The Unfair Commercial Practices Directive What Does It All Mean?

Originally published in Lawrence Graham's 'SmartLaw' newsletter, March 2007

Lawrence Graham LLP

The Unfair Commercial Practices Directive (2005/29/EC), replacing Europe's patchwork of national regimes with a standardised set of EU-wide regulations, will be transposed into UK law by June 2007 and come into force by December 2007. So, what will it mean in practice?

By harmonising the EU's unfair trading laws, the new Unfair Commercial Practices Directive (the Directive) will clarify consumer rights and so facilitate cross-border trade; its ruling concept of 'maximum harmonisation' will in most cases also prevent Member States from applying provisions stricter than those required by the Directive. In essence, the new Directive imposes a general obligation on all businesses not to treat consumers unfairly. In so doing it will capture a very wide range of unfair conduct across all business sectors including unfair practices that have not yet been dreamt up. It will also prohibit businesses from misleading consumers or subjecting them to aggressive selling techniques. There are extra protections for vulnerable consumers, so often the primary target of unfair commercial practices.

Even though the Directive applies only to business-to- consumer commercial practices, the DTI has already indicated that, even where the consumer's only direct commercial contact is with a retailer, it will apply the law further up the supply chain, for example against a manufacturer who falsely labels its products.

The Directive contains clear rules to determine when a commercial practice will be deemed unfair. These fall broadly into three categories:

general prohibitions;

specific examples of misleading actions/omissions and aggressive commercial practices;

an annex of 31 practices that will be deemed unfair in any circumstances.

General prohibition

An "unfair commercial practice" is one that runs contrary to the requirements of professional diligence and which materially distorts a consumer's economic behaviour, or is likely so to do.

This benchmark will normally be judged by the standards of "the average consumer", although in certain circumstances it will be adjusted to the more exacting standards of "the vulnerable consumer".

Misleading and aggressive

The vast majority of commercial practices defined as unfair under the general prohibition will fall into two categories; they will be "misleading" and/or "aggressive". An important objective of the...