CHAPTER FIVE

Marketing Law

#ucpd  #professional diligence  #average consumer

Technology, media, and marketing are closely related, as technology is an important building block for media that is either financed through marketing or developed as a vehicle for marketing, including advertising. In the E-Commerce Directive¹ this was also recognised (in 2000) in recital 29, which stated that

‘commercial communications are essential for the financing of information society services and for developing a wide variety of new, charge-free services […].’

As mentioned in Chapter 3 (regulating markets), from a trader’s perspective, marketing (without ‘law’) serves the legitimate purpose of influencing consumers’ preferences—by means of information and conducts—in order to increase profits. Thus, the trader informs actual and potential customers about his products—understood in this context as including both goods and services, as discussed below in the context of digital services.

From a societal perspective, marketing plays an important role in the function of markets in which customers are expected to make ‘efficient decisions’—i.e. decisions that match their individual goals, values and preferences—based on their experience, knowledge and available information, including, in particular, the trader’s advertising.

Individual traders may have an incentive to present their products and offerings in as favourable a light as possible; e.g. by emphasising their advantages and downplaying the disadvantages. Consumers, on the other hand, are interested in finding the products and deals that best suit their goals, values and preferences. This disparity in interests and incentives is the reason for the necessity of market intervention in the form of marketing law.

The consumer’s evaluation of products and offers may be based on parameters such as price, quality, service and reputation. Advertising and other commercial practices are an important source of information for consumers, and (truthful) marketing is therefore important in order for markets to work properly.

The role of commercial practices in consumers’ decision-making is recognised in the UCPD—which is discussed below—as it focuses on whether a commercial practice causes or is likely to cause the average consumer to take a ‘transactional decision’—in a broad sense—that he would not have taken otherwise.²

To a large extent, decisions to purchase are based on information offered by the trader by means of marketing, though many other sources of information are available, including professional (editorial) reviews and other sorts of peer reviews (e.g. customer reviews). In that regard, marketing serves an educational purpose, informing consumers about the availability, features, qualities and price of products and thereby allowing consumers to make choices that match their preferences.

Misleading information and aggressive conducts may be a problem, not only for consumers but also for other traders who provide products or offerings that the consumer would have purchased had he not been provided with misleading information or exposed to the aggressive conduct.

To allow consumers to take decisions in accordance with their individual goals, values and preferences, transparency and the absence of manipulation are required,³ as we discuss in Chapter 8 (manipulation) and Chapter 9 (transparency), respectively.

A trader may also suffer from other traders’ marketing that exploits his goodwill. Thus, marketing law is closely linked to competition law and intellectual property rights, including trademark law.

By the means of trademark law, a trader can obtain exclusive rights to certain uses of a trade name, whereas competition law concerns cartels (collusion and other anti-competitive practices) and the abuse of a dominant market position. Neither collusion nor dominance is a prerequisite for the application of marketing law; it applies to all traders.

As in the case of data protection, the harmonisation of marketing law also serves an additional purpose of removing obstacles to trade in the European single market. As will be clear from this chapter, many aspects of marketing law are fully harmonised, meaning that as supported by the E-Commerce Directive,⁴ a trader in most cases only has to comply with the marketing law of the ‘country of origin’.

The two main sources of marketing law in the European Union are the UCPD and the MCAD. The primary focus in this chapter is on the former directive, which deals with business-to-consumer commercial practices. Issues pertaining to the sending of unsolicited electronic mail are regulated in the ePrivacy Directive, introduced in the previous chapter. This marketing practice is closely linked to privacy, as discussed in Chapter 10 (human dignity and democracy). Similarly, practices such as doorstep selling and unsolicited phone calls also entail an element of privacy infringement.

Advertising, marketing and commercial practices

A number of names and definitions for various sorts of marketing have been developed in the EU’s acquis over the years—the most recent (and broadest) being ‘commercial practices’ as found in the UCPD. The MCAD regulates ‘advertising’ and the E-Commerce Directive regulates ‘commercial communication’. The most important difference between ‘advertising’/‘commercial communication’ and ‘commercial practices’ is that the latter also includes (aggressive) conducts, whereas the other directives are limited to (misleading) information.

1. The Unfair Commercial Practices Directive (UCPD)

1.1. Scope of application and interpretation

In order to be covered by the UCPD, the practice must be commercial in nature, i.e., it must originate from a trader, and it must be directly connected with the promotion, sale or supply of his products to consumers.⁵ The fact that it must originate from the trader means that, for instance, third-party reviews of the trader or his products in the media are not included, unless they are being used by the trader in his promotion.⁶

The UCPD applies to ‘business-to-consumer commercial practices’, which is a deliberately broad concept⁷ encompassing practices carried out before, during and after a commercial transaction (Article 3). The concept (referred to as ‘commercial practices’) is defined in Article 2(1)(d) as:

‘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.’

