Monthly commercial law update: Top 5 developments in April

Here are this month's 'top 5' developments, as extracted from our Lexis®PSL Commercial monthly round-up.

Of particular interest is the Nemzeti Fogyasztóvédelmi Hatóság v UPC Magyarország Kft case—for two reasons:

  1. The comedic value of seeing if any English speaker can even approximate a decent pronunciation of it without bruising his or her tongue (to be fair, it is probably easier to think of it as the 'National Consumer Protection Authority v UPC Hungary' case), and
  2. The fact that it highlights the far-reaching impact of the Unfair Commercial Practices Directive (implemented into English and Welsh law by the Consumer Protection from Unfair Trading Regulations 2008).

In this case, an invoice sent to just one cable TV customer turned out to be in a wrong amount by about £16. As a result, UPC Hungary was fined by Hungary's National Consumer Protection Authority under the local equivalent of the 2008 regulations.

'To err is human,' Alexander Pope once said.

Alas, not if you are selling to consumers under the unfair commercial practices regime.

This case and others show the need for businesses which sell to consumers to have robust systems in place to keep mistakes to an absolute minimum. The Court of Justice of the EU is taking a strong stand on consumer protection and there is no reason to think that it will stop doing so.

So what else has been going on?

Check out the developments below:

Consumer protection: CJEU rules on misleading commercial practices

The CJEU has made a preliminary ruling in Nemzeti Fogyasztóvédelmi Hatóság v UPC Magyarország Kft  that Directive 2005/29/EU, the Unfair Commercial Practices Directive (UCPD), had to be interpreted as meaning that the communication, by a professional to a consumer, of erroneous information, should be classified as a 'misleading commercial practice' under the UCPD, even though that information concerned only one single consumer.

In addition, it ruled that following the decision in CHS Tour Services GmbH v Team4 Travel GmbH, the UCPD had to be interpreted as meaning that, if a commercial practice met all of the criteria specified in Directive 2005/29/EU, art 6(1) for classification as a misleading practice in relation to the consumer, it was not necessary further to determine whether such practice was also contrary to the requirements of professional diligence, as referred to in Directive 2005/29/EU, art 5(2)(a), for it legitimately to be regarded as unfair and, consequently, prohibited in accordance with Directive 2005/29/EU, art 5(1).

Consumer protection: Which? launches super-complaint about grocery pricing practices

Which? has made a Which? super-complaint under the Enterprise Act 2002 (EnA 2002) to the CMA about misleading and opaque pricing practices.

The practices of concern are:

  • confusing and misleading special offers, which make extensive use of price framing, including reference pricing, volume offers and free offers;
  • a lack of easily comparable prices because of the limitations of unit pricing; and
  • reductions in price sizes without any corresponding price change.

Which? is also asking the CMA to examine the impact of price matching, a practice whereby supermarkets compare their own prices with their competitors and in some cases offer to reimburse customers in some way, usually at the supermarket checkout.

Which? has been reviewing these practices for some years and now believes consumer detriment is significant enough to mean that a comprehensive assessment of them is needed. Consumers should be able to have confidence that they can use pricing to accurately identify the cheapest product and rely on special offers and discounts to be genuine.

The CMA has issued a CMA press release on the super-complaint. It says that it will now consider the issues raised in the super-complaint in order to establish whether any element, or combination of elements, in the relevant market is or appears to be significantly harming the interests of consumers. It will publish a response to the super-complaint within 90 days. The CMA will shortly invite interested parties to provide any evidence which may be useful to its assessment. The TSI is currently working on a new draft of the TSI: Pricing Practices Guide.

Advertising and marketing: swearing in advertisements

The ASA has upheld a ASA adjudication about a television advertisement for Bedworld, which featured both sales staff and customers talking about beds and mattresses, which were available with free shipping.

The advertisement opened with a family's conversation with a salesman, 'Ship this bed. Ship this bed? You can ship the bed right here at bedworld.net'. The advertisement cut to two young children who asked, 'Dad, can we ship this bed?' Another salesman said, 'I've just shipped this mattress'.

Ten complainants challenged whether the advertisement was offensive because they believed the word 'ship' had been substituted in place of a swear word. Five complainants challenged whether the advertisement had been scheduled inappropriately at times when children may be watching television.

The ASA did not uphold the complaint regarding the use of the word 'ship' but it did uphold the complaint about the scheduling. The adjudication follows similar ASA adjudication about a television advertisement for Booking.com, which the ASA did not uphold despite it being one of the most complained about advertisements in 2014.

Consumer protection: Court of Appeal upholds parking charges in private car parks

In Parkingeye v Beavis the Court of Appeal has dismissed an appeal against a first instance decision permitting a parking company to recover a charge of £85 from an individual for overstaying the permitted period of free parking in a car park.

The two issues which were relevant on appeal were whether:

  • the charge was unenforceable at common law as it was a penalty; and
  • it was unfair and therefore unenforceable under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR).

At first instance, the judge held that the charge had the characteristics of a penalty, but one that was commercially justifiable because it was neither improper in its purpose nor manifestly excessive in its amount. It was common ground that the signs in the car park were clear and legible.

The Court of Appeal reviewed the case law and agreed that the fee was not a penalty because it was a way of deterring motorists from abusing the facility by staying beyond the period of free parking—the parking charge was not principally concerned with obtaining compensation for breach of contract or trespass and did not attempt to obtain by contractual means more than the law would award in damages.

The Court of Appeal agreed with the first instance judge that the term did not create a significant imbalance between the parties' rights and obligations and the amount payable was not extravagant or unconscionable, and therefore was not unfair under the UTCCR.

Consumer protection: the growth of ADR in consumer disputes

We have previously reported that the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015, SI 2015/542 were made on 16 March 2015 and come into force in two stages.

Parts 1 to 3 come into force on 7 April 2015 and the remainder on 9 July 2015.

They implement Directive 2013/11/EU on alternative dispute resolution (ADR) for consumer disputes. Their stated aim is to help consumers across Europe get greater access to redress should something go wrong with their bought goods or services without having to resort to legal action. The Department for Business, Innovation and Skills (BIS) says it will provide a more efficient and cost-effective way for consumers to resolve disputes with traders, and provide traders with an opportunity to show how seriously they take the effective resolution of disputes with consumers.

 

So what do you think? Do let us have your thoughts below.

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