Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive){SEC (2003) 724}
Date: 2003-06-18
Institutions: European Commission
Subjects: approximation of laws, competition law, consumer protection, restriction on competition, single market

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 18.6.2003
COM (2003) 356 final

2003/0134 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

concerning unfair business-to-consumer commercial practices in the Internal Market
and amending directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial
Practices Directive)

(presented by the Commission)

{SEC (2003) 724}

EXPLANATORY MEMORANDUM

BACKGROUND

1.

2.

3.

4.

5.

1

2

3

4

5

6

The Green Paper  on EU Consumer Protection1 first outlined  the case for reform of
EU  consumer  protection  legislation  to  tackle  barriers  to  cross-border  provision  of
goods  and  services  to  consumers.  It  identified  a  framework  directive  containing  a
general duty in relation to unfair commercial practices as a possible basis for reform.

A majority of respondents accepted the case for reform, and a majority of those who
expressed a preference, including a majority of Member States, supported reform on
the basis of a framework directive.2 The Council subsequently resolved that effective
follow-up work on the Green Paper should be a priority.3

Feedback  on  the  initial  consultation  and  an  outline  of  how  a  framework  directive
could  be  structured  were  published  in  the  Communication  on  the  follow-up  to  the
Green  Paper4.  This  sought  respondents’  views  on  the  content  of  the  framework
directive which have been taken into account in preparing this proposal.5

A Council resolution adopted on 2 December 2002 on the Commission’s consumer
policy strategy 2002-2006 included a call for the Commission to take further steps in
the  light  of  this  second  consultation  and  the  Brussels  European  Council  of  20-21
March 2003 called for consumer policy to put empowered consumers at the heart of
a competitive internal market, giving appropriate follow-up to the Green Paper. The
European  Parliament  adopted  three  resolutions  relating  to  the  Green  Paper  and
follow-up  communication  on  13  March  2003  which  expressed  support  for  reform
based on a framework directive governing unfair commercial practices and included
calls for the Commission to make a proposal as soon as possible.

including  Member  States’ 

On  22-23  January  2003  the  Commission  held  a  workshop  attended  by  over  150
people, 
industry
associations and academics. The panellists and other participants discussed the case
for  reform  and  for  harmonisation  through  a  framework  directive,  the  relationship
between  unfair  competition  and  consumer  protection,  and  the  role  of  codes  of
conduct.6

representatives,  consumer  and 

COM (2001) 531 final
See  The  Green  Paper  on  EU  Consumer  Protection,  COM  (2001)  531  final,  the  Follow-up
communication  to  the  Green  Paper,  COM  (2002)  289  final,  responses  to  consultations  and  studies
available at:
http://europa.eu.int/comm/consumers/policy/developments/fair_comm_pract/studies_en.html
Internal Market, Tourism and Consumer Council, 1 March 2002, see 6503/02 (Presse 41)
COM (2002) 289 final
Responses to the follow-up communication can be found at:
http://europa.eu.int/comm/consumers/policy/developments/fair_comm_pract/responses_followup/
responses_en.html
Insert details of report location on website when available

2

                                                
THE CASE FOR CHANGE

Potential benefits of the internal market

6.

7.

8.

9.

The  cross-border  movement  of  goods  and  services  (“products”)  gives  consumers
access to a broader range of products, including innovative products which may not
be available in their own country.  It  also  provides the pressure for a  more efficient
and competitively-priced supply.

Despite evidence of the benefits which have accrued from the internal market so far,
there is evidence  that it is by no means  yet  complete.  For  example,  a  recent  report
commissioned by the European Financial Services Round Table7 identified differing
national rules on consumer protection and commercial practices as important barriers
which  “render  a  pan-European  marketing  strategy  and  standardised  products
impossible”. It estimated that a working European retail market for financial services
could save €5 billion annually and add 0.5% to economic growth.

The most recent Cardiff8 report indicated that price convergence, a key indicator of
the completion of the internal market, has stagnated recently. The convergence which
followed the initial ‘shock-wave’ effect of the introduction of the internal market has
not continued and significant price divergences remain. The previous Cardiff report9
highlighted the fact that average retail prices for a product in one Member State can
be  up  to  40%  above  or  below  the  European  average,  with  the  average  divergence
being  around 30%. This compares to  a  variation  of  around  5%  around  the  national
average within Member States.

Both Cardiff reports conclude that further integration and competition could lead to
greater convergence, to the benefit of consumers and the efficient functioning of the
market.  They  also  concluded  that  cross-border  shopping  has  a  role  to  play  in
achieving  this;  as  the  most  recent  report  says  “The  greater  development  of
cross-border  shopping  by  consumers  and  e-commerce  can  also  contribute  to  price
convergence by exerting downward pressure on prices”.

10.

Survey  evidence  suggests  that  the  continued  development  of  the  internal  market
depends both on encouraging business to advertise and market across borders and on
stimulating  consumers,  who  are  in  principle  willing  to  do  so,  to  actually  transact
cross-border. For example,

(cid:1)  55%  of  EU  consumers  had  not  seen  or  heard  cross-border  advertising  or

information in the last 12 months10;

(cid:1)  53%  of  EU  consumers  would  certainly  or  probably  consider  cross-border

shopping to buy a product because it was cheaper or better11.

7

8

9

10

11

http://www.zew.de/erfstudyresults/
Economic  Reform:  report  on 
COM (2002) 743 final
COM (2001) 736 final
Eurobarometer  57.2  and  Flash  Eurobarometer  128:  Public  opinion  in  Europe:  Views  on  business-to-
consumer cross-border trade, 14 November 2002
http://europa.eu.int/comm/public_opinion/flash/fl131_en.pdf

the  functioning  of  Community  product  and  capital  markets

3

                                                
11.

Both the potential benefits, and the risks of allowing the present situation to continue,
will be increased in an enlarged Union of 25 or more Member States.

Barriers and distortions

12.

13.

14.

15.

16.

17.

12

13

14

The  Extended  Impact  Assessment  published  with  this  proposal  examines  at  greater
length  the  barriers  and  options  for  change  summarised  here,  drawing  on  sources
including  Eurobarometer  surveys,  consultation  responses,  academic  studies  of
existing  national  legislation,  work  by  the  group  of  member  states  experts  and  an
ex-ante impact assessment carried out by GFA.12

The  GFA  study  found  that  there  are  a  number  of  barriers,  some  policy-induced,
others  not,  which  prevent  traders  and  consumers  from  taking  advantage  of  the
internal market by shopping cross-border. These include tax, particularly VAT, time
and distance (though these are also present in national markets and are being reduced
by  e-commerce),  and  language  barriers.  That  said,  53%  of  Europeans  say  they  can
speak at least one European language in addition to their mother tongue and 26% can
speak two.

However, even if all these other barriers were addressed, unfair commercial practices
would  in  themselves  constitute  important  barriers  to  the  functioning  of  the  internal
market.

First,  unfair  commercial  practices,  if  they  are  not  addressed  by  effective  consumer
protection, can undermine consumer confidence. On average, 18% of consumers in a
recent  survey  cited  poor  legal  protection  as  a  reason  not  to  buy  financial  services
cross-border,  rising  to  36%  in  one  Member  State.13  In  another  survey  about
cross-border  shopping  in  general,  consumers  who  felt  less  confident  buying  from
another  EU  country  than  in  their  own  country  were  asked  why.  68%  of  those
consumers  cited  lower  standards  of  consumer  protection  laws  as  a  very  or  fairly
important  reason  for  their  lack  of  confidence  while  76%  cited  as  a  very  or  fairly
important factor a lack of trust in foreign sellers and a perceived greater risk of fraud
or deception.14

Second, these unfair commercial practices generate a market failure by impairing the
consumer’s ability to make choices which are informed and therefore efficient. This
distortion  of  consumers’  preferences  is  detrimental  to  the  collective  interests  of
consumers  even  if  a  specific  consumer  affected  by  the  practice  does  not  suffer  a
financial  loss.  The  distortion  of  consumers’  decision-making  also  gives  rise  to
distortions of competition because the trader acting unfairly wins business away from
competitors who play by the rules.

The  effect  is  demonstrated  by  the  work  of  the  European  Advertising  Standards
Alliance  (EASA)  which,  in  its  2002  Annual  Report  on  handling  of  cross-border
advertising  complaints,  concluded  that  “cross-border  complaints  overwhelmingly

See  the  Extended  Impact  Assessment  for  a  discussion  of  the  sources  of  evidence  used.  GFA  study
available at http://europa.eu.int/comm/consumers/cons_int/safe_shop/fair_bus_pract/index_en.htm.
Eurobarometer 58.1 Financial Services
Eurobarometer  57.2  and  Flash  Eurobarometer  128:  Public  opinion  in  Europe:  Views  on  business-to-
consumer cross-border trade, 14 November 2002

4

                                                
18.

19.

20.

concern the activities of 'rogue-traders'  and other  fringe  operators,  who  deliberately
set out to exploit the loopholes between national regulatory systems”.

For consumers, the uncertainty of not knowing what consumer protection is provided
by  other  EU  countries’  laws  was  a  bigger  barrier  to  cross-border  shopping  –  with
79%  of  respondents  citing  it  as  a  very  or  fairly  important  obstacle  –  than  their
perception that the standards of protection were lower in other countries.15

The  impact  of  these  barriers  is  exacerbated  by  the  differences  in  the  regulation  of
unfair  commercial  practices  by  Member  States.  The  minimum  clauses  in  existing
consumer  protection  legislation,  such  as  the  misleading  advertising  directive16
perpetuate  this  problem  by  allowing  Member  States  to  add  divergent  requirements
and provide differing degrees and types of protection.

Many Member States have a general legal principle (i.e. a general clause), sometimes
supported by specific rules, regulating marketing and prohibiting unfair commercial
practices. However, the scope and application of these general principles vary widely
across the EU.

21.

For example,

(cid:1)  while  the  ECJ  has  defined  a  test  of  the  “average  consumer,  reasonably  well-
informed, observant and circumspect”, several Member States do not  apply  this
test  and  instead  examine  the  effect  of  commercial  practices  on  vulnerable
consumers  or  on  a  small  proportion  of  consumers  (eg  10-15%)  in  assessing  its
fairness17;

(cid:1)  some  Member  States  assume  that  all  advertising  has  the  potential  to  distort
consumers’ decision-making and therefore any inaccuracy  would be contrary  to
the  national  provisions  even  if  the  inaccuracy  had  no  bearing  on  consumers’
decisions18.

22.

