OPINION OF ADVOCATE GENERAL

WAHL

delivered on 23 October 2014 ( 1 )

Case C‑388/13

UPC Magyarország kft

v

Nemzeti Fogyasztóvédelmi Hatóság

(Request for a preliminary ruling from the Kúria (Hungary))

‛Unfair commercial practices — Erroneous information provided by a telecommunications undertaking to a subscriber causing added costs for the latter — Concept of ‘commercial practice’ — Role of contract law’

1. What constitutes a ‘commercial practice’ for the purposes of Directive 2005/29/EC (‘the UCP Directive’)? ( 2 ) Or, more specifically, may the communication of erroneous information to a single consumer be regarded as a ‘commercial practice’ for those purposes? That, in essence, is the question on which the referring court seeks guidance in the present case. In what follows, I will explain why that question ought to be answered in the negative.

I – Legal context

2. Recital 6 in the preamble to the UCP Directive mentions the principle of proportionality. In line with that principle, the directive protects consumers from the consequences of unfair commercial practices where they are material but recognises that in some cases the impact on consumers may be negligible.

3. Recital 7 to the UCP Directive states: ‘This Directive addresses commercial practices directly related to influencing consumers’ transactional decisions in relation to products. ...’

4. Recital 9 to that directive explains: ‘This Directive is without prejudice to individual actions brought by those who have been harmed by an unfair commercial practice. It is also without prejudice to [EU] and national rules on contract law …’

5. Article 1 of the UCP Directive provides: ‘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.’

6. Article 2 of the UCP Directive is worded as follows: ‘For the purposes of this Directive: … (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; …’

7. Article 3 of the UCP Directive provides: ‘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. 2. This Directive is without prejudice to contract law and, in particular, to the rules on the validity, formation or effect of a contract. …’

8. In accordance with Article 5 of the UCP Directive (‘Prohibition of unfair commercial practices’): ‘1. Unfair commercial practices shall be prohibited. 2. A commercial practice shall be unfair if: (a) it is contrary to the requirements of professional diligence, and (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. … 4. In particular, commercial practices shall be unfair which: (a) are misleading as set out in Articles 6 and 7, or (b) are aggressive as set out in Articles 8 and 9. 5. Annex I contains the list of those commercial practices which shall in all circumstances be regarded as unfair. The same single list shall apply in all Member States and may only be modified by revision of this Directive.’

II – Facts, procedure and the questions referred

9. In April 2010, Mr S sent a request to UPC Magyarország (‘UPC’), a provider of cable television services, for information concerning the specific payment period to which the annual invoice issued in 2010 referred, as this was not clear from the invoice.

10. Mr S was subsequently informed that the most recent annual invoice related to the period between 11 January 2010 and 10 February 2011. To ensure that the end of the contract coincided with the last day of service already paid for, Mr S requested termination of the contract with effect from 10 February 2011. However, the service was not actually disconnected until four days later, on 14 February 2011. On 12 March 2011, a payment order was issued concerning arrears of HUF 5243 (approximately EUR 18) due for those four days, that is, from 11 to 14 February 2011.

11. Mr S made a complaint to the Budapest Főváros Kormányhivatala Fogyasztóvédelmi Felügyelősége (Consumer Protection Inspectorate under the governmental administration of Budapest capital; ‘the first level authority’) alleging that he had been provided with erroneous information. As a result, he had been unable to ensure that the end of the contract coincided with the last day of the actual payment period, so that he could use the services of another company from the date of termination of the contract. Thus, during the transitional period in question he had to pay both companies.

12. By decision of 11 July 2011, the first level authority imposed a fine of HUF 25000 (approximately EUR 85) on UPC. By decision of 10 October 2011, the Nemzeti Fogyasztóvédelmi Hatóság (National Office for Consumer Protection), acting as the second level authority, considered the claim to be well founded and confirmed the decision of the first level authority.

13. Following judicial review proceedings initiated by UPC, the Fővárosi Törvényszék (Budapest Municipal Court) varied the decision of the National Office for Consumer Protection and dismissed the claim brought by Mr S. In particular, according to that judgment, UPC’s conduct did not constitute continuous conduct. An isolated management error of an administrative nature and in respect of a single client could not be considered to be a practice.

