Brussels, 18 May 2004
Commission applauds Council agreement on
unfair commercial practices: EU to ban pressure
Commission has applauded the political agreement reached by the Competitiveness
Council on the EU’s Unfair Commercial Practices Directive. Proposed by the
Commission in June 2003 (see IP/03/857),
this new EU law will clarify consumers' rights and facilitate cross-border trade
by establishing common, EU-wide rules against aggressive or misleading
business-to-consumer marketing. This will give consumers the same protection
against sharp business practices and rogue traders whether they buy from the
shop around the corner or from a website in another Member State. Independent
economic studies predict the Directive will increase consumer choice, stimulate
competition and enlarge the horizons of small and medium sized businesses in
Europe. The Directive will go back to the European Parliament for a second
reading this autumn.
"This directive creates a triple-win situation: for consumers, businesses and
Europe's economy. Unfair business practices are recognised as a problem in all
EU countries and harm consumers as well as respected companies with established
business practices. They also undermine confidence in markets. This proposal
seeks to tackle unfair practices in a simpler and more effective way," said
Health and Consumer Protection Commissioner David Byrne.
Consumers need to be convinced that their rights will be protected if they
are to take advantage of the potential benefits of the Internal Market. Several
pan-European surveys confirm that unfair commercial practices undermine consumer
confidence if they are not addressed by effective consumer protection (see e.g.
Eurobarometer 57.2 and Flash Eurobarometer 128).
The European Advertising Standards Alliance concluded in its 2002 annual
report that "cross-border complaints overwhelmingly concern the activities of
'rogue traders' and other fringe operators, who deliberately set out to exploit
the loopholes between national regulatory systems". This hurts legitimate
traders as well as consumers.
The text of the directive on which the Council reached political agreement
provides for full harmonisation: as soon as traders comply with the provisions
of the directive they do so not just in their own national context but on
EU-level. There is no need for mutual recognition, the same rules apply in all
EU Member States.
Once adopted, the Commission will actively monitor the implementation of the
Details of the proposed Directive
The Directive lays down rules for determining whether a commercial practice
is unfair and defines a limited range of "sharp practices" which are prohibited
EU-wide. This leaves room for business to innovate in developing new fair
Member States will have a duty to ensure the rules on unfair commercial
practices are enforced and that traders in their jurisdiction who break them are
punished. The duty to pursue "rogue traders" applies equally whether the
consumers targeted live in the Member State or another part of the EU.
General prohibition of unfair commercial practices
The Directive establishes two general conditions to apply in determining
whether a practice is unfair:
- The practice is contrary to the requirements of professional diligence;
- The practice materially distorts consumers’ behaviour.
benchmark consumer to be considered in assessing the impact of a practice is
generally the ‘average’ consumer – but there are also
measures to prevent the exploitation of consumers, such as children, who may be
particularly vulnerable to particular practices. The Council agreed on this
average consumer benchmark. Commissioner David Byrne said: “It is
essential to codify clearly in the Directive what is already Community law
established by the European Court of Justice in several judgements in the fields
of misleading advertising and intellectual property. This Directive is now
bringing about harmonisation. We therefore need to codify the average consumer
benchmark. It is the only way to ensure that the same criteria are used EU-wide
by courts and enforcers to consider, for example, whether an advertisement is
misleading. The Directive will give guidance as to how to do so, while retaining
flexibility based on social, cultural or linguistic factors, as already set out
by the Court.”
Misleading and aggressive commercial practices
Two specific types of unfair commercial practice are defined in more detail -
"misleading" and "aggressive" practices.
The Directive incorporates the provisions of the misleading advertising
Directive which currently protects consumers and clarifies that a commercial
practice may mislead either through action or omission. The Directive
lays down a limited number of core information items that should be regarded as
the ‘material’ information a customer needs to know before making a
purchase. These include the main characteristics of the product, the price
inclusive of taxes and, where appropriate, delivery charges and the existence of
a "right of withdrawal" where one exists. If this information is not apparent
from the context, the trader will need to disclose it.
The Directive describes 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.
Specific unfair commercial practices prohibited by the Directive
The Directive contains an Annex listing some specific types of unfair
commercial practice that are banned in all circumstances. These include:
- Claiming to be a signatory to a code of conduct when the trader is not.
- "Bait advertising" scams (advertising a product as a special offer without
actually having it in stock, or having only a token stock of the product)
- Stating that a product can legally be sold when it cannot.
- Materially misrepresenting the risk to the consumer or his family if the
consumer does not purchase the product.
- Describing a product as “gratis”, “free”,
“without charge” or similar if the consumer has to pay anything
other than the unavoidable cost of responding and collecting or paying for
- Creating the impression that the consumer cannot leave the premises until a
contract is formed.
- Conducting personal visits to the consumer’s home ignoring the
consumer's request to leave or not to return.
- Demanding payment for products supplied by the trader, but which were not
solicited by the consumer (inertia selling).
The Commission’s legislative proposal was made following several years
of consultation with consumer groups, businesses and governments. It was
accompanied by an extended impact assessment, one of the first ever conducted by
For further information about the proposed Directive, as well as on the
consultations and studies that led to it see: