EUROPEAN COMMISSION Brussels, 25.5.2016 SWD(2016) 163 final COMMISSION STAFF WORKING DOCUMENT GUIDANCE ON THE IMPLEMENTATION/APPLICATION OF DIRECTIVE 2005/29/EC ON UNFAIR COMMERCIAL PRACTICES Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A comprehensive approach to stimulating cross-border e-Commerce for Europe's citizens and businesses {COM(2016) 320 final}



Contents INTRODUCTION 1. Scope of the UCPD 1.1 Commercial practices falling within the scope of the UCPD 1.1.1 After-sales practices, including debt collection activities 1.1.2 Traders buying products from consumers 1.2 Commercial practices falling outside the scope of the UCPD 1.2.1 Commercial practices which do not affect the consumer’s economic interests 1.2.2 Commercial practices which relate to a business-to-business transaction or which harm only competitors’ economic interests 1.3 Full harmonisation 1.3.1 Sales promotions and price reductions 1.3.2 Exceptions to full harmonisation 1.4 Interplay between the Directive and other EU law 1.4.1 Relationship with other EU legislation 1.4.2 Impact on enforcement 1.4.3 Information established by other EU law as ‘material’ information 1.4.4 Interplay with the Consumer Rights Directive 1.4.5 Interplay with the Unfair Contract Terms Directive

1.4.6 Interplay with the Misleading and Comparative Advertising Directive 1.4.7 Interplay with the Services Directive 1.4.8 Interplay with the e-Commerce Directive 1.4.9 Interplay with the Audiovisual Media Services Directive 1.4.10 Interplay with the Data Protection Directive and the e-Privacy Directive 1.4.11 Interplay with Articles 101-102 TFEU (competition rules) 1.4.12 Interplay with the EU Charter of fundamental rights 1.4.13 Interplay with Articles 34-36 TFEU 1.5 The relationship between the UCPD and self-regulation 1.6 Application of the UCPD to traders established in third countries 2. General concepts 2.1 The notion of trader 2.2 The concept of commercial practice 2.3 The concept of ‘transactional decision’ 2.4 To ‘materially distort the economic behaviour of consumers’ 2.5 'Average consumer’ 2.6 Vulnerable consumers 2.6.1 The vulnerability criteria in Article 5(3) 2.6.2 ‘Foreseeability’ requirement 2.7 Invitation to purchase — the concept

3. Provisions of the UCPD 3.1 The functioning of the UCPD – Directive flowchart 3.2 The general clause — the requirements of professional diligence 3.3 Misleading actions 3.3.1 General misleading information 3.3.2 Confusing marketing 3.3.3 Non-compliance with codes of conduct 3.4 Misleading omissions 3.4.1 Material information 3.4.2 Hidden marketing/failure to identify commercial intent 3.4.3 Material information provided in an unclear manner 3.4.4 The factual context and limits of the communication medium used 3.4.5 Material information in invitations to purchase — Article 7(4) 3.4.6 Free trials and subscription traps 3.4.7 Provision of certain information in another language 3.4.8 Planned obsolescence 3.5 Aggressive commercial practices 4. The black list of commercial practices (Annex I) 4.1 Products which cannot legally be sold — banned commercial practice No 9 4.2 Pyramid schemes — banned commercial practice No 14

4.3 Products which cure illnesses, dysfunctions and malformations — banned commercial practice No 17 4.4 Use of the word ‘free’ — banned commercial practice No 20 4.5 Persistent marketing by a remote tool — banned commercial practice No 26 4.6 Direct exhortations to children — banned commercial practice No 28 4.7 Prizes — banned commercial practice No 31 5. Application of the UCPD to specific sectors 5.1 Environmental claims 5.1.1 Interplay with other EU legislation on environmental claims 5.1.2 Main principles: Articles 6, 7 and 12 of the UCPD applied to environmental claims 5.1.3 Application of Article 6 of the UCPD to environmental claims 5.1.4 Application of Article 7 of the UCPD to environmental claims 5.1.5 Application of Article 12 of the UCPD to environmental claims 5.1.6 Application of Annex I to environmental claims 5.1.7 Comparing environmental claims 5.2 Online sector 5.2.1 Online platforms 5.2.2 The applicability of the UCPD to online platforms 5.2.3 E-commerce platforms (marketplaces) 5.2.4 App stores 5.2.5 Collaborative economy

5.2.6 Search engines 5.2.7 Comparison tools 5.2.8 User review tools 5.2.9 Social media 5.2.10 Collective buying platforms 5.2.11 Dynamic pricing 5.2.12 Price discrimination 5.2.13 Personalised pricing 5.2.14 Use of geo-localisation techniques 5.3 Travel and transport sector 5.3.1 Cross-cutting issues 5.3.2 Package Travel 5.3.3 Timeshare contracts 5.3.4 Issues relevant in particular to air transport 5.3.5 Issues specific to car rental 5.4 Financial services and immovable property 5.4.1 Cross-cutting issues 5.4.2 Issues specific to immovable property 5.4.3 Issues specific to financial services Annex I: Case-law from the CJEU on the UCPD (ordered by year)





INTRODUCTION The purpose of this guidance document is to facilitate the proper application of Directive 2005/29/EC on unfair business-to-consumer commercial practices in the internal market (‘the UCPD’). It provides guidance on the UCPD’s key concepts and provisions and practical examples taken from the case-law of the Court of Justice of the European Union (thereinafter 'The Court') and from national courts and administrations on how to implement it. It builds upon and replaces the 2009 version of the Guidance. The UCPD constitutes the overarching piece of EU legislation regulating unfair commercial practices in business-to-consumer transactions. It applies to all commercial practices that occur before (i.e. during advertising or marketing), during and after a business-to-consumer transaction has taken place. The 2013 Communication on the application of the Unfair Commercial Practices Directive and its accompanying Report have shown that there is a need to step up enforcement of the UCPD provisions. To facilitate enforcement activities and ensure legal certainty, this Guidance highlights questions that are common to all Member States. This includes topics such as: ·the interplay between the UCPD and other EU legislation; ·the mounting case-law of the Court and national courts; ·how the UCPD applies to new and emerging business models, especially in the online sector. This guidance is linked to the Commission's Communication on "a comprehensive approach to stimulating cross border e-Commerce for Europe's citizens and businesses" (COM(2016)320), in particular section 6 thereto. It was prepared by the Commission services and does not necessarily reflect the views of the European Commission. It is intended to facilitate the implementation of Directive 2005/29/EC on unfair commercial practices. However, it is itself not legally binding. Any authoritative reading of the law should only be derived from Directive 2005/29/EC itself and other applicable legal acts or principles. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The assessment of whether a commercial practice is unfair under the UCPD must, except in the case of the practices listed in Annex I to the Directive, be performed on a case-by-case basis. The power to make this assessment rests with the Member States. 1.Scope of the UCPD Article 3(1) This Directive shall apply to unfair business-to-consumer commercial practices as laid down in Article 5, before, during and after a commercial transaction in relation to a product. The Directive is horizontal in nature and protects the economic interests of consumers. Its principle-based provisions address a wide range of practices and are sufficiently broad to catch fast-evolving products, services and sales methods. 1.1Commercial practices falling within the scope of the UCPD Article 2(d) business-to-consumer commercial practices’ (hereinafter also referred to as commercial practices) means any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers. Article 2(c) ‘product’ means any good or service including immovable property, rights and obligations. This section mainly focuses on examples of commercial practices for which there can be a need to clarify that they do fall within the scope of the UCPD. The application of the UCPD to online business models is discussed in Chapter 5.2.

1.1.1After-sales practices, including debt collection activities Under Article 3(1), commercial practices occur not only during the marketing and supply stages, but also after the transaction has been made. Recital 13 of the UCPD also refers to ‘unfair commercial practices which occur outside any contractual relationship between a trader and a consumer or following the conclusion of a contract and during its execution’. For example: · A trader who uses onerous or disproportionate non-contractual barriers to prevent a consumer from switching service providers: the Italian competition authority (AGCM) fined a telecoms company for delaying and preventing its customers from switching to another service provider. Some national authorities stated that, irrespective of whether a trader has assigned a claim to a third party, debt collection activities should be regarded as after-sales commercial practices, because the debt collection is directly connected with the sale or supply of products. There are no objective reasons to differentiate that assessment based on whether a trader outsources it through specialised agencies or not. This is also implied in No 25 of Annex I which considers the practice of ‘Conducting personal visits to the consumer’s home ignoring the consumer’s request to leave or not to return except in circumstances and to the extent justified, under national law, to enforce a contractual obligation’ as unfair in all circumstances. For example: ·A Slovakian court held that informing a consumer who is not complying with his financial obligations that his name will be published as a default payer in local media is an aggressive commercial practice. ·The Italian competition authority (AGCM) took action against a debt collector that used a logo, name and documents that were similar to those used by official Italian agencies. The trader gave consumers the misleading impression that it was enforcing official court orders to force consumers to pay their debts when in fact such powers are reserved for public authorities. ·The Polish authority (UOKiK) considered debt collection as an after-sale commercial practice falling within the scope of the UCPD and fined a debt collection agency for misleading consumer debtors about the extent and gravity of adverse consequences they would face, would they fail to settle their debt immediately. The debt collection agency also failed to properly inform consumers about the exact contractual basis for the debt and exercised on them undue psychological pressure. 1.1.2Traders buying products from consumers Certain traders may, in the course of their professional activity, purchase products from consumers. Examples of this include car dealers, antique dealers and retailers of second-hand goods. According to the definition provided in the UCPD, commercial practices are only those ‘directly connected with the promotion, sale or supply of a product to consumers’. The reverse situation, where traders purchase products from consumers, does not fall within the scope of the UCPD. However, there are cases where a link can be established between the sale of a product by a consumer to a trader and the promotion, sale or supply of a (different) product to the consumer. For instance, trade-in agreements are common place in the motor vehicle trade. The trader purchases a used vehicle from the consumer who in turn buys a vehicle from the trader. In such cases, the trader’s purchase could be considered as part of the remuneration given by the consumer for the business-to-consumer part of the transaction. Trade-in agreements clearly fall within the scope of the UCPD. For example: · The UK Office of Fair Trading (now: Competition and Markets Authority - CMA) investigated the practice of companies specialized in buying used cars from consumers, considering that it falls within the scope of the UCPD. In particular, the UK authority took action against a used car buying company on the ground that its online evaluations could be misleading. The purchase and resale of gold could in some circumstances fall under the UCPD. For example, a trader, who offers consumers a professional evaluation for their gold before buying it, could be considered as providing a service to the consumers. When this is the case, the UCPD will apply and, as a consequence, the trader should not provide misleading information on the real value of the gold or on the price of the service offered (e.g. omission of ‘administrative fees’). For example: ·‘A trader who is an expert on Chinese pottery tells a consumer that a Ming vase she wants to sell to him is a fake. If it is not the case, the statement would be likely to amount to a misleading action’. 1.2 Commercial practices falling outside the scope of the UCPD 1.2.1Commercial practices which do not affect the consumer’s economic interests

