© Springer-Verlag Berlin Heidelberg 2015Pierre Kobel, Pranvera Këllezi and Bruce Kilpatrick (eds.)Antitrust in the Groceries Sector & Liability Issues in Relation to Corporate Social ResponsibilityLIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition10.1007/978-3-662-45753-5_22
GEISTWERT Rechtsanwälte Lawyers Avvocati, Vienna, Austria
Max W. Mosing
The (non-legal) discussion of sustainable development and its economic impact started in Austria in the late 1980s and has therefore a longer tradition than the discussion around corporate social responsibility (CSR); as many other Austrian approaches, the Austrian CSR activities build upon the long-lasting Austrian tradition of broad stakeholder involvement within the so-called “social-partnership,” which is the common dialogue platform between the main social partners1: in the 1990s, Austrian companies learned to deal with environmental and social friendliness and, last but not least, with the term “sustainability.”
Nowadays, 95 % of the Austrian companies declare to have been involved by one or more measures for society; for eight out of ten Austrian companies, social commitment is part of their entrepreneurial self-understanding, meaning that they are providing money, labour, and material resources for measures in the context of social responsibility.2
However, there are “practical differences” between declaring to do good and actually really doing good—which leads to consider what should be the legal consequences in Austria if such differences appear in the context of commercial practices.
The final version of this report incorporates the views expressed by the Austrian LIDC members at a meeting held on May 2012 (“Austrian Group”).
22.2 The Different Types of CSR Policies and the Law
Basically, there is no clear definition of CSR policies in Austria, and therefore it cannot be distinguished between different types of CSR policies—definitely not in terms of the Austrian laws. However, CSR policies can—depending on the actual circumstances—be subsumed under the below-listed legal terms:
(I) CSR policies could fall under “codes of conducts” (“Verhaltenskodex/Verhaltenskodizes”) mentioned by the Austrian laws in two forms, namely that such code of conduct (a) must be issued and adopted,3 especially in the context of specific rules governing regulated professions4 (e.g., Austrian medical doctors,5 Austrian attorneys at law,6 Austrian Pharmacies,7 etc.) or that it (b) can voluntarily be issued and adopted. As case (a) is out of the scope of this contribution, only case (b) will be covered in this paper.
The Austrian Act against Unfair Competition (“UWG”)8 defines—in the context of commercial practices—the term “code of conduct” as “an agreement or set of rules not imposed by law, regulation or administrative provision of a Member State of the European Union and which defines the behaviour of enterprises who undertake to be bound by the code in relation to one or more particular commercial practices or business sectors.”9
Because of this broad definition corporate social responsibility (“CSR”) policies—at least those used in connection with consumers—can be easily subsumed under “code of conduct” in terms of the UWG. However, the term is much broader.
In the context of “codes of conducts,” the Codex Alimentarius Austriacus (“Österreichisches Lebensmittelbuch – ÖLMB”)10 has to be mentioned, firstly, because of its practical impact and, secondly, because of its “special legal status”: although it is published by the Austrian Federal Ministry for Health, it is not as such legally binding. The ÖLMB is “only” a “qualified experts’ opinion” on certain aspects in the food industry, especially the labelling with certain signs. Although it is not legally binding, not “complying” with the ÖLMB could be a breach of the UWG, as consumers might be misled: where the consumer does not know the specifics of a product, e.g. what it contains, how it is produced, where it comes from, etc., it is possible that such consumer relies purely on what (ingredients, way of production, origin, etc.) experts in the field of such product demand as necessary (“referring consumer perception”/“verweisende Verbrauchervorstellung”).11 Therefore, not complying with the ÖLMB could be a “misleading commercial practice” in terms of Sec 2 UWG.12 This case law developed in the context of the ÖLMB could be also of relevance regarding CSRs—see also (III)(b) below regarding “Private Seals of Quality” (“Gütesiegel bzw Gütezeichen”).
(II) As the case might be, CSR policies could fall under “Austrian standards” (“ÖNORMEN”) that are issued by the Austrian Standards Institute.13 ÖNORMEN are regulated by special Austrian laws14 and again can be15 (a) legally obligatorily issued and adopted16 or (b) voluntarily issued and adopted.
