consumer protection 2021

Consumer Protection 2021A practical cross-border insight into consumer protection law

Second Edition

Featuring contributions from:

ALRUD

Ashurst LLP

Banwo & IghodaloBányaiová Vožehová, s.r.o. advokátní kancelář

Blake, Cassels & Graydon LLP

Bojorge & Associates

Cozen O’Connor

Gonzalez Calvillo

Hassan Radhi & Associates

MinterEllison

Nagashima Ohno & TsunematsuPérez Alati, Grondona, Benites & Arntsen (PAGBAM)

Consumer Protection 2021

Contributing Editors:

Nigel Parr & Christopher EberhardtAshurst LLP

©2021 Global Legal Group Limited. All rights reserved. Unauthorised reproduction by any means, digital or analogue, in whole or in part, is strictly forbidden.

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Second Edition

© Published and reproduced with kind permission by Global Legal Group Ltd, London

Table of Contents

Expert Analysis Chapter

Q&A Chapters7

1 The Relationship Between Consumer Protection and Competition LawNigel Parr, Danica Barley & Christopher Eberhardt, Ashurst LLP

ArgentinaPérez Alati, Grondona, Benites & Arntsen (PAGBAM): Luis Diego Barry, María Carolina Abdelnabe Vila, María Clara Rodríguez Llanos & Sonia Alejandra Del Regno

14 AustraliaMinterEllison: Miranda Noble & Geoff Carter

24 BahrainHassan Radhi & Associates: Fatima AlAli & Mohamed Ali Shaban

31 CanadaBlake, Cassels & Graydon LLP: Jill Lawrie & Emily Hazlett

38 Czech RepublicBányaiová Vožehová, s.r.o. advokátní kancelář: JUDr. Lucie Dolanská Bányaiová, Ph.D. & Mgr. Zuzana Kulhánková

46 FranceAshurst LLP: Michaël Cousin & Marie Florent

58 GermanyAshurst LLP: Dr. Fabian Klein & Dr. Michael Holzhäuser

ItalyAshurst LLP: Denis Fosselard, Gabriele Accardo & Giulia Carnazza

66

75 JapanNagashima Ohno & Tsunematsu: Oki Mori & Mai Umezawa

85 MexicoGonzalez Calvillo: Edgar Grajeda, Jorge Mondragón, Enrique Muñoz & Lucía Fernández

94 NigeriaBanwo & Ighodalo: Azeezah Muse-Sadiq & Mavis Abada

103 RussiaALRUD: Ksenia Erokhina

114 SpainBojorge & Associates: Marla Vanessa Bojorge Zúñiga

122 United KingdomAshurst LLP: Nigel Parr & Christopher Eberhardt

131 USACozen O’Connor: Michael W. McTigue Jr., Meredith C. Slawe & Marie Bussey-Garza


Welcome

PrefaceWelcome to the 2021 edition of ICLG – Consumer Protection, which follows the success of the inaugural edition last year (one of the first comparative guides to consumer protection legislation and enforcement around the world).

Although the level of consumer protections and enforcement differs around the world, this is an area which has been the subject of increased regulatory focus in many jurisdictions. This is expected to continue as a number of jurisdictions consider enhancing regulators’ and consumers’ powers and ability to enforce consumer protections. The COVID-19 crisis has led to various challenges to (and an increasing role for) consumer law enforcement; for example, in relation to retailer profiteering, misleading conduct and unfair contract terms. Consumer law is also increasingly seen as an important element of the regulatory toolkit in looking at the digital economy and markets.

This publication provides a practical overview of the key protections from which customers benefit and the ways in which those rights may be enforced, and so we believe it will prove an essential resource for lawyers across the globe who are advising businesses or consumers in this fast-developing area.

Nigel Parr & Christopher EberhardtAshurst LLP



1

The Relationship Between Consumer Protection and Competition Law

Ashurst LLP

Danica Barley

Nigel Parr

Chapter 1

Christopher Eberhardt


Recent Developments in the UK and EUIn the UK, the focus on consumer protection law has been increasing for some time. In particular, in August 2018, the UK Business Secretary requested advice from the newly appointed Chair of the Competition and Markets Authority (“CMA”) at the time, Lord Andrew Tyrie, on whether legislative and insti-tutional reforms were necessary to safeguard the interests of consumers and to improve public confidence in markets. On 21 February 2019, Lord Tyrie responded to this request with a letter containing numerous proposals for reform. At the heart of Lord Tyrie’s proposals were that the consumer protection regime, together with the competition law regime, should be re-centred to enable the CMA to focus more directly on protecting the interests of the consumer. This would be supported by strength-ening the CMA’s powers to enforce consumer protection law, which Lord Tyrie described as “unfit for its current purpose, and far short of what would be required to enable the CMA effectively to fulfil a consumer interest duty”. It was expected that the UK government would consult on the specifics of the CMA’s increased powers in the course of 2020; however, the anticipated Consumer Protection White Paper is yet to be published.

Nevertheless, there have been a number of relevant devel-opments since then, including Lord Tyrie’s departure from the CMA. In addition, in June 2019, the Department for Business, Energy & Industrial Strategy (“BEIS”) Smart Data Review1

examined how to accelerate the development and use of new data-driven technologies and services to improve the consumer experience in regulated markets. Furthermore, in February 2020, HM Treasury and BEIS commissioned the CMA to produce a report on the “State of Competition” in the UK.2

Subsequently, John Penrose MP was commissioned by HM Treasury and BEIS to produce a brief report, building on and adding to the recent competition policy developments set out above. One of the key questions Mr. Penrose was asked to consider related to consumer protection; namely, how the UK’s competition regime can best “increase consumer trust, including [tack-ling] consumer rip offs and bad business practices, and by ensuring the compe-tition regime operates in a way which is strong, swift, flexible and propor-tionate”.3 Mr. Penrose published his findings (the “Penrose Report”) on 16 February 2021. In the Penrose Report, Mr. Penrose concluded that the UK’s “independent competition and consumer regulation regime currently has a good reputation, but not a great one” … “Citizen-consumers feel ripped off when they buy things like energ y or

Introduction and SummaryIt is evident that, in recent times, the protection of consumers has become an increasingly important area of focus for legisla-tors and regulators around the world. However, whilst there is a general consensus around the need to protect consumers as busi-ness models develop in response to the digitalisation of markets, the methods of seeking to achieve and enforce appropriate levels of protection vary across jurisdictions, to some extent reflecting different perspectives on the relationship between consumer protection, competition, and data protection/privacy laws. In addition, the following developments have focused attention on the need to ensure the appropriate application of legal and regu-latory tools:(a) the growth of the digital economy, which has created

specific challenges and led to regulators identifying and considering ways to address perceived “gaps” in their current enforcement regimes;

(b) the COVID-19 pandemic, which has led regulatory authorities to consider their current laws and regulations and adapt them where necessary (at speed) in order to meet the challenges arising; and

(c) the increasing focus on sustainability issues, which has required regulators to consider whether their existing consumer protection and competition law powers are adequate to address the new questions and issues that are arising.

These questions are being considered against an emerging view that whilst “light touch” regulation may have encour-aged investment, and therefore competing business models and rivalry, which benefitted consumers in the past, it may have resulted in under-enforcement in some areas, which has led to consumer detriment. However, there remains a concern to avoid over-enforcement through onerous and unnecessary regulation, which would increase business costs and, ultimately, prices for consumers.

This chapter attempts to consider these issues by reference to the various approaches that are being taken to these issues by governments and regulatory authorities around the world. Although there are differences in approach, it is evident that the authorities are seeking to remedy similar concerns and are closely watching and learning from each other.

2 The Relationship Between Consumer Protection and Competition Law

Consumer Protection 2021© Published and reproduced with kind permission by Global Legal Group Ltd, London

The EU

In the EU, there has been a considerable number of signifi-cant developments in response to digitalisation and the growing market power of digital companies. This has been seen in both the competition law and consumer protection spheres, as well as in terms of EU policy generally; for example, in the proposal in December 2020 to introduce the Digital Services Act and Digital Markets Act to provide a comprehensive set of new rules for all digital services, including social media, online marketplaces, and other online platforms that operate in the EU. According to the Commission’s press release, the new rules will better protect consumers and their fundamental rights online, and will lead to fairer and more open digital markets for everyone.7

As noted above, from a consumer protection perspective, one of the key priorities in the Commission’s Agenda relates to digital transformation. As part of its Agenda, the Commission states that the “digital transformation is radically changing consumers’ lives offering new opportunities but also presenting them with challenges. The Commission aims to tackle online commercial practices that disregard consumers’ right to make an informed choice, abuse their behavioural biases or distort their decision-making processes, such as dark patterns and hidden advertising. In addition, consumers’ interests need to be duly taken into account when setting rules governing the digital economy and requirements for Artificial Intelligence (AI). To adapt current rules to the ongoing digitalisa-tion and the increase of connected products, the Commission will also review the directive related to product safety. As there is a need to reinforce consumer protection regarding digitalisation of retail financial services, the directives for consumer credit and marketing of financial services will be reviewed”.8

The UK

In the UK, there have been a number of recent developments in the competition and consumer protection law arenas as a result of the perceived need to address specific challenges arising in the digital market space.

For example, in March 2020, the CMA led a Digital Markets Taskforce to provide advice to the UK government on the design and implementation of a pro-competition regime for digital markets. This advice was published in December 2020, and it recommended that the government establish a Digital Markets Unit (“DMU”) to “further the interests of consumers and citizens in digital markets, by promoting competition and innovation”, and to imple-ment a regulatory regime to address the market power of the most powerful digital firms, which will include an enforceable Code of Conduct.9 On 7 April 2021, the DMU (based within the CMA) was launched, with the press release stating that the DMU “will oversee plans to give consumers more choice and control over their data, promote online competition and crack down on unfair practices which can often leave businesses and consumers with less choice and more expensive goods and services”.10

This follows the CMA’s market study into online platforms and digital advertising, which found in its final report published on 1 July 2020 that competition is not working well in those markets, leading to substantial harm for consumers and society as a whole.11 It also reflects the CMA’s recent consumer law investigations into fake and misleading online reviews, which include:(a) the CMA’s investigation, which began on 21 June 2019,

into fake and misleading reviews, in relation to which the CMA has now obtained commitments from Instagram, Facebook and eBay;12 and

(b) an investigation launched on 22 May 2020 into whether several major websites are taking sufficient measures to

car insurance, and increasingly feel that markets aren’t set up to work for them. In other words, the system needs to be updated, improved and refreshed ”. In order to address this, the Penrose Report contains a number of recommendations, including that:(a) the CMA should publish an annual “State of Competition

and Consumer Detriment” report; and(b) the CMA’s civil consumer enforcement powers be updated

to bring them into line with, and have the same impor-tance as, the competition toolkit. In particular, the Penrose Report considers that “the CMA should be able to decide [consumer law] cases itself and impose fines in the same way as it already does for competition law cases”.

It remains to be seen the extent to which the UK government will implement the recommendations in the Penrose Report. However, it is clear that, if adopted, they could have a signifi-cant impact on both the competition and consumer protection law regimes in the UK in the future.

In the EU, there has also been a significant increase in focus on consumer protection law, and a number of key developments which will be relevant to the particular issues identified above. In particular, on 13 November 2020, the European Commission (the “Commission”) launched its “New Consumer Agenda” (the “Agenda”), to “empower European customers to play an active role in the green and digital transitions”.4 According to the Commission’s press release, the Agenda presents a vision for EU consumer policy from 2020 to 2025, focusing on five key priority areas:(a) green transition and digital transformation (see further

below);(b) effective enforcement of consumer rights, whereby the

Commission will assist Member States in the timely imple-mentation and enforcement of consumer law, including through the Consumer Protection Cooperation (“CPC”) network. The Commission will also support national authorities, such as by deploying e-tools to strengthen national authorities’ capacity to tackle illegal online commercial practices and identify unsafe products;

(c) the Commission will consider the specific needs of certain consumer groups, for example, children and older people; and

(d) international cooperation, which will include the adoption of an action plan with China in 2021 to enhance the safety of products sold online, as well as developing regulatory support, technical assistance and capacity building for EU partner regions, including in Africa.

This follows a number of previous developments in this area, including the 2018 New Deal for Consumers, and the public consultation launched by the Commission in June 2020 on the new European consumer policy.5

The Growing Importance of Digital Markets and Related ChallengesThe digital revolution has brought significant benefits, as well as new challenges, from a competition and consumer protection law perspective, and regulatory authorities are working hard to consider the best ways to respond to them. For example, as noted by Teresa Moreira, Head of the Competition and Consumer Policies Branch, United Nations Conference on Trade and Development (“UNCTAD”), “when 104 nations met at the Eighth United Nations Conference on Competition and Consumer Protection, there was a growing sense of urgency around reviewing legislation, enforcement and even regulation. At the heart of the discussions were online platforms, which play an increasingly central role in today’s economy… As of June 2020, seven of the world’s top 10 companies by market capitaliza-tion are digital platforms…”.6 In this regard, while the response to digitalisation has varied in some respects across jurisdictions, there are a number of common themes.

3Ashurst LLP


to take action against large tech companies and digital platforms by modernising the abuse of dominance provisions.

One of the most significant changes to the rules on abuse of dominance will enable the FCO to intervene at an early stage when competition is threatened by certain large digital groups. The FCO can pre-emptively prohibit certain conduct by compa-nies which, due to their strategic position and resources, are of overwhelming importance for competition across markets (so-called “super-dominant companies”). Examples of the types of conduct in which the FCO can intervene include, inter alia :(a) granting preference to a company’s own offerings over its

competitors (“self-preferencing”);(b) hindering third parties’ activities on procurement or sales

markets if the dominant company’s activities are impor-tant for access to these markets;

(c) using competitively sensitive data collected by the company to create or appreciably raise barriers to market entry; and

(d) impeding the interoperability of products or services or the portability of data.

The amendment also expands some of the “classical” abuse of dominance provisions to include internet-specific criteria. When measuring market power, the law provides that access to competition-relevant data and the question of whether a plat-form has so-called “intermediation power” are to be taken into account. Another important innovation is that the FCO can, under certain circumstances, order that data access be granted for an appropriate fee in favour of dependent companies.

This follows the joint paper on data and its implications for competition law published by the German and French competi-tion authorities in 2016, in which it was recognised that data can be a source of market power, and that the collection, processing and commercial use of data can be relevant to competition law issues, rather than merely data protection issues.14 Similar argu-ments can be made in relation to consumer protection, given the relevance of data to consumers and the difficulty consumers have in assessing its value. The German approach demonstrates that regulators are considering a variety of angles (including the expansion of traditional competition law tools) in order to address issues which may also be highly relevant to both the consumer and data protection spheres.

The Response to COVID-19As mentioned above, the COVID-19 pandemic has created unique challenges from a consumer protection and compe-tition law perspective, leading regulators to adopt a range of approaches to address these issues. A detailed description of the implications of COVID-19 on these areas is beyond the scope of this chapter; however, it is interesting to note the various methods deployed by regulators across the world to tackle common issues.

In the UK, the CMA launched a specific task force in response to COVID-19, and is continuing a wide-ranging programme of work considering consumer protection issues arising from the COVID-19 pandemic. The CMA has focused, in particular, on pricing practices and cancellations/refunds, and has used both consumer protection and competition law tools for these purposes. For example:(a) on 20 March 2020, the CMA sent an open letter to the

pharmaceutical and food and drink industries raising concerns about firms seeking to capitalise on the COVID-19 pandemic by charging unjustifiably high prices for essential goods, or making misleading claims regarding their efficacy.15 In this context, the CMA specifically warned that it has recourse to a range of competition and consumer powers to tackle such behaviour. Subsequently,

protect consumers from fake and misleading reviews, and considering, in particular, how the websites currently detect, investigate and respond to such reviews.13

In addition, digital markets are specifically considered in the Penrose Report, together with a number of consumer protec-tion issues which have specifically arisen in the digital arena. In particular, the Penrose Report acknowledges the significant benefits of digitalisation, but notes that downsides can be caused by “new types of business which create enormous network monopolies, or which charge nothing upfront but harvest and use consumer data to make money instead ”. The Penrose Report finds that tactics which can erode competition or consumer power hurt customers in several practical ways. For example, as consumers do not know the value of the data they are signing away in exchange for notion-ally “free” products, it is not possible to tell if they are getting a good deal, making services less interoperable makes switching harder, and monopolies and barriers to entry mean innovative new companies may struggle to gain market share, leading to a reduction in customer choice.

In relation to consumer protection issues specifically, the Penrose Report identifies three “gaps” where it finds that consumer protection rules need to be stronger:(a) price discrimination and the so-called “loyalty penalty”,

with the Penrose Report recommending that a general regime be put in place that is similar to the UK Financial Conduct Authority’s planned requirement for home and motor insurance providers to offer the same prices to new and existing customers;

(b) the asymmetry of information between sellers and buyers due to a lack of visible prices, complicated small print and “take it or leave it” digital offerings. To tackle this, the Penrose Report recommends that, among other things, the CMA should track digital comparison tools to ensure that they are continuing to enable buyers to make reliable choices and consider how to improve transparency of the prices that consumers are paying through providing their data;

(c) “sludge”, which is where the consumer behaviour insights of nudge theory are used to exploit consumers, including:(i) subscription traps, where consumers are offered free

trials to snare them into long, expensive deals that are difficult to terminate;

(ii) making opt-out icons smaller or less visible;(iii) creating a sense of urgency around price or availability,

such as indicating the number of customers looking at the product; and

(iv) using defaults to influence behaviour, such as pre- checked boxes for add-ons, and displaying paid options more prominently; and

(d) the Penrose Report proposes that the CMA should under-take a market investigation to assess how “sludge” should be recognised and measured in future, and to identify rele-vant consumer protection techniques.

Germany

In Germany, there have been significant developments in response to the increasing importance of digital markets, with regulators largely looking to expand their competition law powers in order to address issues of concern. For example, on 19 January 2021, the tenth amendment to the Act against Restraints of Competition (the “Digitalisation Act”) entered into force, bringing substantial changes to German compe-tition law. In particular, the Digitalisation Act implements far-reaching powers for the Federal Cartel Office (the “FCO”)

4 The Relationship Between Consumer Protection and Competition Law


consumers with better information on the sustainability of products and to fight practices, such as greenwashing or early obsolescence. The Commission will also promote, repair, and encourage more sustainable and “circular” products.18

Similarly, in the UK, the CMA is carrying out work to better understand how consumer protection legislation can be used to tackle false or misleading environmental claims that affect consumers.19 In particular, the investigation is focusing on: (i) how claims regarding the environmental impact of products and services are made; (ii) whether such claims are supported by evidence; (iii) whether such claims influence peoples’ behav-iour when purchasing such goods and services; and (iv) whether consumers are misled by an absence of information about the environmental impact of products and services, with the CMA intending to produce guidance for businesses on how they can be transparent in the way that they market goods and services in relation to claims made about environmental impacts.

This comes at a time when many regulators are considering how competition law should apply in a sustainability context, with market participants keen to ensure there is sufficient avail-able guidance, and that competition law does not become an unnecessary barrier to meeting sustainability goals.

For example, on 27 January 2021, the UK’s CMA published an information sheet with the aim of enabling “businesses and trade associations [to] better understand how competition law applies to sustain-ability agreements and where issues may arise”.20 It covers a number of areas, including providing an overview for businesses which notes, inter alia, that many forms of collaboration between busi-nesses for the achievement of sustainability goals are unlikely to raise any competition law issues, and that beneficial coopera-tion (such as joint purchasing of common inputs or research and development) are unlikely to harm competition, provided the businesses do not have market power. However, the guidance also states that sustainability agreements must not be used as a cover for a business cartel. It also notes that many sustainability agreements are standard-setting agreements by which busi-nesses set standards on the environmental performance of prod-ucts, production processes, or the resources used in production. In this context, the information sheet sets out “dos and don’ts” for businesses when setting up a new standard in order to ensure they comply with competition law. Businesses will need to ensure they are particularly aware of their consumer protection and competition law obligations in this area going forward.

ConclusionIt is evident that, as the pace of technological developments and the calls for greater sustainability continue to increase at a time of unparalleled challenges posed by the COVID-19 pandemic, which itself has spurred the digitalisation of many businesses, governments and regulators are being forced to ensure that the tools they use to protect consumers are fit for purpose. In many ways, the magnitude of these challenges is only just beginning to materialise, and a number of different approaches are being adopted by governments and agencies around the world. One of the greatest challenges, which has not been discussed in this chapter, is likely to be how governments and agencies cooperate with each other in addressing these challenges. This is impor-tant not only to ensure that consumers are protected in relation to international supply chains, but also to ensure that businesses that operate internationally are not faced with a myriad of conflicting laws and regulations which will increase costs and, ultimately, make consumers worse off.

on 18 June 2020, the CMA launched investigations into whether four pharmacies and convenience stores may have abused a dominant position by charging excessive and unfair prices for hand sanitiser products; however, these investigations were subsequently closed (albeit, it is under-stood, after their conduct was changed); and

(b) the CMA used its consumer law powers in order to address its concerns relating to cancellations and refunds. In particular, in April 2020, the CMA published a general overview on the legal position relating to refunds and announced that it had opened an investigation into cancel-lations and refunds due to a large number of complaints. Initially, this investigation focused on three sectors (i.e. weddings and private events, holiday accommodation, and nurseries and childcare providers) and has since been extended to package travel. As part of this work, the CMA secured commitments from a number of travel companies. The CMA has also taken action in relation to wedding services, publishing an open letter to businesses in this sector explaining how consumer protection law applies to wedding contracts in the context of COVID-19.

