Cyprus: Misleading Hot Offers: Cypriot Chain Stores Fined For Unfair B2C Practices

Misleading commercial practices are the core of two recent decisions handed down by the Competition and Consumer Protection Service (CCPS), being the government watchdog on unfair B2C practices in the Republic of Cyprus. Both decisions stem from investigations instigated by CCPS own initiative, following its physical on-site investigation of a local leading chain of supermarket outlets (Papantoniou case) and an electronic investigation of an online jewellery store (Papadopoulos case) respectively. 

C.A.C. Papantoniou Trading Limited (Decision no. 2017/03) 

In Papantoniou, CCPS targeted a sales promotion of five shelf products, the corresponding label of each indicated a discount amount/percentage alongside the resulting new discounted product price. CCPS espoused the view that Papantoniou's omission to further include the start (pre-discount) product price in the said label particulars increased the likelihood of confusion to the average consumer as, in its absence, it could be perceived that the discount would be applied against the resulting new discounted price. In their view, such practice could fall foul of Article 5 of the Unfair Business-to-Consumer Practices Law (N.103(I)/2007) (the "Law") and thus amount to an unfair commercial practice.

The findings of CCPS were communicated in writing to Papantoniou in the form of a compliance letter, in response to which Papantoniou undertook to proceed to immediate corrective action. In the interim and following a second on-site investigation to which similar findings were reported (albeit on a different group of products promoted on sale), Papantoniou were summoned to state their views in a statutory hearing before the CCPS, as well as disclose the sale volumes of each product listed in the CCPS compliance letters and Papantoniou's turnover for the immediately preceding financial year. 

In its hearing, CCPS ruled that the practice adopted by Papantoniou on the particular products identified could mislead the average consumer as to the actual product price, the manner in which each product price was reached and the existence of a specific price advantage, and accordingly were unfair and foul of Articles 5(1) and 5(2)(d) of the Law. 

In imposing an administrative fine of €10.000 to Papantoniou, the CCPS took particular note of the following factors: (a) the type of the sale products (items of everyday use); (b) the outreach of the products to consumers (appealing to a large number of consumers); (c) the duration of the breach (prolonged duration); (d) the failure to cooperate and fully comply with CCPS requests (no particulars on product volumes or turnover were submitted); (e) the prior record of similar cases brought before CCPS against, as well as cease and desist undertakings delivered by, Papantoniou; (f) the outreach of the foul commercial practice (limited to small number of products).

L.I.V.E. Papadopoulos Franchises Ltd (Decision no. 2017/04)

In Papadopoulos, CCPS targeted an online sales promotion of five jewellery items performed through Papadopoulos' official Facebook account. By way of follow up investigation, CCPS identified a different cluster of jewellery items promoted on a dedicated telemarketing channel as being on sale by Papadopoulos, advertised further as having a special price and/or being a hot offer. CCPS considered that Papadopoulos was marketing the said items of jewellery as being on sale without having previously placed same on the market on the start (pre-discount) price they advertised. In their view, such practice could amount to an unfair commercial practice on the basis of Article 5 the Law. 

The findings of CCPS were communicated in writing to Papadopoulos in the form of a compliance letter, along with an express request for disclosure of evidence illustrating, inter alia, that the said items of jewellery had in fact been placed for sale at the start (pre-discount) price advertised, the term for which they were made available for such start price as well as the volume of items sold on the purported discounted price. Papadopoulos' failure (on two instances) to adduce sufficient supporting documents led CCPS to summon Papadopoulos to state their position in a statutory hearing. 

In its ruling CCPS, held that Papadopoulos' commercial practices could mislead the average consumer as to the existence of an over-advantageous offer capable of inducing a transactional decision that would not otherwise be exercised, being thus an unfair commercial practice in breach of Articles 5(1) and 5(2)(d) of the Law. 

The CCPS took into account the fact that the items advertised were of value, that the said advertisements were broadcasted to a large number of consumers (both online and on the television), that Papadopoulos failed to immediately correct their practices and that they had fines imposed on them by the CCPS in the past for similar breaches of the Law, and imposed to Papadopoulos an administrative fine of €20.000 while ordering them to cease the said commercial practices and desist from exercising them in the future. 

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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