Who: Trento Sviluppo srl (‘Trento Sviluppo’) and Centrale Adriatica Soc. coop. arl (‘Centrale Adriatica’), Autorità Garante della Concorrenza e del Mercato (the Italian competition authority (the ‘AGCM’))
When: 19 December 2013
Where: Court of Justice of the European Union
Just over a year ago, a small but important decision on the Unfair Commercial Practices Directive (2005/29/EC) (the ‘Directive’) was handed down by the CJEU. The decision was not widely reported at the time, but has recently come to marketinglaw’s attention. It’s an important decision, with the CJEU not only resolving an apparent ambiguity between different-language versions of the published Directive but also ruling on the scope of what counts as ‘taking a transactional decision’ for the purpose of the Directive.
The case centred on an Italian supermarket in the province of Trento, Trento Sviluppo. Centrale Adriatica, which provides services to Trento Sviluppo and other supermarkets in its group, had launched a promotional leaflet for the group in March 2008 advertising a discounted laptop. A consumer complained to the AGCM that the leaflet was inaccurate, as they had visited Trento Sviluppo’s store during the promotional period, but the laptop had not been available.
The AGCM fined Trento Sviluppo and Centrale Adriatica. The retailer and service provider each appealed to the Lazio court, which dismissed both appeals. Undeterred, both companies then appealed to the Italian Council of State against the judgments at first instance.
The Italian Council of State decided that it was unable to adjudicate the proceedings until it had resolved what it saw as an uncertainty with the relevant part of the Directive it was required to apply – Article 6(1).
Article 6(1) reads as follows (in the English version):
‘A commercial practice shall be regarded as misleading if it 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 factually correct, in relation to one or more of the following elements, and in either case causes or is likely to cause him to take a transactional decision that he would not have taken otherwise:
(b) the main characteristics of the product, such as its availability …’
So what did the Italian court need clarifying about Article 6(1)?
The wording which had caused the issue were the seemingly innocuous words ‘and in either case’, underlined in the above extract. EU Directives are released in all the 24 official languages of the European Union. In the Italian version of the Directive this wording had been rendered as ‘e in ogni caso’. The German version of the directive used the phrase ‘und… in jedem Fall’.
The issue was that the above Italian and German expressions also had the potential to mean ‘and in any case’, which, the court felt, suggested that a commercial practice would be misleading if any of the following were true:
(a) it contained false information… or
(b) deceived or was likely to deceive … OR
(c) caused consumers to take a transactional decision which they otherwise would not have taken.
Conversely, the English, French and Spanish versions of this Article (which used wording equivalent to ‘and in either case’) suggested a commercial practice would only be misleading if:
(a) it contained false information… or
(b) deceived or was likely to deceive … AND, in addition to one of (a) or (b), it
(c) was likely to cause consumers to take a transactional decision which they otherwise would not have taken.
The Italian court therefore wanted to know which test they needed to apply to the promotion at hand.
What did the CJEU say?
The CJEU ruled that the correct interpretation of Article 6(1) was the second one – for a commercial practice to be misleading under Article 6, it must be likely to cause a consumer to take a transactional decision.
The court made clear in its ruling that wording used in one language version of an EU Directive could not be the sole basis of interpretation, or override other language versions. In the event of an apparent conflict, the provision of the Directive must be interpreted in light of the ‘purpose and general scheme’ of the rules of which it forms a part. After considering related Articles of the Directive, the court concluded that the second interpretation was clearly what was meant.
Additionally, CJEU gives its view on interpretation of ‘transactional decision’
However, in order to assist the Italian court further, the CJEU also addressed what constituted a ‘transactional decision’ for the purpose of Article 6(1). The court made clear that this was broadly defined by Article 2(k) of the Directive. A transactional decision would cover not only a consumer’s decision whether or not to purchase a product, but also any decision directly related to that decision, for example the decision to travel to and enter the shop.
The CJEU sent both of these decisions back down to the Italian court to assist them in making their decision as to whether Trento Sviluppo and Centrale Adriatica’s promotional activities had been misleading.
Why does this matter:
The initial referral to the CJEU centred on resolving linguistic differences in versions of the Directive. However the most interesting point in this case is the wide view that the CJEU elected to take on ‘transactional decisions’.
It follows from the judgment that if an advertisement containing false information or likely to deceive is likely to cause consumers to take any form of action towards making a purchase, that will be sufficient to constitute a transactional decision, and bring the advertisement into the category of misleading advertising. Given that the vast majority of advertisements contain some form of call to action, it seems likely that the likelihood of encouraging a transactional decision may be found in most circumstances.
National courts will consider this piece of CJEU case law when looking at consumer law cases under local implementations of the Directive (in the UK, the Consumer Protection from Unfair Trading Regulations 2008 as amended).
It is therefore more important than ever for advertisers to ensure that their advertisements do not contain false information and are not deceptive, including offers indicating the availability of items on special promotion.