Article 1 The purpose of this Directive is to contribute to the proper functioning of the internal market and achieve a high level of consumer protection by approximating the laws, regulations and administrative provisions of the Member States on unfair commercial practices harming consumers’ economic interests. The UCPD does not cover national rules intended to protect interests which are not of an economic nature. Therefore, the UCPD does not affect the possibility of Member States to set rules regulating commercial practices for reasons of health, safety or environmental protection. Also existing national rules on marketing and advertising, based on ‘taste and decency’ are not covered by the UCPD. According to Recital 7, ‘This Directive […] does not address legal requirements related to taste and decency which vary widely among the Member States. […] Member States should accordingly be able to continue to ban commercial practices in their territory, in conformity with Community law, for reasons of taste and decency even where such practices do not limit consumers’ freedom of choice. […].’ Therefore, in the context of commercial practices, the UCPD does not cover national rules on protecting human dignity, preventing sexual, racial and religious discrimination or on the depiction of nudity, violence and antisocial behaviour. For example: ·The Court clarified that the UCPD did not apply to a national provision preventing a trader from opening its shop seven days a week by requiring traders to choose a weekly closing day, as this specific provision did not pursue objectives related to consumer protection. Conversely, national rules that aim to protect the economic interest of consumers, in conjunction with other interests, do fall within its scope. For example: ·National rules banning sales with bonuses: the Court has clarified that the UCPD precludes a general national ban on sales with bonuses that is designed to achieve consumer protection and other objectives (such as the pluralism of the press). ·National rules allowing clearance sales to be announced only if authorised by the competent district administrative authority: the Court noted that the referring court had implicitly accepted that such a provision, which was at stake in the case, was aimed at the protection of consumers and not solely at the protection of competitors and other operators in the market. Therefore, the UCPD was applicable. 1.2.2Commercial practices which relate to a business-to-business transaction or which harm only competitors’ economic interests Recital 6 This Directive […] neither covers nor affects the national laws on unfair commercial practices which harm only competitors’ economic interests or which relate to a transaction between traders; taking full account of the principle of full subsidiarity, Member States will continue to be able to regulate such practices in conformity with Community law, if they choose to do so [...]. Business-to-business (‘B2B’) commercial practices do not fall within the scope of the UCPD. They are partly regulated under the Misleading and Comparative Advertising Directive. Member States may also extend, under their national laws, the protection granted under the UCPD to B2B commercial practices. Only measures which protect exclusively competitors’ interests fall outside the scope of the UCPD. Where national measures regulate a practice with the dual aim of protecting consumers and competitors, such national measures are covered by the UCPD. Regarding the distinction between consumers’ and competitors’ interests, the Court considered that: ‘39 […] As is evident from recital 6 in the preamble to [the UCPD], only national legislation relating to unfair commercial practices which harm ‘only’ competitors’ economic interests or which relate to a transaction between traders is thus excluded from that scope. 40 […] that is quite clearly not the case with the national provisions [that] refer expressly to the protection of consumers and not only to that of competitors and other market participants.’ It is for national authorities and courts to decide whether a national provision is intended to protect consumer interests. The Court noted that: ‘29 It is therefore for the national court and not for this Court to establish whether the national provisions […] concerning price reduction announcements to consumers, actually pursue objectives relating to consumer protection, in order to determine whether such provisions are liable to fall within the scope of the Unfair Commercial Practices Directive […].’

The Court has also found that the UCPD precludes a national provision prohibiting sales at loss only in so far as its aim is to protect consumers. Regarding national rules prohibiting price reductions during pre-sales periods, the Court has clarified that such a prohibition is not compatible with the UCPD if it seeks to protect the economic interests of consumers. However it also found that a national provision does not fall within the scope of the UCPD ‘if it aims solely, as argued by the referring court, at regulating relations between competitors and does not aim at protecting consumers. 1.3Full harmonisation The UCPD is based on the principle of full harmonisation. In order to remove internal market barriers and increase legal certainty for both consumers and businesses, a uniform regulatory framework harmonising national rules was established at EU level. The Court has further clarified this. It held that ‘the Directive fully harmonises those rules at the Community level. Accordingly, […] Member States may not adopt stricter rules than those provided for in the Directive, even in order to achieve a higher level of consumer protection’. Consequently, the Directive was found to preclude a national general prohibition on combined offers. 1.3.1Sales promotions and price reductions The UCPD covers commercial practices such as combined or tied offers, discounts, price reductions, promotional sales, commercial lotteries, competitions and vouchers. The UCPD includes several provisions on promotional practices (e.g. Article 6(d) on the existence of a specific price advantage, Annex I point 5 on bait advertising, point 7 on special offers, points 19 and 31 on competitions and prize promotion, and point 20 on free offers). The Court has clarified that rules requiring a price reduction to refer to a reference price and the duration of the promotion are not compliant with the UCPD: ‘61. Consequently, national rules of this nature, which place a general prohibition on practices not referred to in Annex I to Directive 2005/29, without providing for an individual analysis as to whether the practices are ‘unfair’ in the light of the criteria laid down in Articles 5 to 9 of that directive, are not permitted under Article 4 thereof and run counter to the complete harmonisation objective pursued by that directive, even where they seek to achieve a higher level of consumer protection […]’ The UCPD does not expressly require traders to display price reductions in specific ways or to state the reasons for the reduced prices. Whether a trader acts contrary to the UCPD should be assessed on a case-by-case basis. Questions on price promotions and the full harmonisation character of the UCPD have also been raised in light of the Price Indication Directive. The purpose of that Directive is to require traders to state the retail price, the unit price and the measurement of products in order to facilitate price comparisons by consumers. It has been argued that, for pricing policies linked to promotional campaigns, that Directive's objectives can only be achieved by introducing more restrictive requirements on how the price should be indicated than what follows from the UCPD. The Court found that: ‘59. […] the purpose of Directive 98/6 is not to protect consumers in relation to the indication of prices, in general or with regard to the economic reality of announcements of price reductions, but specifically in relation to the indication of the prices of products by reference to different units of quantity’. The Court further concluded that keeping more restrictive national provisions on price reductions cannot be justified under the Price Indication Directive. 1.3.2Exceptions to full harmonisation