14. Entertaining doubts as to the proper construction of the UCP Directive, the Kúria, hearing the case on appeal, decided to stay the proceedings and to refer the following questions for a preliminary ruling: ‘(1) Is Article 5 of [the UCP Directive] to be interpreted as precluding, in respect of misleading commercial practices within the meaning of Article 5(4) of that directive, a separate examination of the criteria laid down in Article 5(2)(a) of the directive? (2) May the communication of false information to a single consumer be regarded as a commercial practice within the meaning of that directive?’

15. Written observations have been submitted in the present proceedings by UPC, the Hungarian Government and the Commission, all of whom also presented oral argument at the hearing on 11 September 2014.

III – Analysis

1. Preliminary observations

16. The present case is closely linked to the judgment of the Court in CHS Tour Services. ( 3 ) That judgment provides an answer to the first of the two questions asked by the referring court in the present case. More specifically, the Court held that the UCP Directive must be interpreted as meaning that, if a commercial practice satisfies all the criteria specified in Article 6(1) of that directive for being categorised as a misleading practice in relation to the consumer, it is not necessary to determine whether such a practice is also contrary to the requirements of professional diligence as referred to in Article 5(2)(a) of the UCP Directive in order for it legitimately to be regarded as unfair and, therefore, prohibited in accordance with Article 5(1) of the directive. ( 4 )

17. In the present analysis, I will therefore focus on the second question (which is logically prior to the first), namely whether the communication of erroneous information to a single consumer may be regarded as a ‘commercial practice’ within the meaning of the UCP Directive. That is a novel question that the Court has not yet dealt with. The present case therefore offers the Court an opportunity to clarify the scope of the directive.

2. Does the concept of ‘commercial practices’ also encompass an isolated act adversely affecting a single consumer?

18. The Hungarian Government and the Commission argue that ‘commercial practices’ within the meaning of the UCP Directive also covers an act that adversely affects an individual consumer, such as that at issue in the proceedings before the referring court, namely the communication of erroneous information to a single consumer. The Hungarian Government, in particular, justifies its viewpoint in terms of the need to ensure a high level of consumer protection. That aim is specifically mentioned in Article 1 of the UCP Directive and constitutes one of the directive’s core objectives.

19. True, the definition of ‘commercial practices’ in Article 2 of the UCP Directive is strikingly broad. That term is defined as ‘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’.

20. Therefore, an extensive range of conduct which may take place before the conclusion of a contract (such as conduct affecting the consumer’s decision to acquire a certain product), but also at later stages of the contractual relationship (such as complaint-handling and after-sales services), can fall within the purview of the directive. This is demonstrated by the blacklist of unfair practices set out in Annex I to the UCP Directive. In that sense, there seems to be nothing in the UCP Directive that would exclude, at the outset, from its scope the provision of erroneous information about such matters as payment periods, the conditions governing the termination of a consumer contract, or other information concerning the performance of the contract. Certainly, the more broadly the scope of the directive is construed, the more likely a high level of consumer protection will be attained, as required by the directive.

21. However, I do not think it is feasible to conclude from the above that the reach of the UCP Directive also extends to conduct — however unfair or misleading — that is directed solely against one single consumer. The reasons for this are manifold.

a) The limits of what can be understood by the term ‘practice’

22. As noted above, the wording of the UCP Directive does not clearly exclude an isolated act directed towards a single consumer from the scope of the directive. To my mind, however, the term ‘practice’ inherently limits the types of conduct that may be covered by the directive. Indeed, the obvious precondition for the directive to apply to the conduct of the trader in a business-to-consumer (‘B2C’) relationship (such as the conduct blacklisted in Annex I) is that the conduct in question constitutes a ‘practice’.

