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• Are You Engaged in Unfair Commercial B2C Practices?

Introduction

The new Unfair Commercial Practices Directive (the Directive) will regulate business to consumer (B2C) dealings that affect the economic interests of consumers across the EU.

It is wide ranging and will introduce no less than 31 automatically unfair "blacklisted" offences. It is due to come into force later this year although the full ramifications of its implementation are not yet clear. In particular it has not been decided whether the right to take legal actions will flow from the Directive or whether enforcement will be left to government agencies.

What will the Directive cover?

The Directive will regulate "commercial practices" (see box below) and it aims to harmonise across the EU all unfair trading laws for consumers; boost cross-border trading and provide a safety net of consumer protection legislation. The thinking is that EU consumers should be afforded the same protection against unfair, aggressive or misleading marketing whether they buy from their local shop or from a website hosted in another Member State. In summary, this directive will apply to most of those situations where you have felt 'duped' (as a consumer) into parting with more money than you originally intended.

What is a "commercial practice"?

The directive defines a "commercial practice" as any activity linked to a promotion, sale or supply of products to consumers and it covers acts, omissions, courses of conduct, representations or commercial communications at all stages of a transaction.

What will be prohibited?

1) Unfair Commercial Practices – this is widely defined as practices contrary to the requirement of professional diligence (i.e. the skill and care of the trader delivered honestly and with good faith) and/or which materially distort, or are likely to materially distort, the average consumer's economic behaviour.

2) Misleading Practices – this includes actions which contain false information or omissions of material information, or which in any way deceive or are likely to deceive the average consumer, causing him to take a transaction decision that he would otherwise not have taken.

3) Aggressive Practices – practices that significantly impair the average consumer's freedom of choice or conduct by means of coercion, harassment, physical force or undue influence (exploiting a position of power to apply pressure).

4) Blacklisted Practices – 31 specific practices that are in all circumstances regarded as unfair and are banned without having to apply the "average consumer test" that the Directive introduces in relation to the practices identified above. These include using a trade mark without authorisation; falsely claiming third party endorsements; bait advertising (i.e. advertising a product at a price without having the ability to supply the same unless such circumstances are made clear); false "limited" offers; the use of undisclosed advertorials; false claims about moving premises or cessation of business; false claims about cures; inertia selling; certain types of pyramid schemes; traders posing as consumers; demanding payment for unsolicited products; aggressive doorstep selling; certain unethical techniques used in sales promotions and making persistent and unwanted solicitations.

The Directive will not cover:

• Slavish imitation (which will continue to be regulated by the Misleading and Comparative Advertising Directive and Intellectual Property legislation and case law)
• Consumer Health & Safety
• Competition law
• Contract law
• B2B transactions (i.e. boycotts or refusal to supply)
• Certain areas where sector specific legislation exists

Impact on your business

The new Directive will not generally add new burdens to your business (unless your commercial practices are potentially caught by it!), as it is framed as a general duty "not" to do certain things. However, it does contain various positive obligations that you are likely to need to be able to demonstrate in order to prove that you are trading fairly when called upon to do so.

The confidence of EU consumers in cross border transactions may well be strengthened, which could open up greater opportunities for the businesses wishing to attract the custom of the 450 million people resident in the EU.

What is the timetable?

The Government is currently debating whether breach of the Directive provisions (notably aggressive and blacklisted practices) should carry criminal sanctions and have recently published a consultation document and partial Regulatory Impact Assessment considering how the Directive will become part of UK Law.

Exactly how the Directive will be adopted into UK law is yet to be finalised but, whichever route is chosen, the legislation must be implemented in the UK by 12 June 2007 and come into force by 12 December 2007. As further details become available they will feature in future editions of this bulletin.

Want to know more?

If you would like further information on the detail of the Directive, please click the following link:

http://ec.europa.eu/consumers/cons_int/safe_shop/fair_bus_pract/ucp_en.pdf

For details of the Government's consultation process and responses received to date, please click the following link:

http://www.dti.gov.uk/consumers/buying-selling/ucp/index.html

f you need assistance with any technology law issue then please contact Ashfords' IP and IT Law Department.

Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.