On 24 September 2013, the government submitted a bill to the Chamber of Representatives to insert a Book VI entitled “Market Practices and Consumer Protection” in the New Commercial Code (the “Bill”). The Bill also introduces a few definitions that are specific to Book VI on market practices and consumer protection in Book I of the New Commercial Code. The New Commercial Code will ultimately comprise a total of 17 books codifying and modernising the present heterogeneous, and at times contradictory, commercial legislation (See, VBB on Belgian Business Law, Volume 2013, No. 9, p. 2; No. 8, p. 3; No. 4, p. 2; No. 3, p. 17 and Volume 2012, No. 12, p. 2 and No. 9, p. 3, available at www.vbb.com).
The Bill contains a number of novelties when compared to the current Law of 6 April 2010 on Market Practices and Consumer Protection (Wet van 6 april 2010 betreffende Marktpraktijken en Consumentenbescherming/Loi du 6 avril 2010 relative aux pratiques du marché et à la protection du consommateur – the “Law on Unfair Market Practices”).
General
The Bill broadly copies the provisions of the Law on Unfair Market Practices. However, some notable changes were made. These changes are in many cases the result of the implementation in Belgian law of Directive 2011/83/EU of 25 October 2011 on consumer rights (“Directive 2011/83/EU”), which has to be implemented in national law by 13 December 2013 and should be applied from 13 June 2014 (See, VBB on Belgian Business Law, Volume 2011, No. 11, p. 2, available at www.vbb.com). Contrary to what its name suggests, Directive 2011/83/EU does not harmonise the entire body of European legislation on consumer protection. Instead, it focuses on particular issues such as distance selling and off-premise contracts.
Definitions
The Bill introduces a number of new or amended definitions, including the following.
Distance contracts (Article I.8, 15° of the Bill)
Contrary to the Law on Unfair Market Practices, the Bill no longer requires that the system through which the distance contract is concluded be operated by the seller. Consequently, sales concluded on an online platform operated by a third party now fall within the scope of the definition.
Off-premise contract (Article I.8, 31° of the Bill)
The distinction made by the Law on Unfair Market Practices between off-premise contracts that are entered into at the request of the consumer and other off-premise contracts is abolished. This means that both types of contracts will fall within the scope of the specific provisions governing off-premise contracts (contrary to the current situation where off-premise contracts entered into at the request of the consumer fall outside the scope of the Law on Unfair Market Practices).
Sales agreement (Article I.8, 33° of the Bill)
The Bill introduces a definition of the term “sales agreement”. The definition does not only cover agreements for the sale of goods but also mixed agreements covering both goods and services.
Public auction (Article I.8, 36° of the Bill)
Furthermore, the Bill defines the term “public auction”. The term only covers an auction at which both the company and the consumer are physically present at the same time. Hence, sales of goods through online platforms such as E-bay do not constitute a “public auction” within the meaning of the Bill.
Scope of application (article VI.1 of the bill)
As is the case for the Law on Unfair Market Practices, the Bill applies to financial services. However, the Bill entitles the government to create special rules for one or more categories of financial services or to cause certain provisions of the Bill to be inapplicable to categories of financial services.
Contrary to the Law on Unfair Market Practices, the Bill does not exclude from its scope securities and other financial instruments, as defined in the legislation governing financial transactions and financial markets.
Substance of Bill
Specific provisions of the Bill are only designed to protect consumers which, pursuant to yet another bill which has been adopted by Parliament and is close to publication in the Belgian Official Journal (Belgisch Staatsblad/Moniteur belge), will be defined in Article I.1, 2° of the New Commercial Code as “any natural person who acts for purposes which are outside his trade, business, craft or profession”.
Information to be provided to the client before conclusion of a sale (Article VI.2 of the Bill)
The Bill requires companies to provide consumers with no less than 9 different types of information prior to the actual conclusion of an agreement. The information concerned is the following:
1. the most important characteristics of the product in a way suitable for the used medium and product;
2. information on the company, including its address, telephone number, company number and trade name;
3. the total cost of the product, including all extra costs and charges;
4. details on payment, delivery, execution of the agreement and complaint mechanisms;
5. a reminder of the statutory guarantee and information on additional commercial guarantee systems;
6. the duration of the agreement and, if applicable, the terms of termination;
7. the general terms and conditions of sale, based on the need for information expressed by the consumer and the product’s reasonable use;
8. the functionality of digital content; and
9. the interoperability of digital content with hardware and software of which the company is aware or could reasonably be expected to be aware.
