© Springer International Publishing Switzerland 2015Bram B. DuivenvoordeThe Consumer Benchmarks in the Unfair Commercial Practices DirectiveStudies in European Economic Law and Regulation510.1007/978-3-319-13924-1_2
2. The Unfair Commercial Practices Directive
Hoogenraad & Haak advertising + IP advocaten / University of Amsterdam, Amsterdam, The Netherlands
Bram B. Duivenvoorde
The Unfair Commercial Practices Directive was adopted in 2005 and fully harmonises unfair commercial practices law in Europe. It aims to achieve a high level of consumer protection, to smoothen the functioning of the internal market and to increase competition in the market as such. The main consumer benchmark in the Directive is that of the average consumer, introduced by the CJEU in 1998. The Unfair Commercial Practices Directive introduced two alternative benchmarks to that of the average consumer, i.e., the target group benchmark and the vulnerable group benchmark. The latter was introduced specifically to take away the criticism that the Directive offered insufficient protection to consumers. Both the target group benchmark and the vulnerable group benchmark aim to offer additional protection to more vulnerable groups. Under what circumstances the two alternative benchmarks can be applied, remains somewhat unclear on the basis of the Directive. However, the requirements for their application emphasise that they remain exceptions to the main benchmark of the Directive, i.e., the average consumer benchmark.
KeywordsUnfair Commercial Practices DirectiveGoalsLegislative historyAverage consumer benchmarkTarget group benchmarkVulnerable group benchmark
This chapter discusses and analyses the consumer benchmarks in the Unfair Commercial Practices Directive. It first introduces the Directive in general (paragraph 2.2) and its goals (paragraph 2.3). After that, the Directive’s benchmarks are dealt with, including their legislative history (paragraph 2.4) and a more detailed discussion of the average consumer benchmark (paragraph 2.5), the target group benchmark (paragraph 2.6) and the vulnerable group benchmark (paragraph 2.7).
2.2 The Unfair Commercial Practices Directive
The Unfair Commercial Practices Directive, adopted on 11 May 2005, is an ambitious effort to harmonise the laws of Member States on unfair commercial practices.1 Due to the full harmonisation nature of the Directive, its scope is of particular importance; it determines not only the cases in which the Directive is to be applied (and thus those areas for which Member States have to provide implementation), but also determines the extent to which Member States can continue to regulate unfair commercial practices.2 The choice for full harmonisation is perhaps the most controversial aspect of the Directive,3 and ushers in a clear break from the minimum harmonisation tradition established by previous European consumer legislation.4
The scope of the Directive is particularly broad, as it covers any commercial practice; a concept defined in the Directive as ‘any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers’.5 This basically includes any type of advertising and marketing, but also post-sale practices.6 Non-commercial practices, such as those concerning political or societal matters, fall outside the scope of the Directive.7
The Directive regulates commercial practices as far as they have the potential to affect the economic behaviour of the consumer.8 Most notably, this means that issues of taste and decency (e.g., rules on nudity and violence in advertising) are excluded from the scope of the Directive, and that these matters are left to Member States.9 Apart from the issue of taste and decency, the Directive excludes a number of other issues from the Directive’s scope. In particular, the Directive excludes matters of intellectual property, as well as immovable property.10 Financial services are included in the scope of the Directive, but they are excluded from full harmonisation. Member States are thus permitted to continue to adopt more restrictive measures in this field.11
The Directive offers a mix of general and specific clauses prohibiting unfair commercial practices. Article 5 provides the general clause prohibiting unfair commercial practices. A commercial practice is regarded as unfair if it is contrary to the requirements of professional diligence and if it materially distorts or is likely to distort the consumer’s economic behaviour.12 Articles 6 and 7 of the Directive offer more specific (but still general) prohibitions of misleading actions and misleading omissions, whilst Articles 8 and 9 prohibit aggressive commercial practices. In the Trento Sviluppo case (2013), the CJEU clarified that these more specific general clauses should be applied in accordance with the general clause of Article 5.13 The first annex to the Directive contains a ‘black list’ of practices that are unfair under all circumstances, with a list of twenty-three misleading practices and eight aggressive practices.
