Earlier today the Court of Justice delivered its judgment in a very interesting case C-393/17 Kirschstein. As reported in our earlier post on the opinion of Advocate-General, the case concerned the application of the Unfair Commercial Practices and the Services Directives in the sector of higher education. In the judgment issued today the Court agreed with the Advocate-General that the national requirement, according to which only accredited higher education establishments may award certain degrees, does not contradict the analysed directives. The part of Court's reasoning on the UCPD, however, clearly deviates from the arguments of AG Bobek.
Facts of the case
The defendants were running a higher education institution which organised study programmes, upon the completion of which master's degrees were awarded, despite the lack of an accreditation. The Public Prosecution Service considered this practice to be in breach of Belgian law and initiated legal proceedings. The defendants argued that national legislation criminalising the act of conferring ‘master’s’ degrees, without having obtained the authorisation required for that purpose, was contrary to Directives 2005/29 and 2006/123.
Unfair Commercial Practices Directive
The questions referred by the national court are framed very generally and it is not entirely clear which part of the UCPD is considered to potentially preclude the contested national rules. The most likely argument seems to relate to the UCPD's black list. Indeed, from Plus Warenhandelsgesellschaft onwards, the Court of Justice has consistently found that national prohibitions, which pursue the objectives relating to consumer protection and are not included in the Annex I to the Directive, do not comply with the UCPD.
The Court, however, did not even get to that stage and focused on the UCPD scope. It recalled the definition of a commercial practice, covering any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product (including services) to consumers (Article 2(d)). However, unlike Advocate-General, who focused on the question whether the provision of higher education qualifies as a service or not, the Court directed its attention towards the aspects of service provision, which fall within the scope of the UCPD. More specifically, according to the Court, a distinction must be made between commercial practices which are closely linked to a commercial transaction involving a product (promotion and sale or supply) and the product (service) itself (para. 42). As a result, a national rule which aims to determine which operators are authorised to provide a service in a commercial transaction, without directly regulating the practices which that operator may subsequently implement to promote or "dispose of the sales of that service", does not qualify as a commercial practice within the meaning of Directive 2005/29 (para. 45). By "disposing of the sales of services" the Court appears to mean "putting into practice the marketing of a service" (following the Dutch version), i.e. the act of supplying the service as such. From this it follows that the UCPD does not apply to national legislation at issue in the main proceedings.
Services Directive
The second part of the judgment, one involving the interpretation of Services Directive, appears to be more aligned with the Advocate-General's opinion (even though again no references are made to the opinion). Similarly to the AG, the Court found that educational services in question can be regarded as neither non-economic services of general interest (Article 2(2)(a)), nor activities which are connected with the exercise of official authority (Article 2(2)(i)), and thus cannot be excluded en bloc from the scope of Directive 2006/123. It then went on to assess whether the authorisation scheme established by national law was compatible with requirements set out in Articles 9 and 10 of Services Directive. According to the Court the analysed framework did not seem to have a discriminatory nature, was justified by an overriding reason relating to the public interest (ensuring a high level of higher education and protecting the recipients of services) and pursued that objective with appropriate means, thus complied with Article 9 of the Directive. As regards Article 10, the Court established that the preliminary reference did not contain sufficient information about the conditions of the authorisation scheme and left the relevant assessment to the national court.
Concluding thought
Case C-393/17 Kirschstein shows that services in higher education sector are not, by their very nature, excluded from the scope of either UCPD, or Services Directive. However, the judgment delivered today also underlines that not all national rules restricting the provisions of services must be analysed under UCPD. When it comes to the conditions imposed on the service as such - here: determination of the operators authorised to provide such a service - it is Services Directive that provides the relevant benchmark, not the UCPD. In making that distinction the Court put a limit to the overly expansive interpretation of the consequences of the UCPD's black list and brought the focus of the discussion back where it belongs.
