Great Britain (but not Ulster) has long since made these legal, but Denmark is the latest EU government to wonder how it can maintain its ban despite an ECJ judgment that such laws are unsustainable in the Single Market. Aslaug Kleve Kiertzner of Advertisinglaw Inc reports from Dragor, Denmark.
Topic: Promotion marketing
Who: The Danish Ministry of Economics and Business Affairs – the EU Commission
When: There is still no solution
Law stated as at: 1 November 2010
The European Court of Justice has in its two judgments (the joined cases C-261/07 and C-299/07 as well as in C-304/08) determined that the Unfair Commercial Practices Directive (2005/29-"UCPD") is a hindrance to national legislation banning marketing activities which are not mentioned in Annex 1 to the Directive.
The Annex is an exhaustive list of 31 forms of commercial practices which in all circumstances are regarded as being unfair. Thus marketing activities which are not covered by the Annex cannot be generally banned. They must be considered specifically based on each case’s factual circumstances according to the UCPD's general ban on unfair commercial practices in Articles 5 to 9.
Before the UCPD was adopted in May 2005 there were negotiations on a proposal for a regulation on sales promotions concerning for example discounts, free gifts, coupons and prize competitions etc. Due to massive opposition against the proposal, the EU Commission withdrew the proposal, and consequently no decision was made on their relation to the UCPD.
Denmark thinks sales promotions are outside the UCPD
Several Member States, among those Denmark, were of the opinion that the UCPD could not cover sales promotions when another proposal on exactly this subject was on the agenda. Consequently, there are still a large number of national bans among the Member States which are not mentioned in the Annex to the Directive on Unfair Commercial Practices. These bans are now under pressure, including among others the Danish ban on coupons and prize competitions contingent on purchase.
Previously, there have been a number of attempts to have these bans lifted in Denmark.
For example in connection with the discussions on the implementation of the Services Directive (2006/123). Here, during a meeting with the Ministry of Economics and Business Affairs, the Commission declared that the Services Directive did not involve a requirement for the bans to be lifted as regards strictly national matters. However, the Commission found that the bans constituted a potential barrier to the free movement of services for service providers from other EU/EEA countries which provided services in Denmark. Consequently, it was specified in the rules that the bans do not apply to service providers which are established in another EU/EEA country and which temporarily provide services in Denmark.
Why this matters:
Due to the above European Court of Justice judgments, the Danish Consumer Ombudsman has put on hold the enforcement of Danish laws banning coupons and prize competitions contingent on purchase until a solution to this problem has been found. The judgments may also influence other provisions in the Danish Marketing Practices Act.
The Danish Ministry of Economics and Business Affairs has acknowledged that the bans are inconsistent with the UCPD, but the Ministry still wants this area to be regulated. Consequently, the Ministry is in dialog with the EU Commission concerning the judgments’ influence on the Danish regulation of this area, including how to lay down a framework for promotion marketing.
From a European perspective the judgments appear to constitute a significant step towards a common EU marketing law. Despite the pretty clear judgments, it has not, however, become any clearer what unfair commercial practices really mean, and to what extent it will be left to the Member States to make this assessment in each specific case. Thus more cases on this subject must be expected before the European Court of Justice. Until decided cases have given a clearer interpretation, the Commission’s work product “Guidance on the implementation/application of Directive 2005/29/EC on unfair commercial practices http://ec.europa.eu/consumers/rights/docs/Guidance_UCP_Directive_en.pdf can become a significant management tool.
Aslaug Kleve Kiertzner
Legal advisor, SEO
Advertisinglaw Inc, Denmark