Among the literally hundreds of ÖNORMEN, which generally refer to nearly every area of (business) life, some could be considered as “economic ethical policies,” respectively CSR policies, e.g., “Guidance on social responsibility” (ISO 26000:2010)17 and “Risk Management for Organizations and Systems—Part 1: Guidelines for embedding the risk management in the management system” (Implementation of ISO 31000).18 These ÖNORMEN are not obligatory CSR policies but can be voluntarily adopted by businesses.
(III)(a) In the context of CSR policies, the Austrian laws providing for a “Seal of Quality” (“Gütesiegel”)19 and an “Official Test or Guarantee Sign” (“Prüf- und Gewährzeichen”)20 have to be mentioned. However, these legally issued seals and signs are—as indicated above—not subject to this paper.
(b) On the other hand, “Private Seals of Quality” (“Gütesiegel bzw Gütezeichen”) can, being qualified as “codes of conducts,”21 be of relevance in the context of CSR policies. “Private Seals of Quality” can have an “economic ethical” respectively “CSR background.” The “seals” as such can also be protected as trademarks.22
According to Austrian Consumers’ Association (“Verein für Konsumenteninformation – VKI”), more than 90 “Seals of Quality” exist only in the sector of the food industry.23 A study by the Austrian Chamber for Labour (“Arbeiterkammer”) considered that “only” one out of 27 tested “Seals of Quality” in the food industry was misleading.24
However, in several cases pertaining to “Private Seals of Ecological Quality,” the Austrian Supreme Court has stated that “statements about the natural or environmental impact of a product are highly suited to influence the buying decision of the consumer. As desirable as such information may be if it is true, it may be dangerous if it is linked to the emotional sphere of the consumer and thereby is likely to mislead the consumer.”25 “The question of whether advertising regarding environmental protection is suitable to mislead has to be assessed in a similar strict manner as those regarding health promotions.”26
22.3 Prevention and Sanctioning in Case of Breach of a Voluntarily Adopted CSR Policy
The Austrian Unfair Competition Act (“UWG”) provides special provisions for the prevention and sanctioning in the context of misuse of, respectively breach of, a “code of conduct” (“Verhaltenskodex”)27 voluntarily adopted by a business. CSR can, as the case may be – as shown under Sect. 22.2 – , be subsumed under the legal term of “code of conduct” (“Verhaltenskodex”):
(I) Sec 2 para 3 UWG reads as follows: “A commercial practice shall also be regarded as misleading if it is able to cause a market participant to take a transactional decision that he would not have taken otherwise, and which involves the following: […] non-compliance with commitments, which the entrepreneur has in the framework of a code of conduct undertaken to be bound, insofar as: a) the commitment is not aspirational but is firm and is capable of being verified, and b) the entrepreneur indicates in a commercial practice that he is bound by the code.”
There is no case law on this provision. Consequently, it remains unclear how close the nexus between (a) the verified breach of the code of conduct and (b) the entrepreneur’s indication to be bound by the code has to be for Sec 2 para 3 UWG to be infringed: does the entrepreneur have to refer to the code and to breach it in the course of the same commercial practice, e.g., in the same advertisement? Is the reference to be bound by the code on the business’ website sufficient that every breach of the code in (another) commercial practice falls under Sec 2 para 3 UWG?
Furthermore, it is worth mentioning that “commercial practice” is defined in the UWG as “any act, omission, course of conduct or representation, commercial communication including advertising and marketing of an enterprise, directly connected with the promotion, sale or supply of a product.” It could therefore be argued that a breach of a “code of conduct” that is not directly connected with the promotion, sale or supply of a product would not fall under Sec 2 para 3 UWG.
(II) Another special provision is Annex 1 lit. 1 UWG, which lists “[t]he false declaration of an entrepreneur claiming to be a signatory to a code of conduct” as a “misleading commercial practice.” Reference is made to the above-cited definition of a “commercial practice” and the argument that a “code of conduct” that is not directly connected with the promotion, sale or supply of a product would not fall under the provision.
(III) But the Austrian UWG provides even more provisions in the context of codes of conducts in the broadest sense: (a) Annex 1 lit 2 UWG qualifies “displaying a trust mark, quality mark or equivalent without having obtained the necessary authorisation” as a “misleading commercial practice.” (b) Pursuant to Annex 1 lit 3 UWG, “the false claim that a code of conduct has an endorsement from a public or other body” is a “misleading commercial practice.”