These issues have also been considered and addressed by other regulators. For example:(a) the Commission and CPC Network authorities issued a

common position on 20 March 2020 in relation to stop-ping scams and tackling unfair business practices on online platforms in the context of COVID-19 in the EU;16

(b) in its announcement regarding the Agenda, the Commission recognised consumer rights in the context of the COVID-19 pandemic crisis, stating that the Commission will continue to tackle consumer scams in cooperation with the CPC Network and in dialogue with the platforms and all rele-vant actors. The press release specifically noted that the Commission will continue to ensure the protection of trav-ellers’ and passengers’ EU rights in case of cancelled trips, and will analyse the longer-term impact of COVID-19 on the consumption patterns of EU citizens, which will serve as a basis for future policy initiatives;17 and

(c) the French government introduced specific emergency legis-lation to address the significant increase in the price of hand sanitiser. The first of these measures, which came into force on 6 March 2020, placed a cap on the price of hand sanitiser at €3 for a 100ml bottle, with prices initially being guaran-teed until the end of May 2020, and compliance being moni-tored by agents of the Ministry of Economy.

The Increase in Focus on ESG IssuesAnother area in which the roles of consumer protection and competition law are developing at pace alongside each other is in the context of the increased focus on sustainability. In this regard, competition and consumer protection regulators are keen to ensure consumers and businesses are sufficiently protected and aware of their obligations in this area, whilst also ensuring that regulation is not an undue burden on companies looking to become more sustainable.

From a consumer protection perspective, as noted above, the “green transition” is a key area of priority under the Commission’s Agenda, with the Commission aiming to ensure that sustainable products are available to consumers on the EU market and that consumers have better information to be able to make informed choices. According to the Commission’s press release, as part of the Agenda, the Commission will present a proposal to equip

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10. https://www.gov.uk/government/news/new-watchdog- to-boost-online-competition-launches--3.

11. https://www.gov.uk/cma-cases/online-platforms-and- digital-advertising-market-study#final-report.

12. https://www.gov.uk/cma-cases/fake-and-misleading- online-reviews#history.

13. https://www.gov.uk/cma-cases/online-reviews. 14. https://webgate.ec.europa.eu/multisite/ecn-brief/en/

content/french-autorite-de-la-concurrence-and-german-bundeskartellamt-publish-joint-paper-data-and.

15. https://www.gov.uk/government/publications/covid-19-cma-open-letter-to-pharmaceutical-and-food-and-drink-industries.

16. https://ec.europa.eu/info/sites/info/files/live_work_travel_in_the_eu/consumers/documents/cpc_common_position_covid19.pdf.

17. https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2069.


19. https://www.gov.uk/cma-cases/misleading-environmental- claims.

20. https://www.gov.uk/government/publications/environ-mental-sustainability-agreements-and-competition-law/sustainability-agreements-and-competition-law.

Endnotes1. https://www.gov.uk/government/publications/smart-

data-review#history.2. https://www.gov.uk/government/publications/state-of-

uk-competition-report-commission-to-the-cma.3. https://www.gov.uk/government/publications/terms-of-

reference-for-john-penrose-mp-report-on-competition-policy/terms-of-reference-john-penrose-mp-report-on-competition-policy.


5. https://ec.europa.eu/info/law/better-regulation/have- your-say/initiatives/12464-A-New-Consumer-Agenda.

6. https://unctad.org/news/building-back-better-requires- stronger-competition-and-consumer-protection-digital- economy.



9. https://assets.publishing.service.gov.uk/media/5fce7567e- 90e07562f98286c/Digital_Taskforce_-_Advice.pdf and https://www.gov.uk/goverment/news/new-competition- regime-for-tech-giants-to-give-consumers-more-choice-and-control-over-their-data-and-ensure-businesses-are-fairly-treated.

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The Relationship Between Consumer Protection and Competition Law

Nigel Parr chairs the Ashurst competition and consumer protection practice. He has advised clients in some of the leading consumer protec-tion cases, including Abbey National’s successful appeal to the Supreme Court in connection with the OFT’s bank charges case, as well as the CMA’s investigation into online gambling. He also specialises in UK and EU competition law, including mergers, strategic business advice and competition risk management, cartel and abuse of dominance cases, market/sector investigations, appeals, competition litigation and consumer law. He is listed as a band 1 adviser for competition law and competition litigation in the major directories and appears in The Legal 500 EU and Competition Hall of Fame. Furthermore, he was listed as one of the top 30 antitrust lawyers in the world in Expert Guides’ “Best of the Best” 2018, as an Acritas “Star Lawyer” 2018 (independently nominated by clients), and was awarded 2019 Lawyer of the Year for Competition Law in London in Best Lawyers’ seventh edition.Additionally, he has long-standing experience of judicial review cases before the English Administrative Court and Competition Appeal Tribunal, particularly in relation to procedural failings in regulatory investigations.

Ashurst LLP London Fruit & Wool Exchange 1 Duval SquareLondon E1 6PW United Kingdom

Tel: +44 20 7859 1763Email: [email protected]: www.ashurst.com

Danica Barley is a Senior Associate in the competition and consumer protection practice in London and practises all aspects of UK and EU competition law and consumer law.Danica has experience advising clients in the context of investigations and market reviews by various UK regulators. This includes the CMA (in relation to antitrust, consumer protection, and market investigations), the Financial Conduct Authority, Ofgem and the Payment Systems Regulator.Danica also has extensive experience in relation to merger control, including multi-jurisdictional transactions.



Christopher Eberhardt is a Senior Associate in the competition and consumer protection practice in London and practises all aspects of UK and EU competition law and consumer law. He has experience in dealing with the European Commission, UK regulators and the UK Competition Appeal Tribunal in relation to competition law investigations and merger control. Key matters on which Christopher has advised recently include acting for IHS Markit in connection with its $44bn merger with S&P Global, Circle Health Group in relation to its acquisition of BMI Healthcare, and Royal Mail in relation to an abuse of dominance investigation by Ofcom and subsequent appeals to the Competition Appeal Tribunal and Court of Appeal. Furthermore, he has experience in advising companies on consumer law investigations work in the UK, including in relation to a recent investigation by the CMA.




Ashurst is a leading global law firm with a rich history spanning almost 200 years. We currently have 28 offices in 16 countries and a number of referral relationships covering 11 time zones that enable us to offer the reach and insight of a global network, combined with the knowledge and understanding of local markets. With over 1,600 partners and lawyers across a network spanning Asia, Australia, Europe, the Middle East and North America, we are able to respond to our clients wherever and when-ever they need us, by focusing on:■ Being approachable, practical and commercially minded.■ Taking a multi-disciplinary approach and working as a team.■ Understandingourclientsandtheirindustry-specificissues.■ Clarity and transparency in communication.

■ Alwaysinnovatingtoprovidethemosteffectiveandefficientservice.■ Diversity of personnel.■ Transparencyandefficiencyinourcosts.■ Alwaysfocusingonpeople–ahuman-firstapproach.

www.ashurst.com


Chapter 2 7

Argentina

Pérez Alati, Grondona, Benites & Arntsen (PAGBAM)

María Clara Rodríguez Llanos

Sonia Alejandra Del Regno

María Carolina Abdelnabe Vila

ArgentinaLuis Diego Barry


1.4 Which agency/agencies is/are responsible for enforcing consumer protection law (i.e., who is the investigator and who is the adjudicator)?

Section 42 of the CPL states that both national and provincial agencies are responsible for enforcing the consumer protection regime. Furthermore, provincial authorities have delegated several functions in their respective municipalities (such as receiving consumers’ complaints, conducting hearings, conducting ex officio investigations, etc.).

Usually, the Enforcement Authority is the investigator and the adjudicator.

1.5 Are there any specific bodies that regulate/enforce consumer protection law in specific sectors?

Yes, a few of which are as follows:■ Insurance Activity: the Department of Orientation and

Assistance to the Insured within the insurance regulator. ■ Financial Activity: the Principal Management for the

Protection of Financial Services Users within the Argentine Central Bank.

■ Social Security: the Permanent Council of Agreementwithin the Superintendence of Social Security Services.

■ Investments: the National Securities and ExchangeCommission.

■ Data Protection: the Agency for Access to PublicInformation.

2 Protections in Relation to the Quality and Function of Goods and Services

2.1 Please describe any protections regarding the quality and function of goods and services acquired by consumers.

Protection regarding the quality and functions of goods and services acquired by consumers is set by the regulator of the specific activity (i.e. quality and functions of pharmaceutical products are established by the National Administration of Medicines, Food and Medical Technology).

Within the consumer protection regime, we can find only a few provisions:■ Generalprovision:Section5oftheCPLrulesthatgoods

and services must be provided in such a way that, when used under foreseeable or normal conditions of use, they do not present any danger to the health or physical integ-rity of consumers.

1 General

1.1 What legislation, regulations and guidelines are relevant to consumer protection in your jurisdiction?

The following are of relevance: Section 42 of the Argentine National Constitution; Sections 1092–1122 of the Argentine Civil and Commercial Code (hereinafter “CCC”); Consumer Protection Law No. 24,240 and its amendments (hereinafter “CPL”); Regulatory Decree No. 1798/1994; Decree No. 274/2019 regarding Unfair Trade and Unfair Competition; Resolutions from the National, Provincial and Municipal authorities; and Mercosur Resolutions once they are incorporated in Argentina (https://www.mercosur.int/documentos-y-normativa/normativa/).

1.2 What is the definition of “consumer” (i.e., who does consumer protection law protect)?

Both the CCC (Section 1092) and the CPL (Section 1) provide the same definition of consumer, i.e. a natural or legal person who acquires or uses, free of charge or due to a payment, goods or services as the final user, for his/her own benefit or that of his/her family or social group. A person is also considered a consumer if he/she, without being part of the consumer relation-ship, as a consequence or on the occasion of it, acquires or uses goods or services, free of charge or due to a payment, as the final user, for his/her own benefit or his/her family or social group.

1.3 Who is/which entities are required to comply with consumer protection law?

All entities that enter into a consumer relationship are required to comply with consumer protection law. A consumer relationship is defined as a relationship between a supplier and a consumer. For the definition of a consumer please refer to question 1.2.

Suppliers are defined as any natural or legal person, private or public entity, that develops in a professional manner, even occa-sionally, activities of production, assembly, creation, construc-tion, transformation, import, brand concession, distribution and marketing of products and services.

Activities that require professionals to have a university degree, as well as for them to be registered in an officially recognised professional association or authority empowering them to carry out such activities, do not fall within the scope of application of the consumer protection regime. However, advertisements made by such professionals offering their services are governed by the consumer protection regime (Section 2 of the CPL).

8 Argentina


registered consumer associations have standing to initiate proceed-ings for a breach. Said proceedings can also be initiated ex officio.

2.7 Describe at least two examples of public or private enforcement of these protections in the last five years, including the conduct/alleged conduct, result and penalties imposed.

■ In re: “Medero Alejandro A. y otro c/ Volkswagen Argentina S.A. y otro s/ daños y perjuicios” – a consumer claimed that the luxury car acquired did not comply with his expectations due to defects. The manufacturer, due to the legal guar-antee, repaired the car but such repair was not satisfactory. Panel J of the Civil Chamber of Appeals ruled that the automobile manufacturer should deliver a brand new car since the repair was not satisfactory, and so the consumer was entitled to receive the car that he purchased in optimal condition. The automobile manufacturer was also obliged to pay for moral damages.

■ In re: “Gionario, Gustavo D. c/ Serra Lima S.A. s/ ordinario” – Panel A of the Commercial Chamber of Appeals ruled that consumers are entitled to make their own reparations in non-authorised services and such reparations cannot void the legal guarantee that the manufacturer must grant.

3 Protections/Prohibitions in Relation to the Safety of Goods and Services

3.1 Please describe any protections regarding the safety of goods and services acquired by consumers.

The CPL indicates that goods and services must be provided in such a way that, used in foreseeable or normal conditions, does not present any danger to consumers’ health or physical integ-rity (Section 5).

3.2 Please outline the substantive tests for these protections.

The Enforcement Authority may act ex officio or due to a complaint filed by a consumer. In either scenario, the Enforcement Authority may seize any products considered to be in infringement in order to analyse them. In both circumstances, the supplier has the burden of proving the legality of its goods and services.

3.3 What types of goods and services are covered by the protections relating to the safety of goods and services?

All goods and services must be safe for consumers.

3.4 Are there any exceptions to these protections?

No, there are no exceptions.

3.5 What remedies are available for a breach of the protections in relation to the safety of goods and services?

Regulatory Decree No. 1798/1994 establishes a recall proce-dure aimed to remedy a breach of the protection in relation to the safety of goods and services (Section 4). Said procedure

■ Regarding goods: (i) suppliers are obliged to grant consumers a three-month guarantee for second-hand products and six months for brand new products, covering any defect in its correct functioning; and (ii) suppliers must guarantee an adequate technical service and the supply of spare parts.

■ Concerning services: (i) in contracts for the provision ofservices whose purpose is to repair, there is the implicit obligation to provide only brand new and necessary spare parts, unless otherwise informed to the consumer; and (ii) if within 30 days following the date on which the service was concluded there are deficiencies or defects in the work performed, the service provider will be obliged to correct all deficiencies or defects, or to replace the materials and prod-ucts used, at no additional cost of any kind to the consumer.


The Enforcement Authority may act ex officio or due to a complaint filed by a consumer. In either scenario, the Enforcement Authority may seize some products considered to be in infringement in order to analyse them. In both circumstances, the supplier has the burden of proving the legality of its goods and services.

2.3 What types of goods and services are covered by the protections relating to the quality of goods and services?

All goods and services are covered. Furthermore, as stated under question 2.1, suppliers are also obliged to fulfil specific obliga-tions related to their activity, which exceed the consumer protec-tion general obligations and are set by their specific regulator.


Yes, just for the rendering of reparation services, suppliers: (i) may use second-hand spare parts; and (ii) may not provide the 30-day guarantee if it is duly informed and indicated in writing to consumers.

2.5 What remedies are available for a breach of the protections in relation to the quality and function of goods and services?

If the quality or function of certain goods or services is not satis-factory, the supplier is obliged to carry out repairs as per the legal guarantee. If the repairs are not satisfactory, the consumer can opt between: (a) requesting the replacement of the goods acquired for

another of identical characteristics; (b) returning the goods as if in exchange and receiving the

corresponding refund, according to the current price of the goods; or

(c) obtaining a proportional price reduction.In all cases, the consumer can claim for damages. If the

consumer decides to file a judicial claim, he or she can also request the imposition of punitive damages.

2.6 Who has or which agencies have standing to initiate proceedings for a breach?

The CPL states that: (i) any consumer affected by the supplier’s conduct; (ii) any administrative or judicial authority; and (iii) duly

9Pérez Alati, Grondona, Benites & Arntsen (PAGBAM)


4 Prohibitions Relating to “Conduct” Against Consumers

4.1 Please describe any protections/prohibitions relating to the conduct of persons or businesses (e.g., manufacturers/retailers) which sell or supply goods and services to consumers (“Conduct”). For example, misleading and deceptive conduct, unconscionable conduct, etc.

Failing to comply with the offer made and/or with the contract executed with the consumer is considered to be conduct against consumers, and is hence sanctioned by the CPL and the CCC. Furthermore, providing misleading information is sanctioned by Decree No. 274/2019 of the CPL and the CCC.

4.2 Please outline the substantive tests for the above-mentioned protections/prohibitions.

The Enforcement Authority may act ex officio or due to a complaint filed by a consumer. In either scenario, the Enforcement Authority may conduct an investigation in order to determine whether the supplier committed an infringement to the CPL. In both circumstances, the supplier has the burden of proving the legality of its actions.

4.3 Are there any exceptions/exemptions to the protections/prohibitions relating to Conduct?

Yes, force majeure.

4.4 What remedies are available for a breach of the protections/prohibitions relating to Conduct?

If a supplier fails to comply with the offer or the contract, the consumer may choose between: (a) requiring the fulfilment of the obligation, whenever possible; (b) accepting another equiv-alent product or service; or (c) terminating the contract and requesting the corresponding refund. The consumer may also claim damages. Furthermore, the consumer may request the imposition of punitive damages if he/she decides to file a judi-cial claim.

4.5 List at least two examples of public or private enforcement of the protections relating to Conduct in the last five years, including the breach/alleged breach, result and penalties imposed.

■ In re: “Compañía Argentina de Marketing Directo SA c/ DNCI- s/ Lealtad Comercial, Ley 22802” – the Administrative Contentious Chamber of Appeals confirmed the fine imposed by the Enforcement Authority on a company for misleading adver-tising, since it did not have scientific supporting informa-tion regarding the properties of the promoted product and ignored the recommendations that should be made to people who present risk factors, as the product could even-tually generate risks to their health. Consumer protection aims to protect consumers against advertisements that offer or promote goods and/or services that present inaccuracy in

was regulated by Mercosur Resolutions No. 4/2017 and 1/2010 (incorporated into the Argentine legislation by Resolution No. 808/2017 of the Secretariat of Commerce and Resolution No. 724/2020 of the Secretariat of Internal Trade, respectively).

3.6 Are there mandatory reporting requirements with respect to the safety of goods or services?

The CPL has a special provision regarding goods or services that may pose a risk to consumers’ health or physical integ-rity. In this sense, Section 6 of the CPL states that risky goods and services must be marketed observing the mechanisms, instructions and rules established to guarantee their safety. In such cases, a manual drafted in the national language must be provided to the consumer. In said manual the correct use, installation and maintenance of the goods or service must be described. The obligation to provide a manual in the national language also applies to imported goods.

3.7 Describe any voluntary or mandatory product safety recall regimes.

Please refer to question 3.5. Suppliers which, after introducing goods or services into the consumer market, acquire knowledge of their danger, must immediately communicate such circum-stance to the Enforcement Authority and consumers through sufficient advertisements. Furthermore, according to Mercosur Resolution No. 4/2017 (incorporated into the Argentine legislation by Resolution No. 808/2017 of the Secretariat of Commerce), the Enforcement Authority will require the filing of reports outlining the recall’s results.

3.8 List at least two examples of public or private enforcement of these protections in the last five years, including the breach/alleged breach, result and penalties imposed.

■ In re: “M. M. X. c/ Asociación Deportiva y Cultural Lacar s/ daños y perjuicios derivados de la responsabilidad contractual de particulares” – Panel II of the Civil, Commercial and Labor Chamber of Appeals of the Province of Neuquén ruled that the club had to indemnify the death of an amateur futsal player who, when playing a game on a rented court, hit his head against a concrete wall behind the goal without any protection. It was ruled that the security duty estab-lished under Section 5 of the CPL was breached, especially due to the fact that it was not proven that the victim had made unusual or abnormal use of the designed playground in the gym. The club was obliged to pay for damages and moral damages.

■ In re: “M., M. R. c/ Parque de la Costa y otro s/ Daños y Perjuicios” – Panel M of the Civil Chamber of Appeals condemned a company that owned an amusement park in which a child fractured an arm after falling from a game that simulated a rural dressage mechanical bull. The damages were related to causality with the security duty. It was ruled that the risk must be absorbed by the amusement park and not by the victim, who came to the park with the belief that it was harmless. The amusement park was ordered to pay for damages.

10 Argentina


registries that allow companies to contract with the State; order the loss of concessions, privileges, special tax or credit regimes; and order the publication of the sanction. The Enforcement Authorities may also order the publication of the resolution or a synthesis in a mass newspaper.


■ In re: “L. M. G. c/ INC S.A.- Supermercado Carrefour y otro s/ daños y perjuicios” – the Civil and Commercial Chamber of Appeals of San Martín condemned the supermarket to pay compensation for moral damage to a disabled woman who was mistreated by personnel of the establishment when the alarm rang for a titanium prosthesis in her spine because, under such conditions, the supplier mistreated the consumer.

■ In re: “González, María Laura c/ Telecom Argentina S.A. s/ Daños y Perjuicios” – the Civil and Commercial Chamber of Appeals of San Nicolás ordered a telecommunications company to compensate damages and to pay for puni-tive damages due to the mistreatment of a consumer. The company took more than one year (an excessive period of time) to solve a consumer’s claim related to a billing problem concerning a mobile phone purchase that the consumer alleged she did not make.

6 Investigation of Potential Breaches

6.1 What powers does/do the consumer authority/authorities in your jurisdiction have to investigate potential breaches of consumer law? Describe the key steps in a typical investigation.

Consumer Enforcement Authorities have the following powers: (a) receiving consumer complaints and commencing inves-

tigations;(b) conducting inspections; (c) conducting, with the corresponding court order, a dawn

raid;(d) requesting reports and opinions from public and private

entities regarding the subject matter of consumer protec-tion; and

(e) conducting ex officio investigations.In a typical investigation, the Enforcement Authority will

receive a complaint or commence an ex officio investigation and it shall immediately notify the investigated party, who will be able to file the corresponding defence brief and may offer different means of proof. Once the evidence is produced, the Enforcement Authority issues a resolution that may impose different sanctions (please refer to question 5.4) or dismiss charges to the supplier. Said resolution can be appealed (please refer to question 8.1).

6.2 How is an investigation triggered (e.g., ex officio, whistleblower or complaint)?

Investigations are typically triggered by a consumer complaint or ex officio.

their content; the purpose of this is to avoid damages to users and consumers, as well as to ensure the protection of their economic interests in relation to consumption.

■ In re: “Sprayette S.A. c. DNCI s/ Lealtad Comercial, Ley 22802 – art. 22” – Panel I of the Administrative Contentious Chamber of Appeals confirmed the administrative sanc-tion of a fine imposed on the company for misleading advertising when promoting a product to lose weight, which stated that it was “possible to lose 30 kilos in just 30 days”. It was stated that the advertisement was aimed at consumers who might be attracted to a quick solu-tion offered with misleading claims, while the plaintiff promoted the product with expressions that generated in the consumer the idea that there were scientific studies that supported the promised results.

5 Other Protections/Prohibitions

5.1 Does consumer law in your jurisdiction have any other prohibitions/protections not covered by the questions above? If so, please describe these prohibitions/protections.

■ Information duty: the supplier is obliged to provide toconsumers clear, accurate and detailed information related to the essential characteristics of the goods and services that it provides, and the conditions of its commercialisa-tion (Section 4 of the CPL and Section 1100 of the CCC).

■ Suppliersmusttreatconsumersfairlyandwithnodiscrim-ination whatsoever (Section 8 bis of the CPL and Section 1097 of the CCC).