Little has been regulated with respect to the enforcement of the Directive. Despite the full harmonisation nature of the Directive, this important issue is thus left to Member States. Article 11 of the Directive does impose an obligation on the Member States to ensure that there are adequate and effective means to combat unfair commercial practices, but the substantiation of this obligation is essentially left to Member States.14 Member States are not required to provide individual remedies for consumers.15 In general, the underlying idea of the Directive—although explicit reference to such a principle is absent and enforcement is left to Member States—seems to be more about protecting the collective interests of consumers than about providing individual remedies in individual cases.16
The interpretation of the Directive, in particular of the general clauses, is generally left to Member States. In order to provide further meaning to the general clauses of the Directive and to support uniform interpretation, the European Commission has produced the EC Guidance, providing guidelines to the Directive.17 The EC Guidance was first published in 2009, but is designed to be a ‘living document’ and should thus be regularly updated online.18 It has been drawn up by the services of the Directorate-General for Health and Consumers and has been drafted in cooperation with Member States and stakeholders. It has no formal legal status and it thus binds neither the European institutions nor the Member States.19
2.3 Goals of the Directive
Article 1 of the Unfair Commercial Practices Directive encapsulates the two formal goals of the Directive, i.e., increasing the smooth functioning of the internal market and achieving a high level of consumer protection:
The purpose of this Directive is to contribute to the proper functioning of the internal market and achieve a high level of consumer protection by approximating the laws, regulations and administrative provisions of the Member States on unfair commercial practices harming consumers’ economic interests.
As the Preamble to the Directive notes, the goal to achieve a high level of consumer protection also follows from the legal basis of the Directive.20 The Unfair Commercial Practices Directive has been adopted on the basis of the internal market clause,21 and the Treaty on the Functioning of the European Union (at the time the EC Treaty) requires the EU to achieve a high level of consumer protection, including in the context of internal market measures.22
The Directive fails to elucidate upon the rationale of consumer protection and thus what can be regarded as a high level of consumer protection. To some extent consumer protection is instrumental to the internal market, in the sense that a high level of consumer protection is meant to increase consumer confidence, leading to more cross-border trade. However, the Directive also emphasises the importance of the protection of vulnerable consumers.23 This element of consumer protection is not linked to the internal market and provides a more socially oriented perspective on consumer protection in the Directive, by taking into account the needs of the weakest members in society.24
Lacking a clear rationale for consumer protection in the Directive, consumer protection in the context of this book is understood in a broad sense, i.e., as the degree of protection of the consumer with regard to his or her position vis-à-vis the trader.25 More specifically within the context of unfair commercial practices, this means that the more emphasis there is on the trader not to act unfairly (rather than on the consumer being responsible not to be affected by the trader’s potentially unfair behaviour), the higher the level of consumer protection is regarded to be.
The other formal goal of the Directive, i.e., increasing the smooth functioning of the internal market, is two-fold. Firstly, as seen from the perspective of traders, the Directive aspires to remove barriers to trade by harmonising national laws. As in many other areas of European consumer law, differences between national laws were seen as barriers to cross-border trade, as they increase costs for businesses who wish to engage in cross-border marketing, advertising campaigns and sales promotions.26 Secondly, as seen from the perspective of consumers, the Directive aims to increase consumer confidence. It is argued that in order for consumers to have confidence in cross-border shopping, they need to be certain of their rights and should enjoy a sufficiently high level of consumer protection.27
In line with the Directive’s legal basis, the goal of increasing the smooth functioning of the internal market is limited to increasing cross-border trade, by enabling businesses to sell their products in other Member States and by promoting cross-border shopping for consumers. However, although it is not one of the formal objectives enshrined in Article 1 of the Directive, the Directive also aims to improve competition in the marketplace as such.28 In the EC Guidance to the Unfair Commercial Practices Directive, a clear reference is made to this broader goal of regulating the market, where it is argued that the Directive, apart from providing protection to consumers, also ‘aims to ensure, promote and protect fair competition’.29 Unfair commercial practices not only harm consumers, but also competitors. They take away market share from those who do act fairly, and thus harm competition.30 The broader goal of improving competition is also clear from the Directive’s Preamble, where it is stated that:31
This Directive directly protects consumer economic interests from unfair business-to-consumer commercial practices. Thereby, it also indirectly protects legitimate businesses from their competitors who do not play by the rules in this Directive and thus guarantees fair competition in fields coordinated by it.
As is discussed in further detail in Chap. 11 of this book, the goal of improving competition requires intervention if competition is hindered as a consequence of unfair commercial practices.32 However, the goal of improving competition also requires that businesses are provided with room to compete and to market their products to consumers. In this sense, competition also requires that over-protection of consumers is prevented.33
2.4 Legislative History on the Consumer Benchmarks
In preparing for the adoption of the Unfair Commercial Practices Directive, the European Commission pointed to the differences between the consumer benchmarks applied in different Member States as one of the main divergences between the national legal systems and thus as one of the main obstacles to cross-border trade.34 The CJEU had already introduced the average consumer benchmark in the 1998 Gut Springenheide case, defining the average consumer as ‘reasonably well informed and reasonably observant and circumspect’.35 The Commission pointed out that, despite the introduction of this uniform notion, some national courts were still applying other benchmarks. In particular, the Commission pointed to Belgian and German case law, in which the courts referred to an uncritical or a casually observant consumer, at least in some circumstances.36
Accordingly, the Commission deemed it necessary to codify the average consumer benchmark in the Directive. It also stressed that the average consumer test is based on a consumer who is reasonably able to protect his or her own interests, and not on a particularly vulnerable or gullible consumer.37
When the Directive was first proposed by the European Commission in 2003, the average consumer notion was included in the definitions section of the Directive, reiterating the definition as introduced in Gut Springenheide.38 The Preamble to the proposed Directive noted the following on the average consumer:39
[The Directive] establishes the ECJ’s average consumer, rather than the vulnerable or atypical consumer as the benchmark consumer. This test, which is an expression of the principle of proportionality, applies when the generality of consumers is addressed or reached by a commercial practice. It is modulated when a commercial practice is specifically targeted at a particular group (e.g., children), when the average member of that group will be considered. This will clarify the standard to be applied by national courts and significantly reduce the scope for divergent assessments of similar practices across the EU, while providing a means to take into account relevant social, cultural or linguistic characteristics of targeted groups as allowed for by the Court.
