and the 'trader' is defined broadly, which means that the Directive applies also when a trader's practice is put to use by another undertaking and benefits that undertaking. (Par. 37-38) The editorial content that was the subject of the judicial proceedings was not promoting the publisher's product (free newspaper) but rather it promoted products and services of other undertakings, and as such could fall under the definition of a commercial practice due to the broad definition of a 'trader' in the Directive, satisfying the first requirement. (Par. 39-40) However, the Court believes that any promotion through the editorial content of a newspaper was 'indirect' and was not liable to significantly influence the consumers' economic behaviour with regards to acquiring the newspaper. Therefore, this practice could not fall under the scope of the Directive as a commercial one. (Par. 41)

Interestingly, both the AG and the CJEU support their argumentation by referring to the same provision in the Directive - point 11 on the black list that determines as unfair such use of advertorials that does not clearly inform consumers that the editorial content was paid for by a trader. According to the AG that provision signifies that national laws may not demand more strict requirements to be met with respect to editorial content's publication. The Court stated, in turn, that this provision:

"(...) is not intended as such to require newspaper publishers to prevent possible unfair commercial practices by advertisers for which a direct connection could thereby be potentially established with the promotion, sale or supply to consumers of the products or services of those advertisers." (Par. 44)

I have to admit, though, that it's hard to see for me what this provision was intended for if not for that? The Court seems to point out that this prohibition would apply only to advertisers and that they should be the ones who make sure that the editorial content is clearly labelled as sponsored. This seems to get the newspaper publishers off the hook rather easily.

More convincing are arguments referring to a potential conflict of this provision with requirements set out by Directive 2010/13 and Directive 89/552. (Par. 45-46) Lastly, the CJEU underlines that the European Commission has not yet directly legislated the area of publishers' obligations with regard to third-party sponsored content of their publications, as far as written press is concerned, which means that Member States are free to regulate it. (Par. 49)

World Food Day 2013

Today, we are celebrating World Food Day and, as usual, the focus then is on issues such as food safety (e.g., yesterday a seminar took place on efficiency of meat official controls - How to make meat official controls work for all?) and food waste. It has been calculated that around a third of food is wasted globally (1.3 billion tons, with 90 million tones in Europe), either due to lack of awareness, lack of shopping planning, lack of knowledge how to use leftovers, or inadequate storage, packaging, overproduction, stock management inefficiencies, etc. (Commission underlines commitment to reducing food waste in Europe) At the moment, the European Commission is debating introduction of specific action plans that would reduce food waste (e.g., date labelling, donation of surplus food to food banks, short food supply chains).

The last year's horse meat scandal and the increasing rates on obesity turned some heads towards the subject of food quality, as well (Calling for quality, not just quantity). While many people in the world still struggle to find enough food, others may have sufficient food but still suffer from malnutrition due to improper diet.

Since Europeans are not the only ones wasting food and it is the World Food Day, it is worth it to listen to this TEDx talk of how to cut food waste in the US, by Peter Lehner.

Your views on cross-border protection of consumers

Today, the European Commission's DG Health and Consumers opened a public consultation on the review of the EU Consumer Protection Cooperation Regulation. Anyone interested in the possibilities to improve the cross-border protection of consumers can express their views on this topic by filling out a questionnaire.

Questions include the following topics:

What means of investigation and intervention do national enforcement authorities need to cooperate better in tackling infringements to consumer laws concerning several countries?

What sanctions are necessary to better deter infringing practices?

How can the enforcers act more efficiently and provide a more robust enforcement response to combat malpractices which occur widely in the EU or which are perpetrated by the same trader operating in a number of Member States?

The consultation will be open till 31 January 2014. See also the Commission's press release and the website of DG Health and Consumers.

One last menthol cigarette?