Article 3(5) and (6) of the UCPD laid down a temporary derogation from full harmonisation for six years starting from 12 June 2007. This applied to national provisions which implement directives containing minimum harmonisation clauses. The Commission’s 2013 Report on the application of the UCPD concluded that there was no need to further extend this derogation. Since 12 June 2013, Articles 3(5) and 3(6) of the UCPD are therefore no longer applicable. Recital 14 clarifies that the full harmonisation does not preclude Member States from specifying in national law the main characteristics of particular products, the omission of which would be material when an invitation to purchase is made. It also clarifies that the UCPD is without prejudice to provisions of EU law which expressly afford Member States the choice between several regulatory options for the protection of consumers in the field of commercial practices. Article 3(9) places a limitation on the full harmonisation character of the UCPD by stating that ‘in relation to ‘financial services’ […] and immovable property, Member States may impose requirements which are more restrictive or prescriptive than this Directive in the field which it approximates’. Consequently, in these sectors, Member States can impose rules which go beyond the provisions of the UCPD, as long as they comply with other EU law. Chapter 5.4 specifically deals with how the UCPD applies to financial services and immovable property. 1.4Interplay between the Directive and other EU law Article 3 (4) In the case of conflict between the provisions of this Directive and other Community rules regulating specific aspects of unfair commercial practices, the latter shall prevail and apply to those specific aspects. Recital 10 It is necessary to ensure that the relationship between this Directive and existing Community law is coherent, particularly where detailed provisions on unfair commercial practices apply to specific sectors. […] This Directive accordingly applies only in so far as there are no specific Community law provisions regulating specific aspects of unfair commercial practices, such as information requirements and rules on the way the information is presented to the consumer. It provides protection for consumers where there is no specific sectorial legislation at Community level and prohibits traders from creating a false impression of the nature of products. This is particularly important for complex products with high levels of risk to consumers, such as certain financial services products. This Directive consequently complements the Community acquis, which is applicable to commercial practices harming consumers’ economic interests. Due to its general scope, the Directive applies to many commercial practices which are also regulated by other general or sector-specific EU legislation. 1.4.1Relationship with other EU legislation Article 3(4) and Recital 10 are key features of the UCPD. They clarify that the UCPD complements other EU legislation ("Community rules") that regulate specific aspects of unfair commercial practices. Consequently, the UCPD works as a "safety net" ensuring that a high common level of consumer protection against unfair commercial practices can be maintained in all sectors, including by complementing and filling gaps in other EU law. Where sector-specific or other EU law is in place and its provisions overlap with the provisions of the UCPD, the corresponding provisions of the lex specialis will prevail. Article 3(4) of the Directive clarifies indeed that "in case of conflict between the provisions of this Directive and other Community rules regulating specific aspects of unfair commercial practices, the latter shall prevail and apply to those specific aspects". Article 3(4) read in conjunction with Recital 10 implies that a provision of EU law will prevail over the UCPD if all of the following three conditions are fulfilled: Øit has the status of EU law, Øit regulates a specific aspect of commercial practices, and Øthere is a conflict between the two provisions or the content of the other EU law provision overlaps with the content of the relevant UCPD provision, for instance by regulating the conduct at stake in a more detailed manner and/or by being applicable to a specific sector. For example: ·Article 12 of the Mortgage Credit Directive prohibits, in principle, tying practices whereby a credit agreement for a mortgage is sold with another financial product and is not made available separately. This per se prohibition conflicts with the UCPD because tying practices would be unfair and thus prohibited under the UCPD only following a case-by-case assessment. Its Article 12 prevails over the general rules of the UCPD. Thus, tying practices within the meaning of Article 12 of the Mortgage Credit Directive are prohibited as such. Where all three conditions set out above are fulfilled, the UCPD will not apply to the specific aspect of the commercial practice regulated, for example, by a sector-specific rule. The UCPD continues nonetheless to remain relevant to assess other possible aspects of the commercial practice not covered by the sector-specific provisions, such as, for example, aggressive behaviour by a trader. For example: ·In order to switch to a different telecom provider, a consumer is required by his current provider to fill in a form. However, the form is not accessible on-line and the provider is not replying to the consumer's emails/phone-calls. This behaviour is not prohibited by Article 30 of the Universal Service Directive , which only provides that, when switching, subscribers may retain their phone number, the porting of numbers shall be carried out quickly and not be overly costly. It can however be assessed under Articles 8 and 9(d) UCPD, which qualify disproportionate non-contractual barriers to switching as an aggressive commercial practice . It follows from the above that, in general, the application of the UCPD is not per se excluded just because other EU legislation is in place which regulates specific aspects of unfair commercial practices.

For example: ·In Joined Cases C‑544/13 and C‑545/13, the Court noted : "(…) the referring court asks, in essence, whether, if medicinal products for human use […] fall within the scope of Directive 2001/83, advertising practices relating to those medicinal products […] can also fall within the scope of Directive 2005/29.(…) As the Court has already held, Directive 2005/29 is characterised by a particularly wide scope ratione materiae which extends to any commercial practice directly connected with the promotion, sale or supply of a product to consumers. (…) "the answer (…) is that even where medicinal products for human use, such as those at issue in the main proceedings, fall within the scope of Directive 2001/83, advertising practices relating to those medicinal products […] can also fall within the scope of Directive 2005/29 provided that the conditions for application of that directive are satisfied." Therefore the UCPD can usually be applied together with sector-specific EU rules in a complementary manner; thus, the more specific requirements laid down under other EU rules usually add to the general requirements set out in the UCPD, typically to prevent traders from providing the information required by the sector specific legislation in a misleading or aggressive manner, unless this aspect is specifically regulated by the sector-specific rules. For example: ·Motor vehicles are subject to fully harmonised EU requirements defining pollutant emission limits and the procedures for testing pollutant and CO2 emissions as well as fuel consumption (see Regulation 715/2007/EC). To help consumers choose vehicles with low fuel consumption, Directive 1999/94/EC specifically requires that information on official fuel consumption and CO2 emissions is provided to potential buyers of new passenger cars offered for sale or lease in the EU. A failure to do so, combined with an aggressive marketing behaviour, such as pressure selling, would expose the relevant trader to the risk of being found in breach of both Directive 1999/94/EC and the UCPD . 1.4.2Impact on enforcement Article 11 1. Member States shall ensure that adequate and effective means exist to combat unfair commercial practices in order to enforce compliance with the provisions of this Directive in the interest of consumers. Based on Article 11, in order to ensure the proper enforcement of EU consumer protection laws, Member States should ensure coordination in good faith between the different competent enforcement authorities. In those Member States where different authorities are responsible for enforcing the UCPD and sector-specific legislation, the authorities should closely cooperate to ensure that the findings of their respective investigations into the same trader and/or commercial practice are consistent. 1.4.3Information established by other EU law as ‘material’ information Article 7(5) 5. Information requirements established by Community law in relation to commercial communication including advertising or marketing, a non-exhaustive list of which is contained in Annex II, shall be regarded as material. ‘Information requirements established by Community law in relation to commercial communication’ are found in a number of pieces of sector-specific EU legislation. For example: Øenvironment (e.g. Energy Labelling Directive, Eco-design Directive, Fuel economy Directive); Øfinancial services (e.g. Markets in Financial Instruments Directive, Payment Services Directive, Consumer Credit Directive, Mortgage Credit Directive, Payment Accounts Directive, the Regulation on key information documents for PRIIPs); Øhealth (e.g. Directive 2001/83/EC); Øtelecommunications (e.g. Universal Service Directive); Øtransport (e.g. Air Services Regulation, Passenger Rights Regulation) Such information requirements will often be more specific than the information requirements of the UCPD. Article 7(5) of the UCPD clarifies that such information requirements ‘shall be regarded as material’. The concept of ‘material information’ within the meaning of the UCPD is discussed in Section 3.4.1.

For example: ·Article 23 of the Air Services Regulation requires air carriers, their agents and other ticket sellers, when offering flight tickets, to break down the final price by components (e.g. air fare, taxes, airport charges, and other charges and fees, such as those related to security and fuel). This constitutes material information within the meaning of Article 7(5) of the UCPD. Recital 15 provides that Member States can retain or add information requirements relating to contract law where this is permitted by minimum harmonisation clauses found in existing EU legal instruments. For example: ·Member States can introduce additional pre-contractual requirements for on-premises sales, which are subject to the minimum harmonisation clause in Article 5(4) of the Consumer Rights Directive. 1.4.4Interplay with the Consumer Rights Directive The Consumer Rights Directive entered into application on 13 June 2014. It applies to all business-to-consumer contracts including off-premises, distance and on-premises contracts. It also fully harmonises pre-contractual information requirements for distance and off-premises contracts, while allowing Member States to adopt or maintain additional pre-contractual information requirements for on-premises contracts (Article 5(4)). This minimum harmonisation clause has consequences for commercial practices falling under the fully harmonised UCPD. Indeed, under Article 5(4) of the Consumer Rights Directive, Member States may adopt or retain pre-contractual information requirements that go beyond the UCPD if these national requirements only apply to on-premises sales and only relate to pre-contractual information requirements, as opposed to advertising and marketing. For example: ·A national requirement for traders in brick-and-mortar shops to mention the previous price next to the promotional one in price promotions would go beyond the remit of the UCPD. However, under Article 5(4) of the Consumer Rights Directive, this could be considered a permissible information requirement, as long as it applies merely to on-premises sales and at the pre-contractual stage. Both directives also complement each other. For example: ·Inertia selling: Point 21 of Annex I to the UCPD prohibits the practice of including in marketing material an invoice or similar document which falsely creates the impression that the consumer has already ordered the marketed product. The Consumer Rights Directive complements the UCPD on the consequences of such practice. Its Article 27 clarifies that, in the case of inertia selling, the ‘consumer shall be exempted from the obligation to provide any consideration’ and in such cases ‘the absence of response from the consumer (…) shall not constitute consent’. For ‘invitations to purchase’, the Consumer Rights Directive provides more detailed pre-contractual information requirements than the information requirements in Article 7(4) of the UCPD. An invitation to purchase under the UCPD refers to both the information provided at the marketing stage (advertising) and before the contract is signed. In the latter case, there is an overlap between the information requirements under Article 7(4) of the UCPD and the pre-contractual information requirements under the Consumer Rights Directive. The difference between pre-contractual information and an invitation to purchase is further explained in Section 2.7. Given the more exhaustive character of the information requirements in the Consumer Rights Directive, complying, already at the stage of invitation to purchase, with the requirements laid down by the CRD for the pre-contractual stage should normally also ensure compliance with Article 7(4) UCPD, as far as the content of the information is concerned. The UCPD will still be applicable when assessing any misleading or aggressive commercial practices by a trader on the form and presentation of this information to the consumer.