Political marketing, as well as a trader’s interaction with his investors, falls outside this scope, as long as the intention is not to promote the trader’s products.⁸ However, operating a commercial service that consists of mediating, e.g., political information does constitute a commercial practice.

The CJEU has consistently maintained that the UCPD is ‘characterised by a particularly wide scope ratione materiae’,⁹ and that the act in question must ‘clearly form part of an operator’s commercial strategy and relate directly to the promotion thereof and its sales development’.¹⁰ The act or omission on the part of the professional need not be recurrent or concern more than one consumer in order to be a commercial practice within the meaning of the UCPD.¹¹

It follows from Article 3(2) that the Directive is ‘without prejudice to contract law and, in particular, to the rules concerning the validity, formation or effect of a contract’. This means that, e.g., the validity of a contract is not affected by the Directive in cases where a contract is concluded following an unfair commercial practice. This does not, however, mean that the use of unfair contract terms cannot be considered an unfair commercial practice.¹²

Besides the proposal for the UCPD,¹³ guidance can be found in the Commission Staff Working Document.

1.1.1. Digital services and digital content

With the New Deal for Consumers Directive,¹⁴ ‘digital service’ and ‘digital content’ were added to the UCPD’s definition of products in Article 2(1)(c) that now (applicable from 28 May 2022) reads:

‘“product” means any good or service including immovable property, digital service and digital content, as well as rights and obligations.’

With the insertion, the definition is aligned with the Digital Content Directive¹⁵ but has no significant effect on the UCPD’s scope, as it focuses on the commercial nature of the practice, regardless of the shape or form of the product.

With the New Deal for Consumers Directive, the scope of the Consumer Rights Directive¹⁶—which regulates consumers’ ‘contractual rights’ for consumers—was expanded to also apply ‘when the consumer provides or undertakes to provide personal data’ instead of paying a price in money.¹⁷ The issue of ‘paying with data’ is touched upon below in the context of ‘purchases’ and ‘payment’; and more elaborately dealt with in Chapter 9 (transparency).

1.1.2. Taste and decency

Recital 7 provides that the UCPD does not address ‘legal requirements related to taste and decency’. This ‘exemption’ must be understood in light of the directive’s purpose to approximate laws concerning unfair commercial practices harming consumers’ economic interests, as introduced in the context of ‘consumer protection’ in Chapter 3 (regulating markets). It seems reasonable to assume that taste and decency must be interpreted narrowly but the exact scope of taste and decency is not settled in case law.

It is clear from case law that this ‘exemption’ may be used only in situations in which the action taken by a Member State is based solely on taste and decency,¹⁸ which for instance could concern national rules on protecting human dignity, preventing sexual, racial and religious discrimination or on the depiction of nudity, violence and antisocial behaviour,¹⁹ as discussed further in Chapter 10 (human dignity and democracy). Thus, Member States may regulate practices that do not concern consumers’ economic interests such as practices that are (only) undesirable for moral or cultural reasons.

The protection of privacy is—at least primarily—a matter of taste and decency and thus exempt from the UCPD. However, as should be clear by now, the processing of personal data has the potential to affect the economic interests of consumers, which is an argument for applying the UCPD to data-driven marketing (alongside the GDPR). The latter solution resonates better with the deliberately wide scope of the UCPD.

Doorstep selling—which we will revisit in Chapter 10 (human dignity and democracy)—offers a good illustration. Doorstep selling may be undesirable for reasons of both privacy and the protection of consumers’ economic interests. Intuitively, a national prohibition of doorstep selling cannot be justified under taste and decency, as it also concerns the protection of consumers’ economic interests.

From the above-mentioned recital 7, it is provided that ‘solicitation in the streets’ might be undesirable for ‘cultural reasons’ and that Member States ‘accordingly [should] be able to continue to ban commercial practices in their territory, in conformity with Community law, for reasons of taste and decency’. This seems like a good argument for maintaining a national prohibition of doorstep selling.

The Question is now addressed in the New Deal for Consumers Directive that amends Article 3(5) UCPD to allow for Member States to adopt provisions in the context of ‘unsolicited visits by a trader to a consumer’s home’, provided the provisions are ‘proportionate, non-discriminatory and justified on grounds of consumer protection’ (emphasis added). According to recital 55, this is a meant as a clarification.

This ‘clarification’ does not account for the fact that taste and decency falls outside the scope of the UCPD and that consumer protection (which must be the justification, cf. emphasis above) includes economic interests. Recital 55 further states that national provisions ‘should not prohibit those sales channels as such’.

It remains unsettled whether, for instance, doorstep selling may be prohibited by a Member State with the sole aim of protecting the privacy of citizens—which undoubtedly falls under taste and decency and, thus, outside the scope of the UCPD. However, it is clear from Item 25 of the blacklist that ‘personal visits to the consumer’s home’ is regulated in the UCPD and thus lies within its scope of application.

