ECJ Finds Spanish General Prohibition On Selling At A Loss Incompatible With EU Law

On 19 October 2017 the Court of Justice of the European Union (the "ECJ") held that Directive 2005/29/EU concerning unfair business-to-consumer commercial practices (the "Directive") outlaws Spanish legislation which establishes a general prohibition of selling at a loss and provides for different criteria for derogating from same (ECJ, 19 October 2017, Case C-295/16, Europamur Alimentación SA v. Dirección General de Comercio y Protección del Consumidor de la Comunidad Autónoma de la Región de Murcia).

The ECJ delivered its judgment in response to a request for a preliminary ruling from the Administrative Court of Murcia in a dispute between Europamur Alimentación SA ("Europamur") and the Regional Consumer Affairs Authority of Murcia (the "Authority"). Europamur is a wholesaler which provides food and household products to smaller retailers who participate in a collective purchasing scheme. The Authority fined Europamur EUR 3,000 for selling certain goods to its retailer clients at a loss, and Europamur appealed this administrative penalty on the grounds that the Spanish legislation allowing for the fine should have been amended when the Directive was transposed into Spanish law. The Administrative Court of Murcia referred two related questions of interpretation to the ECJ, essentially asking whether the Directive allows for national legislation which (i) contains a general prohibition on offering for sale or selling goods at a loss; and (ii) lays down grounds for derogation from that prohibition that are based on criteria which do not appear in the Directive.

The Spanish legislation, Article 14 of Ley 7/1996 de Ordenación del Comercio Minorista (the "Law regulating retail commerce"), prohibited "selling or offering to sell to the public at a loss". Two exceptions were permitted to this general principle, namely if the objective of the loss-making practice was to match the prices of competitors who had the ability to affect the seller's sales, or if the sale involved perishable goods. A later amendment to the Law regulating retail commerce clarified that this prohibition applied equally to business-to-business (i.e., wholesale) sales as to business-to-consumer (i.e., retail) sales.

Article 5 of the Directive provides for a prohibition of unfair commercial practices including those that are contrary to the requirements of professional diligence and which "materially distort or [are] likely to distort the economic behaviour with regard to the...