1.4.5Interplay with the Unfair Contract Terms Directive The Unfair Contract Terms Directive applies to all business-to-consumer contracts and concerns contractual terms which have not been individually negotiated in advance (e.g. pre-formulated standard clauses). In contrast to the UCPD, breaches of the Unfair Contract Terms Directive have contractual consequences: under Article 6(1) of that directive, unfair terms used in a contract with a consumer must ‘not be binding on the consumer’. The Court has clarified certain elements of the relationship between these Directives in the Pereničová and Perenič case, which concerned a credit agreement where the annual percentage rate of charge indicated was lower than the actual rate. The Court concluded that such erroneous information provided in the contract terms is ‘misleading’ within the meaning of the Unfair Commercial Practices Directive if it causes, or is likely to cause, the average consumer to take a transactional decision that he would not have taken otherwise. Finding that such a commercial practice is unfair is one factor that can be cited when assessing the unfairness of contractual terms under the Unfair Contract Terms Directive. Such a finding, however, has no direct effect on whether the contract is valid under Article 6(1) of that Directive. In the UK, in OFT v Ashbourne Management Services it was found that it was contrary to the UCPD to include an unfair term in a contract, and also unfair to seek to enforce it by demanding sums payable under the term. Only a few Member States’ consumer protection authorities have similar powers against unfair commercial practices and unfair contract terms, in order to prohibit the use of non-negotiated standard contract terms which they consider to be unfair without having to take the trader to court. 1.4.6Interplay with the Misleading and Comparative Advertising Directive The Misleading and Comparative Advertising Directive (MCAD) covers business-to-business (B2B) relations. However, its rules on comparative advertising continue to provide a general test, based on fully harmonised criteria, for assessing whether comparative advertising is lawful also in business-to-consumer (B2C) transactions. Article 6(2)(a) of the UCPD qualifies as misleading a practice which, including through comparative advertising, creates confusion with any products, trademarks, trade names or other distinguishing marks of a competitor. At the same time, under Article 4(a) of the MCAD, comparative advertising is not permitted if it is misleading under Articles 6 and 7 of the UCPD. Hence, these two Directives cross-reference each other. Being relevant for both B2C and B2B transactions, the conditions for assessing the lawfulness of comparative advertising laid down by Article 4 of the MCAD are rather broad and include also some aspects of unfair competition (e.g. denigration of trade marks). Therefore, the MCAD will either provide conditions for such assessment under the UCPD for B2C transactions or impose additional requirements which are relevant for traders, mainly competitors, in B2B transactions. For those Member States which have extended all (Austria and Sweden) or part (Denmark, France, Italy) of the provisions contained in the UCPD to B2B transactions, the UCPD provisions as transposed into national laws will in practice replace the relevant MCAD provisions in B2B relations. It should be noted that some countries (Belgium) have also adopted specific rules for B2B. 1.4.7Interplay with the Services Directive Contrary to sector-specific legislation, the Services Directive has a broad scope of application. It applies to services in general as defined in the Treaty on the Functioning of the European Union, with certain exceptions. It can therefore not be considered as lex specialis to the Unfair Commercial Practices Directive within the meaning of Article 3(4). Accordingly, the information requirements in Article 22 of the Services Directive apply in addition to the information required for invitations to purchase under Article 7(4) of the UCPD. 1.4.8Interplay with the e-Commerce Directive The e-Commerce Directive applies to information society services, which can include the services provided by operators of websites and online platforms which allow consumers to buy a good or service. Article 5 of the e-Commerce Directive lays down general information requirements for service providers, while Article 6 lays down information to be provided in commercial communications. The lists of items set out in these two articles are minimum lists.

Article 6 in particular requires Member States to ensure that traders clearly identify promotional offers, such as discounts, premiums and gifts, where permitted in the Member States where the service provider is established, and the conditions to qualify for such promotional offers. The interplay between the UCPD and the e-Commerce Directive is further addressed, in particular, in section 5.2.2 on ‘The applicability of the UCPD to online platforms’. 1.4.9Interplay with the Audiovisual Media Services Directive The Audiovisual Media Services Directive applies to linear and non-linear audiovisual media services (i.e. TV broadcasting and on-demand media services), which can include audiovisual commercial communications which directly or indirectly promote goods or services (e.g. television advertising, sponsorship, teleshopping or product placement). Article 5 of the Audiovisual Media Services Directive lays down general information requirements for service providers, while Article 9 lays down requirements with which all audiovisual commercial communications must comply. Articles 10 and 11 respectively lay down the conditions which sponsorship and product placement in audiovisual media services must respect. The Audiovisual Media Services Directive also provides for other stricter criteria which apply only to television advertising and teleshopping (Chapter VII on television advertising and teleshopping). The UCPD applies to unfair commercial practices occurring in audiovisual media services, such as misleading and aggressive practices, to the extent that they are not covered by the provisions mentioned above. 1.4.10Interplay with the Data Protection Directive and the e-Privacy Directive The protection of personal data is a fundamental right under Article 8 of the EU Charter of Fundamental Rights. Article 8(2) of the Charter contains key data protection principles (fair processing, consent or legitimate aim prescribed by law, right to access and rectification). Article 8(3) of the Charter requires that compliance with data protection rules be subject to control by an independent authority. The Data Protection Directive regulates the protection of personal data and the free movement of such data. Data protection rules are enforced by national supervisory authorities and national courts. The e-Privacy Directive complements the Data Protection Directive regarding the processing of personal data in the electronic communication sector, as it facilitates the free movement of such data through electronic communication services. In particular, the e-Privacy Directive requires the user’s consent when ‘cookies’ or other forms of accessing and storing information on an individual’s device (e.g. tablet or smartphone) are used. The Data Protection Directive applies to the processing of ‘personal data’. Personal data means any information relating to an identified or identifiable natural person (‘data subject’). An identifiable person is someone who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his or her physical, physiological, mental, economic, cultural or social identity. A person or organisation who determines the purposes for processing personal data is a data controller (Article 2(a)). The data controller must comply with the legal obligations in the data protection rules. Processing, which includes collecting and storing personal data, must be fair and lawful. One aspect of fair processing is that the data subject is given relevant information, including: Øthe identity of the data controller and of his representative, if any; Øthe purposes of that processing; Øany further information, such as: 1. the categories of personal data being processed; 2. the recipients of categories of recipients; 3. the existence of the right of access and the right to rectify the data concerning him; 4. whether the personal data will be provided to third parties, and;

5. information about whether replies to the questions are obligatory or voluntary and possible consequences of failure to reply, information on the existence of the right of access to and of the right to rectify own personal data; in so far as such further information is necessary, having regard to the specific circumstances in which the data are collected, to guarantee fair processing in respect of the data subject. Fair and lawful processing of personal data requires that data protection principles are complied with and that at least one of the six grounds for legitimate processing applies to any processing activity. Consent by the individual is one of these criteria. Other criteria will apply where necessary, depending on the circumstances and purposes of the processing. Data protection principles require that personal data is: Øcollected for specific and legitimate purposes and not further processed in a way incompatible with those purposes; Øadequate, relevant and not excessive for those purposes; Øaccurate and, if inaccurate, erased or rectified; Ønot stored for longer than necessary. Data-driven business structures are becoming predominant in the online world. In particular, online platforms analyse, process and sell data related to consumer preferences and other user-generated content. This, together with advertising, often constitutes their main source of revenues. The collection and processing of personal data in these types of situations must comply with the legal requirements under the Data Protection Directive mentioned above. Individuals must be able to exercise their rights in respect of such processing. These include: Øthe right to access their personal data; Øthe right to object to processing (e.g. direct marketing); Øthe right to have their data erased. For example: · An app developer that decides on the collection and processing of personal data is the ‘data controller’ under the Data Protection Directive. Therefore, the app developer must inform consumers at least about what type of personal data is being processed, by whom and for what purposes. An app developer processing personal data for further purposes that are incompatible with the purposes notified to the consumer will be in breach of the Data Protection Directive. An app developer must also comply with his obligations under the e-Privacy Directive and ensure that the consumer’s prior consent has been obtained if ‘cookies’ or some other forms of accessing and storing information on the individual’s device (e.g. smartphone) are being used. As of 25 May 2018, Directive 95/46/EC will be replaced by the General Data Protection Regulation adopted in 2016. The new rules strengthen the existing rights and empower individuals with more control over their personal data. Most notably, these include: Øestablishment of a single, pan-European law for data protection: data subjects, public authorities and companies will have to simply deal with one EU Regulation, as opposed to 28 national laws; Øeasier access to own personal data: individuals will have more information, on top of the existing requirements, as to how their personal data are processed, and this information will have to be made available in a clear and understandable way; Øthe right to know, for instance, when personal data have been hacked: for example, companies and organisations must notify the national data protection supervisory authority of serious personal data breaches as soon as possible, so that users can take appropriate measures.

