The newspaper Osterreich offered a prize of dinner with the winning footballer in a “Footballer of the Year” competition. (Was second prize two dinners? Ed). Entries included sending in an entry slip in the paper. Austrian laws outlawed this, but was this contrary to EU law? Jan Hellenbrand investigates.
Topic: Promotion marketing
Who: Media Print Zeitungs- und Zeitschriften Verlag GmbH & Co. KG .v Österreich-Zeitungsverlag GmbH (Case C-540/08)
When: November 2010
Where: Court of Justice of the European Union (formerly the European Court of Justice)
Law stated as at: November 2010
From 25 November to 6 December 2007 the daily newspaper “Österreich”, belonging to Österreich-Zeitungsverlag GmbH, organised an election for the “footballer of the year” and invited the public to join in. Voters got the chance of winning the prize which was dinner with the footballer chosen.
Voting was online or by completing and sending in a slip included in the newspaper.
Competitor Media Print applied to the Austrian court for an injunction banning the competition.
The argument was that by offering the possibility of gain, linked to the purchase of the newspaper, the promotion constituted an unlawful bonus for the purposes of para 9a (1)(1) of the Austrian Law against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb – UWG).
Whereas that court upheld the application, the Higher Regional Court Vienna (Oberlandesgericht Wien) to which the case was referred on appeal, held that the prohibition on sales with bonuses could apply only if the gain announced was capable of encouraging the public to buy the newspaper. In the view of the appeal court, such an “attraction effect” was not produced in this case, taking account of the fact, in particular, that the public could also participate in this competition via the Internet.
Media Print then appealed on a point of law (“Revision”) against that decision before the High Court (Oberster Gerichtshof). The High Court asked the Court of Justice of the European Union (“CJEU”) if the rules of Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market precludes a provision like para 9a (1)(1) of the Austrian UWG which prohibits sales with bonuses in general.
CJEU rules on compatibility with the Unfair Commercial Practices Directive
The CJEU ruled that Directive 2005/29/EC precludes such a blanket prohibition. The CJEU stated that, according to article 4 of the Directive, member states may not adopt stricter rules than those provided for in the Directive. In annex I to the Directive there is an exhaustive list of 31 commercial practices, which are regarded as unfair “in all circumstances”.
Consequently, as recital 17 in the preamble to the Directive expressly states, those commercial practices alone can be deemed to be unfair without a case-by-case assessment against the provisions of articles 5 to 9 of the Directive. Since annex I does not contain practices that consist in offering consumer bonuses associated with the purchase of products or services, such practices cannot be prohibited in all circumstances. They can be prohibited only following a specific assessment as to whether the practice in question is unfair.
Since para 9a (1) of the UWG prohibits any commercial transaction which links the offer of bonuses with the purchase of goods or services, Directive 205/29/EC precludes such a rule.
Why this matters:
This is an important case that will affect marketing by any business in Austria. Since combining a purchase with bonuses cannot be considered as prohibited any more, new possibilities for marketing products and services arise.
However, any business should be careful when applying this new decision, since the CJEU states that combining a sale with a bonus could still be prohibited if a specific assessment according to the articles of the Directive 2005/29/EC leads to the conclusion that such a combination is unfair for other reasons.