2. The prohibition of unfair commercial practices

Article 5(1) UCPD prohibits unfair commercial practices, and Article 5(2) sets two cumulative requirements that must be fulfilled for a commercial practice to be deemed unfair. Thus a commercial practice is unfair if:

• it is contrary to the requirements of ‘professional diligence’, and

• it materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product (hereafter referred to as ‘economic distortion’).

The layout of this general prohibition is important in order to understand the structure of the directive, even though most cases are likely to be determined by the more specific prohibitions concerning misleading practices (Articles 6 and 7), aggressive practices (Articles 8 and 9), and blacklisted practices (Annex I). These provisions are dealt with below.

Annex I of the UCPD contains a list of 35 commercial blacklisted practices that shall apply in all Member States and that, according to Article 5(5), may only be modified by revision of the directive. The blacklisted practices are the only commercial practices that are considered unfair per se (under all circumstances)—i.e. without an assessment of the requirement of professional diligence or economic distortion.

In practice, in order to determine whether a commercial practice is lawful, one must firstly consult the items on the blacklist, secondly, consider whether the practice is misleading and/or aggressive, and thirdly consider whether the practice is otherwise contrary to the requirements of professional diligence.

If the practice is considered to be ‘otherwise contrary to the requirements of professional diligence’, economic distortion must also be considered. If the practice is found to be misleading and/or aggressive, it must only be determined whether that practice causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise (hereafter referred to as ‘economic effect’). Such an analysis of the economic effect/distortion is not required for blacklisted commercial practices.

2.1. The requirements of professional diligence

Professional diligence is defined as ‘the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers, commensurate with honest market practice and/or the general principle of good faith in the trader’s field of activity’.²⁰ The requirement must be understood as a standard for due care to be exercised by traders in general; ignoring concrete intent and negligence.²¹ Commercial practices that are either misleading (Articles 6–7) or aggressive (Articles 8–9) are as such contrary to the requirement of professional diligence.²²

The International Chamber of Commerce (ICC) has drawn up an ‘Advertising and Marketing Communications Code’ (2018).²³ This code may serve as inspiration for determining the requirement of professional diligence, as it is ‘designed to establish a sound ethical framework to govern marketing practices worldwide based on twin goals of fostering consumer fairness and trust, and the freedom of commercial communications’.

The requirements of economic distortion and professional diligence are cumulative in Article 5(2), meaning that the requirement of professional diligence merely carves out commercial practices that are in fact likely to materially distort the economic behaviour of the average consumer.

It is assumed that the vast majority of the practices which would be defined as unfair under the general prohibition are either ‘misleading’ or ‘aggressive’.²⁴ However, the possible interplay with the protection of privacy, including personal data, seems an obvious situation to invoke the general prohibition of unfair commercial practices. This is pursued further in Chapter 8 (manipulation).

2.2. Economic effect

The second requirement concerning economic distortion, ‘material distortion of economic behaviour’, is defined in Article 2(1)(e) as ‘using a commercial practice to appreciably impair the consumer’s ability to make an informed decision’. It is a further requirement in the definition that this impairment is likely to ‘cause the consumer to take a transactional decision that he would not have taken otherwise’ (economic effect). Distortion of the average consumer’s economic behaviour thus constitutes the core of the Directive.²⁵

Except for the 35 blacklisted commercial practices (Annex I), a commercial practice may only be considered unfair if it ‘causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise’. The requirement entails that any decision directly related to the actual or potential purchase of a product is covered by the concept of ‘transactional decision’.²⁶

‘Transactional decision’ is broadly defined, and includes (potential) decisions concerning whether or not to buy (or complain about) products and on what terms. This concept also covers decisions directly related to such purchase decisions, including the consumer’s decision to enter a shop,²⁷ which indicates a relatively low threshold as to the effect or loss inflicted on the consumer.²⁸

Deciding to use a service that is offered free of charge, including by downloading an app, must also be considered a transactional decision. It seems reasonable to assume that clicking on an online advertisement is sufficient as well.

2.2.1. The average consumer

‘The average consumer’ plays a significant role in the Directive, as the distortion of ‘his’ economic behaviour or transactional decision is required for the prohibition of a commercial practice that is not on the blacklist.

From a linguistic perspective, it could seem like an oxymoron, when it follows from recital 18 that the average consumer test is not a statistical test; because ‘average’ is in fact a prominent concept within statistics. In that vein it should be emphasised that the CJEU has—with what appears as ease—given opinions on how the average consumer is expected to behave in various situations, notably without any discussions of a psychological, economic, sociological, or mathematical nature. This underlines that the average consumer is a ‘normative abstraction’ setting a standard for—not how consumers do behave, but—how they should (/are expected to) behave.²⁹

It has been suggested that emphasising that the average consumer test is not a statistical test could be understood as abolishing the use of statistical (empirical) evidence as a means of proof,³⁰ but this has not been confirmed by the CJEU.

