Case C-146/16, Verband Sozialer Wettbewerb – against printed adverts when the mandatory consumer information is online

Under EU law, if a trader puts an advert in a paper, then it should mention the trader’s address. However, what is to be done when an advert fails to mention mandatory consumer information but this is available on the trader’s website? Is the advert in the paper still contrary to EU law?

Background
In Germany, several electrical retailers and mail order companies have banded together to form an Association known as the Verband Sozialer Wettbewerb. The Association has become embroiled in a legal fight with DHL, one of the world’s largest parcel delivery companies. The Association is objecting to a newspaper advert run by one of DHL’s German websites called ‘mein.paket’.

The website is a little unusual. It tells its users it is a ‘delivery-direct-to-home warehouse’. Users of the site can buy goods, including electrical equipment, but the site is not a party in any contract – the actual supplier of the electrical goods will be the contracting party. In other words, DHL is an intermediary running its website as a portal for the suppliers.

However, it is an advert placed in a newspaper that has sparked the legal dispute. In 2012, the company running the DHL website decided to capture as much of the Christmas trade as it could. To that end, it paid for an advert to appear in Germany’s well-known Sunday newspaper, ‘Bild am Sonntag’. The advert was headed “5 Tips for Clever Christmas Shoppers”, and it displayed 5 electrical gadgets that could make great gifts. The advert also informed readers that if they purchased any of the 5 goods on offer before a specific date, then they would also qualify for a 10% discount on the ticket price. Besides large attention-grabbing headline fonts, attractive pictures of the goods on offer and the ticket prices, the advert simply mentioned that customers could obtain the goods via the DHL ‘mein.paket’ website.

The Association believes that DHL’s advert breaches German law. Because an advert is a contractual offer under German law, the Association points out that DHL’s advert should have clearly informed consumers of the address of the retailer that would actually be supplying the electronic equipment to the consumer. Since it had not done so, DHL was guilty of having made a misleading omission and breaching German unfair competition law.

DHL denies doing anything wrong. The company emphasises that the goods were only available via its website, and that if a consumer really wanted to know which company was going to be supplier of the goods he was buying, then that information was available on the DHL website – the consumer need only click on the hyperlinks embedded in DHL’s website. Since the requisite information was on its website, DHL believes that it did not need to put the information into the advert printed in the newspaper.

At first instance, DHL lost. However, DHL won on appeal but then permission was granted for the case to be escalated to the German Supreme Court.

At the German Supreme Court
The German judges focused on the applicable EU legislation, the EU’s ‘unfair business-to-consumer commercial practices’ Directive 2005/29/EC. (The Directive amends 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 (‘Unfair Commercial Practices Directive’) (Text with EEA relevance) OJ [2005] L149/22).

Article 7 of the Directive regulates ‘Misleading omissions’ and provides:

4. In the case of an invitation to purchase, the following information shall be regarded as material, if not already apparent from the context

b) the geographical address and the identity of the trader, such as his trading name and, where applicable, the geographical address and the identity of the trader on whose behalf he is acting;

Besides the wording of the EU legislation, the German judges also kept in mind an earlier judgment from the CJEU, Case C-122/10, Konsumentombudsmannen v Ving Sverige AB ECLI:EU:C:2011:299. The case was relevant because the CJEU interpreted Articles 2(i) and 7(4) of the earlier Directive (2005/29/EC) and it concerned a commercial communication that had been published in a newspaper. The case turned on what might be said to constitute an invitation to purchase, and the information which such an invitation had to contain.

Indeed, the CJEU in Ving Sverige had said:

33. In those circumstances, the answer to the first question is that the words ‘thereby enables the consumer to make a purchase’ in Article 2(i) of Directive 2005/29 must be interpreted as meaning that an invitation to purchase exists as soon as the information on the product advertised and its price is sufficient for the consumer to be able to make a transactional decision, without it being necessary for the commercial communication also to offer an actual opportunity to purchase the product or for it to appear in connection with such an opportunity.

However, the implications of that reasoning for the present case involving the Association and DHL’s website were unclear to the judges at the German Supreme Court.

One of the areas of uncertainty turned on how the CJEU had gone on to elaborate its Ving Sverige reasoning in Case C-281/12, Trento Sviluppo srl and Centrale Adriatica Soc. coop. arl v Autorità Garante della Concorrenza e del Mercato, ECLI:EU:C:2013:859.