■ Acooling-offperiod,allowingconsumerstoreturngoodsor cancel services purchased from a business away from a normal commercial premise, must be granted (Section 34 of the CPL and Section 1110 of the CCC).


The Enforcement Authority may act ex officio or due to a complaint filed by a consumer. In either scenario, the Enforcement Authority may conduct an investigation in order to determine whether the supplier infringed the consumer protection regime. In both circumstances, the supplier has the burden of proving the legality of its actions.

5.3 Are there any exceptions/exemptions?

The cooling-off period does not apply in the following situations: (a) tailor-made products or those that, by their nature, cannot be returned or may rapidly deteriorate; (b) software that can be downloaded or reproduced immediately for permanent use; and (c) the supply of daily newspapers, journals and magazines.

5.4 What remedies are available for a breach of these protections?

Consumers can file complaints and seek damages. The Enforcement Authorities may: impose fines; seize products that are in infringement; order the closure of the establishment; order the suspension for up to five years in the corresponding



7.4 Where regulators/enforcement bodies have a choice of enforcement tools/powers, what considerations do they take into account in determining which tools/powers to use?

The Enforcement Authorities typically choose to conduct inspections and to receive complaints from which they can commence investigations.

7.5 Describe the relevant rules and procedures that must be followed by such bodies (e.g., administrative, judicial).

Consumers can opt to file a complaint with the Enforcement Authority (please refer to question 6.3) and/or file a judicial claim. In most jurisdictions, in order to be able to file a judicial claim, consumers must have entered into a previous conciliation process, and only after not getting an agreement are consumers entitled to initiate a judicial claim. Consumers’ judicial claims differ from other judicial claims since consumers are granted with court tax-free benefit; the procedural rules that must be applied are those of the most abbreviated procedure, and the evidentiary burden is dynamically distributed.

7.6 Is there a right to a stand-alone action and follow on right of action within consumer law? Who has standing to bring these actions?

The CPL states that any consumer affected by the supplier’s conduct has the right to a stand-alone action. Duly registered consumer associations have standing to initiate proceedings for a breach.

7.7 Is there a statute of limitations for bringing stand-alone or follow on actions?

Yes, five years from the date on which the infringement was committed.

7.8 Describe any international or regional cooperative mechanisms (e.g., MOUs) in which your jurisdiction is involved in the enforcement of consumer protection.

As stated on a regional level, Argentina is aligned with the Mercosur policies regarding consumer protection. However, there is no cooperative mechanism.

8 Appeals

8.1 Describe any appeal processes.

Administrative sanctions can be challenged by suppliers, who must file the corresponding appeal brief within 10 business days of having notice of the imposition of the sanction. In order to be enti-tled to appeal, suppliers must pay the fine imposed, if applicable.

8.2 Can consumers or retailers/manufacturers appeal decisions made by the consumer authority/authorities or by a court?

Consumers are not part of the administrative proceedings and hence are not entitled to appeal administrative decisions.

6.3 Describe any complaints procedure for (i) consumers, and (ii) businesses.

There is no impediment for a business to file a complaint against another business; however, it is not common practice. Instead, investigations are triggered by consumers’ complaints. Once a consumer files a complaint, the Enforcement Authority, depending on the jurisdiction, may conduct hearings where the supplier and the consumer may reach an agreement. If the agreement satisfies the consumer protection regime, then the investigation would be closed. If there is no agreement, the investigation continues but the consumer is not part of it. Hence, if the consumer wants compensation, he/she will have to file a judicial claim for damages. The administrative proceedings will continue, without the involvement of the consumer, and if the Enforcement Authority finds that the supplier has breached the consumer protection regime, it will impose sanctions (please refer to question 5.4). Even though the Enforcement Authority’s actual powers are discussed, it can still impose the compensation of the direct damages suffered by the consumer that filed the complaint.

6.4 What is the timeline for a typical investigation?

Investigations typically take three years.

6.5 Are there criminal penalties for non-compliance with a consumer law investigation? If so, provide examples where such penalties have been imposed.

No, there are not.

6.6 Can investigations be resolved by way of commitments or undertakings?

Yes, please refer to question 6.3 above.

7 Enforcement

7.1 How does/do the consumer authority/authorities seek to enforce consumer law (for example, by administrative decision or by commencing proceedings in court)?

Consumer authorities enforce consumer law by administrative decisions and imposing important monetary sanctions.

7.2 Is/are the consumer protection authority/authorities bound by a time limit to commence proceedings on breaches?

Yes, three years. However, such period will be interrupted if the supplier commits new infractions or by the initiation of admin-istrative proceedings.

7.3 Describe the enforcement powers/tools available to these bodies (civil, administrative, criminal).

Please refer to question 6.1.

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with a link to all the standard form contracts that they offer. If consumers log in, access to executed contracts might be displayed. Suppliers of certain services (such as telephone, internet, prepaid medicine, among others) are also obliged to have an unsubscribe button on their websites so that consumers can easily unsubscribe from the contracted service.

■ Resolution No. 424/2020 of the Secretariat of InternalTrade obliges suppliers to put a “regret button” on their websites to facilitate the exercise of the cooling-off period (please refer to question 5.1).

■ Resolution No. 449/2020 of the Secretariat of InternalTrade obliges suppliers to inform at their stores and at their websites, all the payment methods that they accept.

■ Resolution No. 137/2020 of the Secretariat of Internalregulates hearings by electronic means.

■ ResolutionNo.139/2020oftheSecretariatofInternalTradecreated a new category of consumer: the hyper-vulnerable consumer (children and teenagers, disabled people, LGBT+ people, elderly people, migrants and tourists, low-income people, among others) and promotes their assistance in filing complaints as well as good business practices in the care, treatment and protection of these consumers.

9.2 Are there any proposed reforms to consumer law or policy within the next 12 months?

There is a bill of amendment; however, it is not clear whether this will be analysed in the next 12 months.

However, if consumers file a judicial claim, they are entitled to appeal any court decision.

Suppliers/retailers/manufacturers can appeal administrative decisions (please refer to question 8.1) as well as court decisions.

8.3 Does an appeal suspend the effect of any penalty/the requirement to pay any fine (if applicable)?

The appeal suspends the effects of any penalty other than the payment of the imposed fine, which is a requirement that must be fulfilled in order to be entitled to appeal (please refer to ques-tion 8.1).

9 Current Trends and Anticipated Reforms

9.1 What are the recent enforcement trends in your jurisdiction?

The most relevant recent enforcement trends are the following:

E-commerce ■ Resolution No. 270/2020 of the Secretariat of Internal

Trade (that incorporates the Mercosur Resolution No. 37/2019 into the Argentine legislation) obliges suppliers to provide certain information prior to the purchase of the goods or the acquisition of the service, to give easy access to the terms of the contract, and to provide efficient customer care service.

■ Resolution No. 271/2020 of the Secretariat of InternalTrade obliges suppliers to have a button on their websites



Luis Diego Barry’s practice areas include competition and consumer protection, with great experience in complex and high-profile antitrust and product liability cases. Mr. Barry worked as head of the legal department of Unilever de Argentina S.A. and in the antitrust department of Cuatrecasas (Brussels Office). Furthermore, Mr. Barry is a professor at the most prestigious Argentine university. He publishes articles in key Argentine legal journals and participates as a speaker in several seminars.

Pérez Alati, Grondona, Benites & Arntsen (PAGBAM)Suipacha 1111, 2nd floorC1008, City of Buenos AiresArgentina

Tel: +54 11 4114 3000Email: [email protected]: www.pagbam.com

María Carolina Abdelnabe Vila specialises in competition and consumer protection. She graduated top of her class (summa cum laude) at Universidad Católica Argentina (UCA) and received the annual award due to her academic grades. In 2008, she took a course on Legal Counsel of Companies at UCA. During 2012–2013, she obtained an LL.M. in “International Business Law” at Université Catholique de Lyon (Lyon, France). In June 2013, Ms. Abdelnabe Vila was granted a full scholarship to take a course in Economic European Law at EBS Universität Law School (Germany). She is a professor at several Argentine universities. Furthermore, she publishes articles in key Argentine legal journals and participates as a speaker in several seminars.



Pérez Alati, Grondona, Benites & Arntsen (PAGBAM) is widely recognised as one of the preeminent law firms in Argentina. Established in 1991, over 140 professionals render their services at the Firm throughout its several prac-tice areas. Headquartered in Buenos Aires, our Firm provides coordinated legal advice and transactional capability to international and local compa-nies, financial institutions and international organisations doing business in Argentina and Latin America.Our Firm advises many of the largest Argentine and international corpora-tions and has played a significant role in many of the most complex and landmark transactions of the last decades in Argentina. We are a market leader in Argentina, as evidenced by our rankings in recognised research publications.Among other awards, we were the first Latin American Law Firm to be honoured with the “Latin America Law Firm of the Year Award” by Chambers and Partners.

Additionally, most partners and senior associates have postgraduate degrees from universities in Argentina, the United States of America or Europe and/or have been associated with major law firms in the United States of America or Europe. Moreover, all attorneys are fluent in English, and some of them are also fluent in other languages (including French, German, Italian and Portuguese).

www.pagbam.com

María Clara Rodríguez Llanos specialises in competition and consumer protection. She graduated from Universidad Torcuato Di Tella (UTDT). From June to September, 2016, Ms. Rodríguez Llanos worked on secondment as legal counsel at Google Argentina. From May to June, 2017, she attended the Academy of American and International Law at the Southwestern Institute for International and Comparative Law (Plano, Texas, U.S.). In 2017, Ms. Rodríguez Llanos took a course at ESEADE and obtained a Diploma on Competition, Antitrust and Product Liability. During 2018–2019, she studied at ESADE Business School (Barcelona, Spain) and obtained a Master’s Degree in International Business Law. During 2020, she worked in Gómez-Acebo & Pombo’s office in Barcelona.



Sonia Alejandra Del Regno specialises in competition and consumer protection. She graduated with honours from Universidad Católica Argentina (UCA) and won the Academic Excellence Award issued by the Bar Association of Attorneys of the City of Buenos Aires. She was a member of the Law Student Centre of UCA. Currently, Ms. Del Regno is studying at the University of San Andrés in order to obtain a Master’s in Business Law.





14

Australia

MinterEllison Geoff Carter

Miranda Noble

Australia

Chapter 3


Both a supplier (retailer) of goods or services and/or the manufacturer of goods are required to comply with the ACL.

A ‘manufacturer’ is broadly defined and includes any business that permits its name/brand to be attached to goods, and the importer of goods where the ‘actual’ manufacturer has no place of business in Australia.


The ACL is enforced jointly by the Australian Competition and Consumer Commission (ACCC) and the State and Territory consumer protection agencies, with the involvement of the Australian Securities and Investments Commission on relevant matters. At a practical level, the ACCC is the primary (and most active) enforcement agency.

The ACL is adjudicated by all Australian courts and tribunals, including State and Territory courts and tribunals.


The following bodies enforce consumer protection law in specific sectors:■ TherapeuticGoodsAdministration;■ AustralianPesticidesandVeterinaryMedicinesAuthority;■ FoodsStandardsAustraliaandNewZealand;and■ DepartmentofInfrastructureRegionalDevelopment.



The ACL creates ‘consumer guarantees’ regarding the quality and function of goods and services that automatically apply to every supply to a ‘consumer’. These cannot be waived, limited or excluded, or misrepresented.


Liability for the consumer guarantees lies with both the supplier (retailer) of the good or service and/or the manufacturer of the goods.

1 General


Consumer protection legislation consists of the following:■ Federallegislation:

■ Competition and Consumer Act 2010 (Cth) (previously known as the Trade Practices Act 1974 (Cth) (TPA), which includes the Australian Consumer Law (ACL); and

■ Competition and Consumer Regulations 2010 (Cth). ■ Stateandterritory-basedlegislation:

■ Fair Trading (Australian Consumer Law) Act 1992 (ACT);■ Fair Trading Act 1987 (NSW);■ Consumer Affairs and Fair Trading Act 1990 (NT);■ Fair Trading Act 1989 (Qld);■ Fair Trading Act 1987 (SA);■ Australian Consumer Law ( Tasmania) Act 2010 (Tas);■ Australian Consumer Law and Fair Trading Act 2012 (Vic);

and■ Fair Trading Act 2010 (WA).


For the purposes of the consumer guarantees regime, a person is taken to have ‘acquired’ particular goods or services as a ‘consumer’ under the ACL if the:■ goods or services, of any kind, are valued at less than

A$40,000; ■ goods or services are valued in excess ofA$40,000, but

are of a kind ordinarily acquired for personal, domestic or household use or consumption; or

■ goodsconsistofavehicleortraileracquiredforuseprinci-pally in the transport of goods on public roads.

The definition of a ‘consumer’ under the ACL is set to expand on 1 July 2021, with the monetary threshold referred to above increasing from A$40,000 to A$100,000.

There are other definitions of a ‘consumer’ for other parts of the ACL; for example, definitions of ‘consumer goods’ for the product safety provisions and ‘consumer contracts’ for the unfair terms regime.


Any person (including businesses/corporations) engaged in trade or commerce must comply with the ACL.

15MinterEllison


■ goodswerepurchasedforthepurposeofre-supply;■ goodsarelostordestroyed;■ consumerdidnottakereasonablecareofthegoods,such

as failing to follow instructions or servicing;■ goodsaredamagedbytheconsumer’sabnormaluse;■ consumerexaminedthegoodsbeforepurchaseandshould

have seen obvious faults; or■ defect was brought to the consumer’s attention prior to

purchase.


Remedies from suppliers in relation to goodsIf the failure to comply with a consumer guarantee is ‘major’, or cannot be remedied, the ACL allows the consumer to decide which remedy they would prefer from the supplier, including:■ compensationforanyreductioninthevalueofthegoods;or■ rejectthegoodsandchooseafullrefundorreplacement.

If the failure is minor and can be remedied, the consumer may ask the supplier to remedy the defect within a reasonable time. The supplier has the right to choose the remedy including whether to repair or replace the goods, or provide a refund.

Otherwise, if the supplier does not remedy the failure (or fails to within a reasonable time), the consumer may choose to:■ have the defect remedied by someone else and recover

reasonable costs from the supplier; or ■ rejectthegoodsandseekarefundorreplacement.

Remedies from suppliers in relation to services If the failure is major, the consumer can choose to:■ cancel the services and get a refund for any part of the

service not already used; or■ keepthecontractandgetcompensationforthedifference

in value of the service performed and what they paid for.If the failure is minor, the supplier can choose to:

■ remedytheissuewiththeserviceatnocosttothecustomer(and within a reasonable time); or

■ provideafullrefund.Otherwise, if the supplier takes too long to remedy the issue

or refuses to resolve the issue, the consumer can engage someone else to fix the problem and is entitled to have their reasonable costs reimbursed by the supplier. Alternatively, the consumer can choose to cancel the service (if it is ongoing) and obtain a refund.

Consumers also have an additional right to damages for any reasonably foreseeable consequential loss or damage incurred.

Remedies from manufacturers A consumer can claim damages directly from the manufacturer of goods for a failure to comply with the consumer guarantees. The manufacturer is liable to pay damages for the:■ reductioninvalueofthegoodsresultingfromthefailure;

and■ reasonablyforeseeableconsequentiallossordamagecaused

by the failure.The manufacturer must also indemnify the supplier for

breaches of certain consumer guarantees.


The ACCC may, by application, commence an action on behalf of one or more persons who are entitled to take action under the consumer guarantees regime (if they obtain written consent from the person/s on whose behalf the application is being made).

Consumer guarantees on goods relevant to suppliersWhere goods are supplied to a consumer, the supplier guarantees that they: ■ areofacceptablequality.Theymustbefitforthepurpose

for which goods of that kind are commonly supplied, acceptable in appearance and finish, free from defects, safe and durable, as a reasonable consumer fully acquainted with the state and condition of the goods would regard as acceptable, having regard to any relevant circumstances such as the nature and price of the goods and any descrip-tion applied to them;

■ arefitforanyparticularspecifiedpurposeforwhichtheconsumer tells the supplier;

■ correspondwithanydescriptionorsamplegiven;■ complywithanyexpresswarranty/representationgivenby

the supplier; and■ aresuppliedwithacleartitle,undisturbedpossessionand

are free of undisclosed securities.

Consumer guarantees on goods relevant to manufacturersManufacturers guarantee that their goods:■ areofacceptablequality;■ correspondwithanydescriptionorsamplegiven;■ complywithanyexpresswarranty/representationgivenby

the manufacturer; and ■ havefacilitiesforrepairandsparepartsthatarereasonably

available for a reasonable time after purchase.

Consumer guarantees relating to services Suppliers guarantee to consumers that services will be:■ providedwithduecareandskill;■ fitforanyspecifiedpurposeforwhichtheconsumertells

the supplier; and■ supplied in the timeframeagreedorwithin a reasonable

time.


The consumer guarantees regime covers:■ anygoodsorservicesvaluedatlessthanA$40,000(regard-

less of the kind of good/service or to whom it is supplied);■ goodsorservicesvaluedinexcessofA$40,000,ofakind

ordinarily acquired for personal, domestic or household use or consumption; or

■ goodsthatconsistofavehicleortraileracquiredforuseprincipally in the transport of goods on public roads.

The types of goods and services that are covered under the ACL is set to expand on 1 July 2021, with the monetary threshold referred to above increasing from A$40,000 to A$100,000.


Any attempt to exclude, restrict or modify the application of the consumer guarantee rights (or remedies) will be void. This is subject only to very limited exceptions.

Any representation that seeks to exclude, restrict, modify or otherwise limit the consumer guarantee rights will also breach provisions of the ACL that prohibit false or misleading representations.

However, consumer guarantees do not apply where the: ■ goodswereboughtfromaone-offprivatesale(nonethe-

less, such goods are still covered by guarantees as to title, undisturbed possession and undisclosed securities);

■ goodswereboughtatauction;

16 Australia


Safety warning noticesA Commonwealth, State or Territory Minister responsible for administering the ACL can issue a safety warning notice, informing consumers and suppliers about products or product-related services that may cause injury or that are under investigation.

Bans on products/servicesIn certain circumstances, an interim or permanent ban can be placed on products or product-related services. A ban on a product makes it illegal to supply, offer to supply, manu-facture, possess or have control of the product. A ban on a product-related service makes it illegal to supply or offer to supply that service.

Mandatory safety standardsMandatory safety standards apply to particular goods or product-related services. A supplier must not manufacture, possess or have control of those goods, or offer to supply those services if they do not meet these standards.

In the case of products, the standards may relate to safety, testing and information.

In the case of product-related services, the standards may relate to:■ howtheservicesaresupplied;■ theskillsorqualificationsofapersonsupplyingtheservice;■ thematerialsusedinsupplyingtheservice;■ theteststheservicesmustpass;and■ warningsorinstructions,orotherinformation.


With respect to the safety defect provisions, products will have a ‘safety defect’ if they are not as safe as people are entitled to expect (taking into account the way they are packaged, marketed, labelled and instructions on any warning labels).


Under the ACL, ‘goods’ are broadly defined to include a range of items such as ships, vehicles, animals, minerals, trees, gas, elec-tricity, computer software, second-hand goods, and components and parts of goods.

The provisions relating to bans on products/services, manda-tory safety standards, safety warning notices and recalls apply specifically to ‘consumer goods’ and ‘product-related services’ as defined in the ACL. ■ ‘Consumergoods’aregoodsthatareintendedtobeused,

or are of a kind likely to be used, for personal, domestic or household use or consumption.

■ ‘Product-relatedservices’arealsocapturedbytheproductsafety provisions, which means a service for or relating to the installation, maintenance, repair, cleaning, assembly or delivery of consumer goods of a particular kind, or any other service that relates to the supply of consumer goods of that kind.

With respect to the safety defect provisions, manufacturers are liable for any loss or damage suffered by an injured indi-vidual where the manufacturer has ‘supplied the goods in trade or commerce’.


JetstarIn May 2019, the Federal Court of Australia ordered Australian airline Jetstar Airways Pty Ltd (Jetstar) to pay A$1,950,000 for making false or misleading representations regarding consumer guarantee rights under the ACL. Jetstar stated on its website that certain tickets were not refundable and that refunds were only available if consumers purchased more expensive tickets. These representations were misleading because consumers have automatic consumer guarantees that cannot be excluded, no matter how inexpensive the ticket, and blanket ‘no refund’ state-ments can mislead consumers into thinking that they are not entitled to a refund under any circumstance. Jetstar also agreed to a court-enforceable undertaking to the ACCC to amend its consumer law policies and practices including its website and booking systems, and agreed to review past consumer complaints and offer affected consumers revised remedies.

AppleIn June 2018, the Federal Court of Australia ordered that Apple Inc. (Apple) pay A$9,000,000 for making false and misleading representations regarding consumer guarantees under the ACL. Apple made representations to its customers who were experi-encing an error which disabled the function of their iPhones and iPads that they were not entitled to a remedy if their device had been repaired by a third party. These statements were misleading because the mere fact that the device had been repaired by a third party other than Apple did not mean that the consumer guar-antees under the ACL no longer apply. Apple also agreed to a court-enforceable undertaking with the ACCC to improve its staff training, conduct an audit regarding its warranties, and amend its website and procedures to ensure future compliance with the ACL.

SonyIn June 2020, the Federal Court of Australia ordered Sony Interactive Entertainment Network Europe Limited (Sony) to pay A$3,500,000 for breaching the ACL by making false and misleading representations on its website and in dealings with Australian consumers with respect to their ‘PlayStation Network’ product. Between September 2017 and May 2019, Sony repre-sented to Australian consumers that they were not entitled to the statutorily enshrined consumer guarantees of the ACL. This conduct included Sony implying in the terms of service that users did not have guarantees as to the quality, functionality or accu-racy of digital games and representing to consumers via call-centre agents and emails that Sony were not required to provide refunds for faulty game purchases. The Court held that Sony had breached the ACL by falsely representing that consumer guarantees did not apply and that users were not entitled to a refund irrespective of the condition or functionality of the goods.