In the context of the MCAD, the CJEU has allowed national courts to order an expert’s opinion or commission a consumer research poll for the purpose of clarifying whether a promotional description or statement is misleading or not.³¹ Notably, this does not change the fact that the analysis is an abstraction, because the court will have to determine the validity of the results and convert the data into a normative threshold for what can be expected by an average consumer.

More specifically, this second leg of the prohibition focuses on whether the practice in question is capable of affecting the economic behaviour of an average consumer who is reasonably well-informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors (recital 18 UCPD). Thus, this requirement is to be perceived as a standard for due care to be exercised by the average consumer.

Recital 6 provides that it is in line with the principle of proportionality which says that the directive only protects consumers from the consequences of unfair commercial practices that are material, but also recognises that in some cases the impact on consumers may be negligible.

In a case concerning the possibility of participating in a prize competition associated with the purchase of a newspaper, the CJEU established that, for at least part of the public, the possibility of participating in a competition represented a factor that determined the purchase of the newspaper, meaning it was a relevant factor in the economic effect-assessment; and that it could cause the national court to establish economic effect in the case. However, the Court emphasised that it does not necessarily follow that a sale with a bonus constitutes an unfair commercial practice within the meaning of the Directive, as it must also be verified whether the practice in question is contradictory to the requirements of professional diligence.³²

It follows from Article 5(2) that ‘the average consumer’ should be determined based on the group that the commercial practice reaches, is addressed to, or is directed to. It is not clear when and how these three, often different, criteria apply. In practice, however, this may not be particularly relevant—except for vulnerable groups, as discussed below—as one must consider the legal abstraction of an average consumer who is not an actual person, but rather a standard for how consumers are likely to react in the case of a particular commercial practice. In essence, reference should be made to the persons to whom the commercial practices are applied.³³

2.2.2. Vulnerable consumers

The UCPD contains a provision aimed at preventing the exploitation of consumers whose characteristics make them particularly vulnerable to unfair commercial practices.³⁴ This protection is, however, limited to groups of consumers who are particularly vulnerable to the commercial practice because of their mental or physical infirmity, age or credulity. In these cases the protection requires that the commercial practice is assessed from the perspective of the average member of that group rather from the ‘normal’ average consumer.

It is not a requirement that the vulnerable group be specifically targeted by the commercial practices,³⁵ meaning that all commercial practices that may distort the behaviour of members of the group of vulnerable consumers, must be assessed in the light of this provision. It is important to emphasise that a significant limitation is found in the requirement that the trader should reasonably be expected to foresee the distortion of the vulnerable group’s behaviour.

In the context of consumers’ economic interests, the possible vulnerabilities are vast and may cover all situations in which consumers make inferior choices relative to their preference due to a commercial practice. In the context of the UCPD and the consumers’ efficient choice, the vulnerabilities mainly relate to their ability to gather and comprehend information and the likelihood that they may be more credulous than the average consumer—for instance, the unemployed may be more susceptible to being influenced by a hope of future income, and the ill more prone to believe in possible cures.³⁶

3. Misleading commercial practices

Misleading commercial practices may be misleading actions or omissions. However, these two provisions are so closely related that both will often apply to the same commercial practice.³⁷ Similarly, it may sometimes be difficult to draw clear distinctions between when a commercial practice is aggressive and when it is misleading.

3.1. Misleading actions

Article 6 defines when a commercial practice must be regarded as a misleading action. It should be emphasised that a practice may only be unlawful if it has economic effect, as discussed above.³⁸

The most straightforward situation is when a commercial practice contains false information and therefore is untruthful. However, even when information is factually correct, it may still be misleading when the practice deceives or is likely to deceive the average consumer in any way, including its overall presentation, in relation to one or more of the following elements:

• the existence or nature of the product;

• 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;

• the extent of the trader’s commitments, the motives for the commercial practice and the nature of the sales process, 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;

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

• 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;

• the consumer’s rights, including the right to replacement or reimbursement, or the risks he may face.

Another set of misleading actions is found in Article 6(2), under which a commercial practice is misleading if in its factual context, taking account of all its features and circumstances, it has economic effect, as discussed above. The misleading actions in Article 6(2) include:

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

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

  1. the commitment is not aspirational but is firm and capable of being verified, and where

  2. the trader indicates in a commercial practice that he is bound by the code.

• any marketing of a good, in one Member State, as being identical to a good marketed in other Member States, while that good has significantly different composition or characteristics, unless justified by legitimate and objective factors.

3.2. Misleading omissions

The prohibition of misleading omissions is closely related to information requirements, but it relates only to ‘material information’ that the average consumer needs, based on the context, in order to make an informed transactional decision. The commercial practice must be assessed in its factual context, taking into account all its features and circumstances, as well as the limitations of the communication medium.

There are no firm guidelines for how information should be provided or displayed, but it follows from Article 7(2) that it is a misleading omission if the trader hides or provides in an unclear, unintelligible, ambiguous, or untimely manner such material information as referred to above. As for misleading actions, it is also a requirement that the commercial practice has economic affect, as discussed above.

