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The Protection of Consumers and Competitors
against Unfair Commercial Practices
Chisinau,
November 27th/ 28th, 2008
The fairness of competition is important for
Consumers
Competitors
General Interest
(in the existence of competition)
Directive 2005/29/EC – protection of consumers
Directive 2006/114/EC – protection of competitors
Before Directive 84/450/EEC and Directive 97/55/EC
Control of the behaviour of competitors in the market
Problem:
Each competitor wants to sell his goods or services.
Some competitors may try to increase their sales by using unfair
methods which are detrimental to competition, affecting in an unfair
way the chances of competitors and harming the interests of
consumers.
To sell goods or services, the manufacturer/ trader has to get
the attention of consumers.
The manufacturer/ trader has to somehow address the
consumers. He has to make a representation in some form to
promote his goods or services. The representation is referred
to as advertising.
Misleading advertising
„Misleading advertising“ means any advertising which in any
way, including its presentation, deceives or is likely to deceive
the persons to whom it is addressed or whom it reaches and
which, by reason of its deceptive nature, is likely to affect their
economic behaviour or which, for those reasons, injures or is
likely to injure a competitor.
Consumer
Can be the end-consumer, but also a specialist who wishes to
obtain goods and services.
The average end-consumer, as interpreted by the European Court
of Justice, is „reasonably well-informed and reasonably observant
and circumspect“.
Until the early 1990‘s – at least in Germany – the average consumer
was always regarded as being quick and hasty and not very
observant.
The reasonably well-informed and reasonably observant
and circumspect consumer
Luxury goods
Specialist
End-consumer
Every day/ or mass products
The average consumer test is not a statistical test. A case-by-case
consideration needs to be done.
National courts and authorities will have to exercise their own faculty
of judgement to determine the typical reaction of the average
consumer in a given case.
Particular groups
Elderly people
Children/ Teenager
Misleading Advertisement
A commercial practice is misleading if it either:
Contains false information and is therefore untruthful, or
in any way, including overall presentation, deceives or is likely to
deceive the average consumer, even if the information is correct
and
causes or is likely to cause him to take a transactional decision that
he would have otherwise not taken.
The criteria are objective so that there is no need to prove that a
consumer was actually misled. The possibility of deception alone
can be considered misleading, if the other elements are present as
well. There is no need to prove the financial loss.
Misleading Advertisement
Misleading commercial practices prevent the consumer from
making an informed and thus efficient choice.
Misleading commercial practices may affect the sale figures of
competitors as the consumer might – due to the misleading
advertisement – chose the advertiser and buy his goods or
services, even so his offer is in truth less good than the offer of the
competitor.
Misleading about the extent/ complexity of the offer
The average consumers thinks
that if a trader shows in an
advertisement goods in an eyecatching way, that the price
shown in the advertisement
covers all the displayed goods.
Misleading due to Bluff packaging
Misleading about the price
All the relevant price
elements have to be
given
Now only
69,90 Euro
129,90 Euro
Instead 89,90 Euro
„Now only offer“ is misleading, when price is not reduced.
„Instead offer“ is misleading, when price was already reduced some
time before and the time gap is remarkable.
Misleading about the number of goods on hand
An eye-catching advertisement makes the consumer believe that
the goods are on stock and that he can take them right away
home.
Misleading about the number of goods on hand
The customer is mislead, when due to an inadequate number of
goods on hand, his buying desire can not be satisfied.
The expectation regarding the time, in which the goods should be
on hand, depends on the kind of goods and of the manner (form
and circulation) of the advertisement.
Additionally and to the disadvantage of competitors, the risk is
given that the customer will buy instead, once he is in the store, a
different product.
Misleading about the number of goods on hand
„while stocks last“, „short supply“, „delivery only on order“,
„delivery reserved“
Misleading about the number of goods on hand
Starting day
If there is no remark on
the day, when the offer
starts, the consumer will
think – at least when the
advertising is done in an
eye-catching way – that
the goods/ or services
represented in the
advertisement are right
away available
Judgement can not be done with a schematically view.
