- •Preface
- •Contents
- •List of Contributors
- •1. Introduction
- •1. CONSUMER LAW: THE GROWTH OF THE LEGISLATIVE ACQUIS
- •2. EC ADVERTISING LAW
- •4. NEW RULES AND NEW TECHNIQUES—AND NEW CHALLENGES
- •2. The Unfair Commercial Practices Directive and its General Prohibition
- •1. INTRODUCTION
- •2. THE SCOPE (ARTICLE 3)
- •3. INTERNAL MARKET (ARTICLE 4)
- •4. THE STRUCTURE
- •5. THE GENERAL PROHIBITION (ARTICLE 5)
- •7. ENFORCEMENT
- •8. CONCLUSIONS
- •1. SOME BASIC FEATURES
- •2. REDUCED OR RAISED LEVEL OF CONSUMER PROTECTION?
- •5. WILL FULL HARMONISATION BE ACHIEVED?
- •1. INTRODUCTION
- •3. THE FRAGMENTATION OF COMMUNITY RULES ON COMMERCIAL PRACTICES PRIOR TO THE UCPD
- •5. THE IMPACT OF ENLARGEMENT
- •6. DISENTANGLING THE LOGIC OF COMMUNITY INFLUENCE
- •7. THE UCPD AND ITS PROSPECTIVE EFFECTS ON CEE UNFAIR COMMERCIAL PRACTICES LAW: COHERENCE AT LAST?
- •1. INTRODUCTION
- •2. LEGAL BASIS
- •3. GENERAL CHARACTER OF EC CONSUMER PROTECTION RULES
- •5. FUTURE APPROACH OF THE COURT OF JUSTICE
- •6. CONCLUSION
- •1. INTRODUCTION
- •2. SOME CRITICISMS
- •3. POLICY DEBATES ON MAXIMAL HARMONISATION
- •4. THE INTERNAL MARKET CLAUSE
- •5. CONCLUSION
- •1. INTRODUCTION
- •2. THE VISION OF THE CONSUMER IN EC LAW—CONSTITUTIONAL INHIBITIONS TO THE DISCOVERY OF REGULATORY COHERENCE
- •5. THE ‘AVERAGE CONSUMER’ UNDER THE UCPD
- •6. CONCLUSION
- •8. The Relationship of the Unfair Commercial Practices Directive to European and National Contract Laws
- •1. INTRODUCTION
- •3. POSSIBLE INFLUENCES OF THE UCPD ON ‘CONTRACT LAW’
- •5. CONCLUSION
- •9. The Unfair Commercial Practices Directive and its Consequences for the Regulation of Sales Promotion and the Law of Unfair Competition
- •1. INTRODUCTION
- •2. THE DIRECTIVE IN CONTEXT
- •3. THE CASE LAW OF THE COURT OF JUSTICE ON FREE MOVEMENT IN THE AREA OF COMMERCIAL PRACTICES
- •4. THE UNFAIR COMMERCIAL PRACTICES DIRECTIVE: B2C ONLY
- •5. THE LAW OF UNFAIR COMPETITION IN THE MEMBER STATES
- •6. NATIONAL RULES ON SALES PROMOTIONS AFTER THE UCPD
- •7. THE INFLUENCE OF ANTITRUST LAW ON THE LAW OF CONSUMER PROTECTION AND UNFAIR COMPETITION
- •8. PLEA FOR AN INTEGRATED APPROACH AT THE EC LEVEL
- •4. THE EXAMPLE OF LOOK-ALIKES
- •5. SUMMARY AND CONCLUSIONS
- •11. Unfair Commercial Practices: Stamping out Misleading Packaging
- •1. INTRODUCTION—THE THESIS OF THIS PAPER
- •3. THE COPYCAT PROBLEM
- •4. THE IMPACT ON CONSUMERS OF COPYCAT PRODUCTS
- •5. THE UNFAIR COMMERCIAL PRACTICES DIRECTIVE
- •7. THE INTERPLAY BETWEEN PUBLIC AND PRIVATE ENFORCEMENT UNDER THE DIRECTIVE
- •1. INTRODUCTION
- •3. IMPLEMENTING THE UCPD—MAIN CHALLENGES
- •4. AFFECTED LEGISLATION
- •5. TOWARDS IMPLEMENTING THE UCPD INTO UK LAW
- •6. POST-IMPLEMENTATION ISSUES
- •7. STEPS TAKEN TOWARDS IMPLEMENTATION BY THE UK
- •8. CONCLUSIONS
- •2. THE STORY BEGINS—DISTANT SHOPPING (SWEEPSTAKES I)
- •4. REGULATION 2006/2004—NATIONALISATION (VERSTAATLICHUNG) OF LAW ENFORCEMENT
- •Appendix
- •Index
170 Jules Stuyck
The diversity in approaches towards unfair competition and trade practices between the Member States is in sharp contrast to the situation in the field of antitrust. As a consequence, inter alia, of the modernisation and decentralisation of EC competition law (in particular Regulation 1/200343 implementing Articles 81 and 82 EC), there is now a very high degree of convergence between the antitrust laws of the Member States. The same convergence also exists in the field of merger control (see now Regulation 139/2004).