Information requirements established by Community law in relation to commercial communication including—but not limited to—advertising or marketing are regarded as material,³⁹ including the information requirements found in the E-Commerce Directive and the Consumer Rights Directive.

Article 6 of the E-Commerce Directive states that commercial communications, promotional offers (such as discounts, premiums and gifts), and promotional competitions/games must be clearly identifiable as such, and that the conditions for qualification and/or participation must be easily accessible and presented clearly and unambiguously. These rules are also closely related to the general information requirements discussed above.

3.2.1. Limitations in time and space

Limitations of the communication medium must be taken into account when determining whether material information is omitted. This is elaborated on in Article 7(3) which reads:

‘Where the medium used to communicate the commercial practice imposes limitations of space or time, these limitations and any measures taken by the trader to make the information available to consumers by other means shall be taken into account in deciding whether information has been omitted.’

The measures taken by the trader to make information available to consumers by other means includes posting on a website.⁴⁰

Even when a medium is limited in time and space, it must be assessed whether the general presentation of the commercial practices allows an average consumer to make an informed transactional decision or whether, on the contrary, the commercial communication is, overall, likely to create a mistaken perception of the offer,⁴¹ and thus constitutes a misleading action, as discussed above.

3.2.2. Identification of commercial intent

One of the fundamental requirements of marketing law is that marketing should be identifiable in order to raise the consumer’s awareness of such exposure. This is particularly relevant in contexts in which the consumer has no expectations of being exposed to marketing—e.g. in editorial content (newspaper articles etc.), as opposed to next to (and clearly separated from) such content, which is what is usually expected.

This aspect of marketing is addressed in Article 7(2), under which it is considered a misleading omission if the trader fails to identify the commercial intent of the commercial practice as it is not apparent from the context, and provided that this causes or is likely to cause the average consumer to take a transactional decision that he would not have made otherwise.

In this vein, the use of ‘native advertising’ has flourished, that being a form of advertising that matches the form with the function of the media in which it appears. Examples include a newspaper ad that looks like an editorial article (with by-lines and all), and ‘promoted stories’ on Facebook. Using native advertising is, in itself, not misleading, but it must, all else being equal, meet the requirement of indicating its commercial intent in order to ensure that the average consumer is not being misled.⁴²

The provision concerning limitations in space and time concerns only the disclosure of information and thus does not detract from the requirement that the commercial intent must be apparent—at least from the context. In addition, it must also be emphasised that the provision only applies to misleading omissions, and that such a commercial practice also may be considered a misleading action taking into consideration the ‘overall presentation’ (even provided that the information is ‘factually correct’).⁴³

In an online context, this should be read in conjunction with Article 6(1)(a) of the E-Commerce Directive which provides that commercial communication shall be clearly identifiable as such. This provision does not contain a requirement of economic distortion. However, if the average consumer is likely to identify particular marketing as such, it may be assumed that it is clearly identifiable. In addition, it must—according to Article 6(1)(b) of the E-Commerce Directive—be clearly identifiable on whose behalf the commercial communication is made when an information society service is used as medium.

3.2.3. Invitation to purchase

Further ‘material information’ is specified in Article 7(4), in the case of an ‘invitation to purchase’, which is a particular concept for commercial practices comprising commercial communication that (1) indicates the characteristics of the product, e.g. by verbal or visual reference,⁴⁴ and (2) the product’s price, e.g. an ‘entry-level price’.⁴⁵ Besides the indications concerning price and a product, these indications should also (3) enable the consumer to make a purchase.

Purchase in this context is likely to include situation where ‘the consumer provides or undertakes to provide personal data’ as discussed above; either directly or by means of analogous interpretation of the general prohibition of misleading omissions.

It is not a requirement that an order should be placed within the context of the commercial practice;⁴⁶ hence, a newspaper ad or a website without an order form may be considered an invitation to purchase within the definition of the UCPD if the information provided is sufficient for an average consumer to (mentally) make a decision to purchase the particular product.⁴⁷

If the commercial practice fulfils the requirements to constitute an invitation to purchase, the following information is regarded as material (if not already apparent from the context):

• the main characteristics of the product, to the extent appropriate to the medium and the product;⁴⁸

• the geographical address and the identity of the trader, such as his trading name and, where applicable, the geographical address and identity of the trader on whose behalf he is acting;

• the price inclusive of taxes, or where the nature of the product means that the price cannot reasonably be calculated in advance, the manner in which the price is calculated, 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 such additional charges may be payable;⁴⁹

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

• for products and transactions involving a right of withdrawal or cancellation, the existence of such a right;

• for products offered on online marketplaces, whether the third party offering the products is a trader or not, on the basis of the declaration of that third party to the provider of the online marketplace.