Safety defectsManufacturers are responsible if their products have a ‘safety defect’ and cause injury or damage to another person.

17MinterEllison


The Minister may issue a compulsory recall notice ordering suppliers to recall products that have safety-related defects or that do not comply with safety standards. A recall notice often requires suppliers to: tell the public the nature and circumstances of the defect; repair or replace the products; or provide refunds.


ThermomixIn April 2018, Thermomix In Australia Pty Ltd (Thermomix), a kitchen appliances company, was ordered to pay A$4,600,000 by the Federal Court of Australia for engaging in false or misleading conduct in relation to the safety of its kitchen appli-ances. The Court held that Thermomix was aware of a poten-tial risk of injury to users caused by the appliance lid lifting and hot food or liquid escaping, but failed to notify its customers of this safety risk, and that Thermomix also failed to comply with its mandatory reporting requirements for 14 serious injuries that arose from the use of the appliances. Only after the manu-facturer notified the ACCC of the safety issue did Thermomix undergo a voluntary product recall, which facilitated the replace-ment of the sealing rings for all defective appliances.

Woolworths In February 2016, the Federal Court of Australia ordered Woolworths Limited (Woolworths) to pay A$3,000,000 for breaches of the ACL relating to safety issues with its house brand products sold in its supermarkets. The Court found that Woolworths engaged in misleading or deceptive conduct regarding the safety of five of its products, which were defective and caused several serious injuries including burns caused by hot oil from a deep fryer, and that Woolworths had become aware of the serious injuries from the defective products but failed to recall them, and had also failed to report the serious injuries to the ACCC within two days.



General prohibition on misleading or deceptive conductUnder the ACL, it is illegal to engage in conduct that is misleading or deceptive, or likely to mislead or deceive.

Specifically prohibited false or misleading representations and conduct In addition, specific kinds of false statements and representa-tions (for example, regarding price, quality, benefits, origin, etc.) are also prohibited.

Unconscionable conductUnder the ACL, it is illegal to engage in unconscionable conduct. This includes conduct involving taking unfair or unjust advan-tage, which may include exploiting someone who is suffering from a certain disability, or which oppressively exploits an organ-isation’s position in dealing with a smaller business or consumer.


With respect to the safety defect provisions, manufacturers may rely on various defences, including the fact that the safety defect occurred later in the distribution chain or it could not have been discovered given the state of scientific or technical knowledge at the time it was supplied.


With respect to the safety defect provisions, manufacturers may have to compensate a person who suffers loss arising from the use of a defective good, which may be as a result of:■ deathorpersonalinjury;■ destructionordamagecausedto(consumer)products;and/or■ damagetoland,buildingsorfixturesordinarilyacquired

for private use.Entities importing defective products on behalf of a manufac-

turer overseas will be liable if the manufacturer does not have a place of business in Australia.

Pecuniary penaltiesA supplier may be found guilty of a criminal offence if they:■ fail to comply with a mandatory safety or information

standard;■ supply a product or product-related servicewhich is the

subject of a ban; or■ refuseorfailtocomplywitharecallnotice.

The maximum fine is:■ A$500,000forindividuals;and■ forabodycorporate,thegreaterof:

■ A$10,000,000;■ threetimesthevalueofthebenefitreceived;or■ 10%oftheannualturnoverinthepreceding12months,

if a court cannot determine the benefit obtained from the offence.

Civil penalties of the same amounts also apply.


Mandatory reporting if a consumer good causes injury or deathThe ACL includes a mandatory notification requirement for suppliers that become aware that:■ theuse(orforeseeablemisuse)ofaconsumergood;or■ the use (or foreseeable misuse) of a consumer good to

which its product-related services relate, has caused, or may have caused, serious injury, illness or death. This report must be made via the ACCC website within two days of the supplier becoming aware.

Notification of recallsIf a supplier recalls products voluntarily, the supplier must notify the Minister within two days, setting out the nature of the defect or danger in the products.


Unsafe consumer products can be recalled by a Minister (compulsory recall) or voluntarily by the supplier.

18 Australia


■ the relativebargainingstrengthsof thepartiesand theirwillingness to negotiate;

■ anyuseofundueinfluenceortactics;■ whethertheweakerpartycouldhaveunderstoodanydocu-

mentation used;■ whether the advantaged party imposed conditions not

reasonably necessary to protect its legitimate interests; ■ howmuchtheweakerpartywouldhavehadtopaytobuy

equivalent products or services from elsewhere; ■ whether the advantaged party unreasonably failed to

disclose any foreseeable risks affecting the weaker party; ■ thetermsofthecontract;and■ theconductofbothparties(includingwhethertheyhave

acted in good faith).

Unfair termsFor the purposes of the unfair contract terms laws, ‘consumer contracts’ are:■ contractsforthesupplyofgoodsorservices;■ toanindividual(i.e.anaturalperson);and■ wheretheacquisitionofthegoodsorservicesorinterestis

wholly or predominantly for personal, domestic or house-hold use or consumption.

‘Small business contracts’:■ arecontractsforthesupplyofgoodsorservices;■ aremadewithanentitythathasfewerthan20employees;

and■ havean‘upfrontcontractprice’oflessthanA$300,000or,

if the contract is longer than 12 months, A$1,000,000. A ‘standard form contract’ is one that is essentially presented

on a ‘take it or leave it basis’ and is not subject to negotiation. All contracts are presumed to be standard form unless proven otherwise.

A term will be ‘unfair’ if it: ■ causes a significant imbalance in the parties’ rights and

obligations; ■ isnotreasonablynecessarytoprotectthelegitimateinter-

ests of the party advantaged by the term; and ■ causesdetrimenttotheconsumerorsmallbusiness(both

financial or non-financial). An unfair term may include terms that permit one party (but

not the other) to: ■ avoidorlimittheirobligationsunderthecontract;■ terminateorvarythetermsofthecontract;■ renewornotrenewthecontract;■ unilaterallyvarythecharacteristicsofgoodsorservicesto

be supplied;■ unilaterally determine whether the contract has been

breached; or■ penalisetheotherpartyforbreachortermination.


Unfair contract termsA term is not considered ‘unfair’ if it is reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term. However, there is a presumption that a term of a contract is not reasonably necessary in order to protect the legitimate interests of the party who would be advan-taged by the term, unless that party proves otherwise.

In March 2021, the Full Federal Court of Australia affirmed that unconscionable conduct does not necessarily require a person to exploit some special disadvantage or vulnerability on the part of consumers or small businesses (although that is often the case), but rather, the court must consider whether the conduct involves a sufficient departure from the norms of acceptable commercial behaviour as to be against conscience or to offend conscience.

Unfair contract termsAll consumer contracts and small business contracts that are standard form contracts must not contain ‘unfair terms’.

Other prohibitions/protectionsThe ACL includes a wide range of other specific prohibitions, including prohibitions against or protections relating to:■ baitadvertising;■ wronglyacceptingpayment;■ unsolicitedsupplies;■ pyramidschemesandreferralselling;■ component/partpricing;■ door-to-door/unsolicitedsales;■ lay-byagreements;and■ giftcards.


In general terms, statements and conduct are likely to be misleading if there is a ‘real’ (i.e. not remote) chance that a reasonable person in the audience to whom the statements or conduct are directed is likely to have been led into error. It is not necessary for the person to have actually been misled.

The kinds of statements/conduct that can be misleading are extremely wide-ranging and can include:■ making untrue claims about products/services, including

their performance characteristics, composition and quality;■ omittingtoproviderelevantdetailsaboutaproduct/service;■ remainingsilent/doingnothing,especiallywhereitislikely

the other person has misunderstood;■ creating an overall impression which is not correct, or

presenting factually correct information in a misleading context; and

■ makingpredictions/statementsastofuturematterswherethere are no reasonable grounds to support them.

Specifically prohibited false or misleading representations and conduct Specific kinds of false statements and representations are also prohibited. In particular, it is illegal to make false statements or representations regarding:■ thestandard,qualityorvalueofproducts/services;■ whetherproductsarenew;■ sponsorship,performancecharacteristics,accessories,uses

or benefits of products or services; ■ theavailabilityofrepairfacilitiesorspareparts;■ acustomer’sneedfortheproducts/services;■ anyexclusions,conditionsorrightsthatthecustomermay

have in relation to the products/services that were supplied (or express representations to consumer guarantees); or

■ misrepresentationsregardingacontractualrequirementtopay for a statutory right, warranty, condition or guarantee.

Unconscionable conductWhen deciding whether a person has acted unconscionably, a court may consider:

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iSelectIn October 2020, the Federal Court of Australia ordered iSelect Limited (iSelect) to pay A$8,500,000 for making false or misleading representations regarding its electricity compar-ison service. The Court found that iSelect misled consumers by representing that it would compare all electricity plans and recommend the most suitable plan to consumers, when this was not the case. iSelect’s commercial arrangements, which included receiving commissions from the retailers it recommended, restricted the number of electricity plans those retailers could upload onto the iSelect systems, and therefore the recommended plans were not necessarily the most suitable or competitive.

KoganIn December 2020, the Federal Court of Australia ordered online retailer Kogan Australia Pty Ltd (Kogan) to pay A$350,000 for making false or misleading representations during a ‘tax time’ promotional campaign in the lead up to the end of the finan-cial year in 2018. Kogan increased the prices of more than 600 of its products before the promotion, in most cases by at least 10%,tothenbe‘reduced’asapartofthediscounts.TheCourtfound that Kogan misled consumers about the nature of the promotion and the disingenuous savings, and used statements such as ‘48 hours left!’ and ‘[e]nds midnight tonight!’ to entice consumers to make a purchase during the sale.

Telstra In November 2020, the ACCC initiated proceedings against Australia’s largest telecommunications provider, Telstra Cooperation Limited (Telstra), for unconscionable conduct in the sale of post-paid cell phone products to Indigenous Australian consumers. Throughout five stores, Telstra staff used unfair selling tactics and took advantage of a substantially stronger bargaining position. The ACCC claims that Telstra exploited an unfair or unjust advantage over consumers, many of whom spoke English as a second language, had difficulties understanding Telstra’s written contracts and were relying on government benefits as their primary income source. Whilst a final order has not been made, the ACCC and Telstra have agreed to a pecuniary penalty of A$50,000,000, which is awaiting approval from the Federal Court of Australia.



This is not applicable.








General prohibition on misleading or deceptive conductRemedies can include: damages; injunctions; compensation; and/or corrective advertising.

Specifically prohibited false or misleading representations and conduct The same remedies apply as referred to above. In addition, if a court is satisfied that a person has engaged in unfair practices (including engaging in false or misleading conduct), penalties may be imposed. The maximum pecuniary penalty is: ■ A$500,000forindividuals;and■ forabodycorporate,thegreaterof:

■ A$10,000,000;■ threetimesthevalueofthebenefitreceived;or■ 10%ofannualturnoverinthepreceding12months,

if a court cannot determine the benefit obtained from the offence.

Unconscionable conductThe sam e pecuniary penalties apply as referred to above.

Unfair contract termsThe ACCC or other affected party may apply to the court to have a term declared an unfair term, which, if declared unfair, will be void and unenforceable. However, the relevant contract will continue, if it is capable of operating without the unfair term.


Volkswagen In December 2019, the Federal Court of Australia issued its highest ever consumer law penalty, ordering Volkswagen to pay A$125,000,000 for contravening the ACL. Volkswagen made false representations in relation to vehicles it imported into Australia between 2011 and 2015. It did not disclose to the Australian Government or its consumers that it used ‘Two Mode’ software, whereby Mode 1 software was used for emissions testing, which caused vehicles to produce lower nitrogen oxide (NOx) emissions, and Mode 2 was used when vehicles were actually driven on road and produced higher emissions. Had the vehicles been tested when operating on Mode 2, they would have exceeded the NOx emissions limits permitted in Australia.

STA TravelIn April 2020, the Federal Court of Australia ordered STA Travel Pty Ltd (STA Travel) to pay A$14,000,000 for making misleading representations to consumers regarding their ‘MultiFLEX Pass’ offering. Ordinarily, customers would be required to pay a ‘change fee’ to STA Travel to alter a flight booking. STA Travel sold a range of MultiFLEX Passes which were advertised as allowing customers to make ‘unlimited’ and ‘fee-free’ changes to their flights, without any qualifications to these general representations. Despite this, in a number of instances, STA Travel continued to charge customers who had purchased a MultiFLEX Pass and sought to change their booking. The Court therefore found that STA Travel had made false or misleading claims with respect to the applicable costs when travel services were changed.

20 Australia


7 Enforcement


The ACCC can seek to enforce the ACL by seeking remedies for unlawful conduct in a range of ways, including by commencing proceedings in court. The court has wide discretion to impose orders for breaches of the ACL, including:■ declarations;■ pecuniarypenalties(civil)andfines(criminal);■ injunctions;■ disqualification;■ correctiveadvertisingorders;■ damages/consumerredress;and■ complianceprogrammeorders.

Non-litigious options available to the ACCC include:■ administrativeresolutions,suchascourt-enforceableunder-

takings between the ACCC and the trader; and ■ infringementnotices,whereabusinesspaysafinein lieu of

court proceedings (and without admission).


For civil matters, the usual statute of limitations apply, i.e. within six years of the alleged breach of the ACL, while for criminal matters, prosecutions must be brought within three years.


The ACCC has various enforcement options, including: ■ bringing criminal action or civil proceedings in a court

(noting that only the court, not the ACCC, has the power to determine liability and impose penalties and remedial orders);

■ enforceableundertakings;and■ infringementnotices.


When determining the appropriate enforcement measures, the ACCC takes into account various considerations, including the nature and seriousness of the conduct, the detriment it has caused, and any steps taken to address the ACCC’s concerns.


The ACCC has a number of policies, governance and manage-ment structures in place which enable it to exercise its powers in an accountable and transparent manner, such as its Accountability Framework for Investigations.





The ACCC is responsible for enforcing the CCA, including the ACL. The ACCC has an extensive range of investigative powers, including the power to compel a person to provide information, documents or give evidence (known as issuing a section 155 notice), and powers to issue substantiation notices.


An investigation can be triggered by complaints, whistle-blowers and self-initiated inquiries, including as a result of the ACCC’s market studies and inquiries.


There is no formal complaints procedure for either consumers or businesses. Complaints can be made to the ACCC in a range of ways (in writing, phone, by email and through a call centre).


Investigations can vary significantly in duration. Some can be resolved in a matter of weeks or months, while others can take over a year.


Failure to comply with a section 155 notice (see question 6.1 above) or knowingly furnishing information that is false or misleading is a criminal offence and attracts a significant fine or up to two years’ imprisonment.


Yes, in some cases the ACCC is willing to accept informal commit-ments and formal (court enforceable) undertakings to resolve a matter. A business may offer this voluntarily or the ACCC may propose it as an alternative option to pursuing litigation. The ACCC retains discretion as to whether to accept any proposed commitment or undertaking, and may decline to accept these where it has determined that court proceedings are appropriate.

21MinterEllison



Consumers and suppliers/manufacturers can appeal a decision made by the court if they are party to the proceeding. In certain cases, the ACCC can also seek leave of the court to intervene in these private proceedings.


A penalty will only be enforceable following a decision in the appellate court. The decision may be upheld and the penalty will remain enforceable; alternatively, if the decision is overturned, the penalty may no longer apply.



In recent years, the pecuniary penalties issued by the Courts for consumer law breaches have increased significantly in size. This trend has been reinforced since the ACL was amended in 2018 to increase the maximum civil pecuniary penalty for corpo-rations from A$1,100,000 per contravention to the greater of A$10,000,000,threetimesthevalueofthebenefit,or10%oftheannual turnover of the corporation if the court cannot determine the value of the benefit. Penalties against individuals under the ACL also increased from A$220,000 to A$500,000 per breach. The purpose of these increases are to deter large companies from breaching consumer laws and align the financial consequences for consumer law breaches with competition/antitrust law breaches.

Over 2020, the ACCC’s compliance and enforcement activities adapted to reflect the COVID-19 pandemic, including providing guidance to businesses and consumers regarding a range of consumer law issues emerging throughout the pandemic, including in relation to cancellations, delays and other impacts to services.

The ACCC released its 2021 compliance and enforcement priorities in February 2021. In 2021, the ACCC will focus in particular on:■ theimpact of the COVID-19 pandemic, including sales

practices of the travel and aviation sectors;■ pricingandsellingpracticesofessential services such as

electricity and telecommunication;■ competition and consumer issues relating to digital

platforms;■ competitionandconsumerissuesinthefuneral services

sector;■ consumerissuesinthefinancial services sector, particu-

larly home loans and debt collection practices;■ ensuringthatsmall businesses receive the protections of

competition and fair trading laws, including franchising; and

■ implementing the new safety standards for button batteries and enforcing compliance in relation to the new quad bike safety standard.


Definition of ‘consumer’The definition of a ‘consumer’ under the ACL is set to expand on 1 July 2021 to increase the amount a person can spend and still

In addition, the ACCC publishes its Compliance and Enforcement Policy and Priorities, which sets out the principles adopted by the ACCC, and outlines its enforcement powers, functions, priori-ties and strategies. The priority areas are reviewed and updated each year.


The ACL provides for a private right of action, which can be either stand-alone or follow on. The ACCC may also, by appli-cation, commence an action on behalf of one or more persons who are entitled to take action under the consumer guarantees regime and the defective goods provisions (if the ACCC has obtained the written consent of the person/s on whose behalf the application is being made).


Defective goodsA person may commence a defective goods action at any time within three years after the time the person became aware, or ought reasonably to have become aware, of the following:■ theallegedlossordamage;■ thesafetydefectofthegoods;and■ theidentityofthepersonwhomanufacturedthegoods.

A defective goods action must be commenced within 10 years of the supply by the manufacturer of the goods to which the action relates.

Consumer guaranteesAn affected person may commence an action for damages against the manufacturer of the goods at any time within three years after the day on which the affected person first became aware, or ought reasonably to have become aware, that the guar-antee to which the action relates has not been complied with.

Other provisionsFor civil matters, the usual statute of limitations apply, i.e. within six years of the alleged breach of the ACL, while for criminal matters, prosecutions must be brought within three years.


The ACCC is involved in a number of international activi-ties to pursue its aims of assisting with cross-border investiga-tions into consumer issues, building partnerships with interna-tional agencies to share knowledge and assisting other countries to build effective consumer protection systems. Australia is a member of the Organisation for Economic Co-operation and Development’s (OECD) Committee on Consumer Policy, which focuses on improving the development and enforcement of effective consumer policies in its Member States.

8 Appeals


Either party to a legal proceeding can appeal to a higher-level court if they disagree with a court’s decision.

22 Australia


Unfair contract terms regimeThe Australian Government has agreed to strengthen and broaden the existing unfair contract terms regime under the ACL. Currently, if a contractual provision is found to be ‘unfair’, it can be declared void by the court, but the conduct does not attract any pecuniary penalties. In order to deter companies from taking advantage of their superior bargaining power, the proposed reforms would see unfair contract terms being made illegal and provide the courts more flexible remedies including the power to impose pecuniary penalties. This also involves broadening the definition of a ‘small business’ from one with fewer than 20 employees to one with fewer than 100 employees. These changes have not yet been introduced.

be considered to have acquired goods or services as a consumer. The anticipated amendment will see the threshold increase from A$40,000 to A$100,000, resulting in a broader range of goods and services being classified as ‘consumer’ goods or services. Consequently, the ACL’s consumer guarantees regarding quality and function will apply to goods and services under the revised threshold.

Changes to ‘major’ failureThe Australian Treasury has proposed amendments to clarify what constitutes a ‘major’ failure to comply with the ACL. The proposed change will confirm that multiple, non-major (or ‘minor’) failures can amount to a major failure, by inserting an additional test into the definition of a major failure with respect to goods and services in the ACL. In practice, the courts have already interpreted and considered the meaning of a ‘major’ failure to include multiple minor failures; however, the amend-ment will provide clarity and address any uncertainties in the application of the law going forward.

23


MinterEllison

Miranda Noble specialises in assisting global and domestic clients to navigate Australia’s competition and consumer laws. Miranda advises clients on regulatory investigations and enforcement action for potential consumer law breaches, and assists clients with consumer protec-tion issues, including misleading and deceptive conduct, packaging, marketing and advertising, unfair terms, unconscionable conduct, consumer guarantees, product safety, and recalls.She has extensive expertise in complex competition issues in domestic and global M&A transactions, both through the ACCC’s informal merger clearance process and in merger authorisation applications and associated (contested) proceedings before the Australian Competition Tribunal and Federal Court. Miranda has acted in three of the four merger authorisations proceedings before the Australian Competition Tribunal, and a significant range of other complex merger matters. Miranda has considerable expertise with significant investi-gations/proceedings relating to cartels, anti-competitive agreements, misuse of market power, predatory pricing, exclusive dealing and resale price maintenance.She provides pragmatic, responsive and commercial advice to clients, domestic and multinational, across a broad range of industries. This includes the automotive, agricultural, media/technology, education, energy, fast-moving consumer goods, financial services, government, logistics, manufacturing, industrial products, pharmaceuticals, resources and wagering spheres.

MinterEllison 447 Collins Street Melbourne, VIC 3000Australia

Tel: +61 3 8608 2489Email: [email protected]: www.minterellison.com

Geoff Carter is the head of MinterEllison’s Mergers Unit, and specialises in competition law with a commercial focus. His expertise includes merger clearances, authorisations and notifications, third-party access, economic regulation and consumer protection advice. He develops clearance strategies for complex transactions and assists clients to defend investigations into cartels and other prohibited practices. Geoff has extensive experience across a range of diverse industry sectors, including financial services, telecommunications, aviation, ports, energy, gambling, agribusiness, health services, manufacturing and infrastructure.Geoff is also:■ Chair of the Competition and Consumer Law Committee of the Law Council of Australia.■ Member of the Advisory Board for the Graduate Program on Competition Law at Melbourne Law School.

