Austria: Promotional Bonuses In Austria: Still Problematic

Despite recent rulings by the Court of Justice of the European Union (CJEU) and the Austrian Supreme Court factually invalidating the Austrian prohibition in principle on offering B2C promotional bonuses, companies intending to use this marketing tool may still face obstacles.

Under sec 9a(1)(1) of the Austrian Unfair Competition Act (UWG), unless exceptions from sec 9a(2) UWG apply, it was prohibited so far to offer bonuses in advertising products (Zugabenverbot; ie, the consumer receives other goods in addition to the main product, including the possibility to take part in a sweepstake).

The CJEU judgment

In its decision of 9 November 2010 (case C-540/08, Mediaprint/"Österreich"), the CJEU held that this B2C prohibition in principle contradicts EU law. The Annex to Directive (EC) 2005/29 on Unfair Commercial Practices (UCP-Directive) lists all principally prohibited commercial practices, and member states may not introduce additional prohibitions in principle covering B2C situations. Whether a commercial practice is unfair and must be prohibited would have to be assessed on a case by case basis (whether it fulfills the criteria of misleading, aggressive, or otherwise unfair commercial practices).

The Austrian situation

Following this decision, the Austrian Supreme Court (OGH 15.2.2011, 4 Ob 208/10g – Fussballer des Jahres) stated that sec 9a(1)(1) UWG may no longer be applied. Technically, however, this provision on B2C bonuses still remains effective until the legislator repeals it. Despite this quasi-fall of the prohibition of B2C bonuses, the similar provision in sec 9a(1)(2) UWG concerning bonuses in B2B relationships remains in force. The UCP-Directive only addresses situations where the interests of consumers are concerned. The Austrian provision on B2B bonuses, however, explicitly addresses B2B situations. The CJEU judgment is thus not directly applicable to the B2B provision.

The B2B provision prohibits offering or granting bonuses to businesses. As it also covers the mere offering of bonuses, it is stricter than the B2C clause. Thus, even where businesses in general would be excluded from taking part in a bonus promotion because of a disclaimer in the promotional material, an infringement may still be possible. To infringe the B2B prohibition it would suffice if a bonus were granted to a business despite such disclaimer, and even without knowledge that a customer is a business when (erroneously) granting a bonus. Importantly, in Austria, cease and desist claims and claims for publication of judgment (which would be competitors' and competition protection associations' main legal remedies in case of such infringements) do not require negligence.

In the past, the B2B provision did not play a significant role in court practice and was overshadowed by the B2C prohibition. But now, because of the above, it may gain in importance. Also, it might be used in an effort to maintain the prohibition in principle against offering and granting bonuses generally. Austrian legal commentary criticises the fact that the B2B provision remains in force. The historic aim of the B2B prohibition was to prevent smaller producers from unreasonable requests of dominant retailers for additional deliveries. The current provision is ineffective for this purpose because granting bonuses by delivering higher quantity main products or by giving monetary discounts is allowed and typically would anyway be more common in B2B practice. Even more, the provision is bizarre as it sanctions those who grant bonuses (ie, those "weak producers" which historically should be protected by this provision) and not those who request the bonuses.

Risks remain

Although one could argue that the B2B prohibition is contrary to Austrian constitutional law (at the time of writing, the Austrian Supreme Court was considering requesting the Austrian Constitutional Court to annul the B2B prohibition) and the European freedom of free movement of goods and services, a significant risk remains when using bonuses as a promotional tool.

Further, even if the B2B prohibition were no longer applicable, the legality of offering or granting bonuses for promotional purposes would have to be assessed under general principles prohibiting aggressive, misleading, and unfair commercial practice and thus on a case by case basis.

This article was originally published in the schoenherr roadmap`12 - if you would like to receive a complimentary copy of this publication, please visit: pr.schoenherr.eu/roadmap.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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