The  need  for  businesses to  comply with  a  complex  patchwork  of  different  national
requirements  adds  costs  to  those  who  market  cross-border  and  for  many  is  such  a
deterrent that they simply do not try:

(cid:1)  47%  of  businesses  cited  the  need  for  compliance  with  different  national
regulations  on  commercial  practices,  advertising  and  other  consumer  protection
regulations as very or fairly important obstacles to cross-border  advertising and
marketing.

(cid:1)  This  obstacle  was  considered  as  significant  as  the  need  to  comply  with  tax

requirements (46%) and more important than language barriers (38%).19

15

16

17

18

19

Ibid. 68% of respondents cited lower consumer protection standards as a very or fairly important factor.
Base in each case: consumers who are less confident buying from another EU country than from their
own country
1984/450/EC as last amended by 1997/55/EC
For further information see Extended Impact Assessment published with this proposal, section 1.4
Ibid.
Eurobarometer  57.2  and  Flash  Eurobarometer  128:  Public  opinion  in  Europe:  Views  on  business-to-
consumer cross-border trade, 14 November 2002. See also Extended Impact Assessment, section 1.3

5

                                                
23.

24.

This finding is borne out in a survey of its members carried out by the European Mail
Order  Trade  Association  in  2002.  It  found  that  5  of  the  top  10  barriers  to  cross-
border trade cited related to differences in national rules on commercial practices.20

In  addition,  the  differences  in  legislation  increase  the  cost  and  complexity  of
enforcement,  whether  by  public  authorities  or  by  self-regulatory  bodies.  As  EASA
pointed out, “Every national code must comply with national legislation. The major
discrepancies  between  national  codes  arise  directly  from  differences  in  national
legislation  and  will  be  eliminated  only  when  they  are.”21  The  impact  of  this
fragmentation  was  also  evident  in  the  Commission’s  Eurobarometer  survey,  where
65% of businesses surveyed considered European codes of conduct as a very or fairly
efficient way to make the sale or advertising of products throughout the EU easier.22

CONCLUSIONS

25.

26.

This  evidence  shows  that  there  are  both  appreciable  internal  market  barriers  and
distortions  of  competition  which  arise  from  unfair  commercial  practices  and  the
policy-induced barriers arising from their fragmented regulation. Because the impact
of fragmented regulation is so significant, it is necessary to tackle these barriers with
action at EU level.

The  GFA  ex-ante  impact  assessment  assessed  the  different  legislative  approaches
which could be used to address them. It concluded that a framework directive setting
out general principles supplemented as necessary by specific sectoral legislation was
the most appropriate tool. This conclusion is subject to the directive being based on a
full harmonisation approach and containing provisions for mutual recognition based
on the country of origin (discussed further in the next section). It would also need to
be drafted in such as way as to achieve the necessary clarity and legal certainty.

27.

It was found that:

(cid:1)  38%  of  businesses  expected  to  increase  their  cross-border  advertising  and

marketing budget as a result of harmonisation;

(cid:1)  46%  of  companies  expect  the  proportion  of  their  cross-border  sales  to  increase
with  complete  harmonisation  of  all  regulations  on  advertising,  commercial
practices and other consumer protection regulations;

(cid:1)  10  million  consumers  would  buy  a  lot  more  cross-border  if  they  were  equally
confident  about  making  purchases  from  traders  in  another  EU  country,  and  a
further 70 million might buy a little more23;

(cid:1)  According to a majority of national business associations responding to a survey,
the  introduction  of  a  general  principle  of  fair  commercial  practices  in  a

20

21

22

23

http://europa.eu.int/comm/consumers/cons_int/safe/_shop/fair/bus/pract/green/pap/comm/responses/
followup/business_europe/emota.pdf
http://europa.eu.int/comm/consumers/cons_int/safe_shop/fair_bus_pract/green_pap_comm/responses_
followup/business_europe/easa.pdf
Eurobarometer  57.2  and  Flash  Eurobarometer  128:  Public  opinion  in  Europe:  Views  on  business-to-
consumer cross-border trade, 14 November 2002.
Findings of quantitative survey in Eurobarometer 57.2.

6

                                                
framework directive will result in a decrease of costs, as will the combination of
an adequate level of harmonisation and the application of the principles of mutual
recognition and country of origin.

28.

By contrast, alternative approaches based, for example, on specific directives without
a general framework would have limitations including the following:

(cid:1)  Lack of harmonisation  of  existing  national  general  clauses  and  legal  principles,

leaving significant internal market barriers untouched;

(cid:1)  Leaving the existing minimum harmonisation approach would fail to address the
lack  of  consumer  confidence  about  cross-border  consumer  protection
demonstrated in the surveys;

(cid:1)  Market entry, transaction and marketing costs expected by up to half of business

respondents to increase.

29.

Many  stakeholders,  representing  both  businesses  and  consumers,  have  expressed
their  support  for  an  initiative  based  on  the  mixed  approach.24  Some  stakeholders
made  strident  criticism  of  the  initiative  in  its  early  stages.  There  are  business
stakeholders who continue to be very critical of the Directive. However, many others
have  reviewed  their  position  as  the  Commission’s  proposed  approach  has  been
clarified,  particularly  since  the  workshop  in  January  2003,  and  have  indicated
support for the approach taken in this proposal.

OVERVIEW OF THE DIRECTIVE

30.

In the light of the evidence as to the barriers which need to be addressed, the ex ante
impact  assessment  and  the  responses  to  consultation,  the  approach  taken  in  the
Directive has the following key elements25:

(cid:1) 

(cid:1) 

It  defines  the  conditions  which  determine  whether  a  commercial  practice  is
unfair; it does not impose any positive obligations which a trader has to comply
with  to  show  he  is  trading  fairly.  This  reflects  the  views  expressed  by  many
respondents  that  greater  legal  certainty  can  be  achieved  by  defining  unfairness
rather than fairness, and ensures that the Directive is a proportionate response to
the situations which create material consumer detriment.

It  contains  an  internal  market  clause  which  provides  that  traders  have  to
comply  only  with  the  requirements  of  the  country  of  origin  and  prevents  other
Member States  from imposing  additional requirements  on  those  traders  who  do
so  (ie  mutual  recognition).  This  is  needed  to  ensure  that  traders  have  the  legal
certainty they need to deal with consumers cross-border without imposing undue
burdens  on  them.  The  Member  States  will  be  obliged  to  ensure  that  traders
established in their territories comply with their national provisions regardless of

24

25

Eg Télefonica, Pernod Ricard, PartyLite, Nuskin, Nature’s Own, Mary Kay, Herbalife, GNLD, Amway,
Swedish Marketing Federation, BEUC, UK National Consumer Council and Consumers’ Association,
Federation of German Consumer Organisations (vzbv)
Further information on alternative approaches  which  were considered and rejected is contained in the
Extended Impact Assessment published with this proposal.

7

                                                
(cid:1) 

(cid:1) 

(cid:1) 

(cid:1) 

whether the consumers targeted or reached by their  commercial practices reside
in their territory.

It  fully  harmonises  EU  requirements  relating  to  unfair  business-to-consumer
commercial  practices  and  provides  an  appropriately  high  level  of  consumer
protection.  This  is  needed  to  address  the  internal  market  barriers  caused  by
divergent  national provisions and to  provide  the  necessary  support  to  consumer
confidence to make a mutual recognition approach workable. Member States will
not be able to use the minimum clauses in other directives to impose additional
requirements in the field co-ordinated by this Directive.

It  contains  a  general  prohibition,  which  will  replace  the  existing  divergent
general  clauses and  principles in the Member  States  and  define  a  common  EU-
wide framework, which will considerably simplify the legislative environment in
which traders and consumers operate, as called for by a number of respondents.
The components of the general prohibition are explained in paragraphs 48 to 54
below.

It establishes the ECJ’s average consumer, rather than the vulnerable or atypical
consumer  as  the  benchmark  consumer.  This  test,  which  is  an  expression  of  the
principle  of  proportionality,  applies  when  the  generality  of  consumers  is
addressed  or  reached  by  a  commercial  practice.  It  is  modulated  when  a
commercial  practice  is  specifically  targeted  at  a  particular  group  (eg  children),
when the average member of that group will be considered. This will clarify the
standard  to be applied by  national  courts  and  significantly  reduce  the  scope  for
divergent  assessments  of  similar  practices  across  the  EU,  while  providing  a
means to take into account relevant social, cultural or linguistic characteristics of
targeted groups as allowed for by the Court.

It  elaborates  two  key  types  of  unfair  commercial  practice;  those  which  are
‘misleading’  and  those  which  are  ‘aggressive’.  These  provisions  apply  all  the
same  elements  as  are  contained  in  the  general  prohibition  but  function
independently  of  it.  This  means  that  a  practice  which  is  either  ‘misleading’  or
‘aggressive’ as under the corresponding provisions is automatically unfair; if the
practice  is  neither  ‘misleading’  nor  ‘aggressive’  the  general  prohibition  will
determine  whether  it  is  unfair.  The  provisions  on  ‘misleading’  commercial
practices  define  both  actions  and  omissions  which  can  mislead  and  avoid  the
need  for  a  positive  duty  to  disclose  which  many  respondents  argued  would  be
unduly  onerous  and  which  the  ex-ante  impact  assessment  showed  would  have
imposed  significant  costs  on  traders.  Similar  concerns  were  expressed  about
defining  fair  or  unfair  after-sale  commercial  practices;  the  Directive  therefore
does  not  do  so,  but  instead  applies  the  same  fairness  principles  to  commercial
practices before and after the point of sale.

(cid:1)  For  clarity  and  simplicity, 

it  incorporates  the  misleading  advertising
Directive’s B2C provisions  (ie  provisions  dealing  with  advertising  reaching  or
directed  at  consumers)  and  limits  the  scope  of  the  existing  Directive  to
business-to-business advertising (ie provisions dealing with advertising reaching
or  directed  at  business)  and  comparative  advertising  which  may  harm  a
competitor  (by  denigration,  for  example)  but  where  there  is  no  consumer
detriment.  Some  provisions  on  inertia  selling  from  the  distance  contracts
Directive are also repealed and included in the framework directive.

8

(cid:1)  An  Annex  to  the  Directive  contains  a  short  blacklist  of  commercial  practices.
These are practices which which will in all circumstances be unfair, and therefore
banned in all Member States. This single list will apply in all Member States and
can be changed or added to only in the same way as the rest of the Directive. This
contributes  to  legal  certainty  and  consumer  confidence  by  imposing  an  ex-ante
prohibition  on  those  specific  practices,  such  as  pyramid  schemes,  which  will
always  materially  distort  the  decision-making  of  average  consumers  and  are
contrary to the requirements of professional diligence.

GENERAL PROVISIONS (CHAPTER 1)

Objective (Article 1)

31.

32.

33.

The  objective,  as  set  out  in  Article  1,  is  to  deliver  a  high  degree  of  consumer
protection and enable the functioning of the internal market.

The  method  used  to  achieve  this  is  the  approximation  of  national  laws  on  unfair
commercial practices, through this Directive.

Article  1  makes  it  clear  that  this  approximation  relates  to  those  unfair  commercial
practices which harm consumers’ economic interests.

Definitions (Article 2)

34.

35.

36.

26

27

28

This  article  defines  a  number  of  terms  used  in  the  directive.  The  definition  of
‘consumer’  is  the  standard  definition  found  in  several  consumer  protection
directives26.

A definition of ‘average consumer’ is also given, which incorporates the benchmark
established  by  the  ECJ27  of  the  consumer  who  is  “reasonably  well  informed  and
reasonably  observant  and  circumspect”.  As  explained  above,  this  is  modulated  in
Article  5  to  ensure  that  where  a  specific  group  of  consumers  is  targeted,  the
characteristics  of  the  average  member  of  that  group  are  taken  into  account  in
assessing the impact of the practice.

The  definition  of 
includes  commercial
‘commercial  practice’  explicitly 
communication and advertising, to make clear the connection with the regulation on
sales  promotion  and  provisions  incorporated  from  the  misleading  advertising
Directive.28

Eg  Directive  1999/44/EC  of  the  European  Parliament  and  of  the  Council  of  25.05.1999  on  certain
aspects of the sale of consumer goods and associated guarantees (OJ L 299 of 12.12.1995, pp 11-12);
Directive  97/7/EC  of  the  European  Parliament  and  the  Council,  of  20.05.97,  on  the  protection  of
consumers  in  respect  of  distant  contracts.  (JO  L  144  of  04.6.1997,  pp.  19-28);  Council  directive
93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L 95 of 21.04.1993, pp. 29-34);
Council  directive  85/577/EEC  of  20.12.1985  to  protect  consumer  in  respect  of  contracts  negotiated
away from business premises – door to door selling (OJ L 372 of 31.12.1985, pp. 31-33)
See eg Case C-315/92, Verband Sozialer Wettbewerb eV v. Clinique Labatories SNC and Estée Lauder
Cosmetics GmbH (1994) ECR I-317; Case C-210/96, Gut Springheide GmbH v. Oberkreisdirektor des
Kreises Steinfurt (1998) ECR I-4657
Directive 84/450/EEC (OJ L 250, 19.9.1984) as amended by Directive 97/55/EC

9

                                                
37.

38.

A  definition  is  given  here  of  what  it  means  to  ‘materially  distort’  consumers’
economic  behaviour,  one  of  the  three  conditions  of  the  general  prohibition.  The
definition has two components: first, the commercial practice must be used to impair
the  consumer’s  ability  to  make  an  informed  decision,  and  second  it  must  be
significant  enough  to  change  the  decision  the  consumer  makes.  The  application  of
this concept is further explained in paragraph 54 below.

This  section  also  contains  definitions  of  ‘professional  diligence’,  ‘invitation  to
purchase’ and ‘undue influence’ which are explained in the sections on Articles 5 to
9 below.

Scope (Article 3)

39.

40.

41.

42.

43.

44.

The  Directive  is  concerned  only  with  matters  affecting  consumers’  economic
interests, as is made clear in Article 1. This means that matters of taste, decency and
social  responsibility  will  be  outside  scope  unless  the  trader  establishes  a  specific
connection  between  its  obligations  in  these  areas  and  its  products  in  its  marketing.
For example, if a trader falsely claimed that a certain proportion of the profits from
the sale of a Christmas card would be given to charity that would be within scope.

It also means that  acts which  constitute  unfair  competition  in  some  Member  States
but which do not harm the economic interests of consumers, such as slavish imitation
(ie copying independently of any likelihood of consumer confusion) and denigration
of  a  competitor,  are  outside  the  scope  of  the  Directive.  Acts  which  are  classed  in
some  Member  States  as  unfair  competition  which  do  harm  consumers  economic
interests, such as confusion marketing (which generates a danger of confusion among
consumers  with  the  distinctive  signs  and/or  products  of  a  competitor)  are  within
scope.

The  Directive  does  not  deal  with  antitrust  matters,  such  as  anti-competitive
agreements, abuse of dominant position, mergers and acquisitions. It applies only to
commercial practices between business and final consumers and thus does not cover
commercial practices between businesses, such as boycotts and refusal to supply.

Contract law is outside the scope so the Directive has no bearing on the conditions of
formation, validity or effect of the contract.

This Directive deals with the protection of the economic interests of consumers and
as  such  consumer  health  and  safety  aspects  of  products  are  outside  its  scope  of
application.  However,  misleading  health  claims,  given  their  capacity  to  impair  the
consumer’s  ability  to  make  informed  decisions,  will  be  appraised  under  the
provisions  on  misleading  commercial  practices.  For  example,  if  a  product  which
claims  to  cause  hair  to  grow  back  on  bald  heads  but  does  not  do  so,  that  is  a
misleading claim within the scope of this Directive. If, however, the product makes
the  consumer  unwell,  that  is  outside  the  scope  and  remedies  will  not  be  available
under this Directive.

The framework directive will apply where there are no specific provisions regulating
unfair commercial practices in sectoral legislation. Where such specific provisions do
exist, they will take precedence over  the framework directive.  However,  references
in  sectoral  directives  to  broad  principles  alone,  such  as  the  “general  good”  or  “fair

10

trade”  will  not  be  sufficient  to  justify  a  derogation  in  areas  harmonised  by  the
framework Directive on grounds of the protection of consumer economic interests.

45.

Where  a  sectoral  directive  regulates  only  aspects  of  commercial  practices,  for
example the content of information requirements, the framework directive will come
into play for other elements, for example, if the information required in the sectoral
legislation were presented in a misleading way. The directive therefore complements
both  existing  and  future  legislation,  such  as  the  proposed  Regulation  on  sales
promotion, or the consumer credit Directive29, and the e-commerce Directive.30

46

The Directive is without prejudice to the application of rules governing international
private law provisions in the fields which it does not approximate.

Internal Market (Article 4)

47.

The convergence brought about by the proposed Directive creates the conditions for
introducing the principle of mutual recognition of laws relating to unfair commercial
practices. Thus Article 4 provides that traders are required to comply only  with the
laws  of  the  Member  State  where  they  are  established  and  prohibits  other  Member
States  from  imposing  additional  requirements  on  such  traders  within  the  field  co-
ordinated  by  the  Directive  or  from  restricting  the  free  movement  of  goods  and
services  where  the  trader  has  complied  with  the  laws  of  the  Member  State  of
establishment.

UNFAIR COMMERCIAL PRACTICES (CHAPTER 2)

General Prohibition (Article 5)

48.

49.

29

30

The general prohibition is the essential element of the Directive which achieves the
harmonisation necessary to overcome the internal  market barriers and  ensure that a
high, common level of protection is provided. It will do this by replacing the existing
national general clauses in relation to unfair commercial practices between business
and consumers and establishing more precise criteria for determining what is unfair
than  any  existing  national  general  clause.  If  this  general  prohibition  were  not
included, Member States would be able to continue to apply their divergent general
clauses  which  would  undermine  the  harmonising  effect  of  the  Directive,  even  in
relation to misleading and aggressive practices which are addressed specifically.

In this context, the internal market clause plays a vital role: if a practice is judged to
be unfair in one Member State it will still be able to prevent traders established on its
territory  from  selling  to  consumers.  But,  unlike  now,  it  will  not  be  able  to  prevent
traders  established  elsewhere  in  the  EU  from  selling  to  its  consumers.  This  means
that there will be a high degree of legal certainty because only one set of rules will
apply,  and  the  tests  in  legislation  will  be  more  precise  than  those  which  are  used
now.

Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and
administrative  provisions  of  the  Member  States  concerning  consumer  credit  and  subsequent
amendments. (OJ No. L 278, 11/10/1988, p. 33)
Directive 2000/31/EC of the European Parliament and of the Council on certain aspects of information
society  services,  in  particular  electronic  commerce,  in  the  Internal  Market.  (OJ  L  178,  17/07/2000,
pp.1-16)

11

                                                
50.

Some practices currently judged unfair in certain Member States could be caught by
the  general  clause  even  if  they  are  not  misleading  or  aggressive  (eg  tied  sales  in
France).  For  example, a trader sells package  holidays  only  on  condition  consumers
also buy  an insurance  policy  covering  the risk of cancellation  and travel insurance.
Cases  in  other  Member  States  show  that  enforcers  may  find  it  hard  to  judge  an
innovative  practice  under  specific  provisions  on  misleading  or  aggressive  practices
which  were  not  written  with  those  practices  in  mind  (eg  where  a  website  silently
re-routes a consumer’s web connection to a server in a distant country leading to an
unexpectedly  high  phone  bill)  and  will  need  to  apply  the  conditions  of  the  general
clause directly. Having this possibility helps to ensure that the Directive can adapt to
changing technologies and market developments.

51.

The  general  prohibition  covers  unfair  commercial  practices.  It  establishes  three
conditions  for  determining  whether  a  practice  is  unfair.  A  plaintiff  will  have  to
demonstrate that all three conditions are satisfied in order for a practice to be judged
unfair:

52.

53.

(cid:1) 

(cid:1) 

(cid:1) 

the practice must be contrary to the requirements of professional diligence;

the benchmark consumer to be considered in assessing the impact of the practice
is the ‘average’ consumer established by the ECJ; and

the practice must materially distort or be likely to materially distort consumers’
economic behaviour.

Together  these  three  components  form  an  autonomous  general  prohibition,  which
may be invoked even if the circumstances of a particular case are not covered by the
specific categories of unfairness later in the Directive or the Annex. In practice this is
likely  to  be  used  infrequently  because  the  two  categories  of  misleading  and
aggressive commercial practices capture the vast majority of cases.