This Tuesday, as re-scheduled (see our earlier post On lobbying in Brussels), a vote took place in the European Parliament on the proposal for a new tobacco products restrictions. The draft law suggests, for example, that the health warning on packaging should cover 65% of its surface (instead of current 30/40%). Additionally, flavoured cigarettes are to be banned and e-cigarettes are to be regulated (in the same way as tobacco products with regards to advertising and they could be sold only to consumers over 18 years old). (Tobacco: larger warnings, flavours banned, e-cigarettes regulated) Small cigarette packs (less than 20 cigarettes) would be banned. The idea behind these new revisions is that they would help prevent young people from taking up smoking by making it less attractive and less accessible. As we mentioned in our previous posts it remains to be seen whether these new rules will manage to be agreed on by all the European institutions prior to their term's ending.

BKK Mobil Oil: public law body can be seen as ‘trader’ in the context of the Unfair Commercial Practices Directive

Can public law bodies fall under the personal scope of the Unfair Commercial Practices Directive? Since yesterday’s judgment in BKK Mobil Oil we know the answer is yes. Also the practices of public law bodies can thus qualify as unfair commercial practices. But what the criteria to determine public from commercial practices are in the end remains unclear.

BKK Mobil Oil is a German health insurance fund established as a public law body. BKK published on its website a message targeted at its own customers, trying to convince them not to switch to another health insurance. Without going into the details, the message contained false information and thus was found to mislead BKK’s customers. According to BKK, however, the German Gesetz gegen den unlauteren Wettbewerb (Act against unfair competition, UWG) nor the Unfair Commercial Practices Directive applied to this case, because BKK could not be seen as trader.

The Bundesgerichtshof filed a preliminary question at the CJEU, asking how the Unfair Commercial Practices Directive should be interpreted on this point: should BKK be seen as a proper business, or is it a body that pursues a social objective and the behaviour of which is thus not covered by the Directive?

In its answer, the CJEU emphasizes that this matter should be seen from a European perspective and that the question on whether an organization such as BKK should be seen as a ‘trader’ does not depend on its legal status in national law (par. 25-26).

In the Directive, ‘trader’ is defined as ‘any natural or legal person who, in commercial practices covered by [that] Directive, is acting for purposes relating to his trade, business, craft or profession and anyone acting in the name of or on behalf of a trader’ (Article 2(b)).

The CJEU emphasizes that the term ‘trader’ should be seen as the diametrically opposed concept of ‘consumer’ (par. 33) and that BKK’s members can in fact be seen as consumers, taking into consideration that BKK’s misleading information prevent them from making an informed choice (par. 37). In line with this, the CJEU argues, BKK should be seen as a trader (par. 38).

This does not stand out as an example of clear legal reasoning. The definition of consumer tells us equally little as the term trader in this context. The Court (perhaps deliberately) does not give actual criteria to determine the border between ‘public’ and ‘commercial’ practices, which in the end seems to be the essential – and admittedly, difficult – question.

Taking rally cars around, anyone? - CJEU in Lundberg (C-317/12)

No need for you to install a tachograph, as long as it is your car that you're carrying and you're not doing that for a living. 

For those who, like me until this morning, have little idea
of what a tachograph looks like

That's in short what the Court of Justice decided today in the Lundberg case. Mr Lundberg, a Swedish national and amateur rally driver, was taking his rally car to a fair- by using an extra lorry attached to his normal car- when the police stopped him and issued a fine for violating article 3 of Regulation 3821/85 (now and hence Regulation 561/2006).

The provision at hand requires certain equipment to be installed on vehicles unless they belong to one of the categories listed by the same article. 

After a few passages, the question got to the CJEU by means of a preliminary ruling request. In particular, it was in doubt whether Mr Lundberg's situation could fall under letter h) of article 3, exempting "vehicles or combinations of vehicles with a maximum permissible mass not exceeding 7.5 tonnes used for the non-commercial carriage of goods". The main reason of doubt was that some companies and private persons contribute habitually and substantially to Mr Lundberg's activities by means of various sponsorships. Did this change the nature of the carrying activity into a "commercial" one?