3.3. Disclosure of ranking criteria

The New Consumer Deal Directive introduces an Article 7(4a) specifying what is ‘material information’ in the context of ‘ranking’, which is defined as ‘the relative prominence given to products, as presented, organised or communicated by the trader, irrespective of the technological means used for such presentation, organisation or communication’ (Article 2(1)(m)).

Article 7(4a) UCPD concerns ‘general information […] on the main parameters determining the ranking of products presented to the consumer as a result of the search query and the relative importance of those parameters, as opposed to other parameters’ (emphasis added). The information must be ‘made available in a specific section of the online interface that is directly and easily accessible from the page where the query results are presented’.

The provision does not apply to providers of online search engines regulated in the Platform-to-Business Regulation,⁵⁰ which in its Article 5 provides for similar information requirements between traders and online intermediaries, as discussed in Chapter 9 (transparency).

Article 7(4a) is corroborated by the following blacklisted commercial practice (prohibited per se):

‘11a.  Providing search results in response to a consumer’s online search query without clearly disclosing any paid advertisement or payment specifically for achieving higher ranking of products within the search results.’

According to recital 20 of the New Consumer Deal Directive, the provision also applies to ‘indirect payment’, including accepting additional obligations towards the search provider or increased commission/compensation. However, payments for general services, such as listing fees etc., are only ‘payment’ when they are ‘dedicated to achieving higher ranking’.

The provisions do not apply to mediation of information that is not triggered by a search query, but inspiration may be drawn in that context, as mediation inherently is a matter of giving ‘relative prominence’ to content, including products, and is often triggered by behaviour.

The above-mentioned provisions are not intended to detract from the general provisions of misleading actions and omissions. And as we will discuss in Chapter 8 (manipulation) and Chapter 9 (transparency), ranking based on personal data is also linked to the protection of privacy, including personal data.

4. Aggressive commercial practices

While the two provisions on misleading commercial practices focus on the information provided/omitted, the provisions on aggressive practices focus on conducts exercised in the trader’s course of business.

It is a misleading commercial practice to provide wrong or misleading information, whereas providing information that may be irrelevant to the situation, such as disparaging remarks about a competitor, should be assessed under the provision concerning aggressive practices, as long as the remarks are made in a business-to-consumer context.

Aggressive practices also concern the use of e.g. certain sales promotions such as premiums, bonuses and commercial lotteries. A commercial practice is aggressive if in its factual context—taking account of all its features and circumstances—it significantly impairs or is likely to significantly impair the average consumer’s freedom of choice or conduct with regard to the product. This prohibition concerns impairment by ‘harassment, coercion, including the use of physical force, [and/]or undue influence’.⁵¹

As for misleading commercial practices, the aggressive practices must have commercial effect in order to be unlawful.

As per Article 9 UCPD, in determining whether a commercial practice uses harassment, coercion (including the use of physical force) and/or undue influence, account must be taken of:

1. its timing, location, nature, or persistence;

2. the use of threatening or abusive language or behaviour;

3. the exploitation 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;

4. any onerous or disproportionate non-contractual barriers imposed by the trader when a consumer wishes to exercise his rights under the contract, including rights to terminate a contract or to switch to another product or another trader;

5. any threat to make any action that cannot legally be taken.

In the context of data-driven marketing, it is important to determine the extent to which personalised marketing is deemed aggressive. The provision explicitly comprises ‘coercion’, which is a form of manipulation, and ‘undue influence’, including the exploitation of ‘a position of power’ to apply ‘pressure, even without using or threatening to use physical force’.⁵² The focus must be on whether the commercial practice in question significantly limits the consumer’s ability to make an informed decision, which is pursued in Chapter 8 (manipulation).

4.1. Privacy infringing commercial practices

As mentioned above, doorstep selling is a commercial practice that also may be undesirable for privacy reasons. The same is the case when traders approach consumers by means of telephony and e-mail, which are regulated in the ePrivacy Directive. From a UCPD perspective, privacy infringing commercial practices seems to fit best under aggressive practices that include ‘harassment’. Recital 40 of the ePrivacy Directive provides that

‘safeguards should be provided for subscribers against intrusion of their privacy by unsolicited communications for direct marketing purposes’ and that in some cases the e-mails in addition may ‘cause difficulties for electronic communications networks and terminal equipment.’

The primary regulation of unsolicited electronic messages is found in Article 13 of the ePrivacy Directive⁵³ which is both part of the common regulatory framework for telecommunication and lex specialis to the GDPR discussed in Chapter 4 (data protection law).⁵⁴

Personalised marketing entails the processing of personal data, and it may be argued that the decision to use a particular e-mail address is primarily data processing, whereas the actual ‘sending’ of an electronic mail message is primarily a commercial practice. However, due to the broad concept of ‘processing’, the latter act will also—in itself—constitute processing of personal data. Thus, traders have to comply with both marketing law and data protection law.