This significant increase in mandatory information appears to constitute an additional burden for all companies dealing with consumers. However, the Bill stipulates that information can be omitted if already clear from the circumstances. In case of distance and off-premise contracts, there are also other information requirements.
Abolition of notification requirements on liquidation sales (Articles VI.22 through VI.24 of the Bill)
Whereas the other restrictive requirements concerning liquidation sales continue to exist, the Bill no longer requires such sales to be notified to the competent authorities. However, the Bill foresees the possibility for the government to introduce by Royal Decree new notification requirements.
Blackout pre-sales periods and sales periods (Articles VI.25 and following of the Bill)
The provisions of the Bill concerning blackout pre-sales periods (i.e., Articles VI.25 and following) specify explicitly that the goal of the prohibition on announcing price reductions during the pre-sales periods would be to “ensure fair market practices between companies” (See, Article VI.25, §1 of the Bill). By explicitly including this rationale in the Bill, the government seeks to create conformity with the judgments of both the Court of Justice of the European Union (the “ECJ”) and the Belgian Supreme Court which held that the prohibition on announcing price reductions during the pre-sales periods is incompatible with Directive 2005/29/EC of 11 May 2005 concerning unfair business-to-consumer commercial practices (“Directive 2005/29/EC”) to the extent that this prohibition also seeks to protect consumers (See, ECJ, case C-126/11, INNO v. Unie van Zelfstandige Ondernemers and Others – See, VBB on Belgian Business Law, Volume 2012, No. 2, p. 8, available at www.vbb.com; ECJ, case C-288/10, Wamo BVBA v. JBC NV and Modemakers Fashion NV – See, VBB on Belgian Business Law, Volume 2011, No. 7, p. 14, available at www.vbb.com; Belgian Supreme Court, 2 November 2012, INNO NV v. Unie van Zelfstandige Ondernemers (UNIZO) VZW, Organisatie voor de Zelfstandige Modedetail-handel (Mode Unie VZW) en Couture Albert BVBA – See, VBB on Belgian Business Law, Volume 2012, No. 11, p. 9, available at www.vbb.com).
Further, the Bill gives the power to the government to modify the sales periods, but specifies that their duration cannot exceed 1 month.
Lastly, the blackout pre-sales periods will no longer apply to businesses that were already carrying out a liquidation sale or will be starting a liquidation sale in these periods. Under the current legislation, such businesses are banned from using any advertisements or announcements with regard to the liquidation sale during the pre-sales periods.
Default options (Article VI.41 of the Bill)
The Bill broadens the prohibition on the use of default options as contained in the Law on Unfair Market Practices. It proposes a general prohibition on any additional cost that does not constitute a compensation for the main contractual obligation of the company, unless the consumer explicitly agrees. If not, the consumer is entitled to claim back all additional costs paid.
Costs incurred by consumers for the use of specific payment methods (Article VI.42 of the Bill)
The Bill prohibits companies from charging consumers more than the costs actually incurred for using specific payment methods.
Rules on delivery (Article VI.43 of the Bill)
The Bill provides that, in situations where no delivery period has been agreed upon, the company should deliver the goods as soon as possible and in any case within a period of 30 days as from the date of conclusion of the sales agreement. In case of a failure of the company to do so, the consumer should grant an additional and appropriate delivery period to the seller.
Should the seller fail to carry out delivery within this additional delivery period, the consumer is entitled to terminate the agreement immediately. No additional delivery period should be granted in situations where (i) the seller has plainly refused to deliver; or (ii) the delivery period is essential to the agreement (e.g., delivery of a wedding dress). In such cases, the consumer has the right to terminate the agreement immediately after the expiry of the initial delivery period. Moreover, the consumer remains able to rely on any other available remedies under general civil law.
Transfer of risk (Article VI.44 of the Bill)
The Bill also introduces a new risk transfer mechanism. The Bill provides that the risk of loss or damage transfers from the seller to the consumer at the time when the goods are transferred to either the consumer or a third party, appointed by the consumer (with the exception of a carrier). However, in case the goods are transferred to a carrier appointed by the consumer without this option being provided for by the company, the risk will also transfer to the consumer. The general rules on the transfer of property titles have not changed.