MinterEllison 447 Collins Street Melbourne, VIC 3000Australia

Tel: +61 3 8608 2090Email: [email protected]: www.minterellison.com

MinterEllison is an international law firm, headquartered in Australia and regarded as one of Asia-Pacific’s premier law firms. MinterEllison’s teams collaborate across Australia, New Zealand, Asia and the UK to deliver exceptional outcomes. MinterEllison’s Competition/Antitrust team is regarded for assisting clients with all aspects of consumer protection issues, handling significant domestic and international merger clearances and managing complex cartel/antitrust and related regulatory investiga-tions and enforcement action. MinterEllison’s high-level technical knowledge of Australian consumer laws is complemented by many years of experience working with complex busi-nesses and brands. They advise on strategies for launching new brands and protecting existing brands. They provide advice on the legal risks associated with marketing offers, promotions and strategic re-branding. MinterEllison have significant experience defending clients in proceed-ings for misleading and deceptive conduct, brought by the Australian Competition and Consumer Commission (ACCC) and competitors.

The team have expertise in the consumer guarantees regime, acting for suppliers, manufacturers and insurers, and the unfair contract terms regime. In addition, we regularly advise on the unconscionable conduct provisions of the Australian Consumer Law, product liability and recalls, industry codes and franchising.

www.minterellison.com



Chapter 424

Bahrain

Hassan Radhi & Associates Mohamed Ali Shaban

Fatima AlAli

Bahrain



Consumers of services provided by specialised sectors are protected by provisions in the relevant industry-specific legislation enforced by the authority in charge of such sector, such as:■ the Central Bank of Bahrain (the “CBB”) for services

provided by financial institutions, which include banks, investment firms and insurance companies;

■ theTelecommunicationsRegulatoryAuthority(the“TRA”)for the telecommunications sector;

■ theMinistryofHealthandtheNationalHealthRegulatoryAuthority (the “NHRA”) for the medical sector; and

■ theMinistryofEducation(the“MOE”)forconsumersofeducational services.



Pursuant to the Consumer Protection Law, the main consumer rights that must be safeguarded are as follows:“1. The right to health and safety during his normal use of products.2. The right to access correct information and particulars about the prod-

ucts he purchases or uses or those provided to him.3. The right to freely choose products which fulfil the conditions of quality

conforming to legally approved and recognized specifications.4. The right to obtain knowledge about protecting his legitimate rights

and interests.5. The right to respect the consumer’s privacy and safeguard his personal

information and not abusing it for other purposes.6. The consumer’s right to life in a healthy environment.”

This is in addition to anti-monopoly measures and provisions related to pricing.

It is notable from the above that the first and last protections are health and safety-related and the remaining are related to consumer awareness and full information about the product and its quality. Assuming the lack of any concealment of informa-tion by the Provider (as defined in the Consumer Protection Law and quoted above), the consumer is considered to have accepted the functionality of the product as accurately described. If the

1 General


The main legislation in Bahrain on consumer protection is Law No. (35) of the year 2012 promulgating the Consumer Protection Law (the “Consumer Protection Law”).

In 2014, the Minister of Industry, Commerce and Tourism issued Ministerial Decision No. (66) of the year 2014 which promulgated the Implementing Regulations of the Consumer Protection Law (the “Implementing Regulations”).

More specific provisions on consumer protection can be found in the legislation specific to certain fields such as the medical field, insurance, telecommunications, etc.


The Consumer Protection Law defines “consumer” as: any natural or corporate person who obtains products to satisfy his/its needs, or the requirements of dependants or those affiliated thereto.


Providers are defined in the Consumer Protection Law as: all entities that provide products, whether as wholesalers, retail sellers, merchants, commercial agents, manufacturers or service providers, as well as advertisers, defined as: any natural or corporate person who advertises for products or promotes them directly or through others, by any means.


The main authority in charge of enforcing the provisions of the Consumer Protection Law is the Consumer Protection Directorate (the “CPD”) in the Ministry of Industry, Commerce and Tourism (the “Ministry”).

25Hassan Radhi & Associates


or both, in addition to the confiscation or destruction of the goods which are the subject of the breach, the materials, and the equipment used therefor at the expense of the person respon-sible for the breach. In addition, the Court may order the publi-cation of the judgment in two daily newspapers at the expense of the person responsible for the breach.

Moreover, the law provides for an administrative penalty impos-able by the Court in case of a recurrence of the breach within three years from the date of handing down the final conviction judg-ment. Such penalty ranges between suspension of the business for a period not exceeding three months, and finally striking off the registration of the business from the commercial registry.

The Ministry is entitled to notify the legal person responsible for the breach by a registered letter, with acknowledgment of receipt, to remedy the breach of the Consumer Protection Law within a reasonable period. In case of failure to comply, the Minister in charge of commercial affairs is empowered to issue a resolution to close the establishment for a period of at least seven days and not exceeding three months, or to strike off the registra-tion in the commercial registry. In this case, re-registration in the commercial registry shall not be permitted except upon the lapse of six months from the date of issuing the strike-off resolution.

In addition to the administrative measures that may be taken against those in breach of the Consumer Protection Law, compensatory remedies may be sought by the consumer affected by the breach via tortious or contractual claims.


The CPD, the Ministry of Industry, Commerce and Tourism, the Ministry of Health, the Public Prosecution, and the consumer affected by a breach have standing to initiate proceedings.


In 2018, a chocolate factory and chocolate shop were closed for around two months for breach of Public Health Law provi-sions, due to the discovery of expired ingredients in their facto-ries. Although the investigation led to the finding that none of the expired ingredients were used in production, the closure continued, as possession of expired ingredients in a factory is criminalised. The closure also had deterrent purposes. After being referred to the Public Prosecution, a fine was imposed on the factory.

Apart from the closure, fine and the publicity of such action, the Providers in question are subject to close monitoring.

Recently, in February 2020, the CPD closed down three phar-macies for monopolising medical masks to increase their prices, which the CPD classified as anti-competitive conduct.

In March 2020, the CPD closed down a hypermarket after discovering a number of expired products in its store.



The Consumer Protection Law and Implementing Regulations place an obligation on the Provider to immediately notify the

Provider conceals information about the product or the product is advertised in a deceptive manner, then the functionality reason-ably sought by the consumer will be subject to complaint and may lead to administrative or penal actions against the Provider.

In respect of quality, the main protection is for health and safety purposes. Furthermore, the Consumer Protection Law requires a Provider to provide spare parts and maintenance required for the use of the product for a “reasonable” period of time “commensurate” with the nature of the product, in the absence of an express agreement between the Provider and consumer on the non-availability of the same.

The Implementing Regulations place an obligation on the Provider to notify the CPD of any defects in the products within seven days of the discovery thereof. In the case that the defect poses a risk to the health and safety of the consumer, the noti-fication must be made immediately. A product recall must be announced and products refunded, exchanged or fixed by the Provider at the request of the consumer.

The Provider of a recalled product is obliged to submit a monthly report to the CPD on the number of units sold and recalled, whether the products were exchanged, refunded or fixed, and the measures taken to fix the defect or avoid its occur-rence in the future.


Based on the provisions explained in question 2.1 above, the tests are those of reasonableness as “commensurate” with the nature of the product. These terms used by the law allow the CPD, the Ministry of Health, or even the Court, if the matter escalates to a litigation dispute, the discretion to decide compliance.

The CPD plays a proactive role by conducting regular checks of the products on the market, and a reactive role by responding to complaints on specific products.


Pursuant to Article 1 of the Consumer Protection Law, all goods and services provided by the Providers (as defined) are subject to the Consumer Protection Law, with the exception of medical and professional services, as detailed in question 2.4 below.


Yes. The Consumer Protection Law does not cover medicine, health preparations and health foods authorised to be imported by the Ministry of Health and sold in licensed pharmacies and health centres. It also excludes the services provided by profes-sionals in the medical, engineering, legal, accounting and insur-ance fields. The products of such professionals are subject to standards, quality parameters and consumer protection provi-sions in the specific laws governing the profession or industry.


The Consumer Protection Law sets a penalty for any breach in the quality and function of the goods, ranging between a fine of at least BD 10,000 and imprisonment not exceeding three years,

26 Bahrain


In addition to the penalties and remedies stated in question 2.5 above, possible penalties include imprisonment for a minimum period of one year and a fine of no more than BD 10,000 (around USD 26,500) for anyone who knowingly “imports or otherwise brings into the Kingdom goods that are hazardous to safety”. A Court order may be issued for the re-export of the hazardous products “to their orig-inal source or destruction thereof at the expense of the offender” – Article 19 of the Consumer Protection Law.


There is a mandatory immediate reporting requirement on Providers to report any defective products where the defect may be hazardous (as detailed in question 3.1 above). There is no mandatory reporting requirement on consumers.


Any product that is deemed a hazard to health and safety must be recalled. The recall must be announced and a refund or exchange is mandatory for the Provider upon the request of the consumer. Voluntary recalls (for testing purposes or otherwise) are not regulated; however, given the close monitoring of the market by the CPD and NHRA, arrangement with these author-ities is advised.


On 19 March 2020, the NHRA announced the recall of a hand sanitising gel for its discovery of a “high percentage of methyl alcohol (methanol)… and the exposure to high levels of this substance may cause health risks to the consumer ”. The announcement included a photo of the product, the name of the manufacturer, the country of origin and instructions to consumers to stop using the gel. The recall was triggered by a similar recall in the country of origin which the NHRA became aware of. We are not aware of the penalties imposed.

On the same day, a hand sanitising gel produced locally was also recalled for reasons of containing a “high percentage of Benzalkonium Chloride which can cause the following side effects: -swelling -redness -very bad skin irritation”. A photo of the product and the name of the manufacturer were included in the announcement, together with a warning to consumers not to use the product and to report any side effects experienced. We are not aware of the penalty imposed.



The Consumer Protection Law sets out the prohibited conduct and divides it into five main categories as follows: “1. Manipulating the prices of products being traded by increasing or

reducing them without justification.

CPD of any defect in a product if the defect poses a risk to the health and safety of the consumer. The Provider is obliged to publish a product recall and advise the consumers not to use the defective product. This may be carried out publishing the recall in the daily newspapers or by directly calling each and every consumer as appropriate. If claimed by the consumer, the Provider is obliged to exchange, refund or fix the product.

Companies in the field of personal care, including barber shops, beauty parlours, gyms, spas and cosmetics, and compa-nies in the hospitality and food and beverage industries, and food and beverage packaging industry (a Ministerial decision on the exact categories covered is pending issuance), are subject to the provisions in Public Health Law No. (34) of the year 2018.


Guidelines exist in respect of food and beverages and the prod-ucts of industries covered by the Public Health Law. The substantive standards relate to the contents of the food, such as contamination of the food, the existence of poisonous ingredi-ents, if it has a product derived from a disease-infected animal, if it has dirt or impurities above a certain threshold, or if it includes radioactive materials above a certain threshold. The stand-ards also relate to the packaging of the product, in relation to whether it contains any hazardous materials or has been handled by personnel with a contagious disease.

Samples of imported food and beverages, cosmetics, and cleaning and sanitising products are checked at laboratories before they are permitted to enter the Bahraini market.

(It is to be noted that although interrelated, these matters are regulated from a public health perspective rather than a consumer protection perspective.)

The CPD, together with the Ministry of Health and NHRA, conduct regular checks on the products on the market. If the CPD comes across a possible risk to health and safety, the matter is referred to the Ministry of Health and NHRA.


All goods and services sold on the Bahraini market, whether imported or of local origin, are covered by the protections relating to safety.


The Consumer Protection Law does not cover medicines, health preparations and health foods authorised to be imported by the concerned authority at the Ministry of Health and NHRA, and which are sold in licensed pharmacies and health centres, as well as the services provided by professionals involved in medicine, engineering, law, accounting and insurance.

The excluded products are subject to the protections provided for in the specific laws governing the relevant industry.


As stated above, product recalls are required, as well as the consumers’ right to refund, exchange, or repair if appropriate.



Public Health Law. The specific provisions in the Public Health Law related to safety standards of hospitality, food and beverage production and packaging, and personal care products, serve to protect the rights of consumers of these products.

Other regulations exist for specific sectors, such as TRA Decision No. (17) of the year 2017 promulgating the Consumer Protection Regulation aiming to protect the rights of consumers of telecommunications services, alongside the existing provi-sions in the Telecommunications Law relating to quality stand-ards and consumer privacy protection.

Consumers of the financial services sector are subject to the regulations of the CBB, setting and regularly reviewing its regu-lations on requirements such as transparency, fair pricing and confidentiality.

As stated above, consumers of professional industry-specific products, such as the services provided by lawyers, are protected by specific regulations and provisions.


In respect of public health provisions that serve to protect consumers as part of the public, focus is placed on not only the goods, but also their storage in clean, sanitised and non-contam-inated facilities, and handling by personnel that follow hygiene standards which are free from contagious diseases or infections. Storage facilities, for example, are not to be used as accommoda-tion for personnel and should be kept at specific temperatures, and flammable or hazardous chemicals (such as those in cleaning products) are to be stored separately from other goods, etc.


There are no notable exceptions.


The remedies for the specialised sectors are defined in the specific laws regulating the sector. In general, the penalties range between the suspension of the supplier and striking off its trade licence permanently, without any prejudice to any other criminal punishment if the breach constitutes a criminal charge.

This is in addition to civil rights to compensation available to the consumer affected by such breach.


In addition to the examples listed in this chapter, there have been significant enforcement of consumer protection in the field of legal services. The Lawyers’ Discipline Committee decided to suspend more than four lawyers in 2019 and 14 more in 2020 due to violations related to the unethical conduct of the profes-sion and quality of the legal services provided to their clients.

The decisions were published by the Committee in the Official Gazette.

2. Restricting the free flow of products to the markets or procuring the total or partial disappearance thereof by unlawfully concealing or storing or refraining from trading in them.

3. Artificially creating a sudden abundance of products resulting in selling them at an unreal price that affects the economies of the remaining competitors.

4. Concealing the available products in the market either totally or partially from a certain person.

5. Concealing the necessary information or misleading with regard to a certain product.”


The CPD would investigate and assess whether any of the prohibited conduct has occurred on a case-by-case basis, subject to its discretion.


There are no express exemptions in the Consumer Protection Law to prohibited conduct.


In addition to the administrative remedies defined under ques-tion 2.5, the Consumer Protection Law stipulates a prison sentence for a maximum period of five years and/or a fine not exceeding BD 5,000 for the prohibited conduct listed in ques-tion 4.1 above.


In 2017, the CPD temporarily closed a pharmacy and hyper-market for reasons related to deceptive pricing, i.e. prices on the product were not the same as the price of the item when scanned. Five branches of the pharmacy and hypermarket were closed for a period of 15 days, and the matter was referred to the Public Prosecution. After investigation, no penalties were imposed as the Provider in question was able to prove that the reasons were of technical failure rather than intended deceit.



As seen in the answers above, the provisions of the Public Health Law and the protection of consumer rights are somehow interrelated. Although the scope of the Public Health Law is significantly wider than the scope of the Consumer Protection Law, consumers are part of the public that is covered by the

28 Bahrain


7 Enforcement


The authorities have the power to issue administrative disci-plines; criminal penalties are applicable by reference to the Public Prosecution if the breach is criminalised.


According to Article 22 of the Implementing Regulations, the CPD is bound to investigate complaints within 60 days of the day on which the complaint was submitted.


Generally, the authorities have administrative powers. The CPD personnel have been given law enforcement powers to facilitate their work.


The enforcement bodies take into consideration the following: 1. The size of the breach and the resulting damages. 2. The recurrences of the breach. 3. Whether the breach contains a criminal act or not.


Upon receipt of a complaint, or the detection of a breach upon a regular check, the CPD personnel shall record the same, have the power to take samples and record the action in a special form, and investigate by entering factories or manufacturing units without interference in production. The owner of the Provider must be summoned for recorded investigations. Any further investigation required may be carried out. The CPD may write to the Minister in charge of commercial affairs recommending the temporary closure of the business.

Any criminal proceedings are governed by the Penal Code and the Criminal Procedures Law.


Administrative actions may be brought by the CPD or other relevant authority, such as the Ministry of Health and NHRA in liaison with the CPD.

Criminal proceedings may be commenced in cases where the breach is criminalised.

Civil actions may be brought by the consumer or any person or entity suffering damage from the breach.



The investigators at the CPD have the right to: 1. enter the supplier’s premises; 2. examine the supplier’s books, accounts and documents,

and confiscate his goods in order to test them; and3. question any relevant person deemed fit by the CPD

investigator.


The investigations of the CPD can be triggered by either the findings of the CPD’s regular checks and tests, or submission of a complaint by any means, i.e. ex officio, whistleblowing (as was the case with the chocolate factory incident cited above), etc.


The Consumer Protection Law does not set out a distinct procedure for businesses or consumers. Article 20 of the Consumer Protection Law states that consumers, the CPD and other consumer protection authorities have the right to submit complaints along with the following information: 1. The name of the complainant, his address, position in

regard to the claim, and the documents that support this information.

2. The name of the person against whom the complaint is submitted and his address.

3. The type of breach. 4. The proof of the breach and any other documents which

support the claim. 5. The damages suffered by the complainant (if any).


The Consumer Protection Law sets 60 days as a maximum time-frame for investigation.


Yes, the CPD investigators are given law enforcement officer powers, and non-compliance with their measures will be consid-ered a crime subject to the Penal Code and Criminal Procedures Law.


This is not stipulated in the Consumer Protection Law or Implementing Regulations; however, in practice, a commitment or undertaking may be required in addition to the other appli-cable penalties.



Appealing the administrative case: Judgments by the Civil Court are subject to appeal before the High Court of Appeal, whose decisions are further appealable before the Court of Cassation, which is the highest judicial authority, equivalent to a Supreme Court.


As a general principle, the appeal process described above will not have the effect of suspending the penalty; however, the supplier has the right to submit an interim request to the Court for the suspension of the penalty. The Court has the discretion to decide on the suspension of the penalty based on the justifi-cations submitted therefor.



Due to the spread of the COVID-19 pandemic, the Government of Bahrain issued a number of decisions to combat anti- competitive conduct that results in unjustified price increases of certain goods. For example, the Minister in charge of commer-cial affairs issued Decision No. (18) of 2020 (the “Mask Prices Decision”) to set the price per unit of surgical face masks and N95 face masks and referred to the sanctions stipulated in the Consumer Protection Law in case of violation.

In February 2020, the CPD discovered several violations by some pharmacies to the Masks Prices Decision. On 25 February 2020, the CPD closed three pharmacies and issued a warning to 14 others. The CPD issued a statement encouraging the public to report any increase to the prices of medical masks and this resulted in the stabilisation of the prices of masks until today.


There is no news of any proposed reforms to consumer law or policy in the next 12 months.


This would depend on the nature of the action. Civil actions for damages are subject to a time prescription of three years. Civil actions for a breach of a contract of sale are subject to a time prescription of one year.


There are no international treaties or MOUs that are specifically related to consumer protection. There are some that may serve to protect consumer rights, such as the Asbestos Convention, but are indirect.

8 Appeals


The appeal process consists of a grievance that may be submitted to the Minister in charge of commercial affairs. The decision on the grievance is further challengeable before the Civil Courts as an administrative case.


Appealing a Ministerial decision: Once the Minister issues a decision on a breach of the Consumer Protection Law, the concerned person has the right to file a grievance to the Minister in charge of commercial affairs within 15 days. The Minister shall respond to the grievance within seven days of its submis-sion; in case of a lack of response, the grievance shall be consid-ered rejected.

In case of a rejected grievance, the concerned person has the right to challenge the decision before the Civil Court within 60 days by a way of an administrative case.

30


Bahrain

Fatima AlAli is Head of the Telecommunications and Corporate Team; she has strong experience and knowledge of the Telecommunications Law and the role, rules and regulations of the Telecommunications Regulatory Authority. Fatima renders legal assistance to our clients on various aspects of this dynamic business.Fatima also specialises in corporate law, including company formation and registration, restructuring, mergers and acquisitions, as well as liquidation. Fatima assisted in the establishment of financial institutions governed by the rules of the Central Bank of Bahrain, including the preparation and review of all relevant legal and statutory documents and conducting due diligence.In the dispute resolution field, Fatima represents clients in both litigation and arbitration. She is also experienced in a broad range of matters including insurance law, banking and finance disputes, employment law, and intellectual property.Fatima is a certified arbitrator at the GCC Commercial Arbitration Center.

Hassan Radhi & AssociatesFlat 1801, Building 361 Road 1705, Block 317 Diplomatic AreaManamaBahrain

Tel: +973 1753 5252Email: [email protected]: www.hassanradhi.com

Mohamed Ali Shaban is a litigation lawyer at Hassan Radhi & Associates and has worked on a variety of insurance, employment and banking disputes. Mohamed is an active young lawyer with a high level of knowledge and legal skills. He has proven himself within a short period of time since beginning his internship programme in the firm.He has excellent analytical skills, and compelling briefs, motions and arguments. He has conducted a large amount of legal research which has benefitted our firm immensely. The legal team is consistently impressed with Mohamed’s performance and productivity which shows a high degree of diligence. He is involved in various tasks including drafting and reviewing contracts, rendering legal opinions for clients, and representing clients before the courts of Bahrain.

Hassan Radhi & AssociatesFlat 1801, Building 361 Road 1705, Block 317 Diplomatic AreaManamaBahrain

Tel: +973 1753 5252Email: [email protected]: www.hassanradhi.com

Hassan Radhi & Associates (HRA) is one of the largest and most reputable leading law firms in Bahrain and the Gulf region. The office was founded in 1974 by Dr. Hassan Ali Radhi, the senior partner of the firm with more than 40 years of legal experience and professionalism in the legal sector, espe-cially in banking and finance and corporate law. The firm has nine partners and eight lawyers supported by a dedicated and professional administra-tive team that provide exceptional legal services locally and internationally, in Arabic and English.As part of the Lex Mundi global network – the world’s leading network of independent law firms – HRA is the exclusive member firm in Bahrain and can provide its clients with preferred access to more than 21,000 lawyers around the world, with in-depth experience in 100+ countries worldwide, all from a single point of contact. Individually, each Lex Mundi member firm is a leader in its local market.