A trader’s violation of the Data Protection Directive or of the ePrivacy Directive will not, in itself, always mean that the practice is also in breach of the UCPD. However, such data protection violations should be considered when assessing the overall unfairness of commercial practices under the UCPD, particularly in the situation where the trader processes consumer data in violation of data protection requirements, i.e. for direct marketing purposes or any other commercial purposes like profiling, personal pricing or big data applications. From a UCPD perspective, the first issue to be considered concerns the transparency of the commercial practice. Under Articles 6 and 7 of the UCPD, traders should not mislead consumers on aspects that are likely to have an impact on their transactional decisions. More specifically, Article 7(2) and No 22 of Annex I prevent traders from hiding the commercial intent behind the commercial practice. The data protection information requirement of consumers about the processing of personal data, not limited only in relation to commercial communication, may be considered as material (Article 7(5)). Personal data, consumer preferences and other user generated content, have a "de facto" economic value and are being sold to third parties. Consequently, under Article 7(2) and No 22 of Annex I UCPD if the trader does not inform a consumer that the data he is required to provide to the trader in order to access the service will be used for commercial purposes, this could be considered a misleading omission of material information. Depending on the circumstances, this could also be considered a violation of the EU data protection requirements to provide the required information to the individual concerned as to the purposes of the processing of the personal data. 1.4.11Interplay with Articles 101-102 TFEU (competition rules) Regulation 1/2003 provides the legal framework for implementing the competition rules laid down in Articles 101 and 102 TFEU. Article 101(1) TFEU prohibits in certain circumstances agreements between undertakings, decisions by associations of undertakings and concerted practices, such as fixing purchase or selling prices or other trading conditions, which have as their object or effect the prevention, restriction or distortion of competition in the EU. Its essential feature is that any collusive behaviour by two or more undertakings having anticompetitive object or effect is prohibited and automatically void. Article 102 TFEU prohibits, in certain circumstances, the abuse of a dominant position by one or more undertakings. Its essential feature is to prohibit abusive conduct even by a single undertaking being dominant. Such an abuse may, for example, consist in applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage, or directly or indirectly imposing unfair purchase or selling prices. Although these practices are, under certain circumstances, prohibited under competition rules, they are not automatically considered as unfair under the UCPD. The breach of competition rules should, however, be taken into account when assessing their unfairness under the UCPD. In such situations, the general clause of Article 5(2) UCPD is relevant. 1.4.12Interplay with the EU Charter of fundamental rights According to its Article 51(1), the EU Charter of fundamental rights applies to the Member States when they implement Union law, thus also when they implement the provisions of the UCPD. The Charter contains provisions, among others, on the protection of personal data (Article 8), the rights of the child (Article 24), consumer protection (Article 38) and the right to an effective remedy and a fair trial (Article 47). The Court has stressed the significance of Article 47 of the Charter on access to justice in relation to remedies available to consumers in connection with consumer rights granted under EU directives. The principle of effectiveness, as referred to by the Court, means that national rules of procedure may not make it excessively difficult or impossible in practice for consumers to exercise rights conferred by EU law . 1.4.13Interplay with Articles 34-36 TFEU A national measure in an area which has been the subject of exhaustive harmonisation at EU level must be assessed in the light of the provisions of that harmonising measure and not those of the Treaty of the Functioning of the European Union (TFEU). Thus, when a national measure falls within the scope of the UCPD (discussed in Sections 1.1 and 1.2 above), it should be assessed against the UCPD and not against the TFEU. National measures that neither fall within the scope of the UCPD nor under any other harmonising instrument of secondary EU law are to be assessed under Articles 34-36 TFEU. The prohibition of measures having an effect equivalent to quantitative restrictions as laid down in Article 34 TFEU covers all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Union trade. The issue of when a national rule is capable of hindering intra-Union-trade has been dealt with extensively by the Court. Notably, in Keck the Court held that national provisions restricting or prohibiting certain selling arrangements are not such as to hinder directly or indirectly, actually or potentially trade between Member States, so long as, first, those provisions apply to all relevant traders operating within the national territory and, secondly, they affect in the same manner, in law and in fact, the marketing of domestic products and those from other Member States. The Court includes in the list of selling arrangements, measures relating to the conditions and methods of marketing, measures which relate to the time of the sale of goods, measures which relate to the place of the sale of goods or restrictions regarding by whom goods may be sold and measures which relate to price controls.

Some of the examples of selling arrangements mentioned in the jurisprudence of the Court, notably national provisions that regulate the conditions and methods of marketing, would fall within the scope of the UCPD if they qualify as business-to-consumer commercial practices intended to protect the economic interest of consumers. Many commercial practices that do not fall within the scope of the UCPD or other secondary EU law would appear to qualify as selling arrangements under Keck. Such selling arrangements fall within the scope of Article 34 TFEU if they, in law or in fact, introduce discrimination on the basis of the origin of products. Discrimination in law occurs when the measures are manifestly discriminatory, whilst discrimination in fact is more complex. Such measures would need to be assessed on a case-by-case basis. If a measure or national practice violates Article 34 TFEU, it may in principle be justified under Article 36 TFEU or on the basis of one of the overriding requirements in the public interest recognised by the Court of Justice. It is for national authorities to demonstrate that the restriction on the free movement of goods is justified on one of these grounds. Furthermore, the Member State must demonstrate that its legislation is necessary to effectively protect the public interests invoked. In order to be permissible, such provisions must be proportionate to the objective pursued and the objective must not be capable of being achieved by measures which are less restrictive of intra-EU trade. More recently the Court held that "in determining whether the restriction at issue is proportionate, it is also important to ascertain whether the measures implemented in that context go beyond what is necessary to attain the legitimate objective being pursued. In other words, it is necessary to determine whether there exist alternative measures that are also capable of attaining that objective while at the same time having a less restrictive effect on intra‑Community trade". Moreover, the Court held that "it should be borne in mind in that context that a restrictive measure may be regarded as complying with the requirements of European Union law only if it genuinely reflects a concern to secure the attainment of the objective pursued in a consistent and systematic manner”. 1.5The relationship between the UCPD and self-regulation Article 2 (f) ‘code of conduct’ means an agreement or set of rules not imposed by law, regulation or administrative provision of a Member State which defines the behaviour of traders who undertake to be bound by the code in relation to one or more particular commercial practices or business sectors; Article 10 Codes of conduct This Directive does not exclude the control, which Member States may encourage, of unfair commercial practices by code owners and recourse to such bodies by the persons or organisations referred to in Article 11 if proceedings before such bodies are in addition to the court or administrative proceedings referred to in that Article. Recourse to such control bodies shall never be deemed the equivalent of foregoing a means of judicial or administrative recourse as provided for in Article 11. The UCPD recognises the importance of self-regulation mechanisms and clarifies the role that code owners and self-regulatory bodies can play in enforcement. Member States may encourage code owners to check for unfair commercial practices, in addition to enforcing the UCPD. When the rules in self-regulatory codes are strict and rigorously applied by code owners, they may indeed reduce the need for administrative or judicial enforcement action. Moreover, when the standards are high and industry operators largely comply with them, such rules may be a useful reference point for national authorities and courts in assessing whether a commercial practice is unfair. The UCPD contains several provisions which prevent traders from unduly exploiting the trust which consumers may have in self-regulatory codes. This is discussed in Section 3.3.3 on non-compliance with codes of conduct. To improve compliance with the UCPD, in 2012 the European Commission launched two multi-stakeholder dialogue processes bringing together industry representatives, NGOs and national authorities. The multi-stakeholder group on environmental claims and the multi-stakeholder group on comparison tools provided useful input further discussed in sections 5.1 on Environmental Claims and 5.2.6 on Comparison Tools. In addition, these groups drew up: Ø'Compliance Criteria on Environmental Claims': multi-stakeholder advice to help traders apply the UCPD as regards environmental claims, Øa list of key principles for comparison tools. These documents, which are not legally binding as such, are available at: http://ec.europa.eu/consumers/consumer_rights/unfair-trade/unfair-practices . The stakeholders involved in these multi-stakeholder groups have committed to disseminate, promote and implement the criteria/principles and/or support their implementation. 1.6Application of the UCPD to traders established in third countries The applicability of the UCPD to non-EU traders is regulated by Regulation No 864/2007 on the law applicable to non-contractual obligations (Rome II). This Regulation applies "in situations involving a conflict of laws, to non-contractual obligations in civil and commercial matters". Rome II is applicable in civil or commercial disputes. Article 6(1) of the Rome II Regulation: The law applicable to a non-contractual obligation arising out of an act of unfair competition shall be the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected.