It should be noted that making persistent and unwanted solicitations by telephone, fax, e-mail or other remote media, except in circumstances and to the extent justified under national law to enforce a contractual obligation (Annex I, Item 26), is considered to be an aggressive (blacklisted) commercial practice under the UCPD that maintains a focus on ‘unwanted’ (in contrast to ‘unsolicited’) solicitations, and is based on an opt-out model rather than the stricter opt-in model found in the ePrivacy Directive.

Unsolicited communication is understood as messages to which the subscribers or users have not given their prior consent. Article 13 provides that automatic calling machines (‘automated calling and communication systems without human intervention’), fax (‘facsimile machines’) and electronic mail may only be used for ‘the purposes of direct marketing’ with respect to subscribers who are natural persons⁵⁵ and who have given their prior consent; i.e. an opt-in solution.

Consent should be understood in accordance with the definition in the GDPR,⁵⁶ as discussed in the previous chapter, and electronic mail is defined in Article 2(1)(h) as ‘any text, voice, sound or image message sent over a public communications network that can be stored in the network or in the recipient’s terminal equipment until it is collected by the recipient’.⁵⁷

Article 13(2) contains an exemption concerning communication by electronic mail where the trader has obtained from its customers their electronic contact details for electronic mail, in the context of a sale of a product. In that case, the trader may use these electronic contact details for direct marketing of its own similar products. However, the customers must be given a clearly and distinctly opportunity to object, free of charge and in an easy manner, both at the time of their collection and on the occasion of each message.

This exemption entails that in the context of an online purchase a trader may pre-check a box indicating that the consumer wishes to receive e-mails from the trader, which is notably not akin to consent. Provided that the text is clear, it allows the consumer to un-check the box and thereby indicate that he objects to such communication. From a commercial point of view, it may be a better option to pursue the opt-in approach and thereby avoid the dissatisfaction of consumers who unwillingly end up on a mailing-list.

It does not matter whether the sender is a trader or not; the important part is whether the purpose of communication is direct marketing, meaning that the communication must at least be made on behalf of a trader. Therefore, a trader cannot pay private individuals to send a message that he is not allowed to send himself. The Directive contains no definition of ‘direct marketing’, which may be understood as any solicitation aimed at individuals with a view to making a sale at some point. Thus, the sending of an email with the purpose of obtaining the recipient’s consent to send direct marketing material must also be considered to be done for direct marketing purposes.⁵⁸

To the extent that unsolicited commercial communication by electronic mail is permitted, Member States must ensure that such commercial communication is clearly and unambiguously identifiable as soon as it is received by the recipient (Article 7 of the E-Commerce Directive). This is followed up by Article 13(4) of the ePrivacy Directive, which prohibits the sending of electronic mail that (1) fails to comply with Article 6 of the E-Commerce Directive, (2) does not have a valid address to which the recipient may send a request that such communications cease or (3) encourages recipients to visit websites that contravene Article 6 of the E-Commerce Directive.

4.1.1. Messages in social media services

The ePrivacy Directive regulates communication that is carried out in a ‘public communication network’, as defined in the telecommunication Framework Directive.⁵⁹ The regulatory framework for telecommunication concerns transmission services (‘conveyance of signals’), but not content services (e.g. ‘web-based content’),⁶⁰ which are regulated by other instruments, including in particular the E-Commerce Directive concerning ‘information society services’.

There is not much doubt that social media services must be considered as an information society service and thus are also web-based content falling outside the scope of the telecommunications directives—meaning that messages in social media services are not covered by the prohibition.⁶¹ Thus, unsolicited commercial communication provided through social media services must be assessed in the light of Item 26 of the UCPD blacklist which prohibits persistent and unwanted solicitations by telephone, fax, e-mail or other remote media—except in circumstances and to the extent justified under national law to enforce a contractual obligation. It is noted that this prohibition is without prejudice to the ePrivacy Directive.

5. Blacklisted commercial practices

The blacklisted commercial practices in Annex I are the only commercial practices that are prohibited without the need to assess the economic effect/distortion.⁶² In other words, the blacklisted commercial practices are prohibited ‘under all circumstances’ (per se). These 35 per se prohibitions protect all (not only the ‘average’) consumers. It has been argued that the items, to a large extent, only restate what would be prohibited under the general principles of unfair commercial practices, and that the blacklist—despite the intention to provide clear prohibitions—is not sufficiently precise because of its use of vague notions, which is likely to pose important problems in practice.⁶³

5.1. Free

It follows from Item 20 of the UCPD’s blacklist that it is unlawful to describe a product as ‘gratis’, ‘free’, ‘without charge’ or similar if the consumer has to pay anything other than ‘the unavoidable cost of responding to the commercial practice and collecting or paying for the delivery of that item’. ‘Free’ in this context is likely to be understood as ‘without payment’. In line with the discussions above, it could be argued that ‘purchase’ should include situations ‘when the consumer provides or undertakes to provide personal data’ instead of paying a price in money. The concept of ‘free’ is further discussed in Chapter 9 (transparency).

