17.12.2011 klo 08:52

Lausunto

Public Consultation on Directive 2006/114/EC concerning Misleading and Comparative Advertising and on unfair commercial practices affecting businesses

Scope of this consultation

The Commission is preparing a Communication on Directive 2006/114/EC concerning Misleading and Comparative Advertising.

This Communication will give an overview of how the Directive is currently implemented in the Member States, identify any problematic issues in the interpretation or application of the Directive and explore options for its possible review, including measures which could enhance cooperation between national authorities in the enforcement of cross-border cases.

As part of the consultation process, in view of the preparation of the Communication, the Commission would appreciate receiving your input to the following questionnaire. Your contributions will be taken into account when drafting the Communication on the application of the Directive. Your cooperation will be greatly appreciated.

This questionnaire is complementary to and builds on the recent consultation through the European Business Test Panel on unfair commercial practices and contract terms which gathered information on a Member State level. Therefore, even if you participated in the European Business Test Panel survey we would nonetheless invite you to provide more specific and detailed input into this consultation on unfair commercial practices and the application of Directive 2006/114/EC

Important notice:
Please also note that the maximum time to complete each of the sections is 90 minutes. Partial responses will not be saved. This means once you start filling in the questionnaire, you have to answer all compulsory questions to submit your response. You can, however, preview the whole questionnaire in a document format (pdf).

A Respondent Profile

A.1 Are you responding to this questionnaire on behalf of/as* (compulsory)
(at most 1 answer)
X an organisation or an institution O an enterprise O a citizen

A.2 The organisation or institution is* (compulsory)
(at most 1 answer)
O European level association or grouping O Public authority
X Business organisation or chamber of commerce in a Member State
O Advertising standards organisation in a Member State O None of the above

A.5 Name of your organisation or enterprise (for individual respondents, your name):* (compulsory)

Federation of Finnish Enterprises

A.6 Contact details: If need be can we contact you by e-mail to obtain further information about your Submission* (compulsory) (at most 1 answer)
X Yes, I agree to be contacted for further information
O No, please do not contact me

A.7 Please provide an e-mail address where we can contact you: (optional)

lauri.rautio@yrittajat.fi; janne.makkula@yrittajat.fi

А.8 Contact person: (Ms/Mr, Name, Job Title) (optional)

Mr Lauri Rautio, Legal Adviser; Mr Janne Makkula, Chief of Legal Affairs

A.9 Your country of residence / Country where your organisation is established* (compulsory)
(at most 1 answer)
O Austria O Belgium O Bulgaria O Cyprus O Czech Republic O Denmark
O Estonia X Finland O France O Germany O Greece O Hungary O Ireland
O Italy O Latvia O Lithuania O Luxembourg O Malta O Netherlands O Poland
O Portugal O Romania O Slovakia O Slovenia O Spain Sweden O United Kingdom
O Iceland O Liechtenstein O Norway O Other countries

Α. 10 Please specify whether you have been affected by the practices of Misleading Directory
Companies* (compulsory) (at most 1 answer)
X Yes
O No

A.11 In the affirmative please briefly describe your case (How you have been affected by the practices of Misleading Directory Companies): (optional)

Federation of Finnish Enterprises (FFE) gets daily several phone calls and e-mails from its members who have been affected by the practices of misleading directory companies. In the most typical situation they have received an incorrect document from another company indicating of a contract between our member and the company that has sent the document. In many cases our members have, in fact, earlier received a phone call from the company in question but have not made any contract or the contract that is alleged on the document.

Β Unfair commercial practices affecting businesses

B.1 Please indicate what are the unfair practices affecting businesses that you most frequently encounter and/or that you would consider nowadays as the most harmful ones? Please describe the practices observed and provide an estimation of the magnitude of the problem (e.g. type and number of businesses affected, financial detriment, etc.).
(optional)

There are four most typical scenes that can be roughly divided as followed:

1) Company gets an invoice from another company even though there has not been any contact or contract made between the two beforehand

2) Company gets a phone call, no contract is made during the phone call but the company nevertheless receives an invoice indicating that there is a contract made in that phone call

3) Company gets a phone call where the company´s data (name, line of business, contact details etc.) is checked or “updated”; what follows is an invoice claiming that new contract was made during the phone call

4) Company gets a phone call and the oral contract is made. Later company receives some written documents (eg. terms of agreement) or an invoice that vitally differ from what has been agreed on the phone

According to our members situations 2 and 4 are the most common ones at the moment in Finland. According to the survey done by Federation of Finnish Enterprises in late 2010, almost 60 percent of the sole traders had received disturbing or misleading advertising in 2010.