When the conditions of Article 6(1) of the Rome II Regulation are fulfilled, e.g. if misleading advertising is targeted to EU consumers and this harms the collective interests of EU consumers, the UCPD will be applicable. 2.General concepts 2.1The notion of trader Article 2(b) ‘trader’ means any natural or legal person who, in commercial practices covered by this Directive, is acting for purposes relating to his trade, business, craft or profession and anyone acting in the name or on behalf of the trader. This definition covers not only traders who act on their own account but also persons, including consumers, acting ‘in the name of’ or ‘on behalf of’ another trader. For example: ·A Latvian court held that a company that placed advertisements in the media on behalf of and in the interests of another company, which was the service provider, was considered as a trader in the meaning of the national provisions transposing the UCPD. ·National consumer protection authorities acting through the European Consumer Protection Cooperation Network carried out a joint enforcement action on online games that offer in-app purchases. They clarified that, although liability for the content of an app primarily rests with the app developer, an app store provider could also be held responsible for ensuring that games on their platforms do not contain direct exhortations to children. Hence, under Article 2(b) in conjunction with relevant national laws on liability and sanctions, a trader can be held jointly liable with another trader for infringements of the UCPD committed by the latter on his behalf. . There may be situations where individuals who appear to be consumers selling products to other consumers could in fact be either traders themselves or acting on behalf of traders (‘hidden B2C’ sales). Whether a seller qualifies as a "trader" or a consumer must be assessed on a case-by-case basis. Different criteria could be relevant, such as: Øwhether the seller has a profit-seeking motive, including the fact that he/she might have received remuneration or other compensation for acting on behalf of a given trader; Øthe number, amount and frequency of transactions; Øthe seller’s sales turnover; Øwhether the seller purchases products in order to resell them. Persons whose main activity is to sell products online on a very frequent basis, purchasing products to resell them at a higher price, could for example fall within the definition of trader. Organisations which pursue charitable or ethical goals may qualify as traders under the UCPD when they engage in commercial activities (e.g. the sale of products meeting certain ethical standards) towards consumers. Whenever they act as traders, they should comply with the UCPD insofar as their commercial activities are concerned. For instance, information about the origin of the product or its ethical aspects should not be misleading. The fact that an organisation is structured as ‘non-profit’ is immaterial to the assessment of whether it qualifies as a trader. The same applies to public authorities, which may, depending on the circumstances also qualify as a trader when carrying out commercial activities.

For example: ·A municipality marketing discounted ticket prices for an art exhibition it organises could fall under the definition of trader in the UCPD. In the BKK Mobil Oil case, the Court confirmed that a public law body charged with a task of public interest such as managing a statutory health insurance fund, can qualify as a ‘trader’ as: ‘the EU legislature has conferred a particularly broad meaning on the term ‘trader’, which refers to ‘any natural or legal person’ which carries out a gainful activity and does not exclude from its scope either bodies pursuing task of public interest or those which are governed by public law’. The Court also concluded that: ‘[...] BKK’s members, who must manifestly be regarded as consumers within the meaning of the Unfair Commercial Practices Directive, could be deceived by the misleading information circulated by that body thus preventing them from making an informed choice […] and leading them to take a decision they would not have taken in the absence of such information, as envisaged by Article 6(1) of that Directive. In those circumstances, whether the body at issue or the specific task it pursues are public or private is irrelevant’. In particular, under Annex I of the UCPD (the ‘black list’) No 22, the following practice is prohibited: No 22 of Annex I Falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession, or falsely representing oneself as a consumer. For example: ·A hotel website hosting positive reviews supposedly from consumers which are actually written by the hotel owner. 2.2The concept of commercial practice Article 2(d) business-to-consumer commercial practices means any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers; The Court held that the sole criterion in Article 2(d) of the UCPD is that the trader’s practice must be directly connected with the promotion, sale or supply of a product or service to consumers. A commercial practice can be ‘directly connected’ to the promotion of a product for example by providing ‘information relating to the availability of a product at an attractive price during a certain period’. Based on the case-law currently available, it is difficult to define a limit for when a commercial practice would no longer be ‘directly connected’ to the promotion of a product. However, as an example, where a trader sells a street map not containing any promotional messages, and the consumer subsequently uses that street map to find his way to a given shop, it would seem unreasonable to qualify the selling of that street map as a commercial practice ‘directly connected’ to the promotion of a product in that given shop. The Court stated that the UCPD covers activities of a professional following on from a commercial transaction relating to any good or service and following the conclusion of a contract or during the performance of that contract. On this basis, the Court concluded that: ‘[…] the fact that the action of the professional concerned took place on only one occasion and affected only one single consumer is immaterial in this context. Neither the definitions set out in Articles 2(c) and (d), 3(1) and 6(1) of the Unfair Commercial Practices Directive nor the latter, considered as a whole, contain any indication that the act or omission on the part of the professional must be recurrent or must concern more than one consumer.’

‘[…] the communication, by a professional to a consumer, of erroneous information, such as that at issue in the main proceedings, must be classified as a ‘misleading commercial practice’, within the meaning of that directive, even though that information concerned only one single consumer.’ 2.3The concept of ‘transactional decision’ Article 2(k) ‘transactional decision’ means any decision taken by a consumer concerning whether, how and on what terms to purchase, make payment in whole or in part for, retain or dispose of a product or to exercise a contractual right in relation to the product, whether the consumer decides to act or to refrain from acting. The UCPD’s general provisions (Articles 5 to 9) cover unfair, misleading and aggressive commercial practices which are capable of distorting consumers’ economic behaviour, thereby causing or being likely to cause them to take a transactional decision that they would not have taken otherwise. The wording used in Article 2(k) suggests that the definition should be interpreted in a broad manner and that the concept of transactional decision should cover a wide range of decisions made by the consumer in relation to a product. The Court held that ‘transactional decision’ covers not only the decision whether or not to purchase a product, but also decisions directly related to that decision, in particular the decision to enter the shop: ‘Since the commercial practice at issue in the main proceedings concerns information relating to the availability of a product at an attractive price during a certain period, it must be determined whether the acts preparatory to the purchase of a product, such as the consumer’s trip to the shop or the act of entering the shop, may be regarded as constituting transactional decisions for the purposes of the directive. […] ‘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. […] Article 2(k) of the directive must be interpreted as meaning that any decision directly related to the decision whether or not to purchase a product is covered by the concept of ‘transactional decision’. In that sense, the notion of transactional decision also encompasses pre-purchase and post–purchase decisions. There is a wide spectrum of transactional decisions a consumer may take in relation to a product or a service other than the decision whether to purchase. These transactional decisions may result in actions which have no legal consequences under national contract law and may be taken at any time between the moment the consumer is initially exposed to the marketing and the end of a product’s life or the final use of a service. Many pre-purchase decisions could be considered transactional decisions. For example: ·A decision to travel to a sales outlet or shop as a result of a commercial offer. ·A decision to agree to a sales presentation by a trader. ·A decision to click through a website as a result of a commercial offer. Many post-purchase decisions made after having purchased a product or subscribed to a service can qualify as transactional decisions. For example: ·A decision to withdraw from or terminate a service contract. ·A decision to switch to another service provider. For misleading practices committed by third parties, Article 14 of the e-Commerce Directive determines under which conditions certain online platforms are not liable for such third parties' illegal information stored on the platform, when acting as an intermediary providing 'hosting' services within the meaning of that provision.

From a UCPD perspective, what is decisive is whether the relevant on-line intermediary qualifies as a trader and has or not engaged in a business-to-consumer commercial practice directly connected with the promotion, sale or supply of a product to consumers. It is only if that on-line intermediary qualify as a trader and engages in such commercial practices and does so in a manner that is prohibited under the UCPD that it can be found in breach thereof. In this connection the intermediary cannot invoke the liability exemption of Article 14 of the e-Commerce Directive where those practices concern the intermediary's own activities and not the information stored, nor where the intermediary has knowledge of or control over such information. Many consumers first search for products using search engines or comparison tools or by studying online user reviews and subsequently move to the websites of the traders providing the best offers to make the actual purchase. For example: ·Failure by a trader providing an online comparison tool to disclose paid placement adequately to consumers could be an unfair commercial practice, independently of whether the products compared by the consumer through the comparison tool are directly offered for sale by the comparison tool provider or by third party sellers. In this case, the non-transparent commercial practice by the comparison tool provider could lead the consumer to take a transactional decision he would not have taken otherwise. In addition, an unfair commercial practice directed at one consumer could lead to a transactional decision by another consumer, which the latter would not have taken otherwise. For example: ·Commercial practices by a trader offering online user reviews in which the trader screens negative reviews could be a misleading action or omission even though the relevant transactional decision relates to a decision by a different consumer than the one pressured into removing or not posting a negative review. In this situation, the trader’s creation of a false or misleading overall impression about the nature of the review site, or how it operates, could cause the average consumer reading the online reviews to take a decision to contact a listed trader (and subsequently contract with him) which he would not have taken, had he known that negative reviews had been withheld. Commercial practices related to search engines, comparison tools and user reviews are further discussed in Chapter 5.2 ‘Online sector’. 2.4To ‘materially distort the economic behaviour of consumers’ The UCPD’s general provisions (Articles 5 to 9) cover unfair, misleading and aggressive commercial practices which are capable of distorting consumers’ economic behaviour. These provisions use slightly different wording to express these requirements. Under Article 5(2) UCPD, a commercial practice is unfair if it is contrary to the requirements of professional diligence and ‘materially distorts or is likely to materially distort’ the economic behaviour of the average consumer. However, Articles 6, 7 and 8 prohibit a misleading or aggressive commercial practice if it causes or is likely to cause the average consumer to ‘take a transactional decision that he would not have taken otherwise’. The requirement that a commercial practice must be capable of distorting the consumer’s economic behaviour in order to be unfair is worded differently in Article 5(2) than in Articles 6, 7 and 8. At first sight, this apparent contradiction could pose problems of interpretation. However, Article 5(2) should be read in conjunction with Article 2(e), which states: Article 2(e) ‘to materially distort the economic behaviour of consumers’ means using a commercial practice to appreciably impair the consumer’s ability to make an informed decision, thereby causing the consumer to take a transactional decision that he would not have taken otherwise. Consequently, on the basis of Article 5(2), what determines whether a commercial practice ‘materially distorts or is likely to materially distort’ the consumer’s economic behaviour is whether the commercial practice causes or is likely to cause the consumer to ‘take a transactional decision that he would not have taken otherwise’. This is the same assessment that is to be made on the basis of Articles 6, 7 and 8. It follows that although the wording of Article 5(2) is different from the wording of the latter Articles, the requirement in relation to the material distortion of the consumer’s behaviour is the same. The broad concept of transactional decision developed by the Court (see section 2.3) allows for the UCPD to apply to a variety of cases where a trader’s unfair behaviour does not cause the consumer to enter into a transaction or a service contract. A commercial practice may be considered unfair not only if it is likely to cause the average consumer to purchase or not to purchase a product, but also if it is likely to cause the consumer to, for example: Øenter a shop; Øspend more time on the internet engaged in a booking process;

