General prohibition on selling at loss

Pascal WILHELM & Emilie DUMUR, 08/11/2017

In the context of a request for a preliminary ruling, the European Court of Justice has analyzed  the articulation between the directive 2005/29/EC, regarding unfair business-to-consumer commercial practices (hereinafter “Directive 2005/29”), and the legislation of member states.

More specifically, the recital 17 of Directive 2005/29 states that Annex 1 contains an exhaustive per se unfair practices list and provides that “these are the only commercial practices which can be deemed to be unfair without a case-by-case assessment”(1). Practices that are not expressly referred to in the list shall not be prohibited without any previous determination about the unfair nature of the commercial transaction.

However, in this case, a wholesaler was fined under the Spanish legislation, which imposes a general prohibition on selling at loss.
Following the advocate general’s opinion, the Court ruled that the general nature of this national prohibition is in conflict with the Directive 2005/29.

It should be recalled that in the past the Court already ruled that the directive concerning unfair commercial practices carries out an exhaustive harmonization precluding more restrictive legislation of member states, although it intends to improve consumers’ protection (2).

The Court has merely confirmed its constant position: the higher the degree of directive harmonization, the more the member states’ leeway will be restrained concerning their national legislation

(1) Indicating that this case-by-case appreciation is defined by article 5, para. 2, of Directive 2005/29 worded as follow:
“A commercial practice shall be unfair if :
a) it is contrary to the requirements of professional diligence and ;
b) it materially distorts or is likely to materially distort the economic behaviour with regard to the product of the average consumer whom it reaches or to whom it is addressed […]”
(2) CJEU, 14 January 2010, Plus Warenhandelsgesellschaft, C-304/08, para. 41 and Order of 30 juin 2011, Wamo, C-288/10, para. 33

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