Tuesday, 9 November 2010

Can we add a bonus to the goods we have for sale so as to attract more consumers? ECJ case C-540/08 Mediaprint

9 November 2010: ECJ case C-540/08 Mediaprint

This judgment concerned interpretation of the Directive 2005/29/EC on unfair commercial practices, its maximum harmonisation and the subject of combined offers.

The opinion of the Advocate General in this case has been discussed in an earlier post.

As a short reminder, the facts of the case were as follows: The dispute was between two Austrian newspaper publishers. One of them organised the election of the 'footballer of the year' and invited the public to join in that competition, by internet or by means of a voting slip appearing in the newspaper. Participation in that competition carried the prize of dinner with the footballer chosen.

Austrian law lays down a general prohibition on sales with bonuses, which is aimed at ensuring both the protection of consumers and the maintenance of effective competition. Pursuant to that provision it was an unfair commercial practice.

The questions were:
1. Whether the general prohibition in Austrian law is compatible with the regulation of the Directive on unfair commercial practices?

ECJ upheld the view of the AG in this case. Austrian law is incompatible with the Directive enforcing a general prohibition on sales with bonuses.

There is no doubt that: "Promotional campaigns, such as those at issue in the main proceedings, which enable consumers to take part free of charge in a lottery subject to their purchasing a certain quantity of goods or services, clearly form part of an operator’s commercial strategy and relate directly to the promotion thereof and its sales development. It follows that they constitute commercial practices within the meaning of Article 2(d) of the Directive and, consequently, come within its scope (Case C-304/08 Plus Warenhandelsgesellschaft [2010] ECR I-0000, paragraph 37 and case-law cited)." (Par. 18)

The Austrian government argued that national provisions at issue did not fall withing the scope of the Directive in that they were established to maintain pluralism of the press in Austria. However, it was proven during the proceedings that aside that purpose these provisions were to give additional protection to consumers, as well. (Par. 23) Since the Directive introduces full harmonisation measures, Member States are not free to offer more protection to the consumers in their national laws. (Par. 30) This led the ECJ to concluding:

"(...) it is undisputed that practices consisting in offering consumers bonuses associated with the purchase of products or services do not appear in Annex I to the Directive. Therefore, they cannot be prohibited in all circumstances, but can be prohibited only following a specific assessment allowing the unfairness of those practices to be established." (Par. 35)

As far as the second question was concerned:
2. "whether sales with bonuses must be regarded as unfair commercial practices within the meaning of Article 5(2) of the Directive, merely on the ground that the possibility of gain represents, for at least part of the public concerned, the deciding factor which causes it to buy the main product."?

The ECJ reminded that the Directive contains a test for the unfair commercial practices and all elements of this test have to be fulfilled in order for a commercial practice to be prohibited as unfair.

"The fact that, for at least part of the public concerned, the possibility of participating in a competition represents the factor which determines the purchase of a newspaper constitutes one of the factors which the national court may take into account when making such an assessment.

That fact may lead the national court to consider that the commercial practice in question materially distorts or is likely materially to distort the economic behaviour of the consumer, within the meaning of Article 5(2)(b) of the Directive.

However, that fact does not in any way lead in itself to the conclusion that a sale with a bonus constitutes an unfair commercial practice within the meaning of the Directive. For that purpose, it must also be verified whether the practice in question is contrary to the requirements of professional diligence within the meaning of Article 5(2)(a) of the Directive." (Par. 44-46)

ECJ concluded then by saying that possibility of participating in a prize competition, linked to the purchase of a newspaper, does not constitute an unfair commercial practice simply on the ground that, for at least some of the consumers concerned, that possibility of participating in a competition represents the factor which determines them to buy that newspaper.

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