Ødecide not to switch to another service provider or product. The UCPD does not limit this material distortion test to assessing whether the consumer’s economic behaviour (i.e. its transactional decision) has actually been distorted. It also requires an assessment as to whether a commercial practice is ‘likely’ (i.e. capable) to have such an impact on the average consumer. National enforcement authorities should therefore investigate the facts and circumstances of the individual case (i.e. in concreto), but assess also the ‘likelihood’ of the impact of that practice on the transactional decision of the average consumer (i.e. in abstracto). For example: ·A commercial announcement claimed that a new model of a car was ‘the safest car in the world’. In deciding whether the claim had affected any consumer in regard to making a well-founded transactional decision, a Swedish Court found that to qualify as a transactional decision, it was sufficient that the marketing was likely to raise an interest among the average consumer and trigger the consumer’s decision to take any further action (e.g. visit a store or website to obtain additional information on the product). 2.5'Average consumer’ Recital 18 It is appropriate to protect all consumers from unfair commercial practices; however the Court of Justice has found it necessary in adjudicating on advertising cases since the enactment of Directive 84/450/EEC to examine the effect on a notional, typical consumer. In line with the principle of proportionality, and to permit the effective application of the protections contained in it, this Directive takes as a benchmark the average consumer, who is reasonably well informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors, as interpreted by the Court of Justice, but also contains provisions aimed at preventing the exploitation of consumers whose characteristics make them particularly vulnerable to unfair commercial practices. Where a commercial practice is specifically aimed at a particular group of consumers, such as children, it is desirable that the impact of the commercial practice be assessed from the perspective of the average member of that group… The average consumer test is not a statistical test. National courts and authorities will have to exercise their own faculty of judgment, having regard to the case-law of the Court of Justice, to determine the typical reaction of the average consumer in a given case. As indicated in Recital 18 and further specified in Articles 5 to 9, the UCPD’s benchmark for assessing the impact of a commercial practice is the notion of the ‘average consumer’, as previously developed by the Court: ‘…in order to determine whether a particular description, trade mark or promotional description or statement is misleading, it is necessary to take into account the presumed expectations of an average consumer who is reasonably well informed and reasonably observant and circumspect.’ This concept was indeed developed by the Court of Justice prior to the UCPD. It was codified then by the UCPD to give national authorities and courts common criteria to enhance legal certainty and reduce the possibility of divergent assessments. In the case-law of the Court, the average consumer is a reasonably critical person, conscious and circumspect in his or her market behaviour. For example: ·The ‘reasonably circumspect consumer’ will not believe that the size of a promotional marking on a package corresponds to the promotional increase in the size of that product. Usually, the average consumer will not attribute to goods bearing the marking ‘dermatologically tested’ any healing effects which such goods do not possess. The average consumer under the UCPD is in any event not somebody who needs only a low level of protection because he/she is always in a position to acquire available information and act wisely on it. On the contrary, as underlined in Recital 18, the test is based on the principle of proportionality. The UCPD adopted this notion to strike the right balance between the need to protect consumers and the promotion of free trade in an openly competitive market. Therefore, the average consumer concept under the UCPD should always be interpreted having in mind Article 114 of the Treaty, which provides for a high level of consumer protection. At the same time, the UCPD is based on the idea that, for instance, a national measure prohibiting claims that might deceive only a very credulous, naive or cursory consumer (e.g. ‘puffery’ ) would be disproportionate and create an unjustified barrier to trade. As explicitly mentioned by Recital 18, the average consumer test is not a statistical test. This means that national authorities and courts should be able to determine whether a practice is liable to mislead the average consumer exercising their own judgment by taking into account the general presumed consumers' expectations, without having to commission an expert's report or a consumer research poll . For example: ·A decision by the UK High Court of Justice states that the term ‘average consumer’ relates to ‘consumers who take reasonable care of themselves, rather than the ignorant, careless or over-hasty’. The High Court also concluded that one cannot assume that the average consumer will read small print on promotional documents. ·In Germany, the Oberlandesgericht Karlsruhe found that people with impaired eyesight can also be considered average consumers and printing information in a very small font can be considered a misleading commercial practice. A similar decision was taken by the Slovak Trade inspection. ·In Hungary the Metropolitan High Court of Appeal found that a reasonably acting consumer is not suspicious and tends to trust that the received information is valid and accurate. A reasonably acting consumer is not obliged to further search for the entire accurate content of the message delivered to him, unless the sender of the message emphatically draws his attention to, or there is strong reference to such an obligation in the text of the message. Article 5(2)(b) of the UCPD further refines the average consumer test when the interests of specific groups of consumers are at stake. When the practice is directed at a particular group of consumers, its impact should be assessed from the perspective of the average member of the relevant group.

Article 5(2) 2. A commercial practice shall be unfair if: (…) (b) it materially distorts or is likely to materially distort the economic behaviour with regard to the product of the average consumer whom it reaches or to whom it is addressed, or of the average member of the group when a commercial practice is directed to a particular group of consumers. For example: ·In a case concerning misleading advertising of children’s diapers, notably implying a correlation between allergies and the trader's diaper's, the Swedish Market Court identified the average consumer as parents with small children, not having any special knowledge about allergies. Findings from the European Commission's study on consumer vulnerability across key markets A recent study on consumer vulnerability looked into the concepts of "average" and "vulnerable" consumer, as developed by the Court of Justice, with a particular focus on the UCPD. The study looked at how these legal concepts have been understood across Member States and found that, although used across a number of cases, some level of divergence in the interpretation exists. The study furthermore investigated the concept of the average consumer in two ways – in relation to the indicators developed by the study to conceptualise consumer vulnerability and in relation to the definition of the average consumer in the UCPD, i.e. referring to the average consumer as reasonably "well informed", "observant" and "circumspect". On whether the average consumer is "well informed", the study found that the average consumer, as represented by the median consumer response per indicator, feels quite informed about prices, declares that he/she reads communication from the internet, banking and energy providers (but admits to have only glanced over it or skim read it), and states that he/she does not rely on information from advertisements only. As regards the concept of being "observant" and "circumspect", the study found that the median consumer sees him/herself as quite careful in dealing with people and in making decisions, as not very willing to take risks and that he/she disagrees that advertisements report objective facts. The median consumer was also able to correctly identify the meaning of concepts such as KWh, Megabytes/per second and interest rate and to correctly answer questions measuring basic computational abilities and credulity. Most of the above indicators reflect the self-reported average – as opposed to objective measures – of the concepts of being "well-informed", "observant" and "circumspect" and should hence be interpreted with caution, as they are likely to be influenced – at least in part – by behavioural biases such as consumer overconfidence . This is underpinned by the fact that, when presented with complex offers in behavioural experiments, the median consumer was actually not able to select the best deal in the experiments reflecting current marketing practices in the energy sector (complex pricing), the online sector (bundling of offers) and across sectors (teaser rates - initial rates below market rates that will be in effect for only a short time, following which the rate will gradually increase). Furthermore, the median consumer reports that he/she never compares deals by banks and energy providers, and that he/she has problems comparing deals from such providers. The median consumer also feels vulnerable to some extent due to personal characteristics, such as health problems, age, belonging to a minority group etc. Overall, the majority of the indicators show a consistent picture of the average consumer across the 28 EU Member States, but some differences between countries have been found. For example, 69% of consumers in Bulgaria find it either "very" or "fairly" difficult to compare energy deals, while 35% of consumers in Germany say the same. In Denmark, 63% of consumer finds it either "very" of "fairly" difficult to compare the services offered by banks, while this is the case for 33% of UK consumers. These findings point to the fact that the characteristics of the average consumer depend both on the situation he/she is in and how these characteristics are measured. The findings of this study can therefore guide the understanding of the average consumer, and country-specific findings can be found in the final report. When designing their commercial messages, traders may, at times and in light of the specific nature of the products at stake, need to take certain social, linguistic and cultural features into account which are typical of the average consumers to which the products are targeted. In certain cases, such social, linguistic and cultural features, which can also be peculiar to a given Member State, may therefore also justify a different interpretation of the message communicated in the commercial practice by the competent enforcement authority or court. In a case relating to misleading cosmetics advertising, the Court held that: ‘In order to apply that test to the present case, several considerations must be borne in mind. In particular, it must be determined whether social, cultural or linguistic factors may justify the term ‘lifting‘, used in connection with a firming cream, meaning something different to the German [average] consumer as opposed to consumers in other Member States, or whether the instructions for the use of the product are in themselves sufficient to make it quite clear that its effects are short-lived, thus neutralising any conclusion to the contrary that might be derived from the word ‘lifting‘.’ Moreover, the Court stated that: ‘a prohibition of marketing on account of the misleading nature of the trade mark is not, in principle, precluded by the fact that the same trade mark is not considered to be misleading in other Member States. […] it is possible that because of linguistic, cultural and social differences between the Member States a trade mark which is not liable to mislead a consumer in one Member State may be liable to do so in another.’ Therefore, on the basis of the average consumer test and despite the UCPD’s full harmonisation character, it could be theoretically justified to require a foreign trader to provide additional information on social, cultural or linguistic grounds. In other words, the omission of such information could mislead consumers in the country of destination, unlike those in the country of origin. 2.6Vulnerable consumers Article 5(3) — Prohibition of unfair commercial practices 3. Commercial practices which are likely to materially distort the economic behaviour only of a clearly identifiable group of consumers who are particularly vulnerable to the practice or the underlying product because of their mental or physical infirmity, age or credulity in a way which the trader could reasonably be expected to foresee, shall be assessed from the perspective of the average member of that group. This is without prejudice to the common and legitimate advertising practice of making exaggerated statements or statements which are not meant to be taken literally. Recital 19 Where certain characteristics such as age, physical or mental infirmity or credulity make consumers particularly susceptible to a commercial practice or to the underlying product and the economic behaviour only of such consumers is likely to be distorted by the practice in a way that the trader can reasonably foresee, it is appropriate to ensure that they are adequately protected by assessing the practice from the perspective of the average member of that group. The UCPD is based on the idea that, whilst it is appropriate to protect all types of consumers from unfair commercial practices, consumers who qualify as members of one of the groups listed in Article 5(3) should be ensured a higher level of protection than ‘the average consumer’ referred to in Article 5(2). Recital 19 of the Preamble further clarifies the interpretation of Article 5(3): while Article 5(3) appears to exclusively qualify consumers as vulnerable because of their ‘mental or physical infirmity, age or credulity’, recital 19 provides a non-exhaustive list of characteristics that make a consumer ‘particularly susceptible’. For example: ·In a case involving the omission of material information by a credit institution, the Hungarian Competition Authority considered that consumers that had been banned by credit institutions due to poor ability to pay were particularly susceptible to a specific offer. Findings from the European Commission's study on consumer vulnerability across key markets : Taking stock of various existing definitions and understandings of the concept of consumer vulnerability, the study establishes a broad definition, where being more susceptible to marketing practices represents one of five "dimensions" of consumer vulnerability. The study defines the "vulnerable consumer" as: "A consumer, who, as a result of socio-demographic characteristics, behavioural characteristics, personal situation or market environment: oIs at higher risk of experiencing negative outcomes in the market; oHas limited ability to maximise his/her well-being; oHas difficulty in obtaining or assimilating information; oIs less able to buy, choose or access suitable products; or oIs more susceptible to certain marketing practices". From a UCPD point of view, the last of these "dimensions" is the most relevant, as Article 5(3) defines vulnerable consumers as consumers who are ‘particularly vulnerable to the practice or the underlying product (…)’. Most consumers show signs of vulnerability in at least one dimension, while a third of consumers show signs of vulnerability in multiple dimensions. Less than a fifth of the consumers interviewed show no signs of vulnerability. As consumer vulnerability is multi-dimensional, so is the impact of personal characteristics on the likelihood of being vulnerable as a consumer. For example, characteristics like age and gender can increase vulnerability in some dimensions, but not in others. 2.6.1The vulnerability criteria in Article 5(3)