B.2 Have you observed recently any new unfair practices affecting businesses, in particular in an on-line context? If yes, please describe them.
(optional)

During last few years Finnish entrepreneurs have received more and more phone calls where it is claimed that another enterprise is just about to register domain names still available for the company´s website. In these phone calls entrepreneurs have been told that in order to prevent this they could and should immediately register these domain names themselves for a price that often multiplies the reasonable market price. It seems, however, that after these phone calls the domain names in question have not been registered even if these entrepreneurs have not done the registration themselves.

В.З Do you think that the business-to-business unfair practices described below could be regarded as a significant problem in Europe?

B.3.1 Misleading environmental claims, where certain companies falsely claim that their products have beneficial effects on the environment in advertising aimed at other traders, for example in relation to the energy efficiency;

X Not significant
O moderately significant
O significant
O very significant
O I don’t know

B.3.2 Practices of companies offering an extension of trademarks in foreign jurisdictions whereas such extension can only be granted by official bodies;

O Not significant
X moderately significant
O significant
O very significant
O I don’t know

B.3.3 Practices of companies offering an extension of domain names on the Internet at abusive prices falsely claiming that this will enhance the protection of the existing ones;

O Not significant
O moderately significant
O significant
X very significant
O I don’t know

B.3.4 Practices of companies sending misleading payment forms, making the form look like a reminder of payment of a debt which does not exist;

O Not significant
O moderately significant
O significant
X very significant
O I don’t know

B.3.5 Practices of companies making an unfair use of comparative advertising (an advertising which identifies a competitor or a product offered by a competitor) in breach of Article 4 of the Misleading and
Comparative Advertising Directive;

O Not significant
X moderately significant
O significant
O very significant
O I don’t know

B.3.6 Unfair Commercial practices affecting businesses in an on-line context.

O Not significant
O moderately significant
X significant
O very significant
O I don’t know

B.4 Do you think that there is an increase of cross-border unfair practices affecting businesses?
(compulsory) (at most 1 answer)

O Strongly disagree O Disagree X Agree O Strongly agree O I don’t know

B.5 Please shortly motivate each of your answers to the questions under this section and provide any additional information you deem appropriate

Our answers are based on the current situation in Finland. By and large it can be said that in Finland misleading advertising is still normally received via telephone. It seems that majority of these contacts are, indeed, directed to SMEs and especially to newly established businesses. What is more, later in the process these small and inexperienced businesses are often threatened with expensive debt collection and might, in consequence, end up paying the unfounded invoice of the contract they have not made.

These kinds of unfair commercial practices damage businesses while forcing them to spend both their time and money to prove that they have not made the contract in question. It seems obvious that this kind of behavior lessens the interest for starting new businesses and affects those businesses already running causing damages that in Finland can be estimated to be several millions yearly.

C The practices of Misleading Directory Companies

The problem of Misleading Directory Companies forms the basis of the Parliamentary resolution of 16 December 2008[1] and of 9 June 2011 [2]. The misleading schemes can take various forms. The most frequent practice is that certain directory companies send out forms to small and medium enterprises, professionals and other (e.g. non-profit) organisations asking them to update their details in their directories, seemingly for free. If the trader signs the form they will however be told that they have signed an order form and will be charged a yearly sum (1000 € approximately). Attempts to withdraw from the contract are usually refused and the companies are often pursued for the amount purportedly owed, through the use of debt collection agencies. It would appear that the companies running these schemes would not, however, go to court because of the weakness of their claims, but nonetheless many of the targeted businesses appear to pay under duress.