With regard to restrictive practices Article 3(1) of Regulation 1/2003 de facto forces the Member States to a (quasi absolute) convergence of their national antitrust laws, in that they are precluded from applying national provisions without at the same time applying the EC competition rules where a given practice affects trade between Member States. As they are under an obligation also to apply Article 81 or 82 EC in such a situation, maintaining national antitrust laws that differ substantially from Articles 81 and 82 would make enforcement at the national level very difficult. As to the relationship between antitrust law and unfair competition law attention should be drawn to Article 3(3) of Regulation 1/2003. Here it is expressly said that the principle of simultaneous application of EC and national competition law where a restrictive practice within the meaning of Articles 81–82 affects trade between Member States does not preclude the application of provisions of national law that predominantly pursue an objective different from that pursued by Articles 81 and 82 of the Treaty. The Community legislature had the law of unfair competition in mind whith this provision. The UCPD totally ignores this relationship between antitrust and unfair competition.
This brief overview of the law of the Member States suggests that the EC approach, consisting of harmonisation of the law of commercial practices in B2C relations, ignores the complexity of the legal situation before harmonisation and, in particular, the fact that the area of harmonised law is so closely intertwined with the law of unfair competition and antitrust law.
6. NATIONAL RULES ON SALES PROMOTIONS AFTER THE UCPD
As mentioned above the concept of ‘commercial practices’ in the UCPD is very broad, encompassing methods of sales promotion. Moreover the UCPD is a measure of total harmonisation of commercial practices in B2C relations. Practices that are not mentioned in the exhaustive black list of commercial practices annexed to the Directive can be prohibited in B2C relations only if either they are ‘unfair’ (ie they are contrary to professional diligence and are likely materially to distort the consumer’s behaviour) within the meaning of Article 5 or misleading or aggressive within the meaning of Articles 6 and 7. Hence it is submitted that national rules
43 [2003] OJ L 1/1.
Regulation of Sales Promotion and Unfair Competition 171
which, in B2C relations, per se forbid certain methods of sales promotion, like sale at a loss, premium offers, coupons, prize competitions, clearance sales, etc, or regulate them in an abstract manner, ie without giving the judge power to appraise case by case whether the practice is unfair vis-à-vis consumers, can not longer be maintained.
This—unavoidable—consequence of the UCPD is surprising in the light of the proposal for a Regulation on Sales Promotion in the Internal Market,44 the object of which is precisely to set the conditions under which Member States can regulate methods of sales promotion in both B2B and in B2C relations.
Article 3 of that proposal provides that the Member States shall not impose a general prohibition on the use or commercial communication of a sales promotion unless required by Community law, and that Member States’ laws shall not provide for limitation of the value of a sales promotion, except for discounts on fixed-price products and sales below costs, for a prohibition on discounts preceding seasonal sales, or for a requirement to obtain prior authorisation, or any requirement having equivalent effect, for the use or communication of a sales promotion. ‘Sales promotion’ means the offer of a discount, a free gift, a premium or an opportunity to participate in a promotional contest or game.
The proposed Regulation thus allows the Member States to maintain, provided they respect the Treaty freedoms (see Article 3(2)), certain restrictions with regard to sales promotion, such as a prohibition or regulation of sales below costs and forms of sales promotion not mentioned in the list (eg the indication of discounts). It is however questionable whether such national rules can be maintained in the light of the maximum harmonisation character of the UCPD (except where the method of sales promotion fits in one of the items of the UCPD’s black list or has to be considered ‘unfair’, ‘misleading’ or ‘aggressive’ within the meaning of the Directive).
7. THE INFLUENCE OF ANTITRUST LAW ON THE LAW OF CONSUMER PROTECTION AND UNFAIR COMPETITION
The law of commercial practices is not only intertwined with competition law in the broad sense, ie the law of unfair competition and antitrust law, but, as a separate branch of the law or as part of the law of unfair competition, the law of commercial practices is also influenced by antitrust law.
The importance of competition policy (antitrust and concentration control) for consumers is now generally recognised. Articles 81 and 82 EC, the
Merger Regulation (Regulation 139/2004/EC45) and their domestic equiva-
44Amended proposal: COM(2002)585 final.
45[2004] OJ L 24/1.
