Suppliers sharing names with producers beware - CJEU in Ford Italia (C-157/23)

 

Photo by Benjamin Scheidl on Unsplash

In December the CJEU issued the judgment in the Ford Italia case (C-157/23), which focused on the scope of the notion of an apparent producer, that is a person presenting themselves as a producer by putting their name, trade mark or another distinguishing feature on a consumer product, pursuant to Article 3(1) of the old Product Liability Directive. As the new Product Liability Directive contains the same provision (Article 4(10)(b)), this judgment is bound to shape the interpretation of an apparent producer's notion going forward. 

The CJEU followed the advice of AG Campos Sánchez-Bordona, which we commented on previously ('Unintentionally becoming an apparent producer...'). The literal interpretation of Article 3(1) of the PLD requires apparent producers to take action to mislead consumers as to their participation in the production process by 'putting' their name etc. on a product. The CJEU explains that such active steps do not need to be limited to a physical act of placing a name etc. on a consumer product. Instead, we should look into the 'conduct of a person who uses the affixing of his or her name, trade mark or other distinguishing feature on a product in order to give the impression of being involved in the production process or of assuming responsibility for it' (para 40). This is a very liberal approach, as what suffices is the sole fact of apparent producers benefiting from presenting themselves as actual producers, stemming from consumers believing the product's quality will be higher as if they have bought it directly from the actual producer (para 41).

In the given case it did not matter then that Ford Italia did not put their name or trade mark on the car that has been sold to a consumer, which car proved defective. It was sufficient that they shared (a part of) their name and trade mark with the actual producer, Ford WAG, and it was present on the car. Moreover, CJEU emphasised that apparent and actual producers are jointly and severally liable, which means consumers may choose to raise a claim against the apparent producer (para 44). National procedural rules may then allow such apparent producers to have recourse from the actual producer (para 47).

As a side note, it is worth it to note para 45 of this judgment. In it the CJEU addresses interpretation of Art. 3(3) of the PLD, which requires suppliers to promptly identify the actual producer in order not to be held liable instead of them. The CJEU recalls the historical background to this provision, which seems to suggest that more could be required from suppliers in such cases than simply 'referring' consumers to actual producers, with whom consumers may not be familiar. As Italian courts in the Ford Italia cases wanted the supplier to 'implicate' the actual producer in the actual proceedings, rather than simply identifying them, this may indeed prove to be the proper course of action.

European 'consumer' notion: Continued broad application in 2024

Happy New Year to all our Readers! A couple of posts ago we have commented on the changes that the Compass Banca judgment may bring to the average consumer benchmark (see "Who is the average consumer?..."), although we will need to carefully follow the practical application of this judgment by national courts. Still, it was reassuring for the CJEU to emphasise in para 44 of this judgment that a commercial practice contrary to professional diligence would escape prohibition if it were "only to mislead a very credulous or naïve consumer". 

What we failed to find time to comment on last year was a judgment in Zabitoń case (C-347/23) and an opinion of AG Rantos in Arce case (C-365/23); both pertain to the scope of the notion of a consumer.

Photo by Madhur Shrimal on Unsplash   

Zabitoń judgment follows the paradigm shifting cases of YYY. (Concept of 'consumer') (see our comment here) and Lyoness Europe (see our comment here). When a married couple, a police offer and a school principal, purchased a residential property with the purpose of leasing it for consideration, the question arose whether they could be considered consumers when entering into a mortgage loan contract to purchase this property. It was clear that they were not planning to use this property for their own accommodation. The Court indicates that they could indeed be considered consumers, provided they purchased a single residential property for such a purpose, as they would then not be acting in the professional capacity in the field of property management (para 32). This judgment clearly discounts consumers' financial gain from a conclusion of a transaction as a factor in the determination of the consumer's (non-)professional capacity (paras 34-35). The Court further confirms then a broad interpretation of the consumer notion in applying substantive consumer protection framework. 

   Photo by Markus Spiske on Unsplash

This broad interpretation is further confirmed by AG Rantos in his opinion in the case Arce. Here, a teenager, an aspiring basketball player, was represented by their parents, in concluding a contract with a company providing sports development, career support and coaching services. The question was whether this was a B2C contract, considering that the young sportsperson at the moment of its conclusion had not yet begun their professional career and was not employed by any club. There was, however, a clear intention (desire?) of such a professional employment happening soon after the contract's conclusion, which indeed then occurred. AG Rantos draws a distinction between the consumer notion's scope in procedural and substantive matters. While in cases concerning procedural consumer rights, such as Wurth Automotive (C-177/22) the notion of a consumer is interpreted narrowly and, specifically, "current and future purposes of the conclusion of the contract" are considered, this is different when substantive consumer rights are to be applied. AG Rantos recognises this difference and consequently advises the CJEU to consider the teenager a consumer as "at the time when the contract at issue was concluded, the young sportsperson was not a professional" (para 57). After all, Article 4(1) Unfair Contract Terms Directive requires assessment of unfairness at the date the contract was concluded. "Any other more 'dynamic' interpretation of the status of 'consumer', consisting in maintaining that that status may be lost over time, would run counter to the very wording of that provision" (para 58).