The goal of this chapter was to illustrate design suggestions for efficient enforcement mixes for two hypothetical cases within misleading advertisement, namely a bona fide and a mala fide trader case scenario. Particular attention was paid to online trade/advertising gaining in importance and potential current loopholes in the enforcement responses depending on the mechanism employed. The design suggestions were developed in enforcement models developed in a model world reflecting the common core of European procedural law.
As a first result, the competitor's natural incentives lead to a role for her. A competitor taking action allows to some degree for a consumer to free-ride and thus profit from the action - likewise for a societal benefit. There would be fewer information asymmetries due to the fact that competitors work in the same sector and there would presumably be less need of a 'public law element' to generate information.
Secondly, however, as a competitor's intervention is not certain, for instance in cartel-like situations, an enforcement response triggered by the consumer side is also needed. Individuals will not sue individually for their small harm. The topic of mass litigation is important and different representatives come into play.
Thirdly and importantly, a differentiation between responses for bona and mala fide traders is crucial due to the different amount of benefits they calculate with -they need to be deterred by different means. As to the mala fide traders, the 'public law element' is essential. Depending on the nature of the trader, those enforcers who generate more information have to be favoured whenever it is in the social interest. It was set out how in particular a lack of information on the side of the consumer as regards the location of the trader (potentially aggravated by the rise of internet trade that facilitates the possibility of traders hiding) is the reason for current failures in enforcement. Overall the factor 'information generator' (how, by whom, by which combination of actors) is a crucial topic especially for the mala fide trader case scenario where high information asymmetries are present. They have the potential to cause substantial societal harm. It was analysed which enforcement body can cure which information asymmetry and how mechanisms can be combined to cure each other's weaknesses while paying attention to overall social welfare considerations. Aside from different potentials to create information concerning the nature of a trader, different enforcement mechanisms also vary concerning the amount of information they can generate as to other characteristics of the case.
The intervention of mass litigation has to be optimally coordinated in terms of incentives via remedies. A definition must exist as to which players are empowered to bring lawsuits where, mitigating the problem of, for instance, frivolous lawsuits and aggravated agency and capture problems. In terms of where these actions are to be brought, a court element is favoured - mass CADR is considered not optimal from the overall welfare perspective. Individual CADR cases do not seem to be worthwhile either.
Self-regulatory solutions, if supported by the underlying threat of stronger enforcement responses, can be welfare enhancing and allow for some cross-financing. The information that is available within the market can be absorbed in this way. In relation to mala fide traders the 'speed' factor is crucial and ex ante actions are discussed in detail. On a voluntary basis pre-clearance can protect the bona fide trader and to some extent identify mala fide traders. In relation to some products that can cause very high societal harm, obligatory pre-clearance can potentially be effective.
In terms of policy advice, it was evidently not expected that the solution would be as easy as suggesting one optimal mix of public and private enforcement in consumer law which would then be a one-size-fits-all solution that only would have to be transplanted into the countries that one desired. Apparently countries are no dark horses. Optimality is related to institutional settings. Countries have different attributes: for instance, some have strong private consumer associations while others rely on a public authority for law enforcement purposes. The powers of these authorities can vary. Self-regulation is also not effective in every context. Some jurisdictions are more ready than others to assess damages within criminal law proceedings, and to rely on criminal law in general. A crucial factor in a country's potential to change in a 'low-cost way', a welfare enhancing way, to an optimal solution is to consider the importance of path dependency. Path dependency positively explains why countries' legal enforcement systems are shaped the way they are. While it is not argued that a country can only change along the lines of the path that it has taken, it certainly has to be considered when suggesting changes that the more they are innovative and alien to the system, the more costs of change they potentially incur which has to be weighed against societal (long-term) benefits that can be derived from this. Therefore, the design suggestions are kept sufficiently broad and can be adapted specifically to countries. In that sense, it can be welcomed that national legislators are left with discretion as to the enforcement side of the UCP Directive.
Note lastly that from the misleading advertising cases, some broader conclusions with minor variations are possible for other types of unfair commercial practices.