23. For that to be the case, I believe that either or both of the two following conditions must be fulfilled: (i) the conduct is directed towards an unspecified group of addressees; (ii) the conduct is repeated in relation to more than one consumer. Otherwise, the conduct in question sits very uneasily with the ‘practice’ terminology employed in all the language versions of the directive. ( 5 )

24. As regards the first condition (in which case the conduct occurs only once), the conduct under consideration must be directed towards an unspecified group of consumers. The corollary idea that the criticised behaviour must have a degree of ‘market relevance’ ( 6 ) can also be inferred from Articles 5 to 8 of the UCP Directive: those provisions all refer to commercial practices affecting the economic behaviour of an ‘average consumer’ or an ‘average member of a group of consumers’. The paradigmatic example of this type of a practice is, of course, an advertisement in a newspaper or a magazine, or a sign in a shop, explaining a returns-policy to all (actual or potential) customers. A closely related, albeit different, example can be found in CHS Tour Services. At issue there was false information contained in a sales brochure. While the communication of false information occurred only once, it was directed towards an unspecified group of potential consumers and was thus deemed to fall within the scope of the UCP Directive. ( 7 )

25. Alternatively, where the conduct in question is not directed towards an unspecified group of consumers but, rather, to an individual consumer, as in the present case, the conduct must be repeated by the trader in order for it to fit with the ‘practice’ terminology employed by the UCP Directive. In other words, the conduct under consideration must be recurring and concern more than one consumer. The fact that the conduct must be repeated in relation to more than one consumer means that the second condition overlaps to a certain extent with the first.

26. In the present case, we are dealing with the communication of erroneous information on an isolated occasion to one single consumer and not to a group of consumers. While it is, in the final analysis, for the referring court to verify, there seems to be nothing to suggest that the provision of erroneous information by UPC’s employees — which occurred in relation to Mr S — would be a recurring phenomenon. In the absence of any objective indicator to that effect, I have difficulty in seeing how a single instance of unfair— or perhaps, more specifically, misleading — conduct could be defined as constituting a ‘commercial practice’ within the meaning of the UCP Directive.

b) The UCP Directive and contract law

27. Leaving aside the meaning of the term ‘practice’, I also attach particular importance to Article 3(2) of the UCP Directive. That provision specifically states that the directive is to be without prejudice to contract law. This reflects the reasoning in recital 9 in the preamble to the directive.

28. Yet the approach advocated by the two parties which submitted observations in support of Mr S in the present case would mean that the UCP Directive would apply (in addition to national contract law) to every individual contractual relationship. This would have notable ramifications in many respects. Not least, it would blur the distinction between private law and public law and, in particular, the distinction between the penalties variously applicable.

29. The aim of the UCP Directive is to establish a far-reaching control-mechanism over B2C conduct that may affect the economic behaviour of consumers. To ensure the effectiveness of that control, the directive requires Member States to create the necessary regulatory framework with injunctions and fines to combat such practices. ( 8 )

30. However, it is important to keep in mind that, in accordance with Article 13 of the UCP Directive, the penalties that Member States are to lay down for conduct contrary to the directive are firmly rooted in the sphere of public law, and entirely separate from contractual remedies. If the scope of the UCP Directive were nonetheless extended to cover isolated conduct of the kind at issue in the main proceedings, it would in practice entail the consequence that a public law penalty (in the form of a fine) could be imposed on a trader for each and every contractual breach; and this in addition to possible contractual remedies available to the individual consumer. In other words, following the logic of the parties which submitted observations to that effect, every contractual ‘malpractice’ would automatically attract public law penalties.

31. In my view, this would clearly go beyond what is necessary to ensure a high level of consumer protection. ( 9 ) Indeed, it ought not to be forgotten that public law penalties are intended to protect the public interest and, in the present case, this would have to be the collective interests of consumers.