The firm has been consistently listed among the top law firms in the region by the world’s largest legal referral guides such as: Chambers and Partners; IFLR1000; The Legal 500; and others.

www.hassanradhi.com



31

Canada

Blake, Cassels & Graydon LLP Emily Hazlett

Jill Lawrie

Canada

Chapter 5


cases, a direct contract is required to support any claim for relief under the statute.

In terms of exclusions, persons who provide professional services, such as accountants, pharmacists, doctors and lawyers, are exempted from the application of certain Consumer Protection Statutes.


In each province, there are government authorities that receive consumer complaints and investigate alleged breaches of the Consumer Protection Statutes (“Consumer Protection Agencies”). These agencies include Consumer Protection Ontario, Consumer Protection BC and Quebec’s Office de la protection du consommateur. In each province, the applicable Consumer Protection Statute permits the minister responsible for consumer affairs to appoint inspectors. In many cases, the Consumer Protection Agency itself acts as an adjudicator; however, some offences, generally those more serious, are pros-ecuted in provincial Superior Courts.


In addition to the provincial Consumer Protection Agencies, there are a myriad of other government authorities that regulate and enforce consumer protection laws in specific sectors. For example, there are financial services regulatory bodies that regu-late the financial sector in each province. At the federal level, there is also the Competition Bureau, Canada Mortgage and Housing Corporation, Canada Deposit Insurance Corporation, and the Office of the Privacy Commissioner of Canada, among others, which enforce specific statutes aimed at protecting consumers. Health Canada also enforces several consumer protection laws with respect to product safety, food, tobacco, pharmaceuticals and medical devices, among other products.



The Consumer Protection Statutes vary in terms of the specific protections provided, but generally establish an implied warranty

1 General


In Canada, there are numerous provincial, territorial and federal statutes, regulations and guidelines that provide consumer protection with respect to a wide range of goods, services and industry sectors. These laws range from general consumer protection with broad application, to specific protections appli-cable to specific goods, services or industry sectors. The present publication provides an overview of the key consumer protec-tion laws in Canada in the areas of quality, unfair practices and consumer product safety.

The main collection of consumer protection laws is found in provincial and territorial consumer protection statutes regu-lating common consumer transactions (“Consumer Protection Statutes”). These Consumer Protection Statutes generally include provisions relating to warranties of quality on goods and services and often, but not always, also provide for specific rules relevant to specific products, services or industries. In Quebec, which is a civil law jurisdiction, there is also a legal warranty of quality in the Civil Code of Quebec.

Some, but not all of the provincial Consumer Protection Statutes also include provisions relating to “unfair practices”, including prohibitions on misrepresentations. The federal Competition Act prohibits the making of representations to the public that are false or misleading in a material respect.

In terms of safety, the federal Consumer Product Safety Act sets out the main standards that a wide variety of consumer products must meet, although many categories of products are regulated under other specific statutes and regulations.


While the definitions in the Consumer Protection Statutes vary, “consumer” generally refers to a natural person who obtains goods or services primarily for his or her personal, family or household use, and not for business purposes.


Merchants, suppliers and manufacturers can be required to comply with the Consumer Protection Statutes depending on the specific (and variable) provisions in each statute. In some

32 Canada


refund on the grounds that the hydro-seeding performed by the landscaper did not work. While the court suggested that the failure of the seeding may have been a result of late-May frost, the court nevertheless found that the defendant had breached the implied warranty provisions in Nova Scotia’s Consumer Protection Act, and ordered a refund of CAD 2,415, plus CAD 100 in court filing costs (Stewart v Lands Best Friend Landscaping, 2018 NSSM 90).

Given that consumer protection actions often involve rela-tively small amounts that make them prohibitively costly to pros-ecute as individual actions, consumer claims are often advanced by way of class action. For example, in 2021 the Supreme Court of British Columbia certified a class action against Nissan involving allegations that the timing chain mechanisms in engines installed in certain vehicles were prone to premature failure, in breach of express or implied warranties, among other causes of action (Mueller v Nissan Canada Inc., 2021 BCSC 338). Similarly, in 2016 the Superior Court of Ontario certified a class action against Volkswagen involving allegations that the instal-lation of defeat devices in its diesel-engine automobiles breached provincial Consumer Protection Statutes, as well as the federal Environmental Protection Act and Competition Act ( Quenneville v Volkswagen, 2016 ONSC 7959). The following year, the court approved a settlement of the class action. Among other things, the court found that, in comparison to the settlement of a similar U.S. class action, the compensation for Canadians was proportionally similar, and was fair and reasonable ( Quenneville v Volkswagen, 2017 ONSC 2448).



In terms of statutory protections, the Canada Consumer Product Safety Act (“CPSA”) prohibits the manufacture, import and sale of products that pose a danger to human health or safety. The prohibition also extends to any advertising, packaging or labelling that may mislead consumers as to the safety of the product. The CPSA also restricts the sale of certain products and prohibits the sale of specific, inherently dangerous products.

The CPSA does not provide for a private right of action for breach of the statute. However, consumers may initiate legal claims relating to the safety of goods and services based on common law negligence and failure to warn principles. In Quebec, consumers have similar protections under the Civil Code of Quebec.


The CPSA defines a danger to human health as any hazard that is posed by the normal or foreseeable use of a product that may reasonably be expected to cause death or any adverse effect on human health, including injury.


The CPSA applies to consumer products, including parts or accessories, that may be used by an individual for non-commercial purposes.

of quality for consumer goods and services. In Quebec, there are warranty protections under both the Consumer Protection Act and the Civil Code of Quebec. When applicable, statutory warranties can be mandatory and cannot be excluded or varied by contract.


Each of the Consumer Protection Statutes provides for various specific conditions under which any warranties of quality will apply. Generally, the Consumer Protection Statutes provide that consumer goods must be of reasonable or merchantable quality and fit for the purposes for which they are intended. In Quebec, the Consumer Protection Act specifies that consumer goods must be durable in normal use for a reasonable length of time, having regard to their price, the terms of the contract and the condi-tions of their use.


The terms “goods” and “services” are generally defined and interpreted broadly in order to capture a host of consumer prod-ucts and services. Goods generally refer to all kinds of personal property, although there may be express exclusions under some acts, such as an exclusion for securities. Services include any service, entitlement or benefit, including the installation of goods, repair work or instructional programmes.


The exact criteria for applicability of the implied warranty vary by province, and provincial Consumer Protection Statutes may exclude the application of the implied warranty for certain goods, services or sectors.


The remedies available vary by jurisdiction, but generally include a refund of the purchase price, repair or, in certain circum-stances, damages.


Proceedings for breach of implied warranties are generally brought by consumers directly, and not by consumer protection agencies.


In order to enforce the warranty provisions in the Consumer Protection Statutes, consumers must bring court proceedings. In many cases, warranty claims are prosecuted by way of individual action, often in provincial small claims courts. For example, in 2018 a consumer brought an action against a landscaping company in the small claims court of Nova Scotia, seeking a

33Blake, Cassels & Graydon LLP


products. This case was the first time Health Canada imposed a monetary penalty under the CPSA.

In March 2020, Health Canada issued a recall on certain snowblowers that posed a safety hazard. While there were no reports of injuries, Health Canada advised that consumers should immediately stop using the machines.



Many, but not all provincial Consumer Protection Statutes prohibit unfair, deceptive or abusive practices. These provisions generally capture any representations that are aimed at deceiving consumers, taking advantage of them or placing undue pressure on them. Prohibited unfair practices may include making false, misleading or deceptive representations, failing to mention an important fact, making unconscionable representations, or using control of a consumer’s goods to renegotiate the terms of a consumer agree-ment. The federal Competition Act also prohibits knowingly or reck-lessly making false or misleading representations.


The Consumer Protection Statutes generally do not include a single substantive test for what conduct amounts to an unfair practice. Rather, these statutes set out illustrations of what may amount to unfair practices. For example, statutory illustrations of what may amount to an unfair practice relating to representa-tions include: (1) making a representation that the goods or services have sponsorship, approval, performance characteris-tics, accessories, uses, ingredients, benefits or qualities they do not have; (2) making a representation that the goods or services are of a particular standard, quality, grade, style or model, if they are not; (3) making a representation using exaggeration, innu-endo or ambiguity as to a material fact that is deceptive; or (4) failing to state a material fact if doing so deceives the consumer.


Each of the Consumer Protection Statutes provide for various conditions of applicability relating to the nature of the parties or types of transactions that fall within the prohibitions.


The specific remedies available vary between the Consumer Protection Statutes. Depending on the particular statute at issue, a consumer may be entitled to rescind the contract, recover the amount paid that exceeded the actual value of the good or service received, or claim other remedies, including damages. Some of these statutes also provide for awards of punitive damages.


There are several products exempted from the abovementioned protections in the CPSA, including explosives, cosmetics, phar-maceuticals, tobacco, food, vehicles and cannabis. A full list of exceptions is outlined in Schedule I of the CPSA. The exempted products are generally regulated under different, more specific statutes, including the Explosives Act, the Food and Drugs Act, the Tobacco and Vaping Products Act, the Motor Vehicle Safety Act and the Cannabis Act.


In addition to ordering a recall on a product, Health Canada may order any measures considered necessary to remedy non-compliance with the CPSA, including an order to stop manufacturing, importing or selling a product. Health Canada can also seek a civil injunction for non-compliance. Breach of the CPSA or an order made pursuant to it can result in a fine of up to CAD 5 million and imprisonment of up to two years. In the event of a breach made knowingly or recklessly, the court can impose a fine at its discretion and imprisonment of up to five years, or both.

In terms of an individual action relating to the safety of a product, whether in negligence or under the Civil Code of Quebec, the remedy available to the consumer would be damages.


Pursuant to the CPSA, manufacturers, importers and sellers of consumer products are required to report to Health Canada any incident that results in an individual’s death or serious adverse effects on their health within 10 days of the occurrence. Mandatory reporting rules also apply with respect to any defect or incorrect labelling that may be reasonably expected to result in death or serious adverse health effects.


Health Canada may order a mandatory recall where it believes a consumer product is a danger to human health or safety. More often, manufacturers will initiate voluntary recalls, which can include removing products from the market, safety notices, and/or repair programmes. Health Canada may also post any recall on its Recalls and Safety Alerts Database and distribute notices to the public via email or through social media.


In March 2016, Health Canada announced that it had imposed a CAD 75,000 fine on Orange TKO Industries of Calgary, on the grounds that the company failed to comply with an earlier order to recall an all-purpose cleaner that did not meet labelling and child-resistant packaging requirements for consumer chemical

34 Canada



Under both the common law and civil law, damages are the most common remedy awarded to successful litigants. While punitive damages are available in the common law provinces, the threshold for an award of punitive damages is high. Unlike under the common law, in Quebec punitive damages are only available where they are specifically provided for by statute.


The 2015 tobacco class actions in Quebec, also described above at question 4.5, demonstrate how courts may impose extra-contrac-tual (or tort) liability. In addition to finding breaches of Quebec’s Consumer Protection Act, the court also found that the defendants breached provisions of the Civil Code of Quebec with respect to the manufacturer’s duty to warn, as well as reasonable civil conduct (similar to common law negligence). The court also found a violation of Quebec’s Charter of Human Rights and Freedoms. Based on various grounds of liability, the Superior Court of Quebec ordered the tobacco companies to pay approximately CAD 15 billion in damages, which included a significant award of puni-tive damages. While the Court of Appeal reduced the damages slightly, it otherwise upheld the trial judgment (Létourneau v JTI-MacDonald Corp., 2015 QCCS 2382; Imperial Tobacco Canada ltée c. Conseil québécois sur le tabac et la santé, 2019 QCCA 358).

In 2019, the Saskatchewan Court of Queen’s Bench certified a class action against General Motors which alleged defects in the cooling systems in Chevrolet Cruze vehicles. The certified common issues related to claims in negligence, unjust enrich-ment and breach of statutory warranties (Evans v General Motors of Canada Company, 2019 SKQB 98). While the court certified the class action, there has not been any decision on the merits of the claim.



Consumer Protection Agencies generally have the power to enter a business, examine documents, require production of records, access electronic records, make copies and ask questions rele-vant to the investigation. Anyone involved with the inspections is required to cooperate and not interfere with the process.


Consumer Protection Agencies generally have the power to investigate with respect to any matter that comes to their attention, but in practice investigations are often triggered by consumer complaints.


In 2015, in the context of two class actions, the Superior Court of Quebec ordered the three largest tobacco companies in Canada to pay approximately CAD 15 billion in damages. In addition to other heads of liability, the court found that the defendants breached Quebec’s Consumer Protection Act by failing to mention an impor-tant fact to consumers; namely, in failing to warn consumers about the health risks associated with tobacco use. In 2019, the Court of Appeal of Quebec substantially upheld the decision (Létourneau v JTI-MacDonald Corp., 2015 QCCS 2382; Imperial Tobacco Canada ltée c. Conseil québécois sur le tabac et la santé, 2019 QCCA 358).

In 2019, in the context of a class action, the Superior Court of Justice of Ontario found that the defendant companies, who sell payment cards, violated various provisions of Ontario’s Consumer Protection Act by having amounts on the cards expire. The Court also found that the defendants, among other things, misled consumers about their rights to expired balances, which constituted a misrepresentation and an unfair practice. The court awarded CAD 15,330,000 in aggregate damages and CAD 1,500,000 in punitive damages. The decision was subsequently appealed and finally settled for CAD 17 million all-inclusive (Bernstein v Peoples Trust Company, 2020 ONSC 5880).



In addition to the rights set out in the Consumer Protection Statutes, consumers can seek remedies relating to consumer transactions through common law claims of negligence, negli-gent misrepresentation, fraudulent misrepresentation, failure to warn, or general breach of contract. In Quebec, the Civil Code of Quebec codifies similar contractual and extra-contractual rights that can be advanced by consumers.


Under the common law, in order to succeed in a negligence claim, consumers must establish an applicable duty of care, a breach of the standard of care, causation and damages. Under Quebec civil law, in order to succeed in a negligence claim, consumers must establish fault, causation and damages.


There are many procedural rules and substantive principles that govern private claims. These are however more general appli-cation and are not specifically designed to exclude or exempt any particular claims relating to product safety or objectionable conduct in consumer transactions.

35Blake, Cassels & Graydon LLP



Consumer Protection Agencies generally have investigative powers, the power to impose mandatory undertakings, and the power to bring civil enforcement proceedings. They may also make administrative orders requiring compliance with the Consumer Protection Statutes.


In choosing enforcement mechanisms, Consumer Protection Agencies can consider the severity of the offence, as well as whether there have been repeat breaches of the Consumer Protection Statutes.


There are a range of procedural rules applicable to adminis-trative bodies. Depending on the severity of the enforcement measures, procedural rules can vary from informal written submissions to full court hearings.


Investigation or enforcement actions by Consumer Protection Agencies typically do not preclude individual actions. Follow on rights, where consumers can join enforcement measures taken by consumer authorities, do not exist. However, violations of the Consumer Protection Statutes can generally be brought by consumers as stand-alone actions.


The statute of limitations for consumers bringing stand-alone actions varies from two to six years across jurisdictions, but is most commonly two years.


To ensure coordination and cooperation between them, there are memorandums of understanding in place between the federal Competition Bureau and certain Consumer Protection Agencies. The federal Competition Act also contains certain express provisions allowing for Canada to enter into agreements of mutual legal assistance with foreign states and to assist in the investigations of foreign states.


In most provinces, consumers can file a complaint online by completing and submitting an online form. Consumers may also be required to attach any supporting documents, including the agreement in question, any correspondence with the busi-ness and copies of any invoices.


After being contacted, Consumer Protection Agencies may respond to the consumer in seven to 15 days. However, the investigation process may take longer.


There are penal provisions in the Consumer Protection Statutes, though minimum and maximum penalties vary across juris-dictions. In most jurisdictions, the maximum fines are higher for corporations than they are for individuals, and may also be higher for subsequent offences. For example, pursuant to Ontario’s Consumer Protection Act, an individual may be liable for a maximum fine of CAD 50,000 or to imprisonment of up to two years, and a corporation may be liable for a maximum fine of CAD 250,000. Under Quebec’s Consumer Protection Act, the potential penalties vary depending on the offence, but may range as high as CAD 15,000 for an individual and CAD 100,000 for a corporation, or twice those amounts for subsequent offences.


Written undertakings of voluntary compliance are a potential means of resolving investigations. In such cases, the under-taking may be subject to terms and conditions, including poten-tial compensation to consumers, reimbursement of investigation costs, and/or the obligation to provide security.

7 Enforcement


Consumer Protection Agencies generally seek to enforce consumer law through administrative orders, fines and under-takings. In certain circumstances, the authority may also seek an injunction from the court to restrain the merchant from breaching consumer protection legislation, or to have an offence prosecuted before the provincial Superior Court.


Yes. The time limit is typically two years from the date the occurrence came to the attention of the authority, or, in some jurisdictions, two years from the date the breach occurred.

36 Canada




Since class action legislation was introduced in various Canadian provinces throughout the 1990s, one notable trend has been the increased use of class actions as a means of pros-ecuting consumer protection claims. These class action claims are brought before provincial Superior Courts, particularly in Ontario, Quebec, British Columbia and Manitoba. Examples of these recent consumer protection class actions are described above at questions 2.7, 4.5, and 5.5.


On December 1 2020, Ontario’s Ministry of Government and Consumer Services issued a consultation paper proposing significant legislative changes to Ontario’s Consumer Protection Act, including: creating a set of core requirements for written consumer agreements to increase disclosure rules; protecting consumers against unilateral agreement changes; banning changes to the amount charged during an agreement term unless the consumer has the ability to cancel cost-free; amending the unfair practices provision such that the remedy is available until the later period of one year after entering into the agreement and one year after the unfair practice took place; banning advance payment for contract breaking and exit; and prohibiting contract terms that suggest a consumer has waived legal rights, such as the right to join a class action. Public consultations are ongoing.

8 Appeals


In terms of private actions brought by consumers before the courts, either party can typically seek to appeal a final first level trial judgment to the Court of Appeal in their respective prov-ince; however, leave is required in some provinces depending on the amount of the judgment. Further appeals to the Supreme Court of Canada are only granted with leave on questions of national importance.

In terms of administrative decisions of Consumer Protection Agencies and other authorities, such as Health Canada, various statutes include specific administrative appeal rights. Following the exercise of any statutory appeal rights, in certain circum-stances, retailers and manufacturers could also seek judicial review of the administrative authority’s decision. However, administra-tive authorities are typically afforded significant deference.


Yes (see answer above). However, appeal rights vary from prov-ince to province. For example, in Quebec, a decision of the small claims court (which has jurisdiction over claims of up to CAD 15,000) is final and cannot be appealed.


A properly initiated appeal generally stays execution of the judg-ment unless immediate execution was ordered.

37


Blake, Cassels & Graydon LLP

Jill Lawrie began practising in 1993. Her practice focuses on product liability matters and the defence of class actions involving a range of matters. Jill has acted for clients involved in numerous industries, including manufacturers of medical devices, pharmaceuticals, automo-biles and all manner of food and consumer products, as well as for professional service organisations, financial institutions and insurers.Jill regularly provides proactive advice on product warnings, recalls and litigation risks. Jill was trial counsel in the successful defence of the first medical products class action (146 trial days) to go to trial in Ontario. The defence was successful and the action was dismissed in 2014.Jill is recognised as a leading lawyer in product liability, class actions and life sciences in several Canadian and international directories. She was also named one of the “Top 25 Women in Canadian Litigation” by Benchmark in 2019 for the sixth consecutive year.

Blake, Cassels & Graydon LLP199 Bay Street, Suite 4000Commerce Court WestToronto, ON M5L 1A9Canada

Tel: +1 416 863 3082Email: [email protected]: www.blakes.com

Emily Hazlett’s practice includes complex commercial litigation and class action defence, with a focus on product liability. She repre-sents clients in civil proceedings involving consumer protection as well as pharmaceutical, contract and negligence claims. She has acted for national and foreign clients in numerous industries, including manufacturers of medical devices, pharmaceuticals, automobiles and consumer products, as well as financial institutions. Emily is a member of the Barreau du Quebec and the Bar Society of Ontario, and advises clients in both French and English.

Blake, Cassels & Graydon LLP199 Bay Street, Suite 4000Commerce Court WestToronto, ON M5L 1A9Canada

Tel: +1 416 863 2494Email: [email protected]: www.blakes.com

Blake, Cassels & Graydon LLP is one of Canada’s leading business law firms, representing many of Canada’s most prominent corporations, as well as international clients doing business in Canada. With offices in Montréal, Ottawa, Toronto, Calgary and Vancouver, and internationally in New York, London and Beijing, the firm’s strength across industry sectors and propensity to transfer knowledge and expertise between offices and practices is a key strength.Blakes’ national litigation and dispute resolution practice is one of the largest and most successful in Canada, representing Canadian and inter-national clients on complex litigation in virtually every forum. The firm’s approach to litigation focuses on understanding clients, exploring all methods of dispute resolution and litigating when appropriate. Blakes’ litigators also work to help reduce litigation risk and the group has an

extensive background in domestic and international commercial arbitra-tion, and mediation.For more information on our firm and our Litigation & Dispute Resolution Group, visit:

www.blakes.com



38

Czech Republic

Bányaiová Vožehová, s.r.o. advokátní kancelář

JUDr. Lucie Dolanská Bányaiová, Ph.D.

Mgr. Zuzana Kulhánková

Czech Republic

Chapter 6



The legislation is extensive and imposes various specific obliga-tions on individual market subjects. All manufacturers, distrib-utors, importers, service providers, sellers and other entities marketing the products or services must comply with the obli-gations imposed on them to protect consumers.