According to the Court,  it does not. Interpreting the regulation both according to it literal meaning and to its aims, having regard to both the regulation's and the exception's functions, the Court affirms that carriage of goods has to be understood "non-commercial" every time that it is done solely for the purpose of a hobby, regardless of the extent to which the carriage is financially supported by sponsors. 

The purpose of Regulation 561/2006 is mainly "to improve social conditions for employees who are covered by it" (par. 25) and, by doing so, to make road transport safer. The derogation, on the other side, aims to exclude activities conducted "outside any professional and commercial activity" from the regulated domain. The latter's aim would be frustrated if cases like that of Mr Lundberg's were to be affected by the regulation; at the same time, the regulation's aims are not offended by applying the exemption (cases of this king being "infrequent"- par. 37-, applying the derogation seems unlikely to have serious consequences on road safety.).

Thus, just in case you were thinking of moving your rally car around Europe, rest assured- the Court is protecting you against sour (regulatory) surprises.

Changing consumer's claims in case of non-conformity should be facilitated - CJEU in Duarte Hueros (C-32/12)

3 October 2013: CJEU judgment in case Duarte Hueros (C-32/12)

Two years ago we have discussed an interesting case of Weber & Putz (Replacement of non-conform goods?...) that brought to light interesting issues related with the hierarchy of remedies in the Consumer Sales Directive in case of non-conforming goods (first tier - bringing the goods back into conformity through: replacement or repair; second tier: price reduction or contract's termination). The Court then insisted that consumers should in principle be awarded a remedy from the first tier in case of goods' non-conformity, which meant that if only one of these remedies was possible and it was an expensive one, the costs of making use of that remedy should be placed on the sellers. In order to not encumber sellers unduly, courts could oblige consumers to pay a certain, proportional amount of that cost. Consumer protection would be ensured by allowing consumers for whom this cost would be burdensome to demand one of the second tier remedies instead. Today the CJEU issued another judgment on what the proper use of the remedies for non-conforming goods should be, this time focusing on the second tier remedies and the guarantees that the Member States should keep in force in their procedural laws for consumers´ benefit.

Ms Duarte Hueros had some bad luck when purchasing her new car in 2004. She opted for a fancy model with a sliding roof, allowing her to enjoy an open-topped car when the weather was nice (it's Spain, so probably most of the time). Unfortunately, the car she received was not quite waterproof. When it rained, the water leaked in through the roof (and while it may not rain much in Spain, once could be one time too many). After numerous repairs in the workshop it appeared that the defect could not be repaired. Since repair was impossible, Ms Duarte asked for replacement of her car, which request was denied her. In the end in 2011 Ms Duarte brought an action for contract's termination and repayment of the purchase price. It was not the matter of the dispute that she has exhausted her claims for first tier remedies and was entitled to claim a remedy from a second tier. Out of possible two remedies, price reduction or contract's rescission, she opted for the latter one.

Here is where it gets interesting. Article 3(6) Directive states that contract's rescission can be denied to consumers if non-conformity of the purchased goods is minor. Spanish law (and many other Member States) adopted this provision. The curious matter is that apparently Spanish courts consider a leaking roof of a car a minor defect! As the AG Kokott points out in Par. 57 of her opinion there is no uniform interpretation of what should be understood as a 'minor' defect in European consumer law. He mentions, however, that other European courts have ruled in comparable cases that a lack of waterproofing could not be perceived as a minor defect. Apparently while the Spanish courts focus on the fact that the car can still be driven when it's leaking water inside (maybe that's due to that little amount of rain falling in Spain and it not being seen as something undesirable), other national courts take a broader picture into account. The AG mentions that the Spanish court should have referred also the question of what should be understood as a minor nature of a defect for a preliminary ruling.

Instead, the Spanish courts took their prerogative to determine based on the facts of the case that the defect was not minor and to refuse contract's rescission to Ms Duarte. The question referred to the CJEU inquired whether if the consumer´s claim for one second tier remedy was rejected, the national court was obliged to grant her the other second tier remedy - price reduction, even if the consumer did not apply for it.

