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Product promotion and the Unfair Commercial Practices Directive

The European Court of Justice (ECJ) has held that national legislation which prohibits, in all circumstances, the offering of “bonuses”, such as a sample, a free gift, a sum of money or a competition entry, in order to promote the purchase of goods or services, is incompatible with the Unfair Commercial Practices Directive.

Article 4 of the Directive expressly provides that Member States may not adopt stricter rules than those provided for in the Directive (so-called “maximum harmonisation”), even in order to achieve a higher level of consumer protection.

Austrian law on unfair competition stipulates a blanket presumption of unlawfulness in respect of the offering of bonuses to promote the purchase of goods, in this case a daily newspaper. However, this commercial practice does not fall within the exhaustive list of 31 practices presumed unfair in all circumstances under the Directive. The ECJ therefore held that it should be assessed for unfairness on a case-by-case basis. On the facts, the ECJ held that while entry into the competition acted as an incentive to buy the newspaper for some people, that did not make it an automatically unfair commercial practice.

This does not mean that promoting the sale of products with bonuses will always be lawful. However, the case highlights the maximum harmonisation provisions of the Directive. Member States should not ban outright practices that could be acceptable in certain circumstances.

Summary

This is an important decision in respect of the new pan-European consumer protection regime created by the Directive. The decision is a reminder that national provisions that go further than required by the Directive, and which thus breach the principle of “maximum harmonisation”, are prohibited. It was for this reason that UK legislators repealed significant areas of consumer protection legislation when implementing the Directive.

The ECJ has also made it clear that unless a commercial practice falls within the list of 31 “always unfair” practices, unfairness must be assessed on a case-by-case basis taking into account all of the relevant facts and circumstances.

This decision does not mean that the combining of a purchase with a competition will never be an unfair practice, only that it must not automatically be regarded as unfair. It emphasises the need to apply only the criteria set out in the Directive to commercial practices to determine if they are lawful.

This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, please go to www.law-now.com

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