32. Regrettably, the UCP Directive does not explicitly limit its scope to the protection of the collective interests of consumers. However, as has been pointed out by several commentators, the directive is concerned with protecting the collective interests of consumers and not with providing redress in individual cases. ( 10 ) Redress in individual cases is afforded by contractual remedies under (national) contract law. That said, the UCP Directive may of course have a ‘spill-over’ effect on contractual claims. If a certain type of conduct is deemed contrary to the UCP Directive, that may be of relevance in a dispute between a trader and an individual consumer (for assessing, for instance, the validity of the contract in question under relevant contract law provisions). ( 11 )

33. In this context, Article 11 of the UCP Directive is also worth mentioning. It requires the Member States to put in place adequate and effective means to combat unfair commercial practices in order to enforce compliance with the provisions of the directive in the interests of consumers. Moreover, Article 11 gives persons or organisations regarded under national law as having a legitimate interest in combating unfair commercial practices the possibility of taking legal or administrative action to challenge unfair commercial practices. ( 12 )

34. Had the legislature intended to introduce an additional layer of (public law) penalties for every single instance of contractual ‘malpractice’, the inclusion of that provision in the UCP Directive would seem counterintuitive. If the existence of an unfair commercial practice were to be determined on an individual basis, it would seem unnecessary to have specific rules about the collective supervision of unfair commercial practices in the directive. This view finds further support in Article 1(1) of Directive 2009/22/EC, ( 13 ) which refers to the UCP Directive as one of the instruments enacted to protect the collective interests of consumers.

35. Finally, I wish to emphasise that it cannot be regarded as desirable to apply, under the guise of consumer protection, the UCP Directive to issues for which it was clearly not intended. It is therefore my understanding that B2C conduct such as the communication of erroneous information to a single consumer cannot, to the extent that it constitutes an isolated event, be regarded as a ‘commercial practice’ within the meaning of the UCP Directive.

IV – Conclusion

36. In light of the foregoing, I propose that the Court answer the questions referred by the Kúria as follows: The communication of false information to a single consumer, to the extent that it constitutes an isolated event, cannot be regarded as a ‘commercial practice’ within the meaning of Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council.

( 1 ) Original language: English.

( 2 ) Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’) (OJ 2005 L 149, p. 22).

( 3 ) C‑435/11, EU:C:2013:574.

( 4 ) See ibid., paragraph 48 and the operative part of the judgment.

( 5 ) To take English as an example, the noun ‘practice’ is defined as ‘the habitual doing or carrying out of something’ in the Shorter Oxford English Dictionary, 6th edition, Volume 2, Oxford University Press, Oxford: 2007, p. 2311.

( 6 ) See Glöckner, J., ‘The Scope of Application of the UCP Directive — “I know what you did last Summer”’, 5(2010) International Review of Intellectual Property and Competition Law, pp. 570 to 592, at p. 589.

( 7 ) EU:C:2013:574, paragraph 28 et seq.

( 8 ) For an analysis, see, for example, Collins, H., ‘The Unfair Commercial Practices Directive’, 4(1) 2005 European Review of Contract Law, pp. 417 to 441, at pp. 424 and 425.

( 9 ) See, in this respect, recital 6 in the preamble to the UCP Directive.

( 10 ) Wilhelmsson, T., ‘Scope of the Directive’, in Howells, G., Micklitz, H.W., and Wilhelmsson, T., European Fair Trading Law: The Unfair Commercial Practices Directive, pp. 49 to 81, at p. 72; Glöckner, op. cit., p. 589; Keirsbilck, B., The New European Law of Unfair Commercial Practices and Competition Law, Hart Publishing, Oxford: 2011, pp. 247 and 248.

( 11 ) See, for example, Pereničová and Perenič (C‑453/10, EU:C:2012:144, paragraph 40) on the effect of unfair commercial practices on the validity of a contract. For academic comment, see, in more detail, Wilhemsson, op. cit., p. 73; and Collins, op. cit., p. 424.

( 12 ) I would also note that in a number of places, the UCP Directive refers to ‘consumers’ in the plural: ‘consumers’ economic interests’, ‘consumers’ transactional decisions’. Although the use of the plural form can hardly be seen as a decisive argument here, the choice of the plural form may nonetheless be interpreted as further supporting the idea that we are dealing with the protection of collective interests.

( 13 ) Directive of the Parliament and the Council of 23 April 2009 on injunctions for the protection of consumers’ interests (OJ 2009 L 110, p. 30).