Spanish procedural law has very strict rules on res judicata and the claims submitted in the proceedings. On the one hand, a consumer may make alternative claims aside the main one but the Spanish court will consider only the claim specifically submitted. On the other hand, Spanish law has  a broad interpretation of extension of res judicata - all claims that consumer could have brought are covered and excluded from a new action. (Par. 34 AG Opinion) Since Ms Duarte made only a claim for contract's rescission and recovery of contract's price, the Spanish court did not see itself being able to grant her price reduction of its own motion in these proceedings, and at the same time she would have been prohibited from making a new claim for price reduction in new proceedings.

Both the AG (Par. 41) and the CJEU (Par. 29) state that there is no ex officio duty for the national courts to grant appropriate price reduction to consumers of their own motion when the consumer did not ask for price reduction. As the AG points out the Directive enables consumers to raise certain claims, under specific conditions but contrary to Directive on Unfair Contract Terms it does not require intervention of a third party, that is:

 "Firstly, action as a deterrent taken by a national court of its own motion is irrelevant to the implementation of a contract. In most cases, unsatisfactory performance is not, in fact, dependent on the will of the parties, in particular where the contracting partner is not the manufacturer of the product and normally has no influence over its quality or, in the case of non-obvious defects, knows nothing about it. Moreover, the consumer is not in a comparably weak position with regard to the implementation of the contract. Unlike the position with regard to the unfairness of a term, the consumer can easily detect whether the product is of the agreed quality. This is also demonstrated by the present case, where it is precisely the consumer who is asserting her claims before the national court. In the judgments which have been delivered on the Unfair Terms Directive, on the other hand, it was generally the undertakings which relied on their claim on the basis of an unfair term. Therefore, action by a national court of its own motion would not strengthen consumer protection, but would rather provide the consumer with an additional means of attack. " (Par. 47-48 AG's opinion)

What the Directive requires of the Member States, however, is to ensure that consumers may effectively claim appropriate remedies in practice and that these procedural rules comply with the principles of effectiveness and equivalence. (Par. 30-31) Spanish law, as mentioned above, obliges the Spanish courts to only examine claims specifically raised by consumers, does not allow consumers to change the claim in the course of the proceedings and also prevents them from starting new actions due to broad interpretation of res judicata. (Par. 35-36) This effectively takes away consumer's possibility to claim price reduction when he first demanded only contract's rescission which in the proceedings was denied due to the minor nature of the defect. (Par. 37) Theoretically, the consumer could raise an alternative claim of price reduction from the beginning, but the CJEU assesses the likelihood of such a scenario as extremely low. (Par. 38) These elements combined suggest that the Spanish procedural rules make consumer protection provided for in the Directive if not impossible than at least excessively difficult - on the one hand consumers are prevented from making a claim for a new remedy themselves, on the other hand courts are not authorised to find it themselves. (Par. 39)

"The Spanish system essentially obliges the consumer to anticipate the outcome of the competent court’s analysis of the legal characterisation regarding the lack of conformity in the goods, which is final, making the protection provided for the consumer under Article 3(5) of Directive 1999/44 completely uncertain in nature, and thereby rendering that protection inadequate." (Par. 40)

The CJEU makes it clear that the national court has to solve this issue to the consumer's favour, guaranteeing his protection provided for in the Directive that is a possibility to ask for another remedy if one is denied by court. How this will be achieved in practice is for the Spanish courts to determine.

Universal mobile phone charger

Last week the European Parliament's Members were busy with an interesting project: a universal mobile phone charger for all makes. Imagine the wonderful world where you don't have to worry that your battery is running low and you may end up stranded somewhere, since you know that anyone around you could provide you with a fitting charger. In my experience, when you are looking for that charger in crucial moments the Murphy's law will contribute to people around you having invested in all sorts of mobile phones but the one compatible with yours. A universal mobile phone charger is perceived by MEPs as a tool to cut costs and waste for consumers. (Bring in a universal mobile phone charger for all makes, say MEPs)

Your Ideas for Europe

This month our readers have a chance to show their inventiveness and impress not only us but the whole of Europe. Until 23 October anyone can submit their idea as to how to improve the European single market on a website created for this purpose: Your Ideas for Europe. There are four themes and this is a second week of this action with a theme 'Social Rights' (to be followed by 'banks' and 'e-commerce'). Five of the most promising ideas will be chosen by an expert jury and further discussed during the Euronews TV debate at the European Parliament in Strasbourg on 23 October. 

