By order of 7 March 2013, the Court of Justice of the European Union (“ECJ”) ruled on a preliminary reference from the Ghent Commercial Court concerning the compatibility with Directive 2005/29/EC of 11 May 2005 concerning unfair business-to-consumer commercial practices (the “Unfair Commercial Practices Directive”) of Article 101 of the Law on Market Practices and Consumer Protection (Wet van 6 april 2010 betreffende marktpraktijken en consumentenbescherming/Loi du 6 avril 2010 relative aux pratiques du marché et à la protection du consommateur – the “Law”) (ECJ, case C-343/12, Euronics Belgium CVBA v. Kamera Express BV and Kamera Express Belgium BVBA).
Article 101 of the Law provides for a general prohibition of offering for sale or selling goods at a loss. Article 101, §1, second subparagraph of the Law defines a sale at a loss as “any sale at a price which is not at least equal to the price at which the undertaking purchased the item or which the undertaking would have to pay to replenish its stock, after any discounts granted and definitively obtained”.
The preliminary question of the Ghent Commercial Court arose in the context of legal proceedings initiated by consumer electronics chain Euronics Belgium CVBA (“Euronics”) against its competitor Kamera Express BV and Kamera Express Belgium BVBA (collectively “Kamera Express”). Euronics claimed that Kamera Express had sold two types of cameras at a loss and sought from the Court (i) a declaration that Article 101 of the Law had been infringed; and (ii) an order for the immediate cessation of Kamera Express’ practice.
The ECJ started by saying that it would not reply by judgment to the preliminary question but by reasoned order only given that its reply can be clearly deduced from its existing case law and, in particular, the judgments which it delivered in cases (i) Plus Warenhandelsgesellschaft (judgment of 14 January 2010 in case C-304/08, Zentrale zur Bekämpfung unlauteren Wettbewerbs eV v. Plus Warenhandelsgesellschaft); (ii) Mediaprint (judgment of 9 November 2010 in case C-540/08, Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co. KG v. “Österreich”-Zeitungsverlag GmbH); (iii) Wamo (order of 30 June 2011 in case C-288/10, Wamo BVBA v. JBC NV and Modemakers Fashion NV – See, VBB on Belgian Business Law, Volume 2011, No. 7, p. 14, available at www.vbb.com); and (iv) INNO (order of 15 December 2011 in case C-126/11, INNO NV v. Unie van Zelfstandige Ondernemers VZW (UNIZO) and Others – See, VBB on Belgian Business Law, Volume 2012, No. 2, p. 8, available at www.vbb.com).
Turning to the question at hand, the ECJ established, as a preliminary point in its response, that it followed from the Ghent Commercial Court’s order for reference that Article 101 of the Law is intended to protect consumers and thus falls within the scope of the Unfair Commercial Practices Directive.
The ECJ continued its analysis by examining whether offering for sale or selling goods at a loss constitutes a commercial practice within the meaning of the Unfair Commercial Practices Directive. It concluded in the affirmative, pointing out that the practice of selling at a loss, which is used as bait, serves the purpose of attracting consumers to the trader’s business premises and encouraging them to make purchases. Therefore, the ECJ found that the practice clearly forms part of a trader’s commercial strategy and relates directly to its promotion and sales development.
The ECJ then found that the practices of offering for sale or selling goods at a loss do not appear in Annex I to the Unfair Commercial Practices Directive, which contains an exhaustive "black list" of commercial practices that are to be considered unfair in all circumstances. As the Unfair Commercial Practices Directive does not allow EU Member States to adopt stricter rules than those provided for in the Directive, this implies that the practices of offering for sale or selling goods at a loss cannot be automatically prohibited in all circumstances. These practices can only be prohibited if it follows from a specific assessment that they are unfair having regard to the facts of the particular case.
Therefore, the ECJ concluded that the Unfair Commercial Practices Directive precludes a national provision such as Article 101 of the Law, which provides for a general prohibition of offering for sale or selling at a loss “in so far as that provision pursues objectives relating to consumer protection”.
That specification opens the door for opponents of sales at a loss to argue that Article 101 of the Law rather seeks to protect retailers than the consumer. In their first reactions to the ECJ’s judgment, the professional associations Neutraal Syndicaat voor Zelfstandigen/Syndicat neutre pour indépendants (NSZ/SNI) and Comeos have already advocated that the prohibition on sales at a loss should be maintained to protect competition, i.e., to protect small retailers against the large retail chains. Hence, it remains to be seen whether the blanket prohibition on sales at a loss will be abolished or modified in the near future.