Price calculation indications in online offers: Misleading or not? CJEU in NEW Niederrhein Energie und Wasser (Case C‑518/23)

 On 23 January, the CJEU provided further clarity on what amounts to a misleading omission in an invitation to purchase under the UCPD (Case C‑518/23). The case concerns an online electricity tariff calculator operated by the German company NEW Niederrhein Energie und Wasser. Based on customer input, the calculator generates a tariff offer that the customer can accept, resulting in a contract with NEW. However, the generated tariff appears lower than the actual price as it fails to indicate a variable percentage increase – a ‘compensatory’ amount charged by the electricity distribution network operators for the use of low-tariff electricity for high-tariff purposes. The legal question is whether this missing information constitutes a ‘misleading omission’ under Art. 7(1) and (4)(c) UCPD.

The CJEU first confirmed that the tariff offer generated by the calculator qualifies as an ‘invitation to purchase’ under Art. 7(4)(c) UCPD and that information about the compensatory amount constitutes material information thereunder (‘the manner in which the price is calculated’). Thus, this information must be included in the invitation to purchase to enable the average consumer to make an informed transactional decision (para 33). However, Art. 7(4)(c) UCPD does not prescribe how price calculation methods should be communicated (para 37). More broadly, the UCPD does not contain ‘any specific details concerning the question of the degree to which material information must be communicated, and by what medium this must be done’ (para 40). As such, it cannot be implied that pricing indications must enable the consumer ‘to calculate that price himself or herself and thus reach a final numerical result’ (para 39). Instead, such indications can be displayed in various ways, such as a percentage range, a conditional percentage or a fixed percentage with an indication that it may vary over time (para 41).

Then, referring to the general scheme of Art. 7 UCPD, the CJEU established that the required extent of price calculation indications in the invitation to purchase should be assessed ‘on the basis of the factual context of that invitation and the medium of communication used’ (para 46). As to the latter, the tariff calculator does not seem to impose limitations of space or time (Art. 7(3)UCPD). The CJEU continued to highlight a couple of factors as to the ‘factual context’, which, of course, are ultimately for the national court to ascertain. First, since the electricity distribution network operators in Germany retain different and fluctuating percentages for the compensatory amount, it would require ‘disproportionate resources’ for NEW to indicate to consumers the exact percentage in real time (para 49). Second, the generated price offer contains a link to NEW’s general terms and conditions, which do include information on the applicability of the compensatory amount and that it has been set at 25% by the local network operator of the area of NEW’s registered office (para 50). If such information is visibly displayed and consumers’ acceptance is technically conditional on their consent to the terms and conditions, the omission of the percentage increase in the generated price offer does not constitute a misleading omission.

In conclusion, the UCPD does not require the inclusion of the specific percentage of a variable price component in an invitation to purchase, as long as it ‘indicates the applicability in principle of such a percentage, together with a possible scale and the components having an impact on that percentage’ (para 52). There you go: while a specific percentage is off the hook, some general indication of price variability is nonetheless required. The CJEU seems to suggest that an indication in the company’s terms and conditions is sufficient – thereby expecting the average consumer to read them. But why can’t the CJEU ask for such an indication to be included in the displayed price offer itself? Is the CJEU asking too much from the average consumer? Or do national courts still have the discretion to exercise their faculty of judgment (see para 36)?

Energy price spike: Commission announces toolbox including consumer alleviation measures

Europe – like most of the world – sits in the middle of an energy crunch. Natural gas prices have gone up in the three digits (!) since 2020 and consumers are feeling the brunt: to give but an example, in the Netherlands several smaller companies have either informed their consumers that their monthly payments will have to go up considerably starting next January, or even have tried to terminate their fixed-term, fixed-price contracts in advance – to the point that the Consumer authority warned them that they do, in fact, need to comply with their contractual obligations (or go to court, one may add).

The spike in gas (and oil) prices has been mainly caused by the global production chains picking up again as the pandemic seems to have gone past its peak moment. For consumers, however, the origins of the phenomenon are less salient than its consequences on their ability to heat their homes this coming winter. Furthermore, energy anxiety in advanced and high-impact countries risk undermining the energy transition goals that have been set up in the past few years: suffice it to say that China has announced that its plans not to open new coal power plants will have to be reconsidered. 

Against this background, the Commission has announced this week a “toolbox” meant to guide Member States in the effort to soften the impact of this new crisis on consumers, and in particular vulnerable households who suffer or are exposed to energy poverty. While some elements in the toolbox are related to general energy policy and hence not so interesting to report on here, a few are worth mentioning, in particular:

•     Provide emergency income support for energy-poor consumers, for example through vouchers or partial bill payments, which can be supported with EU ETS revenues;
•       Authorise temporary deferrals of bill payments;
•       Put in place safeguards to avoid disconnections from the grid;
•       Provide temporary, targeted reductions in taxation rates for vulnerable households; 

The first measure seems to be inspired by actions recently taken in France, but also seems to mirror practice in the (formerly MS) UK. It goes without saying that this could be difficult for some MS to bear, especially after years of crisis in which the pandemic has already put a strain on public finances.  

Deferrals may be a more attractive option for public actors, but they may exacerbate problems for providers, some of which have – to take the UK’s example – already declared bankruptcy since last month.  

Safeguards against disconnections should be already part of the policy kit in this area. According to both the 2019 Electricity Directive and the Natural Gas Directive, Member States have the option to ban disconnections “at critical times” to protect vulnerable consumers. What these critical times are, however, is not defined, and neither is the notion of vulnerable consumers – which may or may not, according to the directive, refer to energy poverty.

The Commission’s communication emphasizes that in the long term, energy transition is the best insurance against price fluctuations on the fossil markets. This process, according to the Commission, should thus not be jeopardized by the current crisis. 

The toolbox has been positively received by BEUC; Member States, however, may or may not be receptive to the Commission’s push to put immediate relief centerstage, being divided on many points including the extent of the current threat for prices on their own as well as social cohesion.