European Court captures Public Bodies within The Unfair Commercial Practices Directive

Case: BKK Mobil Oil Korperschaft des offentlichen Rechts v Zentrale zur Bekampfung unlauteren Wettbewerbs eV [2013]

Whilst this case relates to German law, the decision of the European Court of Justice (‘ECJ’) will apply to the laws of England and Wales under the UK’s Consumer Protection from Unfair Trading Regulations 2008 (‘the Regulations’).

Background

This case concerns the Unfair Commercial Practices Directive (‘the Directive’), a piece of European legislation created to harmonise unfair trading laws of those member states in the EU.  The Directive sought to prohibit traders from treating consumers unfairly and required traders not to mislead consumers through acts or omissions or to subject them to aggressive commercial practices.

Under the Directive a trader is defined as “any natural or legal person who, in commercial practices covered by this Directive, is acting for purposes relating to his trade, business, craft or profession and anyone acting in the name of or on behalf of a trader.”

Whilst the UK Regulations implements the Directive it goes on to refer to a trader as “any person who in relation to a commercial practice is acting for purposes relating to his business, and anyone acting in the name of or on behalf of a trader.”

Facts

BKK was a German public body managing the statutory health insurance fund and in December 2008 placed the following information on its website:-

“If you choose to leave [BKK] now, you will be committed to staying with your new [compulsory health insurance fund] for 18 months following that change.  This means that you will miss out on attractive offers that [BKK] will be making next year, and you may end up having to pay more if the amounts allocated to your new scheme are insufficient and it therefore requires you to make an additional contribution.”

BKK were challenged on the basis they had failed to mention that the insured individual would have a statutory right of cancellation if he was required to make an additional contribution.

BKK were given notice to refrain from circulating the information as well as signing an undertaking to that effect and to pay any pre-litigation legal expenses.  Whilst BKK removed the information from its website, they refused to sign an undertaking or pay any pre-litigation legal expenses.

The German court referred the case to the European Court of Justice to consider whether the Directive’s definition of “trader” included a public body.

Decision

The ECJ held that the definition of “trader” in the Directive would include a public body or a body pursuing a public purpose.

A couple of key points of its decision included: there was nothing in the Directive to limit it to a private enterprise nor were there any express exclusions of either a body pursuing a public purpose or a body governed by public law and that it was also important to focus on consumers rather than traders as BKK’s consumers could have been misled by the information it had published and, as such, it was irrelevant whether it was a public or private body, or whether it pursued a public purpose or a private purpose.

Comment

There is nothing within the Directive that suggests its rules may apply to the practices of public bodies or any body pursuing a public interest; therefore in the UK, such a body dealing with consumers must comply with the Regulations.

The UK has sought to amend the 2008 Regulations by the Draft Consumer Protection from Unfair Trading (Amendment) Regulations 2013 so that a trader will include any person acting for purposes relating to that person’s business which will include “the activities of any government department or local or public authority.”  However, the ECJ’s decision appears to be wider than this proposed change as the ECJ suggests that a private body exercising a public function would also be caught.