The European Unfair Commercial Practices Directive

Impact, Enforcement Strategies and National Legal Systems

Willem van Boom, Amandine Garde

• Publisher: Routledge
• Year: 2016
• eBook ISBN: 9781317033158
• Topic: Law
• Subtopic: Commercial Law
• Index: Law

One of the most important EU consumer protection directives of the past decade, the 2005 Unfair Commercial Practices Directive, or UCPD, is brought under examination in this stimulating volume. Bringing together leading experts in the comparative law and consumer law domain, the book discusses the impact of the Directive and whether the many possible issues identified at its inception have been borne out in practice. Divided into four parts of 'Implementation, Approximation and Harmonization', 'Vulnerability', 'The UCP Directive and Other Regimes', and finally 'Enforcement', the volume examines the various policy developments, the growing body of case law, the decisions of relevant national enforcement authorities, as well as the legislative debates which have surrounded the implementation of the UCPD in Member States. This book provides a valuable assessment of the impact of a major EU directive almost ten years after its adoption, and as such will be of interest to academics, legal practitioners and the judiciary working in the areas of European and Consumer law.

PART I
Implementation, Approximation and Harmonization

Chapter 1
UK Implementation of the Unfair Commercial Practices Directive¹

Marios Koutsias and Chris Willett

1. Introduction

This chapter considers how the Unfair Commercial Practices Directive² (UCPD) has been implemented in the United Kingdom. We show that the United Kingdom has used a blend of preventive and traditional UK criminal enforcement techniques, while these techniques have been ‘Europeanized’ by the open-textured nature and breadth of application of the UCPD unfairness concepts. In addition, although the UCPD does not require Member States to grant private law enforcement rights, we also argue that UK private law may nevertheless be Europeanized by the UCPD in more ‘spontaneous’ ways, as a result of the planned introduction of private law remedies for some violations of the (distinctly European) UCPD concepts of fairness.

Nevertheless, we also show that there are limits to this Europeanizing effect. First of all, in the important area of financial services, the ‘home grown’ regime is likely to remain dominant; because it operates within a well-established institutional structure and may well set higher standards of protection than those in the UCPD (permitted by article 3[9] of the UCPD, which exempts financial services from the full harmonization principle that applies generally under the UCPD).

Secondly, there is a possibility that judges may limit the extent of Europeanization. In contrast to the particular position in relation to financial services, the UCPD’s European concepts of fairness often have the potential to increase standards of protection relative to pre-existing UK law. However, these European concepts are sufficiently open textured as to run the risk of being interpreted in non-protective ways, based on underlying UK judicial ethics of self-interest and self-reliance that have shown themselves in the past. So far, courts have taken a relatively protective approach to interpretation of the UCPD concepts. However, we will only really have a clear picture as to the impact of European fairness standards in the United Kingdom when we hear the views of the Supreme Court; and, in particular, see what the response is to the recent, and any future, ECJ interpretation of the unfairness concept.

2. UK Implementation: Techniques and Europeanization

2.1 UCPD Unfairness Concepts and Requirements

As is well known, the UCPD contains general clauses on ‘misleading practices’ (divided into ‘misleading actions’ and ‘misleading omissions’) and ‘aggressive practices’ (the main operative provisions in practice); as well as an overriding general clause, catching practices that are ‘contrary to the requirements of professional diligence’.³ It seems that this ‘professional diligence’ clause is intended to encapsulate, but possibly sometimes extend beyond, what would be caught by the general clauses on misleading practices and on aggressive practices.⁴ There is also a list of 31 practices that are in all circumstances considered to be unfair, i.e., without application of the above general clauses on misleading and aggressive practices.⁵

The UCPD requires Member States to ensure that there are adequate and effective means to combat the use of practices that are unfair in one of the above ways; including means by which persons or organizations regarded under national law as having a legitimate interest in combating unfair commercial practices may take legal or administrative action against such practices.⁶

2.2 Preventive Control

The UCPD was implemented by the Consumer Protection from Unfair Trading Regulations (CPUTR) 2008.⁷ These introduce an injunctive or ‘cease and desist’ form of preventive control known as an ‘enforcement order’. They provide that where a practice is unfair (following the definitions in the UCPD itself), it amounts to a ‘Community infringement’ under the Enterprise Act (EA) 2002; thereby allowing enforcement authorities to ask a court to issue an ‘enforcement order’ against the continued use of the practice.

Enforcement orders can be obtained against a trader carrying out the practice or likely to carry out the practice.⁸ Under EA, s. 213, enforcement orders can be sought by the Office of Fair Trading (OFT), local trading standards authorities and the Department of Enterprise, Trade and Investment in Northern Ireland (all deemed ‘general enforcers’). They can also be sought by those designated as enforcers by the Secretary of State (thus far the Civil Aviation Authority, the Information Commissioner, the Rail Regulator, the Gas and Electricity Markets Authority and the Director Generals of Telecommunications, Water, Gas and Electricity for Northern Ireland).⁹ Enforcement orders can also be sought by those ‘Community enforcers’ listed in the Official Journal under Article 4.3 of the Injunctions Directive.¹⁰ Finally, they can be sought by Consumer Protection Co-operation Enforcers, such as the Civil Aviation Authority, the Financial Conduct Authority, Ofcom, ICSTIS and the general enforcers mentioned above.¹¹

