Maximum Harmonization Principle

Subject to limited exceptions the UCP Directive is subject to the maximum harmonization principle.[1] The underlying rationale is that this guarantees a fair balance between traders' duties and consumers' rights, and creates legal certainty and a pan-European level playing field. However, the generic horizontal character of the Directive, combined with a broad-brushed scope, causes issues of demarcation. It is not entirely clear where the Directive begins and ends. Arguably, this is a problematic feature when combined with the maximum harmonization principle.

There are notable exceptions to the maximum harmonization principle which merit a brief overview. Moreover, the scope of the Directive is defined in such a way that in some respects or for some economic activities, the Directive does not stand in the way of more protective legislation at Member State level:

The UCP Directive is an instrument of minimum harmonization in the domains of financial services and immovable property. By way of exception the UCP Directive is of a minimum harmonization character in these areas.[2] It was thought that the complexity and inherent serious risks surrounding these products and markets may require more detailed and tailored rulemaking at Member State level.[3] In its recent evaluation of the UCP Directive, the European Commission addresses the question whether article 3(9) UCP Directive merits repealing.[4] The Commission concludes that the exceptions to the maximum harmonization principle will be left unchanged.[5] Therefore, Member States will continue to be allowed to apply more stringent rules on commercial practices in the financial services domain.

Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European

Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council ("Unfair Commercial Practices Directive")' (COM (2013) 139 final), Brussels 2013.

The UCP Directive does not harmonize contract law. The Directive explicitly states that it 'is without prejudice to contract law and, in particular, to the rules on the validity, formation or effect of a contract'.[6] One may ask whether 'contract law' should not be read as 'private law' since some jurisdictions categorize pre-contractual duties or defectiveness of consent as part of tort law rather than contract law.[7]

Health and safety aspects. The Directive itself more or less excludes rules relating to 'the health and safety aspects of products' from its scope by stating that the Directive is 'without prejudice' to such rules.[8] This seems to be a rather enigmatic exception since the Directive concerns the protection of informed and unintimidated transactional decision-making. If the exclusion of health and safety aspects of products is to be justified by the fact that such rules relate to the quality of products or by some motive to protect consumers against specific risks or against themselves, then surely more rules can be deemed excluded. For instance, should commercial practices concerning gambling not be explicitly excluded as well?[9]

Rules pertaining to regulated professions are outside the scope of the Directive. So, national authorization regimes and establishment restrictions remain unaffected by the Directive.[10] Also, national requirements related to 'taste and decency' are considered to be outside the scope of the Directive.[11]

Scope of consumer protection. The Directive aims at protecting consumers. This raises the question whether more restrictive national rules which may have a bearing on business-to-consumer relationships but in fact have a different goal (for instance, the protection of competitors) are affected by the Directive. One can think of restrictions of retail shops opening hours for the protection of employees and prohibition of Sunday trading for religious reasons. In Pelckmans Turnhout, the ECJ ruled that national provisions genuinely pursuing other objectives than consumer protection are outside the scope of the Directive.[12]

Collisions with other EU rules. In case of conflicting rules, the Directive gives way to those specific rules.[13] For instance, where a dedicated EU regulation sets particular rules on information disclosure in the online sales of airline tickets which are more specific and stricter than the UCP Directive rules on pre-contractual information duties, these special rules have priority. This is also the case where these specific EU rules are of a minimum harmonization character.

Leaving these exceptions aside, the scope of the maximum harmonization nature of the Directive is contested. The dominant position seems to be that the Directive does not allow categorical prohibitions of certain practices if and to the extent that such national prohibitions aim at consumer protection. This would interfere with the Directive's all-encompassing scope of maximum harmonization, or so the ECJ holds. In fact, the ECJ has ruled that a national regime generally prohibiting combined offers is incompatible with the UCP Directive. Likewise, a general prohibition of practices making the participation in a prize competition or lottery conditional on the purchase of goods is incompatible with the UCP Directive.[14] The same applies to general prohibitions of sales with bonuses,[15] general prohibitions of advertising upcoming sales in a particular period[16] or without authorization.[17] Note that while general prohibitions are not allowed, there can be good reasons to intervene in particular cases where a promotional offer or other marketing technique contravenes the standards for misleading, aggressive or otherwise unfair commercial practices. This would, however, require individual assessment in light of the given circumstances, which is significantly different from an unconditional and general ban on certain practices.