6. Full harmonisation

Article 4 of the Unfair Commercial Practices Directive provides that Member States cannot restrict the freedom to provide services or the free movement of goods for reasons falling within the field approximated by the Directive. The Directive provides full harmonisation of marketing law within its scope, i.e. providing both floor and ceiling for national regulation. It is, however, clear from case law that this directive only sets the exact framework for how Member States may regulate commercial practices within the scope of the directive. Therefore, and despite the full harmonisation, there will be divergences in how Member States assess key concepts used in determining whether a commercial practice is unfair.

Due to the full harmonisation, it is important to understand the scope of application, as the directive limits the Member States’ possibility to regulate within this scope,⁶⁴ thus, also setting the boundaries for when a trader⁶⁵ may solely rely on national marketing law under the Directive. For information society services, the E-Commerce Directive provides for a broader country of origin principle, which also includes aspects that fall under taste and decency.

The limitation of the Member States’ ability to prohibit commercial practices without a case-by-case assessment applies only to prohibitions that pursue consumer protection as their sole or partial objective. Thus, the directive does not apply to national law which does not (at all) pursue objectives related to consumer protection,⁶⁶ cf. the above discussion of prohibitions established solely for privacy reasons.

6.1. Assessment by national courts

Under the MCAD, the CJEU itself settled issues concerning whether an advertisement was misleading—rather than leaving the final decision for the national court—when the evidence and information before it seemed sufficient and the solution clear.⁶⁷ It is, however, emphasised in recital 18 UCPD that national courts and authorities will have to exercise ‘their own faculty of judgement’ to determine the typical reaction of the average consumer in a given case by ‘taking into account social, cultural and linguistic factors’—however, they ‘must have regard to the case law of the [CJEU]’.

There is no similar reference to the national courts’ faculty of judgement in the context of professional diligence. This could mean that professional diligence is a common (‘autonomous’) standard for all Member States, which may make sense given that professional diligence is further elaborated on (harmonised) in Articles 6–9 concerning misleading and aggressive commercial practices. However, these provisions themselves require assessment of what behaviour can be expected by the average consumer, which—at least in these situations—provides an argument for national assessment in accordance with recital 18 (to ‘determine the typical reaction of the average consumer in a given case’).

In case law concerning the Directive, the CJEU has left the assessment of central issues to the Member States—including the requirement of professional diligence,⁶⁸ providing sufficient information to consumers,⁶⁹ and consideration of whether national law pursues consumer protection objectives.⁷⁰ In recent case law, the CJEU has become clearer in its guidance,⁷¹ but has still left central assessment to the national courts. Thus, the CJEU seems to be reluctant to make such assessments in its decisions, and it is obvious that the full harmonisation will not completely eliminate differences in the Member States’ assessment of commercial practices.⁷²

In the Mediaprint case the CJEU found that a national court may establish ‘material economic distortion’ when ‘at least part of the public concerned’ had their economic behaviour distorted.⁷³ The fact that the CJEU, despite opportunities, has not made such assessments⁷⁴ supports the impression of reluctance to interfere with national assessments. Therefore, the courts of various Member States may treat similar commercial practices differently, although the Member State may not, according to Article 4, restrict a trader from providing products that are subject to commercial practices, which in turn are in accordance with national law.

7. The interplay with data protection

Arguments from consumer protection law may play a role in data protection law, as the latter requires the processing of personal data to be ‘fair’ and ‘lawful’. The reverse is also true, as consumer protection law aims at striking a ‘fair balance’ between traders and consumers; a balance that can be affected by the trader’s processing of personal data. Thus, data protection law constitutes an important pillar of consumer protection law.⁷⁵

The non-binding guidance by the Commission suggests that ‘personal data, consumer preferences and other user generated content, have a “de facto” economic value and are being sold to third parties’, and that failure to inform the consumer ‘that the data he is required to provide to the trader in order to access the service will be used for commercial purposes’ could be considered a misleading omission of material information’.⁷⁶

When it comes to ‘professional diligence’—i.e. the special skill and care which a trader may reasonably be expected to exercise—this is likely to include issues pertaining to privacy. For instance, the United Nations Guidelines for Consumer Protection, concerning principles for good business practices, provides that ‘Businesses should protect consumers’ privacy through a combination of appropriate control, security, transparency and consent mechanisms relating to the collection and use of their personal data.’

Similarly, it could be argued that the reasonably well-informed and reasonably observant and circumspect consumer must be aware of how personal data are recorded and used for behaviour modification. He must understand his preferences with regard to not only economic decisions, but also decisions relating to how he administers his attention (this is how we live our lives) and time in general.

It remains fair to say that data protection law provides for a much tighter, more coherent and more robust framework to further its aims compared to the field of consumer law. Marketing law remains fragmented, and the scope of application is unclear with regard to taste and decency. The UCPD shares the principles of empowerment, transparency and proportionality with the GDPR, but the UCPD does not contain similar requirements for legitimacy and accountability.