How to say 'I like you' in 24 languages, and why a European consumer lawyer might care

Today, 26th September, the European Day of Languages is celebrated. The initiative was launched in 2001 by the Council of Europe and the European Union to celebrate Europe's linguistic diversity, with its 24 official languages, about 60 regional and minority languages, and more than 175 migrant languages. More information on events organised in celebration of this day (such as mini-courses on European languages) is available on the Council of Europe's website and in today's European Commission newsletter.

Eurostat, furthermore, published the following data:

'European Day of Languages - Two-thirds of working age adults in the EU28 in 2011 state they know a foreign language - English studied as a foreign language by 94% of upper secondary pupils.

In the EU28 in 2011, 83% of pupils at primary & lower secondary level and 94% of those in upper secondary level general programmes were studying English as a foreign language. The second most commonly studied foreign language at both primary & lower secondary level and upper secondary level was French (19% of pupils in primary & lower secondary level and 23% in upper secondary), followed by German (9% and 21%) and Spanish (6% and 18%). The importance of English as a foreign language in the EU is also confirmed amongst working age adults. In the EU28, English was declared to be the best-known foreign language in 2011 amongst the population aged 25 to 64. Among those stating English to be their best-known foreign language, 20% responded that they spoke it at a proficient level, 35% at a good level and 45% at a fair level. Considering all languages, two-thirds of the total population aged 25-64 stated they knew at least one foreign language.'

Why languages are important for European consumer law is perhaps best illustrated by the case law of the Court of Justice of the EU. A recent example concerns the Court's judgment in Asbeek Brusse v. Jahani (discussed by Candida on this blog), in which the comparison of different language versions of the Unfair Terms Directive was decisive for answering a preliminary question on the Directive's scope:

'25 There is, however, a degree of discrepancy between the various language versions of that provision. Thus, the Dutch version of Article 1(1) of the directive states that the purpose of the latter is to approximate the national provisions relating to unfair terms in contracts concluded between a ‘seller’ (‘verkoper’) and a consumer. The other language versions of that provision use, for their part, an expression which is wider in scope to designate the other party to the contract with the consumer. The French version of Article 1(1) of the directive refers to contracts concluded between a ‘professionnel’ and a consumer. That wider approach is found in the Spanish version (‘profesional’), the Danish version (‘erhvervsdrivende’), the German version (‘Gewerbetreibender’), the Greek version (‘επαγγελματίας’), the Italian version (‘professionista’) and the Portuguese version (‘profissional’). The English version uses the terms ‘seller or supplier’.

26 It is settled case‑law that the need for uniform application and, accordingly, for uniform interpretation of a European Union measure makes it impossible to consider one version of the text in isolation, but requires that that measure be interpreted on the basis of both the real intention of its author and the aim that the latter seeks to achieve, in the light, in particular, of the versions in all other official languages (see, inter alia, Case C‑569/08 Internetportal und Marketing [2010] ECR I‑4871, paragraph 35, and Case C‑52/10 Eleftheri tileorasi and Giannikos [2011] ECR I‑4973, paragraph 23).

27 It must be observed in this connection that the term ‘verkoper’, used in the Dutch version, is defined in Article 2(c) of the directive in the same way as in the other language versions, as designating ‘any natural or legal person who … is acting for purposes relating to his trade, business or profession, whether publicly owned or privately owned’.

28 It thus appears that, beyond the term used to designate the other party to the contract with the consumer, the legislature’s intention was not to restrict the scope of the directive solely to contracts concluded between a seller and a consumer.'

For more on the topic of languages and the law, please refer also to the Amsterdam Circle for Law & Language.