Elsewhere in this update, we report on the key CJEU verdict in the case of Office of Fair Trading vs Purely Creative Ltd & Ors. What will be the likely impact in France, Germany and Spain? Omar Bucchioni reports the views of local promotion law experts.
Topic: Promotion marketing
Who: Purely Creative Limited and Others v The Office of Fair Trading
When: October 2012
Where: Austria, France, Germany and Spain
Law stated as at: 18 October 2012
As reported elsewhere on markektinglaw.co.uk, the Court of Justice of the European Union has recently ruled on a reference from the Court of Appeal (England and Wales) (Civil Division) UK in the context of a dispute between Purely Creative, four undertakings specialised in the distribution of mailings together with four people who have worked for those undertakings and the Office of Fair Trading (“OFT”).
The case concerned the interpretation of paragraph 31 of Annex I to Directive 2005/29/EC of the European Parliament concerning unfair business-to-consumer commercial practices in the internal market.
This provides that the following practice will always be regarded as an aggressive commercial practice and hence a breach of law:
“Creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either,(my emphasis)
– there is no prize or other equivalent benefit,
– taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.”
As reported on marketinglaw.co.uk at this link, the verdict of the CJEU was as follows:
– Para 31 prohibits aggressive practices by which traders give the false impression that the consumer has already won a prize, while the taking of any action in relation to claiming that prize (e.g. requesting information concerning the nature of that prize or taking possession of it) is subject to an obligation on the consumer to pay money or to incur any cost whatsoever;
– it is irrelevant that the cost imposed on the consumer is minimal e.g. the cost of a stamp, compared with the value of the prize or that it does not procure the trader any benefit;
– it is irrelevant that the trader offers the consumer a free of charge method by which he may claim the prize if there is also any other proposed methods whereby consumers would incur a cost in order to obtain information on the prize or how to acquire it;
– It is for the national courts to assess whether the information provided to consumers is clear and can be understood by the public targeted by the practice.
Likely impact of the CJEU ruling in Austria, France, Germany and Spain
Since the verdict concerns the proper interpretation of a Directive affecting common promotional practices throughout Europe, with the assistance of local counsel we have investigated its likely impact in a range of EU jurisdictions, namely Austria, France, Germany and Spain.
Up until this CJEU ruling, Austria allowed a de minimis exception under the rule in para 31 so that requiring a prize winner to pay for the cost of a stamp on a letter claiming a prize or an ordinary phone call was acceptable and not an unfair commercial practice.
Following the Purely Creative verdict, our Austrian expert says that promoters may now have to provide stamped/reply-paid envelopes if the prize claim is by letter or toll-free phone numbers if the prize has to be claimed by making a call.
Similarly, Spanish counsel expects a stricter approach, with no prize claim costs whatsoever payable by a potential winner.
A different approach has historically been adopted in France, which has always prohibited the practice of imposing on entrants any expense for entering into random-based promotions, even the expense of being online so that an email can be sent.
French law has for some time required that Ts&Cs offer to reimburse entrants in respect of any expense (including internet connection costs or stamps), although for skill-based promotions, it has always been tolerated not to offer such reimbursement, provided this was reasonable in all the circumstances.
In light of Purely Creative, our expert in Paris considers that it may well also be forbidden to either ask a potential winner to provide a promoter with affidavits, releases etc. to become a confirmed winner or require a winner to come and collect their prize, even if there is a refund of the incurred costs afterwards.
In Germany also it is already prohibited to require a prize winner to, for example, pay for a stamp on a letter claiming a prize, so it is not anticipated that this verdict will result in any major changes.
Why this matters:
From a quick high-level check in some of the major EU countries, it appears likely that this verdict will lead to greater uniformity in prize claim practices. It remains moot, however, whether other EU states will follow the French example and require that promoters offer to reimburse all online connection costs in connection with entry into a promotion, an extraordinary anachronism for the country that pioneered ecommerce with the Minitel service.
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