Should the EU legislator harmonize rules concerning unfair business-to-business trading practices? Bert Keirsbilck Assistant Professor HUB - KU Leuven

Should the EU legislator harmonize rules concerning
  unfair business-to-business trading practices?
                  Bert Keirsbilck
                Assistant Professor
                HUB – KU Leuven

Impact MCAD
MIMIMUM HARMONIZATION
SCOPE OF APPLICATION? “B2B ADVERTISING”
(precontractual stage):
- the making of a representation in any form
- in order to promote the supply of products
* GENERAL PROHIBITION of MISLEADING B2B
ADVERTISING

                          Ê
           SUBSTANTIAL IMPACT ON
          NATIONAL PROHIBITIONS OF
         MISLEADING B2B ADVERTISING

Impact MCAD
MAXIMUM HARMONIZATION
SCOPE? “B2C/B2B COMPARATIVE ADVERTISING”
(precontractual stage):
- advertising
- which explicitly or by implication identifies (products offered by)
a competitor
* CONDITIONAL PERMISSION of COMPARATIVE
ADVERTISING

                                 Ê
                  BIG IMPACT ON
            NATIONAL RULES CONCERNING
             COMPARATIVE ADVERTISING

Impact UCPD
                                   MAXIMUM HARMONIZATION
                        SCOPE? “B2C COMMERCIAL PRACTICE”
(before, during or after commercial transaction) (Art. 3(1)):
           - any act, omission, course of conduct or representation,
  commercial communication including advertising and marketing,
   - directly connected with promotion, sale or supply of a product
 Nonetheless “without prejudice to contract law” (Art. 3(2))
                                   * GENERAL PROHIBITIONS of
         MISLEADING, AGGRESSIVE and UNFAIR PRACTICES
                                     * 31 PER SE PROHIBITIONS

                               É
                HUGE IMPACT UPON
           NATIONAL UNFAIR TRADE LAW
             (RE- AND DEREGULATION)

MINIMUM                       vs.       MAXIMUM
“… is like an incoming tide. It   “… is now like a tidal wave
flows into the estuaries and      bringing down our sea walls
up the rivers. It cannot be       and flowing inland over our
held back…”                       fields and houses—to the
                                  dismay of all…”

Impact UCPD
• Two important limitations: “The UCPD neither
  covers nor affects the national laws on unfair
  commercial practices
  a. “which relate to a transaction between traders”
  b. “which harm only competitors’ economic
     interests”
• MS remain free to regulate such practices, in
  conformity with EU law, if they choose to do so
• Distinctions
  a. B2C / B2B and
  b. consumer / competitor protection
 = artificial & difficult to apply in practice

“No impact of UCPD on national laws on commercial
    practices which exclusively seek to protect the
economic interests of competitors” = ± ‘empty box’…
National per se prohibitions of B2C commercial
practices are precluded by the UCPD,
even if they (predominantly) seek to protect
the economic interests of competitors,
in so far as they (also) seek to protect
the economic interests of consumers
   – combined offers: ECJ C-304/08 and C-540/08
   – discounts preceding seasonal sales: ECJ C-288/10
     and C-126/11
   – liquidation sales: opinion AG Trstenjak C-206/11
   – sales below cost: see reference C-343/12

        Ö HUGE DEREGULATORY IMPACT

Example

  Pres. Comm. Court         ECJ 30-06-11              Pres. Comm. Court
Dendermonde 02-06-10         (C-288/10 )            Dendermonde 20-06-12
        (Wamo)       B                              B
   Hof van Cassatie         ECJ 15-12-11               Hof van Cassatie
   21-02-11 (Inno)           (C-126/11)                    02-11-12

   Does the UCPD       … falls within the scope of … falls within the scope of
preclude the Belgian            the UCPD                    the UCPD
    prohibition of     - because it relates to a     - because it relates to
 announcements of      B2C commercial practice      B2C commercial practice
                        - in so far as it pursues     - because it pursues
discounts preceding
                          consumer protection         consumer protection
   seasonal sales              objectives                  objectives
  (“sperperiode”)?
                           , and, if yes, … is      … is incompatible with the
                         incompatible with the                UCPD
                                 UCPD
                        because that practice is     because that practice is
                       not on the UCPD blacklist    not on the UCPD blacklist

State of the art… What a mess …
 – two framework directives – dualist
   approach B2C/B2B
 – legal uncertainty on scope of application
   – especially as regards
   consumer/competitor protection
 – combination of minimum and maximum
   harmonization
 – mix of general prohibitions and per se
   prohibitions
 – many new, open-textured concepts

MCAD – which way forward?
• Various consultations and studies:
  – consultation on MCAD (16-12-11)
  – overview of responses (15-11-12):
    • “respondents brought many different cases of
      misleading marketing practices to the
      attention of the Commission, often involving
      several MS”;
    • “most respondents want the Commission to
      increase protection of SMEs and independent
      professionals against misleading
      marketing practices”