The Commission has decided to take new steps to address the issue of Misleading Directory Companies and would appreciate your feedback on the extent of the problem.

[1] European Parliament resolution of 16 December 2008 on misleading directory companies 2008/2126 (INI) A6-0446/2008.
[2] European Parliament resolution of 9 June 2011 on misleading directory companies RSP/2011/2682 (B7-0342/2011)

C.1 In general terms, how would you assess the significance of the problem of Misleading Directory
Companies?* (compulsory) (at most 1 answer)
O not significant O moderately significant O significant X very significant O I don’t know

C.2 How many companies and organisations are affected each year by the practices of Misleading Directory Companies in the EU? (Based on complaints or estimates)
(compulsory) (at most 1 answer)

O less than 1000 O between 1000 and 10 000 O between 10 000 and 100 000
O between 100 000 and 1 000 000 X over 1 000 000 O I don’t know

C.3 What is the size and the type of the companies or organisations that are mostly affected by the activities of Misleading Directory Companies (multiple choice possible)?
(optional) (at most 7 answers)

O large enterprises O medium enterprises X small enterprises X independent professionals
O non-profit or charity O schools and similar O other entities

C.4 What is your estimate of the individual financial damage suffered on average by the businesses who have paid the amounts requested by Misleading Directory Companies?
(compulsory) (at most 1 answer)

X less than €1000 O between € 1000 and € 2000 O between € 2000 and € 5000
O between € 5000 and € 10 000 O over€10 000 O I don’t know

C.5 What is your estimate of the percentage of businesses that have actually paid the
amounts requested by Misleading Directory Companies?*
(compulsory) (at most 1 answer)

O less than 5% O between 5% and 10% O between 10% and 25% X between 25% and 50%
O over 50% O I don’t know

C.6 Please describe in detail the schemes used by Misleading Directory Companies. What are the elements that you find particularly misleading? (e.g. unclear/incomplete order forms, no clear indication of price, failure to adequately disclose the main characteristics of the service offered and/or contract terms such as duration and renewal) By what means do Misleading Directory Companies seek to recover the money from the businesses targeted by their practices?

See the answer in B1.

C.7 Please describe any legal disputes between Misleading Directory Companies and the affected businesses and the enforcement actions taken by national authorities against Misleading Directory Companies.

1) In Finland there is currently going on a massive criminal procedure in the district court of Helsinki with more than 1400 entrepreneurs as plaintiffs. The defendants are a company called Directa and its management. Directa is a Finnish marketing company that has been selling internet-coverage for businesses by telephone. According to the prosecution the defendants are guilty of aggravated fraud and marketing offence. Moreover, according to its own notice Directa is either going to sue or has already sued almost 6000 companies (some of them also plaintiffs in criminal procedure) for not having paid what Directa claims has been agreed on the telephone. Most of these cases deal with actions and phone calls that took place several years before the actual hearing in the court.

Whatever the outcome of these procedures finally is, it is clear that it would have been better for all parties if the point at issue was solved immediately after the disagreements first came up, more than three years ago. There should not be thousands of separate cases where there, in practice, is only one or two legal questions to be argued. Moreover, especially if the actions carried out by Directa are later judged to be criminal, it would have saved time and money of thousands of businesses had these kinds of actions been even temporarily prohibited by an authority or a court years ago.

2) There is also a recent judgment from the Finnish Supreme Court concerning Austrian company called Trademark Publisher GmbH. In the judgment it is ruled that the CEO of the above-mentioned company, who had designed the letter that was sent to several Finnish companies and that, despite its true nature as an offer, resembled a payment form for Finnish trademark authorities, was guilty of aggravated fraud.

According to the judgment, the lawfulness of the letters sent by the above-mentioned company has been under investigation in some other European countries, too.

C.8 Please provide any other information which you consider useful and relevant in relation to the practices of Misleading Directory Companies, the businesses affected, the financial harm and the legal actions taken to fight these practices.