The main authority enforcing consumer protection rules is the CTIA, supervised by the Ministry of Industry and Trade of the Czech Republic. The CTIA monitors and inspects businesses and individuals who sell products on the Czech market unless, as a result of special legislation, these activities fall under the authority of another administrative institution. The CTIA is also one of the entities providing out-of-court settlement of consumer disputes (ADR).

The Czech civil courts are competent to decide administra-tive lawsuits filed against the administrative decisions issued by the CTIA or other competent authority based on public law legislation on consumer protection. They are also competent to decide disputes between consumers and entrepreneurs in civil law proceedings when the consumer does not initiate the ADR or where the ADR fails.

With respect to breaches qualifying as crimes, the Czech Police and Public Prosecutors conduct the investigation, and the Czech courts are competent to conduct the criminal court proceedings.


Compliance concerning the following products is regulated by the following authorities:■ agriculturalproducts,foods,andtobaccoproducts–State

Agricultural and Food Inspection Authority (SAFIA);■ productsandprovisionofservicesregulatedbythePublic

Health Act – Regional Hygiene Stations;■ veterinary care compliance – State Veterinary

Administration, Regional Veterinary Care Authorities and the Municipal Veterinary Administration in Prague;

■ tradeand services is supervisedby theTradesLicensingAuthority;

■ weapons, ammunitions and pyrotechnic products – theCzech Proof House for Arms and Ammunition;

1 General


Consumer rights are primarily stipulated in the following legislation:(i) Act No. 89/2012 Coll., the Civil Code, containing, with

respect to consumer protection in particular: mandatory regulation of consumer contracts; contracts concluded online or outside of the seller’s business premises; regula-tion of liability for damage caused by defective products; sale of goods in the store; and a number of other provi-sions to protect the consumer as the weaker contracting party in private law relations.

(ii) Act No. 634/1992 Coll., on Consumer Protection (ACP), setting out various responsibilities of entrepreneurs vis-à-vis consumers related to the sale of goods and services (together referred to as products), such as: the prohibi-tion of unfair trade practices and discrimination of the consumer; information and labelling obligations; and the enforcement of consumer protection by public authorities.

(iii) Act No. 102/2001 Coll., on General Product Safety, imposes general responsibilities and obligations on manufacturers, distributors and importers relating to the safety of products.

(iv) Act No. 22/1997 Coll., on Technical Parameters for Products, outlines the conformity assessment process and regulates the implementation of technical requirements for products.

(v) Act No. 64/1986 Coll., on the Czech Trade Inspection Authority (CTIA), regulates the powers of the Czech Trade Inspection Authority as a supervisory authority.

The specific rights of consumers and the corresponding responsibilities of entrepreneurs can be further found in a range of special legislation governing the manufacturing, importation, distribution and sale of specific products, commodities and services or certain properties of products.

Severe breaches of obligations, especially in the field of product safety, may qualify as criminal offences under the Act No. 40/2009 Coll., the Criminal Code.


A consumer is a natural person who, acting outside the scope of her/his economic activity or outside the independent exercise of her/his profession, enters into a contract or has other dealings with an entrepreneur.

39Bányaiová Vožehová, s.r.o. advokátní kancelář


safety. The testing is performed by competent authorities in each field by comparison with standardised tests and measurements.

Additional qualities may be agreed by contracting parties. A product is defective if it fails to meet the agreed quantity, quality or design. Where the quality or design has been determined according to an agreed sample or model, the quality or design of the product must correspond to the sample or model. A defect of the documents required for the use of the product is consid-ered a defect of the product itself.


All products and services which are marketed and intended for consumers are covered by the general legislation listed above. In addition, there is specific legislation setting out technical and other mandatory parameters of products applicable to the specific products falling thereunder.


There are no exceptions, unless the product is sold expressly as defective and the consumer consciously buys it as such.


In the public law domain, the CTIA, or other authorities according to special laws (see question 1.1), dispose of a wide range of instru-ments used to prevent violation of legal regulations; namely, the authorities may impose fines up to CZK 50,000,000 (approx.EUR 2,000,000). The severity of the fine depends on the impor-tance of the obligation and the severity of the breach.

Furthermore, the authorities may issue binding instructions for the purpose of rectifying any shortcomings ascertained. In cases of imminent danger to life, health or property, they may stop the sale of products and the provision of services, or close down the business premises; if the urgency of the situation so requires, such a decision may be announced verbally, and written confirmation is to be delivered without delay. The authorities may also order the manufacturer, importer, distributor or seller to withdraw all defective goods or services from the market (so-called “recall”), prohibit the marketing of the respective goods or services as such, or seize or destroy the products. The CNB and ERO may also cancel the trading licence of an entre-preneur in the field of their respective competence.

In the private law domain, the consumer may initiate the ADR or court proceedings to enforce her/his consumer rights.


The CTIA, or the authorities according to special laws (see ques-tion 1.5), are entitled to perform regular inspections and initiate proceedings in case of a detected or suspected breach. The consumers, as well as other third parties, may submit complaints or notifications with the competent authorities pursuant to which the authorities will commence ad hoc proceedings.

With respect to civil court proceedings, only the consumer has locus standi to enforce her/his private law claim from the entrepreneur.

■ businessactivitiesconductedonthebasisofanauthorisa-tion, licence or registration granted by the Czech National Bank (CNB), namely consumer credits;

■ pharmaceuticals–StateInstituteforDrugControl(SIDC);■ advertising – the Council for Radio and Television

Broadcasting with respect to broadcasted advertisement; in relation to particular products – authorities supervising the respective product market (e.g. advertisement of phar-maceuticals is supervised by SIDC);

■ businessintheenergysector–EnergyRegulatoryOffice(ERO);

■ electroniccommunicationsandpostalservices–theCzechTelecommunication Office;

■ business activities ofmembers of professional chamberswith mandatory membership – the relevant chamber;

■ processingofpersonaldata–theOfficeforPersonalDataProtection; and

■ gambling,safetyofimportedproductsandotherspecificareas – the Customs Authority.



Pursuant to the ACP, each seller shall act honestly when selling products, and namely shall: (i) sell products of proper weight, measure or quantity and enable consumers to check that the weights, measures or quantities are correct; (ii) sell products of the prescribed or approved quality, if such quality is deter-mined in a binding manner, ensues from special regulations or is described by the seller; if the quality is not prescribed, approved or stated, products and services are to be of the usual quality; and (iii) sell products for prices agreed in compliance with pricing regulation and charge correct prices when selling prod-ucts or providing services. Breach of these duties is punishable byapenaltyuptoCZK5,000,000(approx.EUR200,000).

Marketed products must also comply with the safety and technical requirements stated by the Act on General Product Safety and the Act on Technical Parameters for Products as well as subsequently issued official technical and other standards. Breach of these duties is punishable by a penalty up toCZK50,000,000 (approx. EUR 2,000,000).

Under the Civil Code, depending on the nature of the product, the seller of the product is obliged to provide to the consumer, mostly in writing, a wide scope of information regarding the product, its nature and quality as well as the rights of the consumer in connection with the sale of the product. The consumer is entitled to request demonstration of function-ality of the product before the sale is executed. If the sale is concluded online or outside of the seller’s business premises, the consumer is entitled to withdraw from the contract without any sanctions within 14 days of delivery of the product. The seller is liable for hidden defects of the product for a period of two years after the sale.


The technical quality (mandatory technical parameters) of a product is often set individually for each product by official technical and other standards and is primarily aimed at product

40 Czech Republic


information must always be given in Czech); (ii) the effect on another product, if used jointly; (iii) the presentation of the product; and (iv) the risks to consumers; in particular, children and persons with reduced mobility.

Products are considered safe if they comply with require-ments stated by legislation of the European Commission (EC) or legislation of an EU Member State pursuant to the criteria listed above. In the absence of such legislation, product safety is assessed according to Czech technical standards, EC recommen-dations, best product safety practices, the state of science and technology, and the consumer’s reasonable safety expectations.


All products which are marketed and intended for consumers are covered by the general legislation, while specific legislation applies to the specific products falling thereunder.


There are no exceptions.


The CTIA or the authorities (see question 1.5) are entitled to: enter premises; take samples of products and test them; inform concerned parties of ascertained safety risks; prohibit marketing, sale or display of the product; and order a recall of the products from the market and the destruction thereof. The authorities may impose a fine up to CZK 50,000,000

(approx. EUR 2,000,000); the severity of the fine depends on the importance of the obligation and severity of the breach. If a breach may have resulted in endangering the life or health of consumers, the inspector may prohibit the operation of business or close down the business premises until the breach is remedied.

Regarding private law remedies, each manufacturer bears objec-tive liability for any defects and damages caused to a consumer by an unsafe product; such liability may not be validly excluded.


Regarding reporting obligations of the manufacturers and distributors, please refer to question 3.1 above.

Supervisory authorities are obliged to report the occurrence of a dangerous product to the Ministry of Industry and Trade. Where appropriate, the information is also shared within the European Community’s Rapid Information System (RAPEX) and with the EC.


Product recall refers to a measure aimed at preventing the distri-bution, offering or display of a dangerous product; the prod-ucts must be completely removed from the market and become unavailable to consumers.

Regarding statutory obligation of the manufacturers and distrib-utors to recall unsafe products, please refer to question 3.1 above.


In 2020, the CTIA prohibited the distribution of an electric wheeled “hoverboard” due to its insufficient protection of elec-trical components which could cause unexpected failures and pose danger to the user during operation.

In 2020, the CTIA prohibited the distribution of a pillow in the shape of a watermelon due to the risk of confusion with real food.



Pursuant to the ACP, it is prohibited to produce, import, export, offer, sell or give away products that are dangerous due to the risk of being mistaken for foods.

Under the Act on General Product Safety, all manufacturers are obliged to: place only safe products on the market; take samples of products placed on the market and carry out tests of their safety when necessary to avoid existing risks; and take other measures to ensure the safety of their products even after placement on the market. Proper information about the prod-ucts shall be provided to the consumer and the products shall be properly labelled.

The distributor may not distribute products of which it knows or can assume, based on available information and expertise, do not meet the product safety requirements. The distributor must participate in activities related to ensuring the safety of products placed on the market; in particular, by communicating informa-tion on the risks associated with the product and cooperating with the manufacturers and supervisory authorities. The distributor must also maintain and provide the written information necessary for tracing the origin of the product.

The manufacturer or distributor shall notify the supervi-sory authority of any ascertained product risk, cooperate with the relevant supervisory authorities on measures to eliminate or reduce the risk, notify the consumer, withdraw the unsafe product from the market and from circulation, and allow all persons who own or hold the dangerous product to return it at the manufacturer’s or distributor’s expense.

The supervisory authorities conduct regular inspections of product safety as well as inspections initiated due to third-party complaints and notifications.


A safe product is a product which, under normal or reasonably foreseeable conditions of use, does not present a hazard for the period stated by the manufacturer or during the normal life of the product.

Namely, the following criteria are evaluated: (i) product char-acteristics, product life, composition, method of packaging, provision of assembly and commissioning instructions, avail-ability, content and readability of the manual, method of use including delimitation of the environment of use, method of marking, method of making and marking warnings, main-tenance and disposal instructions, clarity and scope of other data and information provided by the manufacturer (data and



enterprise; or (iv) is in breach of a code of conduct which the entrepreneur agreed to comply with.

Deceptive omission refers to when the entrepreneur fails to provide the consumer with clear and timely information which is essential for her/his decision-making regarding the purchase.

Business practice is considered aggressive if it may signifi-cantly worsen the freedom of choice or the behaviour of the consumer in relation to a product, namely by harassment or coercion, including the use of force or undue influence. Timing, place, duration, manner and other significant circumstances are taken into account in the assessment of business practices.

The Act also lists concrete behaviours which will always be considered unfair, such as the unauthorised use of quality or certification labels, etc.

The assessment is performed by the competent authority.


Generally, there are no exceptions.


Breach of obligations towards the consumer may result in inva-lidity of the consumer contract or part thereof, or in the consum-er’s right to withdraw from the contract without any sanctions.

Furthermore, breach of obligations both under the Civil Code and under the ACP presents administrative offences punishable byfinesuptoCZK3,000,000(approx.EUR120,000).


In 2020, during a regular inspection, the SAFIA found that the meat content of a canned pork product was significantly lower on the can itself than the actual content. The breach qualified as deceptive activity and the product had to be recalled from the market; the fine was not published.In2020, theSIDCimposeda fineofCZK30,000 (approx.

EUR 1,140) on a drugstore which had not published all the mandatory information for consumers regarding free available medicine, which was required by the law.

In 2020, during a regular inspection, the SAFIA found that an imported green tea contained multiple times more pesticides than permitted, posing a health risk to consumers. The breach was qualified as the release of a dangerous, unsafe product on the market and the product was recalled; the fine was not published.



The ACP further prohibits businesses to: (i) offer for sale, sell or export outside the Czech Republic products intended for humanitarian purposes; (ii) offer for sale, sell or store products that violate intellectual property rights or that use unauthorised labelling; or (iii) use eco-labels without authorisation.

Regarding the authority of the CTIA and other authorities listed in question 1.5 to order the recall, please refer to question 3.5.

There is no specific regulation for a voluntary recall regime.


The CTIA and other authorities (see question 1.5) test several hundred products each year in the course of their regular inspec-tion plan or in ad hoc inspections initiated due to third-party complaints.

In 2020, the CTIA ordered the recall of various clothes and toys which presented safety risks to children, as they contained small parts which could be easily inhaled, or contained heavy metals which posed a threat for human health and the environ-ment; the fine was not published.

In 2020, the CTIA ordered the recall of a pressure cooker due to the malfunction of the pressure breaker, which could lead to severe burns caused by hot steam from the cooker or explosion of the lid; the fine was not published.



The Civil Code, excluding the general rules of conduct appli-cable to all parties to contractual relations, imposes vast infor-mation obligations on each entrepreneur when dealing with a consumer, forbids certain contractual stipulations which are detrimental to the consumer (e.g. exclusion of liability) and forbids discrimination against the consumer.

The ACP obliges the entrepreneurs to act honestly (see ques-tion 3.1 above) and imposes several other obligations in relation to the sale of products, i.a., to provide the consumer with proper documents regarding the purchase, to enable the consumer to effectively file complaints and similar obligations.

The ACP also prohibits so-called “unfair trade practices”, which include deceptive activity, deceptive omission and aggres-sive business practice (please see the criteria in question 4.2 below).


A trade practice is considered unfair if it: (i) does not meet the requirements of due care; and (ii) may substantially disrupt the economic behaviour of the consumer in relation to a product, particularly if it encourages the consumer to make a decision to purchase the product which s/he otherwise would not have purchased.

If the trade practice is focused on a certain group of consumers, such as children or the elderly, it is assessed according to the average member of this group.

An activity is deceptive if it: (i) contains incorrect informa-tion; (ii) may mislead the consumer with respect to essential facts (e.g. attributes or necessity of the product, the price, etc.); (iii) may lead to confusion for another product, trademark or

42 Czech Republic


Seized products which are in breach of the legislation but are otherwise safe, not harmful to consumer health and not in breach of any intellectual property rights, may be provided by the authorities for humanitarian purposes.


The authorities conclude regular inspections in their respec-tive fields in accordance with both the inspection rules and an approved yearly inspection plan. In case of a complaint or notification, the authorities also perform ad hoc inspections of suspect entrepreneurs.


Both consumers and entrepreneurs can inform the CTIA or other state administration bodies in writing or by means of an electronic form on the websites of the relevant authorities.


The timeline depends on the respective field and findings of the authority; a simple inspection of a small business where no breaches are detected may take less than an hour, whereas a complex investigation of a large business enterprise may take several days. Furthermore, the following administrative proceedings may take years.


Investigators of the CTIA and other state authorities are consid-ered public officials.

Assault against a public official or threat of assault qualifies as a criminal act. Interference with the execution of a decision of a public authority or making the execution considerably diffi-cult is punishable under the Czech Criminal Code, e.g. breach of prohibition to conduct business, breach of closure of the busi-ness operation or attempts to hide or destroy seized products would qualify as crimes.


Future commitments or undertakings are not acceptable.However, if the CTIA, or other competent authority, imposes

the obligation to remedy the situation and the entrepreneur complies, then it may continue in its business operation.

7 Enforcement


The measures imposed by the authorities such as a fine, order of a remedy or seizure of products are exercised in the form of an administrative decision which can be enforced in execution proceedings.

The ACP further imposes specific obligations on operators of a marketplace (market hall) and organisers of sales events related to mandatory documentation and appropriateness of conduct towards the consumers.

Further specific prohibitions and protections are stated under special legislation pertinent to specific categories of prod-ucts, such as consumer credits, energy distribution, foods and timesharing.


The general criteria described above in questions 3.1 and 3.2 apply to all products and conduct of the entrepreneurs in rela-tion to consumers. Further specific and often detailed tests may apply to concrete products under specific legislation.


There are no exceptions.


The same remedies are available as listed above, i.e. mainly the imposition of fines, seizure and destruction of products, as well as the prohibition of economic activity and liability for damages.


In2020,theCNBimposedafineofCZK70,000(approx.EUR2,662) on a company which mediated consumer credits without holding the necessary licence on its website.In2020,theCNBimposedafineofCZK120,000(approx.

EUR 4,562) on an exchange office which did not cooperate during the inspection and did not submit the relevant documents regarding its activities. The CNB also removed the licence necessary for providing exchange services for consumers.



With respect to authorisation and tools of the CTIA and other authorities listed in question 1.5, please refer to questions 2.5 and 3.5.

The authorities typically work in disguise until a purchase or other deal is made, at which point they then reveal their iden-tity. Where possible, the identity is revealed and the tests are performed immediately after the purchase (e.g. by weighing or measuring other attributes of the product), and the results are documented and protocoled. After the tests are performed and documented, the inspector may, where appropriate, return the product to the entrepreneur or keep it as a sample; the entrepre-neur is obliged to return the purchase price.




There is no specific consumer action regulated by Czech law. The consumer may enforce its civil claims before the Czech civil courts pursuant to the Civil Code, such as the right to a refund of the purchase price or payment of damages caused by a defec-tive product.


A three-year limitation period applies.


The CTIA and other authorities are involved in the EU struc-tures for consumer protection, particularly in the RAPEX alert system designed to share and spread information about dangerous products across the EU. Furthermore, the authori-ties are engaged in the Information and Communication System on Market Surveillance (ICSMS) for the exchange of informa-tion on controlled products.

8 Appeals


Appeals may be filed against decisions of the CTIA or other competent authorities in the field of consumer protection.

The general appeal period is 15 days from the date of delivery of the decision of the first instance; however, the appeal period may vary depending on the specific legislation (e.g. in case of a decision ordering a remedy of serious deficiencies, the appeal period is only three days).

The appeal typically suspends the effect of the decision, unless specific laws provide otherwise.

The appeal shall be filed with the authority that issued the first instance decision and addressed to the superior authority or, in the absence of a superior body, the head of the first-instance body (e.g. in case of the CTIA, the appellate body is the head of the competent inspectorate).

The decision of the appellate body is final and closes the administrative procedure.

The final administrative decision may be reviewed in court in judicial administrative proceedings. The pertinent action must be filed within two months from the delivery of the final admin-istrative decision. The decision of the court of first instance may be appealed; furthermore, under certain circumstances, extraor-dinary appeal to the Supreme Administrative Court is available.


Only participants to the original administrative proceedings may file a lawsuit, i.e. the entrepreneurs.


The authorities are bound by the limitation periods; the general limitation period is one year. If an offence is punishable with a fineofatleastCZK100,000,thelimitationperiodisthreeyears.


Regarding administrative bodies and their powers, please refer to questions 2.5, 4.4, 6.1 and 6.5 above.

Regarding criminal investigation, the Code on Criminal Procedure applies, including all powers and tools available to criminal investigation authorities.

The consumer may enforce her/his rights stemming from the Civil Code and possibly from specific legislation via ADR or in civil law judicial proceedings.

Furthermore, specific institutions established for the purposes of protection of consumer rights may take certain actions against certain unfair competition practices distorting consumer rights (e.g. deceptive advertising).


The authorities exercise so-called “administrative discretion”, taking into account the nature and gravity of the offence, the importance of the protected interest, the consequences of the breach and other relevant circumstances.

The choice and use of the instruments must be proportionate to the intended objectives.


The inspector is obliged to identify her/himself to the entrepre-neur, or the inspected person is notified of the commencement of the inspection. Under certain circumstances, inspection may be performed up to a certain point without the investigator immedi-ately revealing her/his identity; such as the inspection of restau-rants and the quality of served food. The inspector may also invite another independent natural person to witness the inspection if it is necessary in order to fulfil the purpose of the inspection. The inspector is obliged to investigate the state of the matter, issue a confirmation in case of sampling, and enable the inspected person to be present during the inspection. Where necessary and appropriate, the inspector may order immediate measures. Upon completion of the inspection, the inspected person is entitled to receive a copy of the written inspection protocol, as well as the findings. The inspected person may file objections against the inspection protocol within 15 days of its delivery.

If the inspection results in the finding of an infringement, the authority of first instance issues an official administrative decision, specifying the breached obligations and the eventual penalties imposed. This decision may be appealed; please refer to question 8.1 below for further details.

44 Czech Republic


products, including photographs of the products, are published on the websites of the relevant authorities, such as the CTIA, the CNB, the SIDC and others. In order to systematically protect the consumer, the authorities draw up an inspection plan for each year, which they then seek to implement. The authorities also largely examine suggestions and complaints directly from consumers.


The new Act on Collective Actions (ACA) is currently under discussion in the Parliament of the Czech Republic.


In general, the appeal does suspend the effect of the decision, particularly in relation to impositions of penalties.

However, in cases of other types of decisions, where there is a risk to health or other serious legitimate interests of consumers, the appeal does not have suspensory effects, e.g. if the compe-tent authorities impose a protective measure, the appeal period is reduced from 15 days to three days and the appeal has no suspensive effect.