MCAD – which way forward?
 – report expected by Dec. 2012
 – perceived need of harmonization
   of rules concerning (misleading)
   “B2B MARKETING PRACTICES”:
   • (misleading) B2B advertising
   • other (misleading) B2B practices employed
     at the precontractual stage, that are directly
     connected with the promotion of a product
 – some MS already have such rules
   • e.g. Art. 96, 97, 97/1, 98, 99
     of the Belgian MPCPA

UCPD – which way forward?
• Various consultations and studies:
  – recital 8 UCPD: “The Commission should
    carefully examine the need for Community
    action in the field of unfair competition
    beyond the remit of this Directive and, if
    necessary, take a legislative proposal to
    cover these other aspects of unfair
    competition.”
  – consultation on UCPD (15-10-11): “Is there
    a need, in your opinion, to extend the scope
    of the Directive to some business-to-
    business … transactions?”

UCPD – which way forward?
 – report expected by Dec. 2012 (due June
   2011…)
 – need of harmonization of rules
   concerning (unfair) “B2B COMMERCIAL
   PRACTICES”?

 – some MS already have such rules
   • e.g. Art. 95 of the Belgian MPCPA
   • e.g. §3 of the German UWG

MCAD & UCPD – which way
forward?
• Option 1: minor revision of MCAD
  (dualist approach)
  – maintain minimum harmonization approach
  – extend scope to all “B2B marketing practices”
  – insert PER SE PROHIBITIONS (blacklist) OF MOST
    FREQUENT MISLEADING B2B MARKETING PRACTICES:
    • misleading directory companies (cf. EP resolutions)
    • fake invoices
    • …
  – ascertain that new rules can be
    effectively applied and enforced,
    especially on a cross-border basis

MCAD & UCPD – which way
forward?
• Option 2: substantial revision of
  MCAD so as to mirror the UCPD
  (dualist approach)
  –   maintain minimum harmonization approach
  –   extend scope to all “B2B marketing practices”
  –   insert PER SE PROHIBITIONS
  –   insert GENERAL PROHIBITIONS OF MISLEADING,
      AGGRESSIVE AND UNFAIR B2B MARKETING PRACTICES
  – ascertain effective application and
    enforcement

MCAD & UCPD – which way
forward?
• Option 3: substantial revision of UCPD so
  as to integrate MCAD (integrated approach)
  – maintain maximum harmonization approach
  – extend/limit scope to B2C/B2B commercial
    (marketing) practices before a commercial
    transaction,
    • whether B2C or B2B – integrated approach;
    • irrespective of national protective purpose – codification
      of Schutzzwecktrias
  – possibly complemented with specific derogations
    for certain rules concerning place and time
    of sales (e.g. liquidation / below cost sales)

MCAD & UCPD – which way
forward?
 – new PER SE PROHIBITIONS of B2C and/or B2B
  PRACTICES

 – new   GENERAL PROHIBITIONS OF
   • MISLEADING
   • AGGRESSIVE
   • UNFAIR
  B2C/B2B PRACTICES

 – Injunctions Dir. and CPC Reg.
   would refer to revised UCPD

MCAD & UCPD – which way
forward?
• Option 4: dolce far niente
  – keep the status quo; no further EU
    legislative action
  – possibly introduce new informal
    enforcement cooperation / new cross-
    border cooperation mechanism / new
    cross-border cooperation and new public
    enforcement element

MCAD, UCPD & UCTD – which
way forward?
• Various announcements and
  initiatives in relation to (unfair)
  “B2B TRADING PRACTICES”:
  all kind of (unfair) B2B practices, all along
  the distribution chain, at any stage of the
  commercial relationship, whether non–
  contractual or contractual, including
     • unfair B2B commercial practices
     • unfair B2B contract terms

MCAD, UCPD & UCTD – which
way forward?
 – perceived need of harmonization of
   rules concerning (unfair) “B2B TRADING
  PRACTICES”
   • e.g. Commission Communication Single Market
     Act, 13-04-11; EP Resolution More efficient and
     fairer retail market, 05-07-11
   • e.g. Commission Proposal for a Common European
     Sales Law, 11-10-11
 – some MS already have such rules, at the
   crossroads of commercial, tort, contract or
   competition law
   • see e.g. consultation of European Business
     Test Panel (Oct. 11)

MCAD, UCPD & UCTD – which
way forward?
• The creation of a new horizontal instrument,
  complementing the MCAD, UCPD and UCTD,
  and covering all kind of unfair B2B trading
  practices, would result in a complete legal
  mess at the national level…
• The better approach would be:
  – for the UCTD (minimum harmonization) to cover
    unfair terms in B2C/B2B contracts
  – for the UCPD (maximum harmonization) to
    cover B2C/B2B commercial (marketing)
    practices at the pre–contractual stage
    (repeal MCAD)

Thank you!

• Contact:
  – Bert.Keirsbilck@law.kuleuven.be or
  – Bert.Keirsbilck@hubrussel.be
  – The New European Law of Unfair
    Commercial Practices and Competition
    Law, Oxford, Hart Publishing, 2011, lxiv
    + 702 p.