ECJ clarifies UCPD issues in Canal Digital case

Who: Canal Digital Denmark (“Canal“) and the Court of Justice in the Court of Justice of the European Communities (“ECJ“)

Where: ECJ

When: 26 October 2016

Law stated as at: 16 December 2016

What happened:

The ECJ has clarified the difference between invitations to purchase, misleading omissions and misleading actions in the context of the Unfair Commercial Practices Directive (“UCPD“), which is implemented into the UK through the Consumer Protection from Unfair Trading Regulations 2008.

By way of background, under the UCPD:

1. the material information needed to make an advert an invitation to purchase is carefully prescribed (for example, prices should be displayed including tax) and should enable a consumer to make a purchase. One ECJ case (Konsumentombudsmannen v Ving Sverige AB, Case C-122/10) has suggested that this catches any advert that refers to a product or service with a price and that referring consumers to a website to find all of the material information may be sufficient;
2. a misleading action is to provide false information or give an impression that deceives (or is likely to deceive) a consumer about a product or service (even if the information is factually accurate), which leads such consumer to make a transactional decision that he/she would have not made otherwise; and
3. a misleading omission is when certain information is not included, hidden, disguised or provided later by an advertiser. Again, this must cause a consumer to make a transactional decision that he/she would have not made otherwise. The necessary information is assessed on a case-by-case basis.

Facts of the case

The case was referred to the ECJ by a Danish court. Criminal proceedings had been brought against Canal in relation to how it was advertising television subscription packages on television and the internet. The adverts split the total price of television subscription packages into two categories: the 99 DKK monthly subscription charge was prominently displayed but the additional 389 DKK six-monthly “card service” charge was displayed less prominently or not at all in some of the adverts. The total price of the subscription was available on Canal’s website.

The Danish court asked the ECJ to rule on the following:

1. is displaying the monthly charge prominently and the six-monthly charge less prominently or not at all a misleading action and/or a misleading omission under the UCPD;
2. is the list of material information required for an invitation to purchase an exhaustive list; and
3. if an advert displays all of the material information for an invitation to purchase, does this mean that the advert cannot separately be found to be a misleading action or omission?

ECJ decision

1. The ECJ advised the Danish court to consider the following when deciding whether Canal’s advertisings were:

– misleading actions:

• the consumer in mind should be the average, reasonably well-informed and observant consumer;
• that television subscription packages often have complex pricing structures resulting in adverts that may confuse consumers;
• that time or space restrictions in adverts should not be a factor when considering whether an action is misleading (this should only be a consideration when making a decision in relation to a potentially misleading omission); and
• when a part of the total price is displayed less prominently or not at all, if this part of the price is compulsory, the court should consider whether this will mislead consumers in relation to the overall offer. This is particularly important if the average consumer would be mistaken and believe that the product or service is available for only the prominently displayed price.

– In terms of misleading omissions, the ECJ advised that the following considerations were important:

• whether the less prominently displayed or not displayed at all price element prevented the average consumer from understanding the total monthly charge and therefore from making an informed transactional decision; and
• time and space restrictions should be considered in respect of the type of product or service offered and consumers should only be referred to material information on a website if it is impossible to include the material information in the advert.

2. The list of material information that must be provided in an invitation to purchase is an exhaustive list. Recital 14 of the UCPD states: “In respect of omissions, this Directive sets out a limited number of key items of information which the consumer needs to make an informed transactional decision“.

3. An advert that contains all material information required under the UCPD for an invitation to purchase may still be a misleading action or omission.

The ECJ also advised that the amount of information required in an advert depends on the nature and characteristics of a product and the media that the advert was featured on.

Why this matters:

The ECJ’s ruling is not surprising but very helpful for advertisers considering the risks of manipulating or omitting information in an advert, either to encourage consumer interest or due to space and time restrictions.

Although the ECJ emphasised that adverts will be considered on a case-by-case basis, the case provided some very important practical points for all advertisers:

1. Material information can only be referred to in a website link when it is impossible for this information to be included in the advert. This is a very high bar for advertisers to comply with and may potentially increase the amount of small text that we see in adverts.
2. Time and space restrictions will only be a consideration when a court assesses whether there has been a misleading omission. Therefore, advertisers should not seek to rely on this reason when manipulating or reducing the amount of information provided in adverts.
3. Providing all material information may still result in a misleading action or omission. Advertisers must carefully consider how information is presented in adverts going forward and when it is appropriate to rely on providing further information on a website.

The case is also particularly relevant in light of the recent changes to broadband price advertising in the UK. CAP guidance now provides that broadband prices should be expressed as a total, rather than broken down in parts. It is worth noting that the UCPD does not require prices to be expressed as a total or broken down into parts.