Italy: The ECJ Judgment Of 19 September 2013 On Unfair Commercial Practices: Strict Liability For Professionals?

Last Updated: 26 November 2013
Article by Maschietto Maggiore

On 19 September 2013, the Court of Justice of the European Union gave its interpretation on the "professional diligence" as a constitutive element of companies liability under the Parliament and Council Directive 2005/29/EC ("the Unfair Commercial Practices Directive"). The issue was referred for a preliminary ruling by the Austrian Supreme Court (Case C-435/11).

The case which was brought before the Austrian Supreme Court concerned an Austrian travel agency which in its brochure stated that it had exclusivity rights on booking services for certain hotels. In fact the hotels concerned had, by contract, guaranteed such exclusivity to the travel agency, but they did not honour it. Thus the information contained in brochures was objectively incorrect and constituted, from the viewpoint of the average consumer, a misleading commercial practice.

In accordance with Article 5(2) of the above mentioned Directive: "a commercial practice shall be unfair if: (a) it is contrary to the requirements of professional diligence, and (b) it materially distorts or is likely to materially distort the economic behaviour with regard to the product of the average consumer whom it reaches or to whom it is addressed, or of the average member of the group when a commercial practice is directed to a particular group of consumers". In addition, more specifically on misleading practices, Article 6(1) of the Directive states that: "a commercial practice shall be regarded as misleading if it contains false information and is therefore untruthful or in any way, including overall presentation, deceives or is likely to deceive the average consumer".

As clearly summarized by the Court of Justice, the Austrian Supreme Court raises the question "whether for the purpose of applying Article 6(1), and with a view to treating the travel agency's practice as 'misleading' within the meaning of that provision, it is sufficient to examine that practice in the light of the criteria specified in that provision alone which (according to the findings of the Court of Justice) are all met in the present case; or whether, on the contrary, it is necessary to determine, in addition, whether the condition as to whether the commercial practice is contrary to the requirements of professional diligence (...) which would not, however, be the case in this instance, on the ground that the travel agency concerned had done everything to secure the exclusivity it claimed in its sales brochures". 

On 19 September last, answering to the question asked by the Supreme Court, the Court of Justice of the European Union ruled that if a commercial practice satisfies all the criteria set out in article 6(1) of the Unfair Commercial Practices Directive for being categorised as a misleading practice in relation to the consumer, it will not be necessary to determine whether such a practice is also contrary to the requirement of professional diligence, as referred to in article 5(2)(a) of the Directive, in order for it to be regarded legitimately as unfair and, therefore, prohibited.

The Court of Justice justifies its interpretation on the basis that there is no mention in the definition of misleading practice of the condition being contrary to the requirements of professional diligence, set out in Article 5(2)(a) of the Directive.

Therefore the Court of Justice seems to isolate the notion of misleading practice from the general notion of unfair commercial practice. The Court excludes the application of professional diligence's requirement to misleading practices since said requirement is only mentioned in Article 5 of the Directive where the general definition of unfair commercial practices is found. 

Furthermore, the Court of Justice considers that: "Article 5(4) of the Directive categorises commercial practices as unfair where it is established they are misleading or aggressive 'as set out in' Articles 6 and 7 and Articles 8 and 9, respectively, of directive, that expression suggesting that the determination of whether the practice concerned is misleading or aggressive depends only on the assessment of the practice in the light of the criteria set out in those latter articles alone".

However, moving along these lines, the Court of Justice does not explain clearly the relationship between the special definition (of "misleading commercial practice") and the general definition (of "unfair commercial practice"), whereas normally the special one should be contained in the general as a category of unfair commercial practices.

The Court of Justice states that its interpretation is "supported by the objective pursued by the Unfair Commercial Practices Directive of providing a high common level of consumer protection by carrying out a complete harmonisation of the rules relating to unfair business-to-consumer commercial practices, including unfair advertising, given that the interpretation upheld is such as to facilitate the effective application of Article 6(1) of that directive in a way favourable to the interests of consumers to whom false information has been given in advertising brochures distributed by a trader". Therefore, if the requirement of professional diligence was interpreted differently, there would be an abatement of consumer protection.

Thus, if the requirement of professional diligence is not satisfied even by compliance of the professional operator to a criterion of good faith, it amounts to strict liability for the professional.

In the end this ruling of the Court of Justice sheds a new light on the Directive since given by the need to ensure, in case of misleading commercial practices, a very high level of consumer protection.

However this ruling is also somewhat disorienting for professionals which vis-à-vis consumers will may have no defense if not by demonstrating the objective truth of their advertising.

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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