Facts of the case
The judgment was triggered by a dispute between two German traders offering consumer goods for sale online: the-trading-company and absoluts-bikes. According to the former, the latter failed to provide sufficient information about the products which it sold with help of Amazon. More specifically, the dispute concerned the listing of a pocket knife of the Swiss manufacturer Victorinox. In that listing, under the subheading labelled “Further technical information”, the consumers could find a link described as “Operating instructions”. The link led to a two-page information sheet, drafted by the knife’s manufacturer and referring, among others, to the ‘Victorinox guarantee’, describing the damage covered and the relevant time period.
The claimant argued that the information provided by the defendant was not sufficiently specific. In particular, absoluts-bikes failed to inform the consumers that the manufacturer’s guarantee did not affect their statutory rights, neither did it describe the territorial scope of the guarantee. This – following the claimant – constituted an infringement of the German act on unfair competition. Since the relevant provisions had their background in the EU law, namely the Consumer Rights and Consumer Sales Directives, the national court decided to stay the proceedings and refer preliminary questions to the Court of Justice.
Guarantees in the Consumer Rights Directive
The Court began its analysis by turning to Directive 2011/83/EU on consumer rights and I will also limit this blog post to this part, as it is most developed and most consequential.
To recall, Article 6(1)(m) of the CRD requires traders to inform the consumers before concluding distance contracts, where applicable, about “the existence and the conditions of after sale customer assistance, after-sales services and commercial guarantees”. The relevant question in the present case was whether the information requirement arises “merely through the existence of that guarantee or whether it is only in certain circumstances that the trader is required to inform the consumer of the existence and conditions of such a guarantee” (para. 24).
The Court began its reasoning by recalling the purpose of pre-contractual information duties laid down in the Directive. The relevant provision, it remarked, “seeks to ensure the communication to consumers, before the conclusion of a contract, both of information concerning the contractual terms and the consequences of that conclusion, allowing consumers to decide whether they wish to be contractually bound to a trader, and of information necessary for proper performance of that contract and, in particular, for the exercise of their rights” (para. 26). It follows that the information duties aim to allow consumers to, firstly, make informed decisions about the contracts they wish to enter into and, secondly, effectively exercise their rights after contract conclusion.
These two main functions of information duties have previously been remarked upon in the scholarship and testify to the importance of mandatory disclosure beyond the moment of the contract conclusion. Indeed, the paradigm of consumer protection that focuses primarily on allowing consumers to make informed decisions has long been questioned in the light of behavioural findings showing that consumers may suffer from information overload and take account only of certain details communicated to them by the traders. Such details may nonetheless prove rather valuable at a later stage, e.g. when a problem related to the contract arises. This also seems to be the case for the producer’s guarantees, discussed in the present context.
Against this background, the attention paid by the Court to the two functions of information duties is be welcomed. Unfortunately, it is not subsequently translated to the remaining part of the judicial reasoning. Instead, the Court appears to focus primarily on the influence of pre-contractual disclosure on consumers’ decisions to enter into contracts, and views it through a particularly narrow lens, namely the lens of a possible deception. This lens, however, is not an obvious one in the context of the Consumer Rights Directive, but rather seems aligned with the perspective of (certain provisions of) the Unfair Commercial Practices Directive.
How then, did the Court proceed with its analysis? First, rather typically, it attempted the decode the meaning of Article 6(1)(m) of the CRD by looking at its wording, context and objectives. Referring to Article 2(14) of the CRD it concluded that the concept of a ‘commercial guarantee’, within the meaning of Directive 2011/83/EU, covers both commercial guarantees offered by traders (sellers) and by manufacturers. The trader is thus required, at least in certain circumstances, to provide the consumer with details concerning not only its own commercial guarantee, but also that of the manufacturer. So far, so good.
Turning to the objectives of the CRD the Court understandably referred to establishing “a high level of consumer protection”, also pointing to Article 169 TFEU and Article 38 of the Charter of Fundamental Rights (para. 38). Having said that, however, the Court went on to emphasizing the need of ensuring “the right balance between a high level of consumer protection and the competitiveness of enterprises, while respecting the enterprise’s freedom to conduct a business”, as also set out in the Charter (para. 39). The Charter was thus invoked primarily to set the scene as one in which competing interests must be balanced.
Focusing on the interests of traders, the judgment concluded that an unconditional obligation to provide information about commercial guarantees, in all circumstances, “seems to be disproportionate, in particular in the economic context of the functioning of certain undertakings, in particular small undertakings” (para. 40). This seems rather uncontroversial: it would indeed be burdensome for traders to have to continuously collect and update information about any potential guarantees, when they are not the ones providing them, nor pointing at them in their offer. However, according to the Court, the balancing exercise should go even one extra step in favour of the traders. And interestingly, the Court did so by referring to the notion of legitimate consumer interests – and mobilizing it to the consumers’ disadvantage.
To illustrate this point consider the following passage of the judgment:
In those circumstances, the weighing up of a high level of consumer protection and the competitiveness of enterprises, as set out in recital 4 of Directive 2011/83, must lead to the conclusion that the trader is required to provide the consumer with pre-contractual information on the manufacturer’s commercial guarantee only where the legitimate interest of the average consumer, who is reasonably well informed and reasonably observant and circumspect to a high level of protection must prevail in the light of his or her decision whether or not to enter into a contractual relationship with that trader. (para. 41)
As is apparent from the cited passage, the Court seems to forget about the double function of information duties referred to earlier in the judgment. This is additionally harsh for consumers considering the subsequent reasoning, whereby the Court considers a legitimate interest in being informed about producers’ guarantees to exist “where the trader makes the manufacturer’s commercial guarantee a central or decisive element of its offer” (para. 44). The latter is supposedly the case “where the trader expressly draws the consumer’s attention to the existence of a manufacturer’s commercial guarantee for sales or advertising purposes and, accordingly, to improve the competitiveness and attractiveness of its offer in comparison with its competitors’ offers” (para. 45). When this is not the case, the information on the guarantee is not likely to mislead the consumer, and thus their legitimate interest does not seem to exist.
In so doing, the Court essentially limits consumer protection not only to the pre-contractual phase and to the contested idea of informed decision-making, but also to the protection from being “misled by unclear, ambiguous or incomplete information”. As mentioned, that seems to rather be the domain of the Unfair Commercial Practices Directive, in which a link with the CRD is indeed established (cf. Article 7(5) UCPD). Moreover, the way in which the “average consumer” notion is constructed in the case at hand appears at least debatable. As a reference point for undertaking the balancing exercise the Court refers to the consumer, “who is reasonably well informed and reasonably observant and circumspect with respect to the different rights which he or she may exercise under a guarantee or to the real identity of the guarantor” (operative part). However, information about those very factors is precisely what the consumer should be equipped with by means of mandatory disclosure. Overall, it can be questioned, in my view, whether the reading adopted by the Court in the case at hand corresponds with the requirement of a “high level” of consumer protection.