The concept of professional diligence referred to in the first condition, and defined in
Article  2,  is  analogous  to  notions  of  good  business  conduct  found  in  most  legal
systems of the Member States. It is the measure of care and skill exercised by a good
businessman, in accordance with generally recognised standards of business practice
in  his  particular  sector  of  activity.  This  concept  is  necessary  to  ensure  that  normal
business  practices  which  are  in  conformity  with  custom  and  usage,  such  as
advertising based on brand recognition or product placement, will not be caught by
the  Directive  even  if  they  are  capable  of  influencing  consumers’  economic
behaviour. It is important to remember that, given that the conditions are cumulative,
even  if  a  practice  is  found  to  be  contrary  to  professional  diligence  it  will  only  be
unfair if the other conditions of the general prohibition are also met.

54.

The third condition means that the commercial practice, in context,

(cid:1)  must  have  a  significant  enough  effect  to  change,  or  be  likely  to  change,  the
consumer’s  behaviour  by  causing  him  to  take  a  transactional  decision  that  he
would not otherwise have taken, and

(cid:1) 

it must have this effect by impairing the consumer’s ability to take an informed
decision. So incentives, such as the offer of free tea or coffee or free transport to

12

their premises, would not qualify because the consumer has a free choice about
whether to take advantage of the incentive or not.

55.

A  transactional  decision  would  include,  for  example,  a  decision  about  whether  to
buy,  and  from  which  supplier;  a  decision  to  exercise  rights  under  a  contract;  or  to
either continue or terminate a commercial relation with a supplier.

Misleading and Aggressive Commercial Practices (Articles 6 to 9)

56.

The vast majority of the practices which would be defined as unfair under the general
prohibition fall within two categories: ‘misleading’ or ‘aggressive’ practices. For the
sake of legal certainty, these two categories are elaborated more fully in Articles 6 to
9.  These  articles  apply  the  three  conditions  of  the  general  prohibition  in  these  two
key areas. That means that if a commercial practice is found to be either ‘misleading’
or  ‘aggressive’  it  will  automatically  be  unfair,  without  any  further  reference  to  the
conditions contained in Article 5.

57.

The  three  conditions  of  the  general  prohibition  are  contained  in  the  unfairness
categories as follows:

(cid:1)  Misleading  a  consumer  or  treating  them  aggressively  are  considered  in
themselves  to  be  distortions  of  consumer  behaviour  rather  than  legitimate
influence  and,  as  such,  contrary  to  the  requirements  of  professional  diligence.
Conduct  that  truly  deceives,  harasses,  unduly  influences  or  coerces  will  always
violate  the  requirements  of  professional  diligence  and  significantly  impair  the
consumer’s  ability  to  make  an  informed  decision.  For  this  reason  there  is  no
separate reference to the professional diligence test or the ‘distortion’ element of
the ‘material distortion’ definition.

(cid:1)  The ‘materiality’ condition is captured by the requirement in Articles 6 and 8 that
the  commercial  practice  “thereby  causes  or  is  likely  to  cause  the  average
consumer  to  take  a  transactional  decision  that  he  would  not  have  taken
otherwise”.

(cid:1) 

In  each  of  articles  6,  7,  8  and  9  the  impact  of  the  commercial  practice  on  the
“average  consumer”  will be  assessed,  in  line  with  the  conditions  of  the  general
prohibition.  This  means  that  where  a  particular  group  of  consumers  is  directly
targeted  the  impact  of  the  commercial  practice  will  be  assessed  from  the
perspective of the average member of that group.

These specific categories do not prejudice the autonomous functioning of the general
prohibition, which will continue to operate as a safety net and hence provide a way
of assessing the fairness of any current or future trade practices that do not fall within
one of the two key types explicitly mentioned.

As explained above, rather than impose a specific unfairness category in relation to
after-sale  practices,  this  proposal  applies  the  provisions  of  the  Directive  to
commercial practices both before and after sale. The trader will consequently need to
ensure  that  commercial  practices  after  sale  meet  the  same  fairness  standards  as
commercial practices before sale. However, the absence of after-sale services would
not in itself be considered unfair unless the trader’s conduct would lead the average
consumer  to  have  materially  different  expectations  about  the  after-sale  service

13

58.

59.

available. For example, there is no obligation under the proposed Directive to offer a
dedicated technical support hotline. However if the trader (e.g. a computer supplier)
makes  claims  that  he  will  provide  such  a  facility  and  then  does  not  do  so,  this  is
misleading and thus unfair.

Misleading practices (Articles 6 & 7)

60.

61.

62.

63.

64.

65.

66.

67.

A  commercial  practice  may  mislead  either  through  action  or  omission,  and  this
division is reflected in the structure of the articles.

The  articles  include  the  current  provisions  of  the  misleading  advertising  Directive
and  apply  them  to  other  commercial  practices,  including  those  after  sale.  These
provisions reproduce the provisions of the existing misleading advertising Directive
with  the  additions  necessary  to  achieve  full  harmonisation.  For  example,  it  will  be
misleading to deceive consumers about the results to be expected from the product,
such as weight loss, hair re-growth or enhanced performance.

An  important  principle  here  is  that  the  effect  of  the  commercial  practice  in  its
entirety,  including  the  presentation,  must  be  considered.  If  the  presentation  is
obscure, Article 7 makes clear that this is tantamount to an omission.

The  provisions  do  not  attempt  to  define  a  comprehensive  list  of  information  to  be
positively  disclosed  in  all  circumstances.  Rather  the  duty  the  framework  directive
imposes on a trader is not to omit ‘material’ information which the average consumer
needs to make an informed transactional decision where this information would not
be apparent from the context.

Under Article 7 the trader is obliged to disclose a limited number of core information
items  in  order  to  enable  the  consumer  to  take  an  informed  transactional  decision.
Such information is needed by the consumer at the stage when he is contemplating a
decision to purchase The requirements provided for under Article 7(3) only apply to
commercial communication, which constitutes an invitation to purchase as defined in
Article 2. General brand or product awareness marketing, which would not meet the
definition  of  an  invitation  to  purchase  would  not  need  to  include  this  information.
Where  this  information  is  not  apparent  from  the  context,  the  trader  will  need  to
disclose it to avoid committing a misleading omission.

Article 7 also provides that information requirements established in other Directives
will be regarded as ‘material’ information under this Directive. This approach seeks
to balance consumers’ needs for information with a recognition that an overload of
information can be as much a problem to consumers as a lack of information.

Article  6  sets  out  the  ways  in  which  actions  by  traders  could  deceive  consumers,
which  would  make  that  action  an  unfair  commercial  practice.  These  include  the
requirements  of  the  misleading  advertising  Directive,  with  certain  additions,
including  after-sale  customer  assistance  and  complaint  handling;  the  need  for
services,  replacements  or  repairs;  and  representations  concerning  direct  or  indirect
sponsorship.

Article 6 also covers marketing of a product by imitating the distinguishing features
of another product in a way which causes confusion between the two products; non-
compliance  by  a  trader  with  commitments  made  to  a  public  authority  to  cease  an

14

68.

69.

unfair  commercial  practice;  and,  under  certain  conditions,  non-compliance  by  a
trader with the provisions of a code of which the trader is a member.

The provision recognises that codes of conduct are fundamentally voluntary in nature
and  establishes  criteria  to  indicate  when  the  trader’s  performance  in  relation  to  the
code  might  reasonably  be  expected  to  influence  the  consumer’s  decision.  These
provisions apply to any code, regardless of whether it is a national or EU-level Code.
However, only those elements of codes which would or would be likely to materially
distort  the  reasonable  consumer’s  economic  behaviour  in  relation  to  the  product
would be taken into account. Matters of taste, decency or social responsibility would,
as explained above, therefore be outside scope unless the trader establishes a specific
connection  between  its  actions  in  these  areas  and  its  product  in  its  marketing
material.

As  a  general  rule,  the  burden  of  proof  of  the  unfairness  of  a  disputed  commercial
practice  lies  with  the  plaintiff.  Article  6(1f)  makes  an  exception  to  this  rule.  If  a
trader  makes  a  factual  claim  about  a  product,  which  he  is  unable  to  further
substantiate, this will be taken into account by a judge when determining whether the
trader engaged in any misleading and thus unfair commercial practice. This reversal
of  the  burden  of  proof  already  exists  as  a  possibility  in  the  misleading  advertising
Directive  and  reflects  the  fact  that  consumers  are  in  no  position  to  prove  that  a
factual claim is untrue. On the other hand, a trader claiming that his product has no
side-effects or has been tested clinically or scientifically, is in a far better position to
prove the accuracy of such claims, for instance by supplying research findings. If he
is not in a position to do so, he should not make such factual claims.

Aggressive practices (Articles 8 & 9)

70.

71.

These articles describe three ways in which a commercial practice can be aggressive,
namely harassment, coercion and undue influence. Criteria are set out to be applied
in  differentiating  between  aggressive  practices  on  the  one  hand  and  legitimate
marketing on the other.

‘Undue influence’, defined in Article 2, involves that a trader exploits a position of
power  in  a  way  which  significantly  limits  the  consumer’s  ability  to  make  an
informed decision. For example, where a consumer is already in debt to a trader and
behind  with  payments,  the  trader  would  be  using  undue  influence  if  said  he  would
reschedule the debt on condition that the consumer bought another product. Offering
an  incentive  to  a  consumer,  such  as  a  free  bus  to  an  out-of-town  store,  or
refreshments  while  shopping,  might  influence  a  consumer  but  would  not  constitute
undue  influence  because,  as  indicated  above,  it  would  not  impair  the  consumer’s
ability  to  make  an  informed  transactional  decision.  Following  the  same  logic,  the
offering of a sales promotion could not, per se, be considered an aggressive practice.

CODES OF CONDUCT (CHAPTER 3)

72.

In some Member States there is a tradition of using codes of conduct to define norms
or standards of behaviour  for  traders which  are not  prescribed  in  legislation.  These
can  be  used  either  to  show  in  greater  detail  how  to  apply  legislative  requirements
(eg how to explain complex concepts in ways that consumers can understand) or in
areas where there are no specific legal requirements (eg aspects of after-sales care).

15

73.

74.

75.

There  is  potential  for  codes  with  EU-wide  application  to  promote  convergence  in
expectations  regarding  professional  diligence  and  thereby  further  reduce  internal
market  barriers,  while  ensuring  that  such  codes  do  not  prevent,  restrict  or  distort
competition.  Such  codes  could  bring  added  value  by  helping  traders  to  apply  the
principles in the Directive effectively in their particular day-to-day business;

Codes within  the  field  harmonised by  the  Directive could  be taken into account by
the Member States in assessing whether a trader had breached the provisions of the
Directive as implemented in  the  Member State where the trader  is  established.  The
precise  way  in  which  an  EU  code  of  conduct  could  operate  would  depend  on  the
needs and circumstances of different sectors;

This  chaptercontains  provisions  for  control  of  the  Directive’s  requirements  by
code-owners provided this is in addition to and not in place of the other mechanisms
provided  for  in  Chapter  4.  This  replicates  a  provision  contained  in  the  existing
misleading advertising Directive.