Expectance of consumers is conditioned by the circumstances of
each individual case, especially by the content and extent of the
advertisement, the kind of advertised goods and the position of
the advertising company.
Misleading because of omission
Omissions refer to the fact that consumers need information to
make informed choices. A trader must provide material information
that the average consumer needs.
It is misleading to:
- omit material information that the average consumer needs,
according to the context, to take an informed transactional decision;
- hide or provide material information in an unclear, unintelligible,
ambigous or untimely manner.
Misleading because of omission
„A good breakfast made from healthy wheat.“
Misleading about impact on health?
An advertiser does not have to point out the less
advantage features of his product. This is
especially true, if there is not much time or room
The
cerials
of Kellog‘s
15or%an
sugar.
for the
advertising,
e.g.contain
a tv-spot
advertising
in
newspaper.
It isa not
misleading that the advertiser does not
mention the sugar. The consumer knows that eating
food can produce tooth decay. The percentage
contained in the product of the advertiser is not that
that out
it would
increase the
risk.if the
The obligationhigh
to point
a disadvantage
is normal
only given,
consumer will - by not informing – be deceived about a feature,
which is able to influence his decision in buying the product. But
when considering, if an obligation on informing is given, also the
legitimate interests of the manufacturer/ trader have to be
considered.
Advertising with leading position
Often done using the superlative – e.g. „the best“, „the biggest“
1. The statement must be true.
2. The distance given to the competitors must be clear and
considerably.
3. There must be the prospective that the leading position is
somewhat consistent and continuing.
The advertising is not misleading, when the statement is just an
exaggeration, which is typically found in advertising.
Advertising with leading position
„Kellogg‘s - The best every morning“
Advertising with leading position?
No: The slogan is open for interpretation. It does
not say that Kellogg‘s breakfast is the best food
which one can have for breakfast.
One can also not verify the content as being true.
It is a subjective valuation.
Advertising with leading position
„Philishave – the most sold shaver in Europe“
Competitor claimed that this statement, when done in an
advertising in Germany, would be misleading as the
electrical shaver „Philishave“ is not the most sold
electrical shaver in Germany. The German consumer
would think that the advertiser (Philips) also has in
Germany the leading position.
Philips held during the 4 years before the case came to court 46 to
48 % of the European market. The competitor ranging behind Philips
held only 37 to 39 %.
In Germany, Philips held in fact only 25 %. The German market
leader (the claiming competitor) held 55 %.
Advertising with leading position
„Philishave – the most sold electrical shaver in Europe“
Philips was allowed to claim that it is the market leader in
Europe, as the claim was true having a clear (10 %) and
enduring (for at least four years) lead.
The court found that it was not misleading to claim the
European leadership, even so Philips was not the market
leader in Germany. The reasonably well-informed and
reasonably observant and circumspect German
consumer will not take the information on Philips being
the market leader in Europe also as an information about
its position in Germany.
Agressive advertising
A practice is considered aggressive, if the average consumer's
freedom of choice or conduct is significantly impaired.
„Undue influence“ means „exploiting a position of power in
relation to the consumer so as to apply pressure, even without
using or threatening to use physical force, in a way which
significantly limits the consumer's ability to make an informed
decision.“
Undue influence?
YES: If a consumer is already indebted to a trader and behind
with payments, the trader would be using undue influence if he
said he would reschedule the debt on condition that the
consumer bought another product.
NO: Offering an incentive to a consumer, such as a free bus to
an out-of-town store, or refreshments while shopping, is not
undue influence. The consumer's ability to make an informed
transactional decision would not be impaired. In the same way, it
would be acceptable to offer a sales promotion.
General clause
Some practices may not fall under the criteria of „misleading“ or
„aggressive“ although they are unfair. There is a general clause
included in the Directives which will ensure that the new
legislation withstands the test of time.
A commercial practice – which is not misleading or aggressive –
will still be regarded as unfair, if it meets two cumulative criteria:
1. The practice is contrary to the requirement of professional
diligence.
2. The practice materially distorts or is likely to materially distort
the average consumer's economic behaviour.