In brief, the Trento Sviluppo case was about alleged unfair business-to-consumer commercial practices, and the concept of ‘misleading action’, and the cumulative nature of the conditions set out in Article 6(1) of the earlier directive.

The CJEU in Trento Sviluppo explained that the phrase ‘making a transactional decision’ was to be understood as not only covering the decision to purchase but also anything which the trader had done in getting the consumer to enter the shop.

More specifically, the CJEU in Trento Sviluppo had reasoned:

36 It is apparent from the very wording of Article 2(k) of Directive 2005/29 that the concept of ‘transactional decision’ is broadly defined. In the words of that provision, ‘any decision taken by a consumer concerning whether, how and on what terms to purchase’ is a transactional decision. That concept therefore covers not only the decision whether or not to purchase a product, but also the decision directly related to that decision, in particular the decision to enter the shop.

Despite the breadth of the CJEU’s reasoning in Trento Sviluppo, the German Supreme Court realised that the EU Directive did not always require all of the information relating to a transactional decision to be mentioned in an advert. This was because Recital 14 of the Directive explained:

… In respect of omissions, this Directive sets out a limited number of key items of information which the consumer needs to make an informed transactional decision. Such information will not have to be disclosed in all advertisements, but only where the trader makes an invitation to purchase, which is a concept clearly defined in this Directive….

With all this in mind, the German Supreme Court thought that the DHL company which had placed the advert in the newspaper could and should be covered by the Directive because the company was the one making an invitation to purchase. Consequently, the German court was minded to find that DHL’s advert should have contained the mandatory information. Further, the CJEU’s reasoning in Trento Sviluppo judgment could be applied be analogy since a rule relating to a consumer’s decision to enter a shop was akin to the consumer’s decision to go to the DHL website. Nevertheless, the German judges admitted that that could not be said with sufficient certainty, not least because neither the Trento Sviluppo nor Ving Sverige rulings made any mention of a website.

Therefore, Judge Büscher and four other German judges on the bench decided to make a preliminary reference to the CJEU.

Questions Referred
According to the Official Journal (C243/15 dated 4 July 2016), the German Supreme Court has asked:

1. Must the information concerning the geographical address and identity of the trader, within the meaning of Article 7(4)(b) of Directive 2005/29/EC, […] appear in advertising material for specific products which appears in a print medium, even if consumers obtain the advertised products exclusively via a website of the trader who publishes the advertisement, and which is indicated in the advertisement, and consumers can easily obtain the information required by Article 7(4) of the Directive on or via that website?

2. Does the answer to Question 1 depend on whether the undertaking advertising in the print medium is advertising sales of its own products and refers directly to its own website for the information required by Article 7(4) of Directive 2005/29/EC, or whether the advertising relates to products which are sold by other undertakings on an internet platform operated by the advertiser, and consumers are able to access the information set out in Article 7(4) of the Directive only through one or more steps (clicks) via links to the internet sites of those other undertakings which are made available only on the website specified in the advertisement?

Comment
Last week, the CJEU handed down its judgment in another preliminary reference from the German Supreme Court. The case was Case C-476/14, Citroën Commerce and it concerned not only whether a newspaper advert is an offer but also whether, for the purposes of Article 7(4)(c) of Directive 2005/29/EC, adverts must mention the price of goods including any additional charges; see further, Case C-476/14, Citroën Commerce – an advertised price is not an offer.

However, this DHL preliminary reference raises a number of issues about the relationship between old principles of contract law and new technology in the form of websites, issues which are also present in other preliminary references currently pending before the CJEU.

For example, on the issue of price-discount law and online adverts, there is another preliminary reference from Germany, Case C-148/15, Deutsche Parkinson Vereinigung – bonuses for buying Dutch mail order medicines.

Contract terms that are available online rather than in print are currently at the centre of a dispute involving an Austrian bank; see further, Case C-375/15, BAWAG – communicating with its online banking customers by non-durable media.

There is also a dispute involving one of the world’s largest mail order companies, Amazon. The company sets its online contract terms unilaterally and deems Luxembourg’s law to be the applicable law. The question is whether that contract term is valid when this means it also deprives the consumer of the data protection and consumer rights he has in his home state; see further, Case C-191/15, Verein für Konsumenteninformation – Amazon’s unfair online forum shopping.