Infirmity (mental or physical) includes sensory impairment, limited mobility and other disabilities. For example: ·The Italian AGCM considered advertising that misleadingly presented products as able to cure serious illness as particularly serious because it could cause vulnerable consumers, such as people affected by a serious illness, to take a transactional decision that they would not have taken otherwise. In this respect, it is worth mentioning that the EU ratified the United Nations Convention on the Rights of Persons with disabilities in 2010 . In the UN Committee's first concluding observations in October 2015, a recommendation was made for the EU to "take appropriate measures to ensure that all persons with disabilities who have been deprived of their legal capacity can exercise all the rights enshrined in the European Union treaties and legislation, such as (….) consumer rights (…)". As regards age, it may be appropriate to consider a commercial practice from the perspective of consumers of various ages. The Commission study on consumer vulnerability found that age can, in some instances, be a driver of consumer vulnerability. For example, compared to middle aged consumers (34-44), young consumers (16-24 years) are: ·Less likely to take action when experiencing a problem; ·More likely to overpay for services because they cannot use certain payment methods. On the other hand, the study found that elderly consumers (65-74 and 75+) find it more difficult than middle aged consumers (33-44) to compare offers and select deals in key markets. Elderly people may be more vulnerable to certain practices because of their age. Aggressive door-to-door selling methods may not affect the average consumer but are likely to intimidate a certain group of consumers, in particular the elderly, who may be more vulnerable to pressure selling. Findings from the European Commission's study on online marketing to children: ·Children have clear difficulties in recognising online advertising and consciously defending themselves against commercial persuasion and are affected in their choices and behaviour by such practices. ·The effects of embedded advertisements in games on actual behaviour can be clearly documented. A behavioural experiment investigating the effect of embedded advertisements in games (in this case an advergame) found that playing a game promoting energy-dense food induced higher energy-dense snack intake among children compared to children playing an advergame promoting a non-food product. ·A behavioural experiment investigating the effect of prompts to make in-app purchases in games found that such prompts influence children’s consumer behaviour and several children report having bought extra features without fully realising that it would cost money. Many children find it difficult to make a decision when prompted to make in-app purchases. ·Children’s vulnerability depends on several factors, including the medium in which the advertisement is sent. Children are more likely to understand the commercial intent of an advertisement shown on TV than advertisements in online games. Children are also less likely to notice and understand the commercial intent of ‘embedded advertisements’ as compared to more direct advertisements. In addition to Article 5(3) of the UCPD, children benefit from specific protection through the ban on direct exhortations in Annex I No 28 to the UCPD. This ban, which includes putting pressure on children to buy a product directly or to persuade adults to buy items for them (the ‘pester power’), is discussed in section 4.6. As mentioned in section 2.5 on the average consumer, the capacities of children in understanding online and offline advertising will vary greatly from one child to the next and depending on age and maturity. To a certain extent, it is possible to take this into account under the UCPD, as Article 5(3) allows assessing a commercial practice from the perspective of an average member of a specific age group. Teenagers represent another category of consumers often targeted by rogue traders. Promoting products which are particularly appealing to teenagers might exploit their lack of attention or reflection, as well as their risk-taking behaviour, due to their immaturity and credulity. For example: ·An advertisement for mobile phone services conveying the message that, by subscribing to a particular loyalty plan, you can easily make and maintain friends is likely to be taken more literally by teenagers. Depending on the circumstances, this could be taken into account under Article 5(3) UCPD. The concept of ‘credulity’ covers groups of consumers who may more readily believe specific claims. The term is neutral and circumstantial, so the effect is to protect members of a group who are for any reason particularly open to be influenced by a specific commercial practice. Any consumer could qualify as a member of this group. The study on consumer vulnerability found that people failing a credulity test are more likely than others to have problems choosing deals. Furthermore, people who consider themselves as credulous are less likely to complain when facing problems and are more likely to feel vulnerable as consumers. For example: ·A trader advertised the sale of bags of sweets by stating that for each bag sold, it would plant one tree. However, the trader had already agreed to plant a certain number of trees, independently from the number of candy bags sold. The Finnish Market Court upheld a claim by the Consumer Ombudsman that this statement took advantage of the credulity of consumers that were concerned about the environment. 2.6.2‘Foreseeability’ requirement

The ‘vulnerable consumer’ criteria apply if a commercial practice distorts the economic behaviour of a group of consumers who are particularly vulnerable ‘in a way which the trader could reasonably be expected to foresee’. For example: ·Online games or applications that are likely to concern children or teenagers, as a vulnerable group, are usually not solely targeted at children. Indeed, games can be very popular also among adults, although they often use cartoons or other features children or teenagers are typically attracted by. The ‘foreseeability’ criteria becomes relevant each time one needs to establish whether a given trader could have reasonably expected this practice to appeal in particular to vulnerable groups. This criterion adds an element of proportionality to the assessment of a commercial practice in relation to vulnerable consumers. It aims at holding traders responsible only if the negative impact of a commercial practice on a category of vulnerable consumers could reasonably be considered foreseeable by the trader. This means that traders are not required to do more than is reasonable, both in considering whether the practice would have an unfair impact on any clearly identifiable group of consumers and in taking steps to limit such impacts. As a consequence, a commercial practice would not be likely to be considered misleading if some consumers, because of their extreme naivety or ignorance, are misled by, or otherwise act irrationally in response to, even the most honest commercial practice. For example: ·There may be a few consumers who may believe that ‘Spaghetti Bolognese’ is actually made in Bologna or ‘Yorkshire Pudding’ in Yorkshire. Traders, however, will not be held liable for every conceivable interpretation of or action taken in response to their commercial practice by certain consumers. 2.7Invitation to purchase — the concept Article 2(i) ‘invitation to purchase’ means a commercial communication which indicates characteristics of the product and the price in a way appropriate to the means of the commercial communication used and thereby enables the consumer to make a purchase; For ‘invitations to purchase’, Article 7(4) of the UCPD regards certain pieces of information as ‘material’. This means that traders will need to provide consumers with this information if i