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Advertising: the “offer” and "inclusive of taxes" concepts

31/01/2017

An automotive dealer published an advertisement in a magazine on a Citroën automobile, which included the price of the vehicle and the following wording in a footer at the bottom of the advertisement: "Price plus 790 [euros] for transfer costs. Offer intended for non-professionals, valid for all Citroën C 4 […] ordered until 10 April 2011 […]." The total price, including the cost to transfer the vehicle from the manufacturer to the seller, which the customer was to pay to acquire this vehicle, was therefore not indicated in said advertisement. An association against unfair competition in the automotive sector launched an action against the advertiser on the grounds that the total price to be paid by the consumer was not indicated in the advertisement.

The first article of Directive 98/6 of 16 February 1998 on consumer protection in the indication of the prices of products offered to consumers states: "The purpose of this Directive is to stipulate indication of the selling price and the price per unit of measurement of products offered by traders to consumers in order to improve consumer information and to facilitate comparison of prices."

Article 3 of this Directive states: "The selling price and the unit price shall be indicated for all products referred to in Article 1, the indication of the unit price being subject to the provisions of Article 5. The unit price need not be indicated if it is identical to the sales price."

For its part, Article 7.4 of Directive 2005/29 of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market provides that: "In the case of an invitation to purchase, the following information shall be regarded as material, if not already apparent from the context: […] the price inclusive of taxes, or where the nature of the product means that the price cannot reasonably be calculated in advance, the manner in which the price is calculated, as well as, where appropriate, all additional freight, delivery or postal charges or, where these charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable."

Seized for a preliminary ruling on the interpretation of these provisions on the occasion of the case referred to above, the Court of Justice of the European Union (CJEU) provided interesting clarification on the concepts of "offer" and "price inclusive of taxes" (CJEU, 7 July 2016, C-476/14).

We note that the directive on unfair commercial practices only applies when no specific provision exists under the Union's law that governs specific aspects of unfair commercial practices, such as rules regarding information or on the presentation of information to consumers. It provides consumers with protection when no specific sector-based law exists at the European level and prohibits businesses from providing a misleading impression of the nature of the products.

For the CJEU, a business must indicate the price pursuant to the requirements of Directive 98/6. In particular, this price must be the selling price for the relevant product, i.e. its final price within the meaning of Article 2(a) of Directive 98/6. Only the final price allows a consumer to assess and compare the price indicated in an advertisement with the price of similar products, and therefore to make an informed decision on the basis of simple comparisons, in accordance with "whereas" point (6) of this directive.

The price of a product offered for sale by a business to consumers must include - in the advertisement for said product - the cost to transfer this product from the manufacturer to the business when said cost is payable by the consumer.

Incidentally, the Court confirms that, when a conflict exists between Directive 2005/29 and another rule of law of the EU governing specific aspects of unfair competition practices, the other rule prevails and applies to these specific aspects.

Directive 98/6 governs specific aspects, within the meaning of Article 3.4 of Directive 2005/29, of commercial practices that may be held to be unfair in relations between businesses and consumers, i.e., in particular, those related to the indication in sales offers and advertising of the selling price of the products.

In these circumstances, as the aspect related to the selling price indicated in an advertisement is governed by Directive 98/6, Directive 2005/29 does not apply in this regard.

The Court confirms that Article 3 of Directive 98/6, when read alongside Articles 1 and 2(a) of the text, must be interpreted as follows: the cost to transfer an automotive vehicle from the manufacturer to the seller, which cost is payable by the consumer, must be included in the selling price of the vehicle indicated in an advertisement published by a business when, in light of its characteristics, this advertisement constitutes an offer for said vehicle in the mind of the consumer.

Authors

Nathalie Pétrignet
Nathalie Petrignet
Partner
Paris