A misleading practice shall be prohibited as unfair without being assessed whether it is also contrary to the requirements of…

On the 19th of September 2013 the Court of Justice of the European Union handed down an important judgment regarding the assessment of "professional diligence" in the context of the qualification of a commercial practice as "misleading" under the Directive 2005/29/CE concerning unfair business-to-consumer commercial practices in the internal market (the "Unfair Commercial Practices Directive").

The question referred to the Court was whether the requirement of "professional diligence", laid down as a condition for generally assessing the unfair nature of a commercial practice should be understood as an independent condition for particularly assessing the "misleading" nature of a commercial practice.

In anticipation of the Court's decision, the European Commission stated in it's first report on the application of the Directive of the 14th of March 2013 that in order to penalise a trader for "misleading" practice there is no need to be demonstrated that the conduct was in breach of professional diligence and that professional diligence is automatically violated in the event of a "misleading" action. In addition, the Commission underlined that the general definition of an unfair practice (article 5(2) of the Directive) can be applied as a stand-alone provision, as a "safety net", to make sure that any unfair practice which is not caught by the remainder of the Directive can be penalised.

The Court confirmed Commission's position in a crystal clear reasoning which follows the logic and the wording of the Directive. At the outset the Court states the core principle of the Directive which is the prohibition of all unfair commercial practices and recalls on its settled case-law (Joined Cases C 261/07 and C 299/07 VTB-VAB and Galatea, Case C 304/08 Plus Warenhandelsgesellschaft, Case C 540/08 Mediaprint Zeitungs-und Zeitschriftenverlag) to refer on the criteria set out by the Directive in order to establish whether a practice is unfair. Thus, in accordance with Article 5(2) of the Directive, a commercial practice is unfair if (i) it is contrary to the requirements of professional diligence and if (ii) it materially distorts or is likely to materially distort the economic behaviour of the average consumer.

The principle being recalled, the Court continues by underlinging that the Directive defines two specific categories of unfair commercial practices, namely, "misleading" practices and "aggressive" practices, both being by far the most common unfair commercial practices. Therefore, the basic principle of prohibition of the unfair commercial practices is given effect and concrete expression by two specific provisions namely, the "misleading" and the "aggressive" commercial practices.

Afterwards Court recalls on the relevant provisions governing the assessment of a commercial practice as being or not being "misleading" (article 6(1) of the Directive). Indeed, the misleading nature of a commercial practice derives solely from the fact that it is untruthful inasmuch as it contains false information or that, generally, it is likely to deceive the average consumer in relation to, inter alia, the nature or main characteristics of a product or a service and that, therefore, it is likely to cause consumers to take a transactional decisions that they would not have taken if there had been no such practice. For the Court, when those features are to be found, the practice must be regarded as "misleading" and, therefore, unfair and prohibited, and it is not necessary to verify the condition - contained in another provision of the Directive setting out the general definition of unfair commercial practices ‒ that the practice is contrary to the requirements of professional diligence.

The interpretation of the Court aims at preserving the effectiveness of the specific rules laid down for "misleading" and "aggressive" commercial practices. Indeed, if the conditions for determining whether a commercial practice in generally unfair were identical to those determining whether a practice is particularly "misleading", the last provisions would in practice have no significance.

In conclusion, the Court clarified that, within the meanig of the Unfair Commercial Practices Directive, if a commercial practice satisfies all the criteria set out for "misleading" practices, it is not necessary to determine whether such a practice is in addition contrary to the requirements of professional diligence in order for it legitimately to be regarded as unfair and, therefore, prohibited.