Ad (I) and (II): In the context of the application of Sec 2 para 3 UWG (non-compliance with the code of conduct) and Annex 1 lit 1 UWG (false declaration to be a signatory to a code of conduct), Sec 1 UWG has to be taken into account:
(1) Anyone who in the course of business 1. resorts to an unfair commercial practice or another unfair practise which is likely to distort not only insignificantly the competition to the detriment of enterprises or 2. uses an unfair commercial practise contrary to the requirements of professional diligence and [which] is with regard to the respective product suitable to materially distort the economic behaviour of the average consumer whom it reaches or to whom it is addressed, may be sued for a cease-and-desist order and in case of fault for payment of damages.
(3) Unfair commercial practices shall be in particular those, which are 1. aggressive in the sense of Section 1.a. or 2. misleading in the sense of Section 2.
Ad (III): In connection with the above-cited Annex 1 lit 1 to 3 UWG, Sec 2 para 2 UWG reads as follows:
In any case the commercial practices mentioned in the annex under lit 1 to 23 are deemed to be misleading.
(IV) The Austrian Unfair Competition Act (“UWG”) provides also general provisions for the prevention and sanctioning in the context of a breach of statements or commitments voluntarily issued or adopted by a business:
Sec 2 UWG reads as follows and could be applied on the breach of a CSR policy being a code of conduct:
(1) A commercial practice shall be regarded as misleading if it contains false information (Section 39)28 or otherwise is able to deceive a market participant in relation to the product on one or more of the following elements in such a way that he will be caused to take a transactional decision that he would not have taken otherwise:
2. the main characteristics of the product or the material features of tests or checks carried out on the product;
3. the extent of the commitments of the enterprise, the motives for the commercial practice, […] any statements or symbols in relation to direct or indirect sponsorship or approval of the enterprise or the product;
6. the person, the attributes or rights of the enterprise or his agent, such as his identity and assets, his qualifications, status, approval, memberships or relations as well as ownership of industrial, commercial or intellectual property rights or his awards and distinctions;
7. the rights of the consumer from warranty and guarantee or the risks he may face.
Again, reference is made to the above-cited definition of a “commercial practice” and the argument that a “code of conduct”/CSR policy that is not directly connected with the promotion, sale or supply of a product would not fall under the provision. However, this argument could in the context of the general provisions against “misleading practices” be overcome by the possible “referring consumer perception” (“verweisende Verbrauchervorstellung”) based on codes, policies, etc., as explained above in Sect. 22.2.
(V) Pursuant to Sec 8 of the Law on Standards 1971, the usage of the sign ÖNORM (or confusingly similar signs) without fulfilling the regarding requirements for using the sign ÖNORM is punishable with an administrative fine of up to EUR 2,180.
22.4.1 By Public or Regulatory Authorities
Fines under the Law on Standards 1971 can only be imposed and enforced by the Austrian administrative punitive authority. However, a breach of the Law on Standards 1971 can also be seen as a breach of the Austrian Unfair Competition Act in terms of unfair competitive advantage due to a breach of law.
Public respectively Regulatory Authorities have certain rights to file actions under the Austrian UWG: pursuant to Sec 14 UWG in the case of a “misleading (commercial) practice” or “breach of law, which is likely to significantly distort the competition to the detriment of enterprises”—like a breach of Law on Standards 1971—a petition for, inter alia, a cease-and-desist order may, inter alia, be filed with the Austrian courts by the Federal Competition Authority (“BWB”) as a public authority and the following “regulatory authorities”: the Federal Chamber of Labour, the Federal Economic Chamber, the Presidential Conference of the Austrian Chambers of Agriculture and the Austrian Trade Union Federation.
22.4.2 By Consumers
In the case of a “misleading commercial practice” contrary to the Sec 2 UWG petition for, inter alia, a cease-and-desist order29 may be filed by any consumer directly affected when the undertaking is at fault for the damages sustained by the consumer.30
In the absence of case law on this issue, the main commentators disagree as to whether or not directly affected consumers should also be entitled to file for a “popular action” pursuant to Sec. 14 UWG, which could be raised irrespective of any fault of the undertaking.31 Pursuant to Sec 14 UWG in the case of a “misleading commercial practice,” actions for, inter alia (for details, see Sect. 22.5), a cease-and-desist order may also be filed with the courts by (inter alia) the Austrian Consumers’ Association (“Verein für Konsumenteninformation – VKI”). Furthermore, any of the bodies and organisations of another European Union Member State in terms of Art 4 (3) of Directive 98/27/EC on injunctions for the protection of consumers’ interests can file such claims with the Austrian courts.