FINAL PROVISIONS (CHAPTER 4)

76.

This Chapter includes certain general provisions and also:

(cid:1)  enforcement and sanctions;

(cid:1)  amendments to the scope of the misleading advertising Directive to achieve  the
incorporation of the business to consumer aspects into the framework Directive,
as explained above; and

(cid:1) 

replaces  the  misleading  advertising  Directive  with  this  Directive  in  the  list
appended to the injunctions Directive

The  provisions  on  enforcement  in  Articles  11  to  13  reproduce  those  established  in
various  existing  directives,31  including  in  particular  Articles  4  to  6  of  Directive
84/450/EEC concerning  misleading advertising, as amended by Directive 97/55/EC
concerning  misleading  advertising  so  as  to  include  comparative  advertising.32  It
therefore imposes no new obligations on Member States as to the nature or form of
enforcement required.

The  provisions  in  Article  13  on  the  imposition  of  penalties  on  traders  who  are  in
breach  of  fair  trading  rules  also  reflects  the  provisions  in  existing  consumer
directives33.  It  asks  Member  States  to  ensure  the  Directive’s  effect  in  accordance
with the ruling of the Court in case C-68/88 (Commission v. Greece).

Articles  14  and  16  make  the  amendments  necessary  to  limit  the  scope  of  the
misleading advertising Directive to advertising which causes harm to businesses but
not  to  consumers.  This  change  is  needed  because  all  the  provisions  from  that
Directive  which  affect  consumers  are  incorporated  in  the  framework  Directive.

For instance Article 11 of Directive 97/7/EC
Ante
Article 10 of Directive 90/314/EEC, Article 11(1) of Directive 97/7/EC, Article 8 of Directive 98/6/EC,
and Article 31 of the Consumer credit Proposal

16

77.

78.

79.

31

32

33

                                                
Article  14  amends  the  scope  and  provisions  of  the  84/450/EEC  as  amended  by
97/55/EC.  Article  16  replaces  that  Directive  with  this  framework  Directive  in  the
Annex  of  the  Injunctions  Directive  so  that  it  is  possible  to  seek  an  action  for  an
injunction aimed at the protection of the collective interests of consumers in relation
to unfair commercial practices.

80.

In  line  with  other  recent  consumer-related  directives,  Article  17  obliges  Member
States  to  increase  the  awareness  of  harmonised  national  consumer  law  amongst  its
citizens, where possible in co-operation with businesses34.

FINAL REMARKS

81.

82.

The Commission considers that  adoption of the proposed Directive by Council and
Parliament should be undertaken as quickly as possible.

A complementary proposal for a regulation on consumer protection co-operation will
enable more effective administrative co-operation between Member States to support
the effective enforcement of the principles enshrined in this proposal.

34

Article 16 of Directive 97/7/EC, Article 7 of Directive 98/6/EC and Article 9 of Directive 1999/44/EC

17

                                                
2003/0134 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

concerning unfair business-to-consumer commercial practices in the Internal Market
and amending directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial
Practices Directive)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article
95 thereof,

Having regard to the proposal from the Commission35,

Having regard to the opinion of the European Economic and Social Committee36,

Acting in accordance with the procedure laid down in Article 251 of the Treaty37,

Whereas:

(1)

(2)

(3)

In accordance with Article 14(2) of the Treaty, the internal market comprises an area
without  internal  frontiers  in  which  the  free  movement  of  goods,  services  and  the
freedom of  establishment are ensured. The development of fair commercial practices
within the area without internal frontiers is vital to promote the development of cross-
border activities.

The laws of the Member States relating to unfair commercial practices show marked
differences which can generate appreciable distortions of competition and obstacles to
the  smooth  functioning  of  the  internal  market.  In  the  field  of  advertising,  Council
Directive 84/450/EEC, as amended by Directive 97/55/EC, concerning misleading and
comparative  advertising  establishes  minimum  criteria  for  harmonising  misleading
advertising,  but  does  not  prevent  the  Member  States  from  retaining  or  adopting
measures which provide more extensive protection for consumers. As a result Member
States’ provisions on misleading advertising diverge significantly.

These  disparities  cause  uncertainty  as  to  which  national  rules  apply  to  unfair
commercial practices harming consumers' economic interests and create many barriers
affecting  business  and  consumers.  These  barriers  increase  the  cost  to  business  of
exercising internal market freedoms, in particular when they wish to  engage  in  cross
border  marketing,  advertising  campaigns  and  sales  promotions.  They  also  make

35

36

37

OJ L […], […], p. […].
OJ C […], […], p. […].
OJ C […], […], p. […].

18

                                                
(4)

(5)

(6)

(7)

38

39

40

41

42

consumers  uncertain  of  their  rights  and  undermine  their  confidence  in  the  internal
market.

In the absence of uniform rules at Community level, obstacles to cross-border services
and goods or the freedom of establishment could be justified in the light of the case-
law of  the  Court  of  Justice as long  as they  seek to protect recognised  public  interest
objectives  and  are  proportionate  to  those  objectives.  In  view  of  the  Community’s
objectives, as set out in the provisions of the Treaty relating to freedom of movement,
of  secondary  Community  law,  and  in  accordance  with  the  Commission's  policy  on
commercial  communications38,  such  obstacles  should  be  eliminated.  These  obstacles
can  only  be  eliminated  by  establishing  uniform  rules  at  Community  level  and  by
clarifying  certain  legal  concepts  at  Community  level  to  the  extent  necessary  for  the
proper  functioning  of  the  Internal  Market  and  to  meet  the  requirement  of  legal
certainty.

This  Directive  therefore  approximates  the  laws  of  the  Member  States  on  unfair
commercial practices, including unfair advertising, which harm consumers' economic
interests. It 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,  nor  the  provisions  of  Directive  84/450/EEC  on  advertising  which
misleads  business  but  which  is  not  misleading  for  consumers  and  on  comparative
advertising. Neither does it affect accepted advertising and marketing practices such as
product  placement,  brand  differentiation  or  the  offering  of  incentives  which  may
legitimately  affect  consumers’  perceptions  of  products  and  influence  their  behaviour
without impairing the consumer’s ability to make an informed decision. This Directive
addresses commercial practices directly related to influencing consumers' transactional
decisions in relation to products. It does not address commercial practices carried out
primarily for other purposes, including for example commercial communication aimed
at investors, such as annual reports and corporate promotional literature.

This  Directive  is  without  prejudice  to  individual  actions  brought  by  individuals  who
have  been  harmed  by  an  unfair  commercial  practice.  It  is  also  without  prejudice  to
Community  and  national  rules  on  contract  law,  intellectual  property  rights,  rules
relating  to  the  health  and  safety  aspects  of  products  and  to  Community  competition
rules and the national provisions implementing them.

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  therefore  amends
Directive  84/450/EEC  39, as  amended  by  Directive  97/55/EC,  concerning  misleading
and comparative advertising,40 Directive 98/27/EC on injunctions for the protection of
consumers’  interests41  and  Directive  97/7/EC  on  the  protection  of  consumers  in
respect  of  distance  contracts.42  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

"The  follow-up  to  the  Green  Paper  on  Commercial  Communications  in  the  Internal  Market"
Communication from the Commission. COM(1998) 121 final 4.03.1998.
OJ No. L 250, 19.9.1984, page 17
OJ No. L 290, 23.10.1997, page 18
OJ No. L 166, 11.6.1998, page 51
OJ No L 144, 4.6.1997, page 19.

19

                                                
information is presented to the consumer. It provides protection for consumers where
there is no specific sectoral 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.  The  Directive  consequently  complements  the  Community  acquis
which  is  applicable  to  commercial  practices  harming  consumers'  economic  interests
and, in particular, the Regulation of the European Parliament and Council concerning
sales  promotions  in  the  internal  market.  The  Regulation  removes  certain  bans  or
limitation  to  the  use  of  sales  promotions  and  reference  to  them  in  commercial
communications. The general requirements on misleading advertising and other unfair
commercial  practices,  which  are  applicable  to  the  use  and  communication  of  sales
promotions, are covered by this Directive.

The high level of convergence  achieved by the approximation  of  national provisions
through  this  Directive  creates  a  high  common  level  of  consumer  protection.  The
Directive  establishes  a  single  general  prohibition  of  unfair  commercial  practices
distorting consumers' economic behaviour. It also sets rules on aggressive commercial
practices, which are currently not regulated at EU level. The harmonisation achieved
and  the  high  common  level  of  consumer  protection  create  in  turn  the  conditions  to
make  the  principle  of  mutual  recognition  applicable  in  the  field  co-ordinated  by  the
Directive.

As  a  result  of  the  combination  of  harmonisation  and  the  principle  of  mutual
recognition legal certainty will considerably increase for both consumers and business.
Both  consumers  and  business  will  be  able  to  rely  on  a  single  regulatory  framework
based  on  clearly  defined  legal  concepts  regulating  all  aspects  of  unfair  commercial
practices  across  the  EU.  Business  will  only  have  to  comply  with  the  national  rules
transposing the Directive in the country where there are established. The effect will be
to  eliminate  the  barriers  stemming  from  the  fragmentation  of  the  rules  on  unfair
commercial  practices  harming  consumer  economic 
the
achievement of the internal market in this area. The place where a trader is established
shall be determined in conformity with any specific provisions in Community law and
in conformity with the case law of the Court of Justice.

interests  and  enable 

In order to achieve the Community’s objectives through the removal of internal market
barriers it  is necessary to replace  Member States’  existing,  divergent  general  clauses
and  legal  principles.  This  Directive  therefore  establishes  a  single,  common  general
prohibition,  covering  unfair  commercial  practices  distorting  consumers’  economic
behaviour.  The  general  prohibition  is  elaborated  by  rules  on  the  two  types  of
commercial  practices  which  are  by  far  the  most  common,  namely  misleading
commercial practices and aggressive commercial practices.

