The draft EU Sales Promotion Regulation may be running into the sand, but this parallel initiative looks to be running and up with publication of a draft directive.
Topic: Consumer protection
Who: The European Commission
Where: Brussels
When: June 2003
What happened:
Since October 2001, two separate EU initiatives to harmonise promotion marketing and selling laws across Europe have been progressing through the EU law making process. One was a proposed regulation to remove legal barriers to various forms of promotion marketing across Europe. The other was a "framework directive" targeting unfair commercial practices.
Whilst the proposed promotion regulation has not made the hoped-for progress and is unlikely to make its way out of the present inter-state squabbles until the Irish presidency of the European Council starts January 2004, the initiative which was less favoured by the marketing industry has apparently made better ground.
On 18 June 2003 this resulted in publication of a proposed "Directive concerning unfair business to consumer commercial practices in the internal market".
The Directive is concerned only with matters affecting consumers' economic interests and therefore does not cover areas such as taste, decency and social responsibility, nor does it cover commercial practices between businesses or consumer health and safety aspects of products, although misleading health claims made in respect of such products could be caught.
Boiling the Directive right down to its basics, it requires member states to have measures in place to prohibit "unfair commercial practices" B 2 C, in all sectors. The idea is that the general provisions of the Directive will come into play wherever member states do not already have specific provisions regulating unfair commercial practices in a particular sector. Also, where existing controls in a particular sector fall short of the standards required by the new Directive, the new Directive's rules will have to be introduced.
To be caught, the commercial practice in question has to harm "consumers' economic interests." "Commercial practice" is explicitly stated to include advertising and marketing, whilst the consumer which the Directive is designed to protect is defined as the "average consumer", i.e. a consumer who is reasonably well informed and reasonably observant and circumspect. This will be "modulated" (dontcha just love that Eurospeak) to ensure that where a specific group of consumers is targeted, for instance children, the characteristics of the average member of that group are taken into account in assessing the impact of the practice.
To establish any case in any European Member State that an "unfair commercial practice" is being pursued, a claimant will have to demonstrate that two fundamental conditions are satisfied:-
- the practice must be contrary to the requirements of professional diligence (described as "the measure of care and skill exercised by good businessmen, in accordance with generally recognised standards of business practice in their particular sector of activity"); and
- the practice must materially distort or be likely to materially distort the economic behaviour of the average consumer whom it reaches or to whom it is addressed, or of the average member of the group when a commercial practice is specifically directed to a particular group of consumers.
However, that is not the end of the story. Consumers or consumer bodies wishing to make a case against an unfair commercial practice may not have to resort to these very general requirements. This is because two more specific categories of unfairness are then defined, backed up by a "black list" of commercial practices which will in all circumstances be unfair and therefore banned in all member states. These specific categories are either "misleading" or "aggressive" commercial practices.
Included in "misleading" unfair practices are:-
- "bait and switch tactics," where products are advertised at a specified price and then, when an enquiry is made, the purchase of a different product in its place is encouraged;
- falsely stating that a product will only be available for a very short time in order to elicit an immediate decision;
- advertising a product at a specified price if there are reasonable grounds for believing that the trader will not be able to actually supply the product at that price ("bait advertising"); and
- using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content (advertorial).
Examples of "aggressive" commercial practices are:-
- making persistent and unwanted solicitations by telephone, fax, e-mail or other remote media;
- advertising to children in a way which implies that their acceptance by their peers is dependent on their parents buying them a particular product;
- targeting consumers who have recently suffered a bereavement or serious illness in their family in order to sell a product which bears a direct relationship with that misfortune;
The "misleading commercial practices" section of the Directive lists various types of deceptive statement which will be caught by the prohibition as "misleading actions", while another section lists various "misleading omissions".
Examples of misleading actions are claims about the product which the trader cannot substantiate and false claims about the need for a service part replacement or repair of a product.
Examples of "misleading omissions" are where a trader hides material information that the average consumer needs in order to take an informed transactional decision or provides that information in an unclear, unintelligible, ambiguous or untimely manner.
"Aggressive commercial practices" are defined and certain types of behaviour listed which will be regarded as constituting harassment or undue influence, and therefore caught by this prohibition.
For ease of reference, it is also proposed that the existing misleading and comparative advertising rules introduced by previous EU directives should be incorporated into the new Directive.
Why this matters:
The Directive will now be forwarded to the European Parliament and the Council for adoption through "co-decision" and could enter into force by the beginning of 2005. The vast majority of the requirements contained in it are already part of UK laws and codes and one concern is that this is an unnecessary vote-catching Euro measure introduced at a time when elections to the European Parliament are looming. The UK Government is due to publish its own consultation paper on these proposals within the next few weeks.
