ECJ Further Extends Scope of Unfair Commercial Practices Directive

On 16 April 2015, the Court of Justice of the European Union ("ECJ") ruled on a request for a preliminary ruling from the Hungarian Supreme Court regarding the interpretation of Directive 2005/29/EC of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market (the "Directive") (ECJ, 16 April 2015, case C-388/13, Nemzeti Fogyasztóvédelmi Hatóság v. UPC Magyarország Kft.). Contrary to the opinion of Advocate General Wahl (the "Opinion"), the ECJ held that the communication of erroneous information by a professional to a consumer must be classified as a misleading commercial practice within the meaning of the Directive, even when the information concerns only a single consumer.

The judgment was given in a dispute between the Hungarian consumer protection authority and UPC Mayarország Kft. ("UPC"), a provider of cable TV services. A subscriber to these services, who wished to terminate his contract, had requested UPC to inform him of the specific period to which the invoice issued in 2010 related. UPC replied that the invoice related to the "period between 11.01.2010 and 10.02.2011 inclusive", whereas the correct end date was 10 January 2011. The subscriber then requested termination of the contract with effect from 10 February 2011, but the provision of services was not terminated until 14 February 2011 and the subscriber subsequently received a document requesting him to pay arrears of payments due up to that date. Following a complaint by the subscriber, the Hungarian consumer protection authority imposed a fine on UPC, which contested it before national courts.

The ECJ was asked to examine whether a communication of erroneous information, by a professional (UPC) to a consumer, is to be classified as a misleading commercial practice and thus falls under the scope of the Directive.

First, the ECJ ruled, in line with its previous case law from which it follows that the term "commercial practice" has a very broad meaning, that a communication of information by a professional in the context of an after-sales service is to be regarded as a commercial practice within the meaning of the Directive.

Second, the ECJ found that in the present case, the commercial practice was misleading, since the communication contained erroneous information. More specifically, the ECJ referred to the definition of a misleading commercial practice as contained in Article 6(1) of the Directive to conclude that all the factors set out in that provision are present in the situation at hand, which is characterised by the fact that: (i) a consumer received erroneous information from a professional as to the duration of their relationship; and (ii) the erroneous information "prevented the individual from making an informed choice and, moreover, occasioned him additional costs".

Third, the ECJ proceeded to rebut the arguments which ran counter to its conclusion. In the first place, the ECJ held that the fact that the conduct concerned took place on only one occasion and affected only one consumer is immaterial, ignoring the Advocate General's viewpoint that "the Directive is concerned with protecting the collective interests of consumers and not with providing redress in individual cases" (§32 of the Opinion). To support this, the ECJ put forward the following arguments:

(i) the Directive does not contain any indication that the conduct must be recurrent or must concern several consumers;

(ii) the necessity of protecting consumers which underlies the Directive entails that it cannot be interpreted as imposing such requirements when they are not explicit;

(iii) the opposite view that an isolated act affecting a single customer cannot constitute a ‘practice' would give rise to serious disadvantages, in that

a. it would be incompatible with the principle of legal certainty, since the Directive does not establish a threshold (in terms of frequency or number of consumers) beyond which an act or omission falls within its scope; and

b. it implies that the consumer must establish that other individuals have been harmed by the same professional, yet such evidence is extremely difficult to provide in practice.

Fourth, the ECJ held that the unintentional nature of the conduct is also entirely irrelevant. Indeed, the ECJ found that the use of the wording "likely to deceive the average consumer" in Article 6 of the Directive entails that this Article is preventive and that it suffices that the objectively erroneous information was capable of adversely influencing the consumer's decision. Further, the ECJ noted that Article 11 of the Directive expressly provides that the application of national measures to combat unfair commercial practices is independent of evidence of: (i) intention on the part of the professional; and (ii) actual harm suffered by the consumer. In the ECJ's view, this also implies that it is irrelevant whether the additional cost imposed on the consumer is significant or not.

Fifth, the ECJ ruled that the assertion that the consumer could himself have obtained the correct information is irrelevant, since the consumer protection objective of the Directive rests upon the assumption that the consumer is in a weaker position (both economically and in terms of experience in legal matters and of level of information) in relation to a professional.

Therefore, the ECJ concluded that UPC's conduct constitutes a misleading commercial practice that falls within the scope of the Directive. It noted that there is thus no need to verify whether this practice is also contrary to the requirements of professional diligence (as referred to in Article 5(2)(a) of the Directive) in order for it to be regarded as unfair.