Distance contracts (Articles VI.45 and following of the Bill)
The Bill introduces a new set of rules concerning distance contracts between companies and consumers. However, these new rules do not apply to distance contracts involving financial services and, as a result, do not affect the current rules governing this type of distance contracts.
Information requirements
Article VI.45 of the Bill lists the information which companies should communicate to consumers when entering into a distance contract. However, this information can be tailored to the circumstances, taking into account the medium through which the distance contract is concluded. Depending on the medium used, it may suffice to provide the consumer with minimum information, provided the consumer has access to all other information through another medium, e.g., a website. Similarly, it is not necessary to provide all information if the agreement is concluded via text message.
The Bill requires companies to inform the consumer of any form of deposit which the consumer is required to put up, including the blocking of a fixed sum on credit and debit cards. If the sale is concluded through a website and the company requires direct payment, the company should inform the consumer explicitly and unambiguously that the conclusion of the sale entails a direct payment obligation. Further, the Bill allows the government to adopt a Royal Decree requiring specific agreements concluded over the phone to be confirmed by the consumer in writing or through any other durable medium.
Right of withdrawal
The consumer continues to have a right of withdrawal, which should be exercised within a period of 14 days after the date of (i) conclusion of the agreement in case of service agreements; and (ii) delivery of the last delivered good in case of sales of goods agreements. Should the company have failed to inform the consumer of this withdrawal right, the withdrawal period will be extended by an additional 12 months. However, should the company proceed to inform the consumer of his right of withdrawal within this 1 year-period, a definitive withdrawal period of 14 days will start.
Moreover, a standard form should be given to the consumer in order to allow him to exercise his right of withdrawal. The use of this standard form is not mandatory for the consumer. Should he decide not to use the standard form, the consumer will have to prove that he exercised his right of withdrawal in a valid manner. If a company allows consumers to exercise their right of withdrawal through an online standard form, it is obliged to send a receipt confirmation to these consumers by durable medium (e.g., by e-mail).
If the consumer exercises his right of withdrawal, the company should reimburse all costs borne by the consumer. This reimbursement should be made within 14 days after the date on which the company was informed by the consumer of his decision to exercise his right of withdrawal. In the case of sales of goods, the reimbursement period will start on different dates depending on the terms for returning the goods.
As regards services, the Bill allows consumers to request the company to start providing the service during the 14-day withdrawal period. Contrary to the Law on Unfair Market Practices, the Bill provides that the consumer maintains his right of withdrawal in that case. However, should the consumer exercise his right, he will be liable to pay a pro rata compensation for the services already supplied.
Off-premise contracts (Articles VI.64 and following of the Bill)
The Bill requires companies to comply with specific information requirements. These information requirements are the same as those applicable to distance contracts (See above). The Bill entitles the government to exempt from this obligation maintenance and reparation works performed at the request of the consumer for a value of up to EUR 200.
Furthermore, a consumer who wishes the services to start during the withdrawal period, has to request this on a durable medium.
The withdrawal period is extended from 7 to 14 days.
The penalty for any failure to inform consumers of their right of withdrawal is the same as that for distance contracts, i.e., the extension of the 14-day withdrawal period by 1 year. The terms for the exercise of the right of withdrawal are the same as those for distance contracts (See above).
Sales at a loss (Articles VI.116 and VI.117 of the Bill)
Another novelty in the Bill is that it relaxes the prohibition of sales at a loss. The Bill allows businesses to consider the volume discounts which they actually obtained in the previous year for the good at issue when calculating their reference purchase price (i.e., the purchase price against which it is to be assessed whether or not their onward sale is a sale at a loss). It will be possible to deduct 80% of the thus obtained volume discount from the reference purchase price (See, VBB on Belgian Business Law, Volume 2013, No. 9, p. 11, available at www.vbb.com).
In an attempt to comply with the case law of the ECJ from which it follows that the prohibition of sales at a loss is incompatible with Directive 2005/29/EC insofar as it also seeks to protect consumers (See, ECJ, case C-343/12, Euronics Belgium CVBA v. Kamera Express BV and Kamera Express Belgium BVBA – See, VBB on Belgian Business Law, Volume 2013, No. 3, p. 15 and No. 2, p. 6, available at www.vbb.com), the explanatory memorandum to the Bill points out that the prohibition of sales at a loss exclusively aims to protect SMEs and individual retailers.