It  is  desirable  that  misleading  commercial  practices  cover  those  practices,  including
misleading advertising, which by deceiving the consumer prevent him from making an
informed  and  thus  efficient  choice.  In  conformity  with  the  laws  and  practices  of  the
Member States on misleading advertising, the Directive classifies misleading practices
into  misleading  actions  and  misleading  omissions.  In  respect  of  the  omissions,  the
Directive sets out a limited number of key information which the consumer needs to
make  an  informed  transactional  decision.  Such  information  will  not  have  to  be
disclosed  in  all  advertisements,  but  only  where  the  trader  makes  an  invitation  to
purchase, which is a concept clearly defined in the Directive.

(8)

(9)

(10)

(11)

20

(12)

(13)

(14)

(15)

(16)

(17)

The provisions on aggressive commercial practices should cover those practices which
significantly  impair  the  consumer's  freedom  of  choice.  Those  are  practices  using
harassment, coercion and undue influence.

This Directive codifies the average consumer test elaborated by the European Court of
Justice. Pursuant to the Court of Justice case law national courts will in applying the
test  also  take  social,  cultural  or  linguistic  factors  into  account.  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 is assessed from the perspective
of the average member of that group.

It is appropriate to provide a role for codes of conduct, which enable traders to apply
the principles of the directive effectively in specific economic fields. Such codes may
be  helpful  to  national  authorities  in  determining  the  requirements  of  professional
diligence  in  a  particular  sector.  The  control  exercised  by  code  owners  at  national  or
Community  level  to  eliminate  unfair  commercial  practices  may  avoid  the  need  for
recourse to administrative or judicial action and should therefore be encouraged.

Persons or organisations regarded under national law as having a legitimate interest in
the  matter  must  have  legal  remedies  for  initiating  proceedings  against  unfair
commercial practices, either before a court or before an administrative authority which
is competent to decide upon complaints or to initiate appropriate legal proceedings.

It  is  necessary  that  Member  States  lay  down  penalties  for  infringements  of  the
provisions  of  this  directive  and  must  ensure  that  they  are  enforced.  These  penalties
must be effective, proportionate and constitute a deterrent.

Since  the  objectives  of  the  proposed  action,  namely  to  eliminate  the  barriers  to  the
functioning of the internal market represented by national laws on unfair commercial
practices  and  to  provide  a  high  common  level  of  consumer  protection,  by
approximating  the  laws,  regulations  and  administrative  provisions  of  the  Member
States on unfair commercial practices, cannot sufficiently be achieved by the Member
States and can therefore be better achieved at Community level, the Community may
adopt measures, in accordance with the principle of subsidiarity as set out in Article 5
of  the  Treaty.  In  accordance  with  the  principle  of  proportionality,  as  set  out  in  that
Article, this directive does not go beyond what is necessary in order to eliminate the
internal market barriers and achieve a high common level of consumer protection.

(18)

This directive respects the fundamental rights and observes the principles recognised
in particular by the Charter of Fundamental Rights of the European Union.

HAS ADOPTED THIS DIRECTIVE:

CHAPTER 1: GENERAL PROVISIONS

Article 1

Objective of the Directive

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

21

administrative  provisions  of  the  Member  States  on  unfair  commercial  practices  harming
consumers' economic interests, as defined below.

Article 2

Definitions

For the purposes of this Directive:

(a)  ‘consumer’  means  any  natural  person  who,  in  commercial  practices  covered  by  this
Directive, is acting for purposes which are outside his trade, business or profession;

(b) ‘average consumer’ means the consumer who is reasonably well informed and reasonably
observant and circumspect;

(c) ‘seller or supplier’ (hereinafter referred to  as ‘trader’) means  any natural  or  legal person
who, in commercial practices covered by this Directive, is acting for purposes relating to his
trade, business or profession;

(d) ‘product’ means any good or service including immovable property;

(e)  ‘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;

(f)  ‘to  materially  distort  the  economic  behaviour  of  consumers'  means  using  a  commercial
practice  to  significantly  impair  the  consumer’s  ability  to  make  an  informed  decision  and
thereby  causing  the  consumer  to  take  a  transactional  decision  that  he  would  not  have  taken
otherwise;

(g)  ‘code  of  conduct’  means  an  agreement  which  defines  the  behaviour  of  the  traders  who
undertake to be bound by the code in relation to one or more particular commercial practices
or business sectors;

(h)  ‘Community  level  code’  means  a  code  of  conduct  which  allows  any  trader  from  any
Member  State,  who  meets  the  requirements  laid  down  in  the  code,  to  participate  on  a  non-
discriminatory basis, and contains appropriate and effective  mechanisms  for  monitoring  and
enforcing compliance with the code;

(i) ‘code owner’ means any entity, including a trader or group of traders, which is responsible
for the formulation and revision of a code of conduct and/or for monitoring compliance with
the code by those who have undertaken to be bound by it;

(j) ‘professional diligence’ means the measure of special skill and care exercised by a trader
commensurate  with  the  requirements  of  normal  market  practice  towards  consumers  in  his
field of activity in the internal market;

(k)  'invitation  to  purchase'  means  a  commercial  communication  which  indicates  the  main
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;

22

(l)  'undue  influence'  means  exploiting  a  position  of  power  to  apply  pressure,  without  using
physical force, in a way which significantly limits the consumer's ability to make an informed
decision.

1.

2.

3.

4.

5.

6.

1.

2.

1.

2.

Article 3

Scope

This Directive shall apply to unfair commercial practices, as defined below in Article
5, before and after a commercial transaction in relation to any product.

This Directive is without prejudice to the rules on the validity, formation or effect of
a contract.

This  Directive  is  without  prejudice  to  the  determination  of  the  types  of  damage
which may be caused by an unfair commercial practice and their quantification.

This Directive does not affect Community or national rules relating to the health and
safety aspects of products.

In  case  of  conflict  between  the  provisions  of  this  Directive  and  other  Community
rules governing specific aspects of unfair commercial practices, the latter will prevail
and apply to the specific aspects of the unfair commercial practices.

This  Directive  is  without  prejudice  to  the  rules  determining  the  jurisdiction  of  the
courts.

Article 4

Internal market

Traders  shall  only  comply  with  the  national  provisions,  falling  within  the  field
approximated by this Directive, of the Member State in which they are  established.
The Member State in which the trader is established shall ensure such compliance.

Member States shall neither restrict the freedom to provide services nor restrict the
free  movement  of  goods  for  reasons  falling  within  the  field  approximated  by  this
Directive.

CHAPTER 2: UNFAIR COMMERCIAL PRACTICES

Article 5

Prohibition of unfair commercial practices

Unfair commercial practices are prohibited.

A commercial practice shall be regarded as unfair if:

– 

it is contrary to the requirements of professional diligence, and

23

– 

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 specifically directed to a particular group of consumers.

3.

In particular, commercial practices shall be regarded as unfair that

(a)

are misleading, or

(b)

are aggressive

as defined below in this Directive.

4.

Annex 1 contains a list of commercial practices which shall in all circumstances be
regarded as unfair.

SECTION 1: MISLEADING COMMERCIAL PRACTICES

Article 6

Misleading actions

1.

A commercial practice shall be regarded as misleading which in any way, including
overall  presentation,  causes  or  is  likely  to  cause  the  average  consumer  to  take  a
transactional decision that he would not have taken otherwise because it deceives or
is likely to deceive him in relation to:

(a)

(b)

(c)

the main characteristics of the product, such as its availability, benefits, risks,
execution,  composition,  accessories,  after-sale  customer  assistance  and
complaint  handling,  method  and  date  of  manufacture  or  provision,  delivery,
fitness for purpose, usage, quantity, specification, geographical or commercial
origin  or  the  results  to  be  expected  from  its  use,  or  the  results  and  material
features of tests or checks carried out on the product;

any  statement  or  symbol  in  relation  to  direct  or  indirect  sponsorship  or
approval of the trader or the product;

the price or the manner in which the price is calculated,  or the  existence of a
specific price advantage;

(d)

the need for a service, part, replacement or repair;

(e)

the nature, attributes  and rights of the trader or his agent, such as his identity
and  assets,  his  qualifications,  status,  approval,  affiliation  or  connection  and
ownership  of  industrial,  commercial  or  intellectual  property  rights  or  his
awards and distinctions;

(f)

claims about the product which the trader cannot substantiate;

(g)

the consumer's rights or the risks he may face.

24

2.

A  commercial  practice  shall  also  be  regarded  as  misleading  where,  in  its  factual
context, taking account of all its features and circumstances, it thereby  causes or is
likely to cause the average consumer to  take a transactional  decision that  he would
not have taken otherwise, and it involves:

(a)

any marketing of  a  product,  including comparative  advertising,  which  creates
confusion with any products, trade marks, trade names and other distinguishing
marks of a competitor;

(b)

non-compliance by the trader with commitments contained in codes of conduct
by which the trader has undertaken to be bound, where:

– 

– 

the commitment is firm and is capable of being verified, and

information  specifying  the  traders  to  whom  the  code  applies  and  the
content of the code are publicly available; or

(c)

non-compliance  with  a  commitment  given  to  a  public  authority  to  cease  an
unfair commercial practice under this Directive.

Article 7

Misleading omissions

1.

2.

3.

A commercial practice shall be regarded as misleading which, in its factual context,
taking account of all its features and circumstances, omits material information that
the  average  consumer  needs,  according  to  the  context,  to  take  an  informed
transactional decision and thereby causes or is likely to cause the average consumer
to take a transactional decision that he would not have taken otherwise.

It shall also be regarded as a misleading omission when a trader hides or provides in
an unclear, unintelligible, ambiguous or untimely manner such material information
or fails to identify the commercial intent of the commercial practice.

For  commercial  practices  before  a  commercial  transaction  a  misleading  omission
may  occur  only  if  a  trader  makes  an  invitation  to  purchase.  In  the  case  of  an
invitation to purchase, the following information shall be regarded as material, if not
already apparent from the context:

(a)

the main characteristics of the product;

(b)

(c)

the trading name of the trader and, where  applicable,  the trading  name  of  the
trader on whose behalf he is acting;

the price inclusive of taxes, as well as, where appropriate, all additional freight,
delivery  or  postal  charges  or,  where  these  charges  cannot  reasonably  be
calculated in advance, the fact that additional charges may be payable;

(d)

the  arrangements  for  payment,  delivery,  performance  and  the  complaint
handling policy, if they depart from the requirements of professional diligence;

25

4.

5.

(e)

for  products  and  transactions  involving  a  right  of  withdrawal  or  cancellation.
the existence of such a right.

Information  requirements  in  relation  to  advertising,  commercial  communication  or
marketing established by Community law shall be regarded as material.

Annex  2  contains  a  non-exhaustive  list  of  Community  law  provisions  setting  out
information  requirements  in  relation  to  commercial  communication,  advertising  or
marketing.