The upshot of all this is that Member States cannot administer their own national 'black lists'. The Annex is exhaustive. The basic idea of an exhaustive black list was justified with the argument that 'it was essential to overcome the protection, which may a broader and more factual test than the mere enquiry into the aims of the national provisions. See also recital (6) of preamble to the UCP Directive, which states that the Directive "[...] neither covers nor affects the national laws on unfair commercial practices which harm only competitors' economic interests or which relate to a transaction between traders" (emphasis added, eds) specific legal barriers caused by the fragmented regulation of unfair commercial practices, which gave rise to cost, complexity and uncertainty for both businesses and consumers.'[18] However, it is debatable whether having a fixed list at the EU level without any room for considering 'local practices' that may merit similar outright banning is the most efficient way of dealing with unfair commercial practices in Europe. Responding to national incidents by amending rules and thus prohibiting certain unfair practices at a national level to curb excesses can be part of a rational, devolved policy-making process. By pre-empting legislative intervention at the Member State level, national 'black lists' have been rendered impossible and so have the national legislative policies targeting 'local' unfair practices. What remains, is the aspiration of maximum harmonization by means of a combination of a European black list and general clauses on misleading, aggressive and unfair commercial practices broadly defined. As will be shown throughout this volume, it remains to be seen whether this aspiration, supported by the EU 'mantra' of increasing legal certainty for both consumers and businesses through maximum harmonization,[19] is realistically attainable in this area.[20]

  • [1] Cf. Recital 14, 15, 5 UCP Directive.
  • [2] Art 3(9) UCP Directive.
  • [3] Art 18 UCP Directive charges the EC with submitting a review of the experiences with the UCP Directive by 12 June 2011. The review was submitted in March 2013.
  • [4] Recital (9).
  • [5] European Commission, 'First Report on the Application of Directive 2005/29/ EC of the European Parliament and of the Council of 11 May 2005 Concerning Unfair Business-to-Consumer Commercial Practices in the Internal Market and Amending Council
  • [6] Art 3(2) UCP Directive.
  • [7] Cf. the German notion of liability for 'culpa in contrahendo' (§§ 311 [2] Bürgerliches Gesetzbuch) or the French liability for 'fautes' in precontractual dealings (art 1382 Code Civil).
  • [8] Art 3(3) UCP Directive.
  • [9] Note that Recital (9) of the Preamble to the UCP Directive suggests that regulation concerning gambling services remain unaffected by the Directive. This probably only follows if one underwrites to a broad interpretation of art 3(8) UCP Directive so as to include any regulatory regime setting quality standards or prohibiting certain practices. Admittedly, if one accepts such a broad construction of 'any conditions of establishment or of authorisation regimes imposed on professionals' then the UCP Directive as a whole is effectively neutralized by regulatory regimes at Member State level.
  • [10] Art 3(8) UCP Directive.
  • [11] See Recital 7 Preamble UCP Directive.
  • [12] ECJ 4 October 2012, C-559/11, Pelckmans Turnhout NV v Walter Van Gastel Balen et al. Note that the ECJ queries whether the objectives are 'related' to consumer
  • [13] ECJ 23 April 2009, C-261/07 and C-299/07 (VTB-VAB NV v Total Belgium NV and Galatea BVBA v Sanoma Magazines Belgium NV). In a similar vein ECJ 11 March 2010, C-522/08 (Telekomunikacja Polska).
  • [14] ECJ 14 January 2010, C-304/08 (Zentrale zur Bekämpfung unlauteren Wettbewerbs eVv Plus Warenhandelsgesellschaft mbH).
  • [15] ECJ 9 November 2010, Case C-540/08 (Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co KG v 'Österreich'-Zeitungsverlag GmbH).
  • [16] ECJ 15 December 2011, C-288/10 (Wamo BVBA v JBC NV and Modemakers Fashion NV) and ECJ 11 December 2011, C-126/11 (Inno NVv Unizo and others).
  • [17] ECJ 17 January 2013, C-206/11 (Köck v Schutzverband gegen unlauteren Wettbewerb).
  • [18] (COM (2013) 139 final) 4.
  • [19] See, e.g., Recital (12).
  • [20] Cf. Stuyck, Terryn and Van Dyck, 148; B Keirsbilck, 'Towards A Single Regulatory Framework on Unfair Commercial Practices?' (2009) EBLR 507, 509.
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