Enforcement is coordinated by the OFT. The enforcer must consult the trader and the OFT to seek to ensure cessation of the practice.¹² Normally this consultation period is 14 days, but 7 days is sufficient for an interim order; and, if the OFT considers it necessary, consultation can be dispensed with altogether. An enforcer may accept an ‘undertaking’ that the practice will cease (and, therefore, not proceed to seek an enforcement order).¹³

The OFT issued guidance on the new concepts of unfairness when the law was first passed.¹⁴ Of course, it must be emphasized that this guidance represents the OFT view as to how the concepts of unfairness should be understood; it being open to the courts (when cases come before them) to take a different view.

This ‘enforcement order’ regime for UCPD-based unfair practices fits within a broader regime of preventive control in UK consumer protection. Enforcement orders can also be obtained against other ‘Community infringements’, that is, actions that represent breaches of standards contained in various other EU directives.¹⁵ This would cover, for example, failure to abide by the various information obligations and cancellation rights that are provided for in doorstep and distance selling directives and the replacement provisions in the new Consumer Rights Directive.¹⁶ It also covers selling goods that do not meet the conformity standards in the Consumer Sales Directive (or failing to provide the remedies in the Consumer Sales Directive);¹⁷ the use of terms that are unfair under the Unfair Contract Terms Directive;¹⁸ and breaches of the provisions of the Timeshare, Electronic Commerce and Television Broadcasting Directives.¹⁹

Enforcement orders can also be obtained against so called ‘domestic infringements’. Essentially, ‘domestic infringement’ covers a variety of actions that represent breaches of contract, statutory duties, criminal offences and torts that harm ‘the collective interests of consumers’.²⁰ The label ‘domestic’ infringement is used to indicate that the actions in question represent breaches of standards that have been set by domestic law, that is, they have not come from EU law. So, it would cover, for example, practices that amount to the criminal offence of harassment of debtors under the Administration of Justice Act (AJA), section 40; and breaking contracts by not delivering promised goods or services.²¹ So, quite apart from harassment representing a criminal offence and failure to deliver goods or services giving consumers the right to seek private law remedies for breach of contract, an enforcement order can be issued requiring such conduct to cease in future.

2.3 Europeanization of Preventive Enforcement through the ‘General Clause’

So, we can see that tools for preventive control of unfairness as defined by the UCPD have been ‘slotted in’ to a pre-existing national regime of preventive consumer protection. However, it is our contention that this is more than a mere technical extension of such preventive consumer protection powers. The pre-existing ‘domestic’ and ‘Community’ infringements all tend to involve relatively narrow and specific issues (often only in particular sectors): e.g., failure to provide specific types of information in doorstep and distance sales; supply of defective goods; use of unfair contract terms; harassment of debtors etc.

In contrast, the UCPD concepts of unfairness, which can now form the basis of preventive action, are much broader in their scope. The various ‘general clauses’ – ‘misleading actions’, ‘misleading omissions’, ‘aggressive practices’, violation of ‘professional diligence’ – are ‘general’ partly because they are themselves very open textured.²² In addition, they can be called ‘general’ because they cover such vast ground. They cover practices²³ ‘before, during or after’ any ‘commercial transaction’²⁴ (there being no restriction to particular types of transaction or sector). So, in relation to almost all conceivable goods or services, there is a ‘cradle-to-grave’ regime covering practices such as advertising, persuasion and negotiation at the pre-contractual stage; post-contractual alterations or variations; performance, delivery etc. by the trader; performance, payment etc. by the consumer; complaint handling; after sales service; and enforcement by either party.

In short, UCPD implementation has brought a very significant expansion of the use of the ‘general clause’, a very significant ‘Europeanization’ of the UK preventive consumer protection regime.²⁵ (It is worth emphasizing that use of an open-textured general clause that covers considerable ground is not only ‘European’ in the sense that it comes from a European Union directive. It is also ‘European’ – and here, ‘continental’ European is the more precisely accurate term – in that this tradition of open-textured, broadly applicable general clauses is a tradition that is deeply embedded in the civil law legal tradition of continental Europe, and not the common law UK tradition.)²⁶

2.4 Criminal Sanctions: Tradition, Rationales, Policies and Operation

Criminal sanctions have been a core part of public enforcement of consumer law in the United Kingdom for centuries. There is plenty of scope for debate as to the rationales for using the criminal law in the consumer protection sphere.²⁷ Certainly, criminal sanctions can be viewed as having important deterrent effects that might be missing in the case of the preventive sanctions discussed above. More generally, the OFT have said that criminal enforcement should be used where:

civil enforcement is unlikely to be effective in achieving a change in behaviour and/or the breach is sufficiently serious that the...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of Abbreviations
• Notes on Contributors
• Acknowledgements
• Introduction
• PART I IMPLEMENTATION, APPROXIMATION AND HARMONIZATION
• PART II VULNERABILITY
• PART III THE UCP DIRECTIVE AND OTHER REGIMES
• PART IV ENFORCEMENT
• Index