172 Jules Stuyck
lents are crucial for consumers. Consumers are the primary beneficiaries of a vigorous competition policy, in particular the effective enforcement of the prohibition of cartels and abuse of dominant positions and the prior control of concentrations. Competition policy guarantees that the consumer gets good quality and choice at a reasonable price.46
The protection of consumer interests requires additional measures, such as protection against unfair practices, including unfair contract terms, which may indeed also occur in situations where competition is effective. In addition it should be recognised that the consumer is not merely a homo oeconomicus who takes decisions on the basis of the quality and price of products, but he may want to know whether goods are produced according to fair trade principles (a decent revenue for the producer, no exploitation by multinational groups, no child labour, etc) and to buy accordingly. The debate on genetically modified organisms has also shown that at least some consumers want to take consumption decisions with due consideration for the environmental impact of these decisions.
Whatever the reality of the possibility of influencing fairness of trade or the environment by consumption decisions, one can agree that the consumer has the right to be informed about the environmental, social, societal and other non-economic consequences of his decision to buy a given product. The now generally accepted basic principle of consumer autonomy47 also encompasses his right to be informed so as to enable him to decide according to his own principles and ethical values.
On the other hand it is possible for fairness rules to restrict competition in a way that is disadvantageous for consumers, whether these rules are (primarily) designed to protect competitors (the law of unfair competition) or indeed consumers (like the UCPD).
This has been increasingly recognised with the emergence of antitrust law. The law of unfair competition and commercial practices is much older than antitrust law. The function of ‘honest business practices’ was very often to protect existing positions on the market. New techniques of advertising and sales promotion, new sales methods and so on were described as being contrary to honest business practices, which meant contrary to what was usual. A good example is the prohibition of comparative advertising. Directive 97/5548 has forced all the Member States to allow comparative advertising that fulfils certain conditions (of truthfulness and objectivity) so as to guarantee the proper information of consumers. Several Member States had
46See J Stuyck, ‘EC Competition Law after Modernization: More than Ever in the Interest of Consumers’ (2005) 28 Journal of Consumer Policy 1; K Cséres, Competition Law and Consumer Protection (The Hague, Kluwer, 2005).
47See J Drexl, Die Wirtschaftliche Selbstbestimmung des Verbrauchers (Tübingen, Mohr Siebeck, 1998).
48Amending Directive 84/450 and authorising comparative advertising, [1997] OJ L 290.
Regulation of Sales Promotion and Unfair Competition 173
a long tradition of prohibiting comparative advertising, the aim or at least the effect of which was to protect incumbents against new entrants who want to position their products by reference to similar products offered by the incumbents. The ‘honest business practices’ were the practices that were considered to be honest by the incumbents.
Comparative advertising was thus liberalised through internal market harmonisation. Other practices that were traditionally qualified as unfair between competitors had to be accepted as normal under the pressure of antitrust actions. Since the early years of application of Articles 81 EC the ECJ has refused to accept the fight against unfair competition (eg underbidding) as a justification for restrictive agreements between competitors.49
On the other hand national courts had to define the relationship between antitrust law and unfair competition law, two branches of the law that may be complementary but are also to a certain extent incompatible. The question arises how one can protect market participants against ‘unfair competition’ without at the same time restricting effective competition? Interestingly in Belgium the Supreme Court (Hof van Cassatie, Cour de Cassation) has ruled that the conduct of an undertaking that restricts competition but that is authorised under antitrust law cannot be prohibited as an act of unfair competition when the alleged violation of honest business practices essentially consists of the restriction of competition.50 This ruling overturned decisions of certain lower courts which (among other matters) qualified refusals to sell on the part of non-dominant undertakings that were not engaged in agreements appreciably restricting competition as acts of unfair competition.
Apart from clear examples where the Community courts or national courts cut back on the applicability of unfair competition law in cases where it restricted competition or prohibited as being ‘unfair’ a restrictive practice which did not adversely affect effective competition, it cannot be denied that in general the notion of honest business practices has been influenced by the development of antitrust law. In the pre-antitrust era aggressive competition or even innovative methods of competition could be considered unfair because they affected vested positions and existing goodwill. Nowadays it is generally accepted that undertakings have to put up with copying, imitation and other acts by competitors that affect the value of their businesses, unless they can prove an infringement of an intellectual property right recognised by law. Freedom of competition also means that undertakings basically have the right to poach clients from their competitors and that they should not be prevented from attracting consumers even
49Commission Decision of 15 May 1974, IFTRA [1974] OJ L 160/1; Commission Decision of 15 July 1975, IFTRA [1975] OJ L 228/3.
50Cass, 7 Jan 2000 [2001] Revue Critique de Jurisprudence Belge p. 256–269, annotation by J Stuyck.