Unfair Commercial Practices Directive 

November, 2005 -

Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (OJ [2005] L 149) – hereinafter the “Directive” The Directive is aimed at approximation of laws of the Member States regulating unfair business-to-consumer commercial practices. The Directive states that the laws of Member States relating to unfair commercial practices show marked differences which can lead to distortions of competition and obstacles to smooth functioning of internal market. Such disparities may cause uncertainty as to which national rules apply and create many barriers affecting business and consumers and thus make consumers uncertain and undermine their confidence in the internal market. The Directive regulates those commercial practices which are directly related to influencing consumers’ transactional decisions in relation to products (i.e. to purchase, make payment, retain or dispose of a product and the like). Unfair commercial practices shall be prohibited. Pursuant to the Directive, there are basically two categories of unfair commercial practices: (a) practices fulfilling criteria set by the Directive, while these shall be assessed on the case-by-case basis and, apart from these, also (b) those listed in Annex I to the Directive – activities listed therein are prohibited in their entirety regardless of criteria mentioned in (a) above. Under the criteria set by the Directive a commercial practice is unfair if it is contrary to the requirements of professional diligence and materially distorts the economic behaviour of the average consumer. In particular, commercial practices shall be unfair if they are misleading or aggressive under the criteria set by the Directive. A misleading commercial practice contains false information and is therefore untruthful or else otherwise deceives the average consumer in respect of elements that are likely to influence his economic behaviour, in particular the existence and nature of the product, its main characteristics, the extent of trader’s commitments in respect of the product, etc. A commercial practice shall be also regarded as misleading if it involves any marketing of the product that creates confusion with any products, trademarks, trade names or other distinguishing marks of a competitor or non-compliance by the trader with commitments contained in codes of conduct by which the trader has undertaken to be bound. A commercial practice shall be also regarded as misleading if it omits material information that the average consumer needs, according to the context, in order to take an informed transactional decision and thereby causes the average consumer to take a transactional decision that he would not have taken otherwise. A misleading omission shall be also omission of material fact in the invitation to purchase, e.g. omission of main characteristics of the product, identity of the trader, indication of price inclusive of taxes, arrangements for payment and delivery, etc. Other types of unfair commercial practices include any aggressive commercial practice which significantly impairs the average consumer’s freedom of choice or conduct and thereby causes to take him a transactional decision that he would not have taken otherwise. Such practices include use of harassment, coercion, physical force or undue influence. Annex I to the Directive stipulates that practices considered to be unfair, regardless of criteria set by the Directive, shall be inter alia (i) bait advertising (i.e. making an invitation to purchase products at a specified price without disclosing existence of any reasonable grounds the trader may have for believing that he will not be able to offer for supply those products at that price and in quantities that are the scale of advertising of the product and the price offered) (ii) falsely stating that the product will only be available for a very limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice, or (iii) making persistent and unwanted solicitations by telephone, fax, e-mail or other remote media except in circumstances and to the extent justified by the national law to enforce a contractual obligation. The Member States shall adopt measures to ensure that effective means exist to combat unfair commercial practices. Such means shall include opportunities available to the consumer to take legal action against such unfair commercial practices or to bring such unfair practice before an administrative tribunal. In this respect, the courts or administrative authorities shall have the power to order the cessation of unfair commercial practices or, if the unfair commercial practice has not yet been carried out but is imminent, to order prohibition of such practice even without proof of actual loss or damage or of intention on the part of the trader. Such orders shall be made under an accelerated procedure either with interim or definitive effect. Furthermore, Member States may confer upon the courts power to require publication of decisions on cessation/prohibition of unfair business conduct and publication of corrective statements. Member States shall lay down penalties for infringement of national provisions adopted in application of this Directive. The Directive came into force on 12 June 2005 and the Member States are obliged to adopt measures to comply with the provisions of the Directive by 12 June 2007 and apply these measures by 12 December 2007. The Directive has relevance for all Member States of the European Economic Area.



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