SECTION 2: AGGRESSIVE COMMERCIAL PRACTICES

Article 8

Aggressive commercial practices

A commercial practice shall be regarded as aggressive if, in its factual context, taking account
of  all  its  features  and  circumstances,  by  harassment,  coercion  or  undue  influence,  it
significantly  impairs  or  is  likely  to  significantly  impair  the  average  consumer's  freedom  of
choice or conduct with regard to the product and thereby causes him or is likely to cause him
to take a transactional decision that he would not have taken otherwise.

Article 9

Use of harassment, coercion and undue influence

In determining whether a commercial practice uses harassment, coercion or undue influence
account shall be taken of

(a)

its timing, nature or persistence;

(b)

the use of threatening or abusive language or behaviour;

(c)

(d)

the use by the trader of any specific misfortune or circumstance of such gravity
as  to  impair  the  consumer's  judgement,  of  which  the  trader  is  aware,  to
influence the consumer's decision with regard to the product;

any  onerous  or  disproportionate  non-contractual  barriers  established  by  the
trader where a consumer wishes to exercise rights under the contract, including
rights to terminate a contract or to switch to another product or another trader;

(e)

any threat to take any action that cannot legally be taken.

26

CHAPTER 3: CODES OF CONDUCT

Article 10

Codes of conduct

This Directive does not exclude the  control  which  Member  States may encourage, of unfair
commercial practices by code owners of national or Community level codes 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.

CHAPTER 4: FINAL PROVISIONS

Article 11

Enforcement

1.

Member States shall ensure that adequate and effective means exist to combat unfair
commercial practices and for the compliance with the provisions of this Directive in
the interest of consumers.

Such  means  shall  include  legal  provisions  under  which  persons  or  organisations
regarded  under  national  law  as  having  a  legitimate  interest  in  combating  unfair
commercial practices may:

– 

– 

take legal action against such unfair commercial practices; and/or

bring  such  unfair  commercial  practices  before  an  administrative  authority
competent  either  to  decide  on  complaints  or  to  initiate  appropriate  legal
proceedings.

It shall be for each Member State to decide which of these facilities shall be available
and whether to enable the courts or administrative authorities to require prior recourse
to  other  established  means  of  dealing  with  complaints,  including  those  referred  to  in
Article 10.

With due regard for national laws, these legal  facilities may be directed separately or
jointly  against  a  number  of  traders  from  the  same  economic  sector  or  against  a  code
owner.

2.

Under the legal provisions referred to in paragraph 1, Member States shall confer upon
the courts or administrative authorities powers enabling them, in cases where they deem
such  measures  to  be  necessary  taking  into  account  all  the  interests  involved  and  in
particular the public interest:

– 

to  order  the  cessation  of,  or  to  institute  appropriate  legal  proceedings  for  an
order for the cessation of, unfair commercial practices, or

27

– 

if the unfair commercial practice has not yet been carried out but is imminent,
to  order  the  prohibition  of  the  practice,  or  to  institute  appropriate  legal
proceedings for an order for the prohibition of the practice,

even without proof of actual loss or damage or of intention or negligence on the part of
the trader.

Member  States  shall  also  make  provision  for  the  measures  referred  to  in  the  first
subparagraph to be taken under an accelerated procedure:

– 

– 

either with interim effect, or

with definitive effect,

on the understanding that it is for each Member State to decide which of the two options
to select.

Furthermore, Member States may confer upon the courts  or administrative  authorities
powers  enabling  them,  with  a  view  to  eliminating  the  continuing  effects  of  unfair
commercial practices, the cessation of which has been ordered by a final decision:

– 

to require publication of that decision in full or in part and in such form as they
deem adequate,

– 

to require in addition the publication of a corrective statement.

3.

The administrative authorities referred to in paragraph 1 must:

(a)  be composed so as not to cast doubt on their impartiality;

(b)  have  adequate  powers,  where  they  decide  on  complaints,  to  monitor  and

enforce the observance of their decisions effectively;

(c)  normally give reasons for their decisions.

Where  the  powers  referred  to  in  paragraph  2  are  exercised  exclusively  by  an
administrative authority, reasons for its decisions shall always be given. Furthermore
in  this  case,  provision  must  be  made  for  procedures  whereby  improper  or
unreasonable  exercise  of  its  powers  by  the  administrative  authority  or  improper  or
unreasonable failure to exercise the said powers can be the subject of judicial review.

Article 12

Courts and administrative authorities

Member States shall confer upon the courts or administrative authorities powers enabling them
in the civil or administrative proceedings provided for in Article 11:

(a)

to require the trader to substantiate  factual claims in  relation  to  a  commercial
practice  if,  taking  into  account  the  legitimate  interest  of  the  trader  and  any
other party to the proceedings, such  a requirement appears  appropriate on the
basis of the circumstances of the particular case; and

28

(b)

to  consider  factual  claims  as  inaccurate  if  the  evidence  demanded  in
accordance with (a) is not furnished or  is deemed  insufficient by  the  court or
administrative authority.

Article 13

Penalties

Member States  shall lay down  penalties for infringements  of  national  provisions  adopted  in
application  of  this  Directive  and  shall  take  all  necessary  measures  to  ensure  that  these  are
enforced. These penalties must be effective, proportionate and constitute a deterrent.

Article 14

Amendments to Directive 1984/450/EEC as amended by Directive 1997/55/EC

Directives 1984/450/EEC and 1997/55/EC are hereby amended as follows:

(1) Article 1 shall be replaced by the following:

"Article 1

The  purpose  of  this  Directive  is  to  protect  traders  against  misleading  advertising  and  the
unfair  consequences  thereof  and  to  lay  down  the  conditions  under  which  comparative
advertising is permitted.";

(2) Article 2(3) shall be replaced by the following:

‘seller or supplier’ (hereinafter referred to as ‘trader’) means any natural or legal person who
is acting for purposes relating to his trade, craft, business or profession.”

(3) The following Article 2(4) shall be added:

"code owner" means any entity,  including  a  trader or  group  of traders,  which  is responsible
for the formulation and revision of a code of conduct and for monitoring compliance by the
signatories with the code.

(4) Article 3a shall be replaced by the following:

Article 3a

1. Comparative  advertising  shall,  as  far  as  the  comparison  is  concerned,  be  permitted  when
the following conditions are met:

(a) it compares goods or services meeting the same needs or intended for the same purpose;

(b)  it  objectively  compares  one  or  more  material,  relevant,  verifiable  and  representative
features of those goods and services, which may include price;

(c) it does not discredit or denigrate the trade marks, trade names, other distinguishing marks,
goods, services, activities, or circumstances of a competitor;

29

(d) for products with designation of origin, it relates in each case to products with the same
designation;

(e)  it  does  not  take  unfair  advantage  of  the  reputation  of  a  trade  mark,  trade  name  or  other
distinguishing marks of a competitor or of the designation of origin of competing products;

(f) it does not present goods or services as imitations or replicas of goods or services bearing a
protected trade mark or trade name.

(5) Article 4(1) shall be replaced by the following:

“Member  States  shall  ensure  that  adequate  and  effective  means  exist  to  combat  misleading
advertising and for the compliance with the provisions on comparative advertising in the interest
of  traders  and  competitors.  Such  means shall  include  legal  provisions  under  which  persons  or
organisations  regarded  under  national  law  as  having  a  legitimate  interest  in  combating
misleading advertising or regulating comparative advertising may:

(a) take legal action against such advertising; or

(b)  bring  such  advertising  before  an  administrative  authority  competent  either  to  decide  on
complaints or to initiate appropriate legal proceedings.

It  shall  be  for  each  Member  State  to  decide  which  of  these  facilities  shall  be  available  and
whether  to  enable  the  courts  or  administrative  authorities  to  require  prior  recourse  to  other
established means of dealing with complaints, including those referred to in Article 5.

With  due  regard  for  national  laws,  these  legal  facilities  may  be  directed  separately  or  jointly
against a number of traders from the same economic sector or against a code owner.”

(6)  In  Article  6(a)  the  words  “furnish  evidence  as  to  the  accuracy  of  factual  claims”  shall  be
replaced by the words “substantiate factual claims”.

(7) Article 7(1) shall be replaced by the following:

“ This Directive shall not preclude Member States from retaining or adopting provisions with a
view  to  ensuring  more  extensive  protection,  with  regard  to  misleading  advertising,  for  traders
and competitors”.

Article 15

Amendment to Directive 1997/7/EC [Distance Selling]

Article 9 shall be replaced by the following:

“Inertia selling

Member States shall take the measures necessary to exempt the consumer from the provision
of any consideration in cases of unsolicited supply, the absence of a response not constituting
consent.”

Article 16

Amendment to Directive 1998/27/EC [Injunctions]

In the Annex to Directive 1998/27/EC the text in point 1shall be replaced by the following:

30

“1. Directive //EC of the European Parliament and of the Council of …… concerning unfair
commercial practices affecting consumers in the internal market (OJ L, xx p. )”.

Article 17

Information

Member  States  shall  take  appropriate  measures  to  inform  the  consumer  of  the  national  law
transposing  this  Directive  and  shall  encourage,  where  appropriate,  traders  and  professional
organizations to inform consumers of their codes of conduct.

Article 18

Transposition

Member  States  shall  adopt  and  publish  the  laws,  regulations  and  administrative  provisions
necessary  to  comply  with  this  Directive  by  [18  months  after  the  entry  into  force  of  this
Directive]. They shall forthwith inform the Commission thereof and inform the Commission
of any subsequent amendments without delay.

They shall apply these provisions by [2 years after the entry into force of this Directive].

When Member States adopt these provisions, they shall contain a reference to this Directive
or be accompanied by such a reference on the occasion of their official publication. Member
States shall determine how such reference is to be made.

Article 19

Entry into force

This  Directive  shall  enter  into  force  on  the  […]  day  following  that  of  its  publication  in  the
Official Journal of the European Communities.

Article 20

Addressees

This Directive is addressed to the Member States.

Done at Brussels, […]

For the European Parliament
The President
[…]

For the Council
The President
[…]

31

Annex 1: Commercial practices, which are in all circumstances considered unfair

Misleading commercial practices

(1) Claiming to be a signatory to a code of conduct when the trader is not.

(2) Claiming  that  a  code  of  conduct  has  an  endorsement  from  a  public  or  other

body which it does not have.