Professional diligence is „the special skill and care which a
trader may reasonably be expected to exercise, commensurate
with honest market practices and/ or general principle of good
faith in the trader's field of activity.“
The criterion „to materially distort the economic behaviour of
consumers“ means using a commercial practice to appreciably
impair the consumer's ability to make an informed decision,
thereby causing the consumer to take an transactional decision
that he would not have otherweise taken.
Comparative advertising
Comparative Advertising
Comparative advertising may be very precious for the consumers
and to their advantage as it can give them valuable information.
Besides, it also challenges the manufacturer/ traders in trying
harder to please the consumer.
For the advertiser, comparative advertisement is an effective
marketing tool as he can show the advantages of his goods or
services.
BUT: A comparison done by a competitor can be less reliable than
those done by a neutral person. There is the risk of deception of the
consumer by an unfair one-sidedness.
Because of an unfair one-sidedness, the comparative advertising
would distort competition, be detrimental to competitors and have
an adverse effect on consumer choice.
Comparative Advertisement
3 (competing) interests
For the advertiser,
comparative advertisement is
an effective marketing tool as
he can show the advantages
of his goods or services.
For the competitor, being
compared, the comparison
can damage or take unfair
advantage of his reputation.
For the consumer, the
comparison of goods can be
useful information.
Safeguard that a comparison done by a competitor is objective.
Directive 2006/114/EC
concerning comparative advertising
Comparative Advertisement
„Comparative Advertising“ means any advertising which
explicitly or by implication identifies a competitor or
goods or services offered by a competitor.
This is a broad definition covering all forms of
comparative advertising, so that, in order for there to be
comparative advertising, it is sufficient for there to be a
statement referring even by implication to a competitor
or to the goods or services he offers.
Therefore it is sufficient, if, due to the circumstances, the consumer
knows which competitor is meant, e.g. calling the home town of the
competitor.
Radio Advertisement of BMW
4.3 Liter
3.2 Liter
2.1 Liter
1.8 Liter
Comparative Advertisement
Comparative advertising shall be permitted when …
it objectively compares one or more material, relevant,
verifiable and representative features of those goods and
services, which may include price.
Pippig Augenoptik versus Hartlauer
2.000,- Austrian Schilling
5.785,- Austrian Schilling
One single price of one single good
Comparative Advertising shall, as far as the comparison is
concerned, be permitted when it is not misleading.
2.000,- Austrian Schilling
5.785,- Austrian Schilling
with lenses from
with lenses from
Pippig Augenoptik
versus
Hartlauer
The competing goods being compared must meet the same needs
or be intended for the same purpose, that is to say they must display
a sufficient degree of interchangeability for consumers.
Pairs of products have to be compared
De Landtsheer Emmanuel
versus
Comité Interprof. du Vin de Champagne,
Veuve Clicquot
Belgian Beer
The competing goods being compared must meet the same needs
or be intended for the same purpose, that is to say they must display
a sufficient degree of interchangeability for consumers.
Pairs of products have to be compared.
But the pairs do not have to be viewed separately. The
advertisement can relate collectively to two or more sets of such
comparable products.
Colruyt versus Lidl
Two major grocery stores
Advertising of Colruyt on January 19th, 2004:
„On the basis of our average price index of the year 2003, we are able
to state that a family, spending 100 Euro the week at Colruyt, saved
155 to 293 Euro while not buying at Aldi, Lidl, Makro.“
Comparison relating to a selection of comparable products
Store B: 19,98 Euro
Store A: 16,98 Euro
A: 1,98 Euro
B: 2,28 Euro
The selection has to consist of products which, when viewed
individually, satisfy the requirement of comparability.
Trade marks, trade names etc. of competitors may be used for an
objective comparison.
Toshiba versus Katun
Toshiba = Manufacturer of copying machines and its
spare parts and consumable items
Katun = Supplier of spare parts and consumable items
OEM product number
Katun product number
Description of product
Model
Original equipment manufacturer
The indication of OEM numbers constitute a positive statement that
the two products have equivalent technical features.
A comparison of material, relevant, verifiable and representative
features of the goods is given.
Thank you for your attention!