Hence, apart from referring to the case law of the CJEU on the average consumer, the Preamble to the proposed Directive also pointed out that if the commercial practice is specifically targeted at a particular (and possibly vulnerable) group of consumers, the average member of that group will be considered.40
Despite the fact that this exception aimed at protecting vulnerable groups, the proposed codification of the average consumer benchmark met significant resistance in the further legislative process. In fact, it was one of the major points of debate in the Directive’s process of adoption.41 The criticism commenced at an early stage in the process, namely in the Opinion of the European Economic and Social Committee (EESC). In their advice on the adoption of the Directive, the Committee noted the following:42
The EESC fears that the use of this interpretive criterion [i.e. the average consumer benchmark] will mean that consumer-protection policy loses its protective nature and, notwithstanding the special attention that the proposal devotes to the most vulnerable groups, fails to protect less well-informed or less well-educated consumers.
Alongside the EESC, the European Parliament was also worried that vulnerable consumers would not be protected sufficiently. It argued, therefore, that the interest of vulnerable consumers (being vulnerable due to, for example, age, infirmity, mental state or level of literacy) should be taken into account.43 The European Council took this criticism into account when drafting the proposals for amendment. The Council proposed to remove the average consumer notion from the definitions section of the Directive and to move it to the Preamble.44 Moreover, the Council proposed to pay more attention to the interests of vulnerable consumers, both in the Preamble to the Directive and in the form of an alternative benchmark aimed specifically at the protection of vulnerable groups.45
2.5 The Average Consumer Benchmark
The proposals of the European Council were accepted by the Commission and made it into the final version of the Directive.46 Recital 18 now deals with the average consumer benchmark, but also emphasises the importance of preventing the exploitation of vulnerable consumers:
(18) It is appropriate to protect all consumers from unfair commercial practices; however the Court of Justice has found it necessary in adjudicating on advertising cases since the enactment of Directive 84/450/EEC to examine the effect on a notional, typical consumer. In line with the principle of proportionality, and to permit the effective application of the protections contained in it, this Directive takes as a benchmark the average consumer, who is reasonably well informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors, as interpreted by the Court of Justice, but also contains provisions aimed at preventing the exploitation of consumers whose characteristics make them particularly vulnerable to unfair commercial practices. Where a commercial practice is specifically aimed at a particular group of consumers, such as children, it is desirable that the impact of the commercial practice be assessed from the perspective of the average member of that group. It is therefore appropriate to include in the list of practices which are in all circumstances unfair a provision which, without imposing an outright ban on advertising directed at children, protects them from direct exhortations to purchase. The average consumer test is not a statistical test. National courts and authorities will have to exercise their own faculty of judgement, having regard to the case-law of the Court of Justice, to determine the typical reaction of the average consumer in a given case.
Recital 19 specifies how vulnerable groups are offered additional protection:
(19) Where certain characteristics such as age, physical or mental infirmity or credulity make consumers particularly susceptible to a commercial practice or to the underlying product and the economic behaviour only of such consumers is likely to be distorted by the practice in a way that the trader can reasonably foresee, it is appropriate to ensure that they are adequately protected by assessing the practice from the perspective of the average member of that group.
The Directive thus still generally sets the benchmark at the average consumer, but at the same time provides for alternatives aimed at preventing the exploitation of vulnerable consumers. Micklitz has raised the question whether the removal of the average consumer benchmark from the definitions section of the Directive should be seen as a paradigm shift in terms of the level of protection offered by the Directive.47 However, although the legislative procedure illustrates that there was resistance against the standard of protection offered by the average consumer benchmark as introduced by the CJEU, the level of protection is, in principle, still set at the average consumer. Also on the basis of the Preamble, the conclusion should be that—despite the protests—the average consumer benchmark is still the leading benchmark in the Directive. Vulnerable groups can be protected under certain circumstances, but the Directive also clearly adheres to the case law of the CJEU on the average consumer; the Gut Springenheide