(3) Making  an  invitation  to  purchase  products  at  a  specified  price  if  there  are
reasonable  grounds  for  believing  that  the  trader  will  not  be  able  to  offer  for
supply  or  to  procure  another  trader  to  supply,  those  products  or  equivalent
products at that price for a period that is, and in quantities that are reasonable
having regard to the product and price offered (bait advertising).

(4) Making an invitation to purchase products at a specified price and then:

a)

b)

c)

d)

refusing to show the advertised item to consumers, or

refusing to take orders for it or deliver it within a reasonable time, or

disparaging the product,

or demonstrating a defective sample of it

with the intention of promoting a different product (bait and switch).

(5)

Falsely stating that the product will only be available for a very short time in
order  to  elicit  an  immediate  decision  and  deprive  consumers  of  sufficient
opportunity or time to make an informed choice.

(6) Undertaking  to  provide  after-sales  service  to  the  consumer  and  then  making
such  service  available  only in a language  other than the one which  the  trader
used  in  communications  with  the  consumer  prior  to  a  transaction  without
clearly disclosing this to the consumer before the consumer is committed to the
transaction.

(7)

Stating that a product can legally be sold when it cannot.

(8) Using  editorial  content  in  the  media to  promote  a  product  where  a  trader  has

paid for the promotion without making that clear in the content. (Advertorial).

(9)

Falsely  arguing  that  the  personal  security  of  the  consumer  or  his  family  is  at
risk if the consumer does not purchase the product.

(10) Establishing,  operating  or  promoting  a  pyramid  promotional  scheme  where  a
consumer gives consideration for the opportunity to receive compensation that
is derived primarily from the introduction of other consumers into the scheme
rather than from the sale or consumption of products.

(11) Failing to provide the information stipulated in the Annex of the Regulation on
Sales Promotion or providing information which is false, unclear or ambiguous
in fulfilment of the requirements in the Annex.

32

(12) Using  the  expression  “liquidation  sale”  or  equivalent  when  the  trader  is  not

about to cease trading.

Aggressive commercial practices

(1) Creating the impression that the consumer cannot leave the premises until the

contract is signed or the payment made.

(2) Conducting prolonged and/or repeated personal visits to the consumer’s home

ignoring the consumer's request to leave.

(3) Making persistent and unwanted solicitations by telephone, fax, e-mail or other

remote media.

(4) Targeting  consumers  who  have  recently  suffered  a  bereavement  or  serious
illness in their family in order to sell a product which bears a direct relationship
with the misfortune.

(5) Requiring a consumer who wishes to claim on an insurance policy to produce
documents  which  could  not  reasonably  be  considered  relevant  as  to  whether
the  claim  was  valid  in  order  to  dissuade  the  consumer  from  exercising  his
contractual rights.

(6) Advertising to  children  in  a  way  which  implies  that  their  acceptance  by  their
peers  is  dependent  on  their  parents  buying  them  a  particular  product.  This
provision  is  without  prejudice  to  Article  16  of  Directive  89/552/EEC  on
television broadcasting.43

(7) Demanding  payment  for  products  supplied  by  the  trader,  but  which  were  not

solicited by the consumer (inertia selling).

43

Council Directive 89/552/EEC of 3 october 1989 on the co-ordination of certain provisions laid down
by  law,  regulation  or  administrative  action  in  Member  States  concerning  the  pursuit  of  television
broadcasting activities, in OJ L298 of 17.10.1989, p.23, as amended by Directive 97/36/EC.

33

                                                
Annex 2 - Community law provisions setting out rules for advertising and commercial
communication

Articles 4 and 5 of Directive 97/7/EC on  the protection of consumers in  respect of  distance
contracts44

Article 3 of Directive 90/314/EEC on package travel, package holidays and package tours45

Article 3(3) of Directive 94/47/EC on the protection of purchasers in respect of certain aspects
of  contracts  relating  to  the  purchase  of  a  right  to  use  immovable  property  on  a  timeshare
basis46

Article  3(4)  of  Directive  98/6/EC  on  consumer  protection  in  the  indication  of  the  prices  of
products offered to consumers47

Articles  86  to  100  of  Directive  2001/83/EC  on  the  Community  code  relating  to  medicinal
products for human use48

Article 6 of Directive 2000/31/EC on certain aspects of electronic  commerce  in the  Internal
Market (Directive on electronic commerce)49

Article  4  and  the  Annex  of  the  annex  of  [the  proposal  for  a  Regulation  concerning  sales
promotions in the internal market]

Article 4 of Directive 20../../EC [consumer credit proposal50 (replacing Article 3 of Directive
87/102/EEC concerning consumer credit agreements51, as amended by Directive 90/88/EEC52
and Directive 98/7/EC53)]

Articles  3  and  4  of  Directive  2002/65/EC  concerning  the  distance  marketing  of  consumer
financial services and  amending Council Directive 90/619/EEC and  Directives  97/7/EC  and
98/27/EC54

Article  1.9  of  Directive  2001/107/EC  amending  Council  Directive  85/611/EEC  on  the  co-
ordination  of  laws,  regulations  and  administrative  provisions  relating  to  undertakings  for
collective  investment  in  transferable  securities  (UCITS)  with  a  view  to  regulating
management companies and simplified prospectuses55

Articles 12 and 13 of Directive 2002/92/EC on insurance mediation56

Article 36 of Directive 2002/83/EC concerning life assurance57

44

45

46

47

48

49

50

51

52

53

54

55

56

OJ L 144, 4.6.1997, page 19
OJ L 158, 23.6.1990, page 59
OJ L 280, 29.10.1994, page 83
OJ L 80, 18.3.1998, page 27
OJ L 311, 28.11.2001, page 67
OJ L 178, 17.7.2000, page 1
COM(2002) 443 final
OJ L 42, 12 .2.1987, page 48
OJ L 61, 10.3.1990, page 14
OJ L 101, 1.4.1998, page 17
OJ L 271, 9.1.2002, pages 16-24
OJ L 41, 13.2.2002, pp. 20-34
OJ L.9, 15.1.2003, p. 3

34

                                                
[Article 18 of the proposed Directive on investment services and regulated markets, amending
Directives  85/611/EEC,  93/6/EEC  and  2000/12/EC  (COM(2002)  625  final  -  2002/0269
(COD))]

Article  31  and  43  of  Directive  92/49/EEC  on  the  co-ordination  of  laws,  regulations  and
administrative provisions relating to direct insurance other than life assurance and amending
Directives 73/239/EEC and 88/357/EEC (third non-life insurance Directive)58

Articles 5, 7 and 8 of [Amended proposal for a Directive of the European Parliament and of
the  Council  on  the  prospectus  to  be  published  when  securities  are  offered  to  the  public  or
admitted  to  trading  and  amending  Directive  2001/34/EC  (COM(2002)  460  final  -
2001/0117(COD))]

57

58

OJ L 345, 19.12.2002, pp.1-51
OJ L 228, 11.8.1992, pp. 1-23

35

                                                                                                                                                        
LEGISLATIVE FINANCIAL STATEMENT

Policy area: HEALTH AND CONSUMER PROTECTION

Activity: Consumer policy

TITLE OF ACTION: DIRECTIVE ON UNFAIR BUSINESS-TO-CONSUMER COMMERCIAL PRACTICES

1.

BUDGET LINE(S) + HEADING(S)

n/a

2.

2.1.

2.2.

OVERALL FIGURES

Total allocation for action (Part B): None

Period of application:

None

2.3.

Overall multiannual estimate of expenditure:

(a)

Schedule  of  commitment  appropriations/payment  appropriations 
intervention) (see point 6.1.1)

(financial

€ million (to three decimal places)

2004

2005

2006

2007

2008

2009+

Total

subs
yrs

Commitments

Payments

(b)

Technical and administrative assistance and support expenditure(see point 6.1.2)

Commitments

Payments

Subtotal a+b

Commitments

Payments

36

(c)

Overall  financial  impact  of  human  resources  and  other  administrative  expenditure
(see points 7.2 and 7.3)

Commitments/
payments

TOTAL a+b+c

Commitments

Payments

2.4.

Compatibility with financial programming and financial perspective

Proposal is compatible with existing financial programming.

2.5.

Financial impact on revenue:

Proposal has no financial implications

3.

BUDGET CHARACTERISTICS

Type of expenditure

New

EFTA
contribution

Contributions
from applicant
countries

Heading in
financial
perspective

NA

4.

LEGAL BASIS

Article 95 TEC

5.

DESCRIPTION AND GROUNDS

5.1.

Need for Community intervention

n/a

5.1.1. Objectives pursued

5.1.2. Measures taken in connection with ex ante evaluation

5.2.

Action envisaged and budget intervention arrangements

n/a

5.3.

Methods of implementation

n/a

37

6.

FINANCIAL IMPACT

6.1.

Total financial impact on Part B - (over the entire programming period)

(The  method  of  calculating  the  total  amounts  set  out  in  the  table  below  must  be
explained by the breakdown in Table 6.2.)

6.1.1.

Financial intervention

n/a

6.1.2.

Technical  and  administrative  assistance,  support  expenditure  and  IT  expenditure
(commitment appropriations)

n/a

6.2.

Calculation  of  costs  by  measure  envisaged  in  Part  B  (over  the  entire
programming period)59

n/a

7.

IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE

7.1.

Impact on human resources

Staff to be assigned to management of the
action using existing resources

Description of tasks deriving from
the action

Types of post

Total

Number of
permanent posts

Number of
temporary posts

Officials or

 temporary staff

A

B

C

Other human resources

Total

7.2.

Overall financial impact of human resources

Type of human resources

Amount (€)

Method of calculation *

Officials

Temporary staff

Other human resources

(specify budget line)

Total

59

For further information, see separate explanatory note.

38

                                                
7.3.

Other administrative expenditure deriving from the action

Amount €

Method of calculation

Budget line

(number and heading)

Overall allocation (Title A7)

A0701 – Missions

A07030 – Meetings

A07031 – Compulsory committees (1)

A07032 – Non-compulsory committees (1)

A07040 – Conferences

A0705 – Studies and consultations

Other expenditure (specify)

Information systems (A-5001/A-4300)

Other expenditure – Part A (specify)

(1) Specify the type of committee and the group to which it belongs.

Total

I.

II.

III.

Annual total (7.2 + 7.3)

Duration of action

Total cost of action (I x II)

n/a

n/a

n/a

8.

FOLLOW-UP AND EVALUATION

8.1.

Follow-up arrangements

n/a

8.2.

Arrangements and schedule for the planned evaluation

n/a

9.

ANTI-FRAUD MEASURES

n/a

39