- temporary discounts — article 43 of the FTP Act provides in essence that a price can only be advertised as a discounted price if it is lower than the price applied in the same point of sale for the same product of service during a continuous period of one month immediately preceding the promotion;
- bundled offers — article 54 of the FTP Act contains a general prohibition on offering products, services or other advantages to consumers on the condition that they first purchase another product or service. Articles 55, 56 and 57 contain a number of limited exceptions to this general prohibition;
- vouchers — article 64 of the Act determines under which conditions it is allowed to issue free vouchers to consumers; and
- seasonal sales — article 49 and the following points in the FTP Act determine substantive and formal conditions for seasonal sales.
These rules have been criticised because of the burden they impose on businesses, while at the same time generating only uncertain consumer benefits.
Questions were therefore raised as to the need for a fundamental review of the FTP Act. The adoption on 11 May, 2005, of Directive 2005/29/EC concerning unfair business-to-consumer commercial practices (the UCP Directive) confirmed the need for a significant review of the existing legal framework.
On 5 June, 2007, the Federal Parliament adopted the Act transposing the UCP Directive. The legislator clearly chose not to completely overhaul the existing legal framework but rather to make as few amendments to the FTP Act as possible. The new provisions came into force on 1 December, 2007, ahead of the deadline of 12 December, 2007, set out in the UCP Directive. So far, so good. However, a more detailed analysis suggests that it is far from obvious that the Belgian legislator has correctly and completely transposed the UCP Directive. In particular, the legislator’s decision to leave the provisions of Chapter VI regulating commercial promotions unaltered raises some serious doubts in view of the scope and objectives of the UCP Directive.
Scope and purpose
The UCP Directive applies to unfair business-to-consumer commercial practices. It does not cover nor affect the national laws on unfair commercial practices which harm only competitors’ economic interests or which relate to a transaction between traders. Business-to-consumer commercial practices are defined as “any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers”.
Member states are not allowed to restrict the freedom to provide services or the free movement of goods for reasons falling within the field approximated by the directive. The directive’s aim is to achieve a total harmonisation of the laws of the member states applying to business such practices: “Both consumers and business will be able to rely on a single regulatory framework based on clearly-defined legal concepts regulating all aspects of unfair commercial practices across the European Union. The effect will be to eliminate the barriers stemming from the fragmentation of the rules on unfair commercial practices harming consumer economic interests and to enable the internal market to be achieved in this area.”
Controversial interpretation
The Belgian legislator nevertheless decided to keep the provisions of Chapter VI dealing with commercial promotions unaltered, based on a very strict interpretation of the concept of commercial practices in the UCP Directive. The explanatory memorandum to the act of 5 June, 2007, claims — based on a somewhat surprising reading of the definition of the term ‘business-to-consumer commercial practice’ — that the directive only applies to practices “directly connected with the promotion, sale or supply of a product to consumers”. The actual promotion, sale or supply of products would therefore fall outside of the field approximated by the directive. This view is — still according to the explanatory memorandum — supported by the fact that the European Commission (EC) had initially also issued a separate draft regulation on sales promotions which was distinct from the draft directive applying to commercial communications on which the UCP Directive is based.
The strict interpretation defended by the Belgian legislator appears, however, to be inconsistent with the text of the UCP Directive. The concept of ‘commercial practice’, as defined in the UCP Directive, is not limited to advertising. It encompasses “any act, omission, course of conduct or representation, commercial communication including advertising and marketing” (article 2(d)). Furthermore, article 3.1. provides that the directive applies to unfair business-to-consumer commercial practices “during and after a commercial transaction in relation to a product”. Practices such as offering discounted prices or bundling several products or services therefore appear to fall within the scope of the directive.
Any reference to the distinction made initially by the EC between commercial communications on the one hand, and sales promotions (governed by the then draft regulation) on the other hand is also unjustified. The UCP Directive clearly does not only apply to commercial communications but also to any other “act, omission or course of conduct”. The strict interpretation adopted by the Belgian legislator therefore does not appear to stand closer scrutiny.
What does this mean in practice?
Strictly speaking, the pre-existing substantive rules of the FTP Act governing sales promotions are still fully applicable. Companies wishing to do business in
This is, however, clearly not the end of the story.
The Federation des Entreprises Belges recently announced that it had filed a complaint with the EC against the
Neither the complaint nor the two requests with the ECJ can be expected to offer quick responses to businesses needing to make decisions on a day-to-day basis. Legal uncertainty can therefore be expected to persist for some period of time.
Businesses wishing to offer sales promotions to Belgian consumers cannot — in the meantime — simply ignore the existing provisions of the FTP Act. However, in accordance with the ECJ’s established case law, Belgian judges will be required to interpret the provisions of the FTP Act in a manner that is consistent with the UCP Directive. This means that, for each of these regulated practices, they will have to analyse whether the legal provision aims to protect consumers or serves to protect competitors’ economic interests. Arguably, most if not all sales promotion practices regulated by the FTP Act are at least in part intended to protect consumers and hence fall within the harmonised field of the UCP Directive.
Once this has been established, the judge will — to the maximum extent possible — need to interpret the relevant provision of the FTP Act in such a way that the relevant sales promotion practice will only be prohibited if and to the extent that it constitutes a breach of the general prohibition of unfair commercial practices or of the specific prohibitions on misleading or aggressive commercial practices, as defined in the UCP Directive. Such interpretation should at least have a moderating effect on the application of the litigious provisions of the FTP Act.
However, it seems clear that in the long run, the provisions of the FTP Act with respect to promotional practices will need to be substantially amended to bring them into line with the UCP Directive.
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