At the moment there is, in practice, not much SMEs can do when encountering unfair commercial practices. Because of the potential costs of litigation, SMEs may often be reluctant to initiate private lawsuits even in cases where practices they encounter are clearly unlawful. Also the protracted duration of a judicial process will have a bigger influence on entrepreneurship in a small company than in a large firm with their own legal department. In comparison with consumers the biggest differences in pleading a case are often the risks of the expenses that SMEs will have to bear.

D Effectiveness of the current legislation and options for improvement

This part of the public consultation gives an indication of some of the topics which the Commission may further consider in the planned Communication on Directive 2006/114/EC concerning Misleading and Comparative Advertising.

D.A Misleading and comparative advertising

D.1 In general, do you think that the current EU and national legislative framework allows to sufficiently well tackle misleading advertising practices?
(compulsory) (at most 1 answer)

X Strongly disagree O Disagree O Agree O Strongly agree O I don’t know

D.2 Do you think that the current enforcement mechanisms in Member States against misleading business-to-business advertising are effective?
(compulsory) (at most 1 answer)

X Strongly disagree O Disagree O Agree O Strongly agree O I don’t know

D.3 Do you think there is a need to develop a cooperation mechanism among Member States authorities in cross-border cases of misleading advertising?
(compulsory) (at most 1 answer)

O Strongly disagree O Disagree X Agree O Strongly agree O I don’t know

D.4 Do you think that the transposition of former Directive 84/450/EEC (which was replaced by Directive 2006/114/EC concerning Misleading and Comparative Advertising) has created legal gaps/loopholes in Member States that are exploited by companies engaging in misleading business-to-business advertising?
(compulsory) (at most 1 answer)

O Strongly disagree O Disagree O Agree O Strongly agree X I don’t know

D.5 Do you think there is a need to revise the rules regarding the conditions for comparative advertising (advertising which identifies a competitor a product offered by a competitor)?
(compulsory) (at most 1 answer)

O Strongly disagree X Disagree O Agree O Strongly agree O I don’t know

D.B Unfair business-to-business commercial practices

D.6 Do you think that in general the protection of businesses against any unfair commercial practices (especially micro-businesses and independent professionals) in Europe is NOT sufficient, especially in cross-border transactions and should be strengthened?
(compulsory) (at most 1 answer)

O Strongly disagree O Disagree X Agree O Strongly agree O I don’t know

D.7 Do you think that there should be a European legislation protecting businesses against the most harmful unfair commercial practices?
(compulsory) (at most 1 answer)
O Strongly disagree O Disagree O Agree X Strongly agree O I don’t know

D.8 Do you think that businesses should have a similar level of EU wide protection against unfair commercial practices as the one granted to consumers by Directive 2005/29/EC on Unfair Commercial Practices?

O Strongly disagree O Disagree X Agree O Strongly agree O I don’t know

D.9 Do you think there is a need for development and an increased use of alternative dispute resolution mechanisms (e.g. conciliation, mediation, etc.) in cross-border cases of business-to-business unfair commercial practices?
(compulsory) (at most 1 answer)

O Strongly disagree O Disagree X Agree O Strongly agree O I don’t know

D.10 Please shortly motivate each of your answers to the questions under this section and provide any additional information you deem appropriate.
(optional)

We would like to point out that in COM(2008) 394 final (A “Small Business Act” for Europe) it is stressed that one of the goals of the EU´s policy needs to be making the EU a world-class environment for SMEs. Moreover, in COM(2011) 78 final (Review of the ”Small Business Act” for Europe) it is stated that the Commission will carry out an in depth analysis of the unfair commercial practices and contractual clauses in the business to business environment in the Single Market and table a legislative proposal if needed in order to protect businesses against unfair contractual terms. In this context it is good to remember, among other things, that the European Parliament has taken notice of the need of a clearly identifiable national authority for SMEs especially in case of misleading advertising (P6-TA(2008)0608).

D.11 Options for improvement in relation to Directive 2006/114/EC on misleading and comparative advertising

Please choose your preferred options for improvements in relation to Directive 2006/114/EC in the table below and tick the boxes accordingly:

D.11.1 Sanctions provided for by national law should be strengthened.