The current trend is the authorities’ efforts to inform consumers about unsafe products and services. For this purpose, unsafe

45


Bányaiová Vožehová, s.r.o. advokátní kancelář

JUDr. Lucie Dolanská Bányaiová, Ph.D. is a partner in our law office. She focuses primarily on litigation, competition law, conflict of laws and European law. Lucie has been a member of the Czech Bar Association (Česká advokátní komora) since 2004. She speaks Czech and English.Lucie has represented major companies in proceedings before the Competition office, in judicial review proceedings and has also pleaded before the General Court of the EU. She also successfully represents clients before Czech courts. Thanks to her broad litigation and compe-tition law practice, she has gained knowledge about the legal environment of various industries including the dairy, agriculture and telecom-munications industries. She is also active in the academic sphere; at the Law Faculty of Charles University in Prague, she leads seminars and lectures on competition law to international students of LL.M. and Erasmus programmes. Lucie has been listed among the top attorneys in the field of competition law by Chambers and The Legal 500.

Bányaiová Vožehová, s.r.o. advokátní kancelářLazarská 13/8120 00 Praha 2Czech Republic

Tel: +420 222 517 088Email: [email protected]: www.bvlaw.cz

We provide comprehensive legal services and advice to global corpo-rations, as well as to clients operating regionally or locally. Our services include: corporate and M&A advisory; litigation and dispute resolution, including disputes in insolvency and in general insolvency related support; competition and antitrust law support; labour law; construction law; and assistance with criminal law matters.The team is led by partners with extensive, longstanding practice who have vast experience working on elaborate projects and transactions touching on various areas of the law. Our lawyers have in-depth knowledge of the legal environment as well as regulatory and commercial awareness which enables our clients to make effective and informed decisions.We are a member of E-Iure (http://www.e-iure.com), the international asso-ciation of law offices/attorneys-at-law; therefore, we are able to arrange the provision of legal services through this network of law offices elsewhere in Europe and all over the world.

www.bvlaw.cz

Mgr. Zuzana Kulhánková is a graduate of the Law School at Masaryk University in Brno; she also studied International Law at the University of Iceland. Zuzana has been a member of the Czech Bar Association (Česká advokátní komora) since 2010. She speaks Czech and English.Zuzana focuses on real estate law, business law and dispute resolution, as well as criminal law litigation. She has assisted international real estate development companies as well as banks with their real estate projects in the Czech Republic, participated in acquisitions and gained experience in drafting commercial contracts and handling litigation, including arbitration and insolvency proceedings.

Bányaiová Vožehová, s.r.o., advokátní kancelářLazarská 13/8120 00 Praha 2Czech Republic

Tel: +420 222 517 088Email: [email protected]: www.bvlaw.cz



46

France

Ashurst LLP Marie Florent

Michaël Cousin

France

Chapter 7


defendant in relation to certain offences. The DGCCRF may also use the civil courts in order to obtain the removal of unfair contract terms from certain consumer contracts.


Specific authorities may be competent to set standards for consumer goods in certain given sectors (see, for instance, the answers to questions 2.2 and 3.2); the French Directorate General for Food (“Direction Générale de l’Alimentation” (“DGAL”)) is notably competent to issue administrative decrees fixing safety standards for food.

Moreover, other administrative bodies have consultative powers; for instance, decrees adopted by the Council of the State (“Conseil d’Etat ”) in the field of product safety or conformity can also be subject to prior opinions from the relevant sectoral administrative authority. For example, the National Agency for the Safety of Medicines and Health Products (“Agence Nationale de la Sécurité des Médicaments et des Produits de Santé ” (“ANSM”)) may provide prior opinions for medicine, the French National Food Council (“Conseil national de l’alimentation”) for food, or the Commission for Energy Regulation (“Commission de regulation de l’énergie” (“CRE”)) for energy.

In urgent cases, the Ministry in charge of consumer protection and the other relevant Ministries may also issue decrees to suspend the making, import, export or marketing of a product and to initiate a recall procedure (Art. L. 521-17 of the Consumer Code).

Finally, French law allows multiple public bodies (e.g. Ministries, agencies) to enforce provisions of the Consumer Code in specific sectors (Arts L. 511-20 to L. 511-26 of the Consumer Code) and the competences of each administrative agent, i.e. which consumer law provisions a given administrative agent can enforce, must be assessed on a case-by-case basis. For instance:■ For misleading and deceptive commercial practices (see

answer to question 4.1), inspectors for veterinary public health and accredited agents from the Ministry of Agriculture are competent (Art. L. 511-20 of the Consumer Code).

■ For infringements to Arts L. 511-5 to L. 511-9 of theConsumer Code (concerning consumer information, disloyal commercial practices, formation and execution of consumer contracts and consumer credits), specific administrative agents can be appointed by governmental decrees in order to enforce consumer law (Art. L. 511-21 of the Consumer Code). Currently, sectors in which such decrees have been issued include transport, insurance, and environment, amongst others (Art. L. 511-21 of the Consumer Code).

■ For infringements of provisions of the Fourth Book ofthe Consumer Code (concerning the conformity and the

1 General


Rules on consumer protection are generally found in the Consumer Code.


Consumer law applies to both consumers and so-called “non-pro-fessionals”. According to the Consumer Code’s Liminary Article, a consumer is “any physical person not acting for purposes which are in the framework of his/her commercial, industrial, artisanal, self-employed or agri-cultural activity”. The same Article defines “non-professionals” as any legal person who is not acting in a professional capacity.


As provided for by the Consumer Code’s Liminary Article mentioned above, Consumer protection rules apply to so-called “professionals” which are defined as “any physical or legal person, public or private, acting for purposes which are within the framework of its commercial, industrial, artisanal, self-employed or agricultural activity, also where it acts in the name and on behalf of another professional ”.


The officials in charge of investigating and verifying alleged breaches of the provisions of the Consumer Code are agents of the Ministry of Economic and Financial Affairs, part of the French Directorate for Competition Policy, Consumer Affairs and Fraud Control (“Direction Générale de la Concurrence, de la Consommation et de la repression des fraudes” (“DGCCRF”)).

Different rules apply depending on the relevant sector (e.g. product quality and security, consumer information, unfair trade practices, etc.). The agencies may, in addition to carrying out investigations, impose official warnings, injunctions, adminis-trative penalties (see below) or refer matters to the public prose-cutor who will initiate criminal proceedings. As an alternative to these criminal proceedings, the DGCCRF may conclude, subject to the public prosecutor’s prior approval, a settlement with the

47Ashurst LLP


(“Décrets en Conseil d’Etat”); the so-called “Conseil d’Etat” (Art. L. 412-1 of the Consumer Code); industry customs and norms (e.g. norms of the “Association Française de Normalisation” (French Standards Association (“AFNOR”)), a non-profit organisation controlled by the Minister for Industry); the state of art (e.g. the level of knowledge and development achieved in the industry); information previously given by the seller or the manufacturer of the product; and the terms of the contract, amongst other factors. The State Council decrees in relation to product safety or security are specific and can set conditions on the compo-sition or denomination of the products, safety rules and pack-aging. Moreover, in France, there are thousands of industry norms which are negotiated between interested parties (e.g. firms, consumer associations, etc.). Most of these norms are established by AFNOR.

Secondly, conformity can be assessed according to the specific terms of a contract. According to Art. L. 217-5 of the Consumer Code, a product or service complies with the terms of the contract if it can perform the use expected from similar goods. Two types of analysis are available. First, an in concreto analysis can be used, which asks whether the product or service fits the seller’s description. Secondly, while applying an in abstracto analysis, the product can be compared to the qualities and functions usually expected by a buyer. The defect of the product must exist at the time the good or service was deliv-ered or when the product was installed by the seller or under his responsibility. When the existence of a defect is established, the burden of proof lies on the seller to prove that it did not exist at the time of delivery.

In the Civil Code, according to the guarantee of conformity (Art. 1604 et seq. of the Consumer Code), the seller must deliver the buyer the goods and all the goods’ accessories which were agreed upon. The product must be able to be used in the way usually expected from a reasonable buyer, with consideration to the terms of the contract and to the general principle of good faith which governs the execution of contracts under French law. Secondly, for the guarantee against hidden defects (Art. 1641 et seq. of the Civil Code), in order to give rise to remedies, the defect must: (1) be inherent to the product; (2) be hidden from the buyer at the time of sale; (3) exist before the sale or before the transfer of the risks associated to the good sold; and (4) remain unknown to the buyer. The buyer has two years from the moment he becomes aware of the defect to initiate legal proceedings.


The scope of application of the provisions relating to the quality of goods and services varies.

Firstly, every product or service put on the EU or national market and sold by a professional to a consumer is covered by the general duty of conformity (Art. L. 411-1 of the Consumer Code). This duty of conformity applies to whichever entity in the distribution chain (e.g. importer, wholesaler, retailer) first put the product or service on the market.

Secondly, the contractual duty of conformity contained in the Consumer Code (Art. L. 217-4 of the Consumer Code) only applies to contracts for the sale of tangible personal property (either already in existence or to be produced) and contracts for the sale of water and gas when it is packaged in a determined volume or quan-tity according to Art. L. 217-1 of the Consumer Code.

Thirdly, under the Civil Code, the duty to deliver goods compliant with contractual terms (“garantie de conformité ”) and the duty to offer a guarantee against any hidden defects (“garantie des vices cachés”) apply to all contracts for the sale of goods.

safety of products, as well as compliance to injunctions of conformity), a list of competent administrative agents can be found in Art. L. 511-22 of the Consumer Code, which includes, for example, customs officials, tax agents, labour inspectors, accredited agents from the Ministry of Agriculture, accredited agents from the Ministry or authority in charge of the sea, etc.

Furthermore, more specific powers are defined in specific sectors such as public health; doctors or pharmacists can be accredited as agents (Art. L. 511-23 of the Consumer Code) in order to enforce specific consumer law provisions.



Both consumer law and civil law provide for a general duty of conformity (Art. L. 411-1 of the Consumer Code) according to which the person who has first put a product or service on the national market or on the European Union (“EU”) market must ensure that it complies with the relevant laws and regula-tions on security, safety, fairness of commercial transactions and consumer protection. The seller must carry out the necessary checks and in case of non-conformity, it must inform the buyer.

A manufacturer who has affixed the “CE” mark on its product has obtained a certificate of conformity allowing it to put the product on the EU market; however, this does not exempt the first seller on the national or EU market of its duty to control the products (French Supreme Court for civil and criminal matters (“Cour de Cassation”), 7 April 1999, No 98-83770). Moreover, since the burden of proof lies on it, the entity in charge (i.e. the manu-facturer or the other professional who has first put the product on the market) should keep all relevant documents establishing compliance.

Non-conformity of the product or service may also be used in order to characterise an offence of deceit (“tromperie”) (Art. L. 441-1 of the Consumer Code) or falsification (Art. L. 413-1 of the Consumer Code).

Both the Consumer and the Civil Codes provide for a specific duty to deliver goods which comply with the terms of the contract (Art. L. 217-4 of the Consumer Code and Arts 1604 and 1641 of the Civil Code). There are, however, differences between the Consumer Code and the Civil Code.

Firstly, they differ in scope. The Consumer Code only applies to specific types of contracts (see answer to question 2.3), whereas the Civil Code applies to all contracts for the sale of goods.

Secondly, the duty of conformity in the Consumer Code encompasses both the duty to deliver a good or service compliant with contractual terms (“garantie de conformité ”) and the duty to offer a guarantee against any hidden defects (“garantie des vices cachés”). In the Civil Code, this duty is divided into two articles with separate conditions.


Conformity to the relevant laws and regulations on security, safety, loyalty of commercial transactions and consumer protec-tion can be assessed in two ways.

Firstly, according to Art. L. 411-1 of the Consumer Code, conformity must be assessed against: State Council decrees

48 France


seller. When suing the manufacturer, the consumer is using the action the first buyer (e.g. importer, wholesaler, retailer) had on the manufacturer (“action récursoire”). Therefore, if he sues the manufacturer or intermediary seller using this action, the consumer cannot use the Consumer Code’s provisions but may rely on the Civil Code and the Commercial Code.


Private enforcement. The Lyon Court of Appeal ruled in January 2021 that the sale of a sick domestic animal, affected by a contagious disease from which it died a few days after the sale, constituted a breach of the contractual duty of conformity, since the buyers were legitimately expecting to take care of an animal in perfect health. The Court of Appeal confirmed that as the recovery or replacement of the animal was impossible, the buyers should be reimbursed of the sale price and amounts corresponding to veterinary, hospitalisation and cremation costs, and should also be granted EUR 500 in damages (Lyon Court of Appeal, 21 January 2021, RG No 19/06969).

Public enforcement. In 2018, the DGCCRF conducted inves-tigations on eight marketplaces (e.g. Amazon, eBay, Cdiscount, AliExpress) and analysed 152 products. Its report established that 43%of theproductsweredangerous and 24%didnot complywith existing legal requirements. In response to the DGCCRF’s warnings and/or injunctions, most marketplaces have already removed the products in question from their websites.

In December 2019, the DGCCRF released the results of its investigations into foie gras sold on the French market. It found that there was a non-conformity rate of 54%. Twelve warn-ings and six injunctions were issued, and four sets of criminal proceedings are currently ongoing. The exact amount of the fines imposed by the DGCCRF is usually not public since the proceedings often lead to settlements.



Under French law, the safety of goods and services is governed by a number of legal provisions. Art. L. 421-3 of the Consumer Code imposes on professionals (manufacturers or distributors) a general duty of safety and states that “products and services must, under normal conditions of use or under other circumstances that may reason-ably be foreseen by the professional, offer the safety that can legitimately be expected and must not be a danger to public health”.

This duty applies to the professional liable for the product’s safety, which can be the actual manufacturer, its representative, another person whose activities may impact product safety or another distributor.

In order to satisfy this duty, professionals must inform, control and report on any risks related to the products and services that they offer. For example, they must conduct the relevant safety tests and recall the product if necessary. Furthermore, they must keep records of all relevant documents.

Governmental bodies (e.g. DGCCRF or the Minister in charge of consumer protection) may also prohibit or restrict the sales of dangerous products. Additionally, more specific safety requirements have been enacted for specific types of product (e.g. fresh food, medicine, cars).

More specific requirements apply to certain types of prod-ucts (e.g. food and medicine) and can be found, for instance, in decrees of the State Council.


There are no exceptions to these provisions.


Fines. Non-compliance with the self-control obligation (see answer to question 2.1) does not lead to a specific fine. However, in case of non-compliance with decrees of the State Council (see answer to question 2.1) for specific products or services, there can be a fine up to EUR 1,500 for a natural person and EUR 7,500 for a legal entity. The amount is doubled in cases of repeated infringements.

If an offence of deceit or falsification is committed, crim-inal proceedings can lead to a fine of up to EUR 300,000 and a prison sentence of up to two years (the amount is increased in cases of threat to human or animal health or in the event of a group offence). The decisions taken by the DGCCRF can also be published.

Contractual remedies. Several contractual remedies, such as damages, may also be imposed. In most cases, there is a choice between the repair or the replacement of the good or service, a reduction of the price or the termination of the contract. Depending on whether the buyer chooses to rely on the Civil Code or the Consumer Code, there is a difference in the reme-dies available. If he relies on consumer law, the buyer may only ask in the first place for the repair or the replacement of the goods. If these two remedies are not available, the consumer may then request a price reduction or the termination of the contract. However, if the buyer chooses to rely on the Civil Code, more options are available. For instance, when applying the guarantee for hidden defects (“vices cachés”) under Art. 1641 of the Civil Code, the buyer can choose between returning the product or service purchased in exchange for the restitution of the price paid, or keeping the product or service in exchange for the restitution of part of the price.

In case of mistake or misrepresentation, the contract may also be void or voidable (Art. 1130 of the Civil Code).

Limitations. Proceedings under the Consumer Code must be initiated two years from the delivery of the goods (Art. L. 217-12 of the Consumer Code), with the exception of the offences of deceit and falsification which are subject to a six-year limitation period. However, proceedings on the basis of the Civil Code are subject to a five-year limitation period and in practice, numerous claims use civil law.


Proceedings may be initiated either by the buyer, the public Ministry or by the DGCCRF (see answer to question 1.4 above) in accordance with Art. L. 511-1 of the Consumer Code. The DGCCRF will conduct reviews periodically (e.g. annual inves-tigations for biocidal products and detergents) or through large-scale investigations. The results of investigations are available on the DGCCRF’s website.

The buyer may initiate both criminal and civil proceedings against both the final seller and the manufacturer or intermediary

49Ashurst LLP



Administrative measures. When a product is deemed to be dangerous, administrative authorities may adopt all measures in order to remedy the threat (e.g. product recall or order destruc-tion of the products). Their action must be proportionate to the danger that the public is facing. Therefore, it is not possible to prohibit the distribution of a product when consumer infor-mation would be sufficient to prevent any threat or when it is possible to modify the product to make it compliant.

Fines. Non-compliance with the general duty of safety is punishable by a fine with a maximum of EUR 1,500 (EUR 7,500 for a legal entity). The amount is doubled in case of repeated infringements within one year. If there are no ongoing criminal proceedings, the DGCCRF may also reach a settlement with the professional.

The infringement of a duty to inform the relevant administra-tive authorities of the measures taken to prevent consumer harm can lead to the same level of fines.

Non-compliance with the duty to establish and keep a record of all products which have been recalled (Art. L. 452-7 of the Consumer Code) can lead to a fine of EUR 5,000 (EUR 25,000 for legal entities).

Not declaring a product safety recall procedure or giving false or incomplete information (Art. R. 452-5 of the Consumer Code) can lead to a fine of up to EUR 1,500 (EUR 7,500 for legal entities). The amount is doubled in cases of repeated infringe-ments within one year.

There are specific penalties (e.g. imprisonment, fines) if the offences of manslaughter and battery are committed.

Damages. The undertaking may be held liable for the harm the consumers have suffered and may be required to remedy their losses under either contract or tort law.


If a manufacturer or a distributor discovers that a product does not satisfy the general duty of safety, he has a duty to imme-diately inform the competent administrative authority and consumers (Art. L. 423-3 of the Consumer Code). A govern-mental order dated 9 September 2004 describes the informa-tion which must be given to the administration. As of 1 April 2021, the professional concerned will be required to inform the DGCCRF directly, by making a declaration on a dedicated website, “RappelConso”, whose operating modalities have been specified by a governmental order dated 20 January 2021. The DGCCRF will then make the information collected available to the public, on another dedicated website.

The relevant administrative authority depends on the type of products concerned:■ theDGCCRFiscompetentfor:foodforhumanconsump-

tion; food for animal consumption (except for the prod-ucts for which the DGAL is competent); products to be sold or given to consumers; and cars (except for the prod-ucts for which the Directorate General for Energy and Climate Change (“Direction Générale de l’Energie et du Climat” (“DGEC”));

■ DGAL: meat for human consumption, canned prod-ucts, and food for animal consumption composed of or containing meat; and

■ DGEC:cars(Art.R.321-14-1oftheHighwayCode).The manufacturer or the distributor cannot argue that he was

not aware of risks that he should have reasonably known.

Businesses may also be liable on the basis of criminal, contract or tort law:■ Firstly, a business may be held liable, for instance, for

manslaughter (Art. 221-6 of the Criminal Code) or battery (Art. 222-19 of the Criminal Code) when the use of the product has led to death or injury.

■ Secondly, there is a contractual duty to inform theconsumer of the characteristics and risks associated with a product or a service, and case-law has often recognised the existence of an implied duty of safety in given contracts (e.g. transport, sports).

■ Thirdly,theCivilCodeholdsmanufacturers(ortheinter-mediary seller) liable for defective products (Art. 1245 of the Civil Code). In specific cases, businesses have also been recognised as liable due to fault or negligence (Art. 1240 of the Civil Code) or due to an action under its control (Art. 1242 of the Civil Code).


A product is considered compliant with the general duty require-ment if it complies with the relevant legal and regulatory frame-work on health and safety (Art. L. 421-5 of the Consumer Code).

A product is deemed to be compliant if it complies with the French non-mandatory regulations which implement European regulations on product safety (Art. L. 421-6 of the Consumer Code).

In other cases, numerous factors can be considered in order to assess whether a product is compliant (Art. L. 421-7 of the Consumer Code):■ non-mandatoryFrenchregulationsimplementingEuropean

norms; ■ otherFrenchregulations;■ recommendationsfromtheEuropeanCommission;■ goodpracticesguidelines;■ thecurrentstateof(technical,scientific,etc.)knowledge;

and■ thelevelofsafetythatconsumerscanreasonablyexpect,

under normal conditions of use.


Every product or service, if it is not subject to specific national or EU provisions on consumer health and safety, is subject to a general duty of safety. The scope of the general duty of safety is therefore wider in French than in European law since Directive No 85/374/EEC of 25 July 1985 only applies to prod-ucts designed for or used by consumers.

There is, however, an exception: if the seller has duly informed the buyer, this duty does not apply to antiques and second-hand products which must be repaired or restored before being used (Art. L. 421-2 of the Consumer Code).

Moreover, it is important to determine if there are specific laws and regulations which may impose additional safety requirements for specific types of product (e.g. medicines, toys, videogames, washing machines).


There are no exceptions to these provisions.

50 France


(“pratiques commerciales déloyales” (Art. L. 121-1 et seq. of the Consumer Code)). UCP may constitute offences in themselves but they also refer to the prohibition of deceptive commer-cial practices (“pratiques commerciales trompeuses” (Art. L. 121-2 et seq. of the Consumer Code)) and aggressive commercial prac-tices (“pratiques commerciales agressives” (Art. L. 121-6 et seq. of the Consumer Code)).

The scope of this prohibition is wide since there is no legis-lative or regulatory definition of the concept of “commercial practice” under French law. The case law refers to Art. 2(d) of the Directive, which covers any act or omission committed by a professional and linked to its commercial activities. Art. L. 121-2 of the Consumer Code, which refers to practices by omis-sion, may concern an infringement of pre-contractual informa-tion obligations, which is also referred to in Art. L. 111-1 et seq. of the Consumer Code.

In addition, the Consumer Code prohibits abuses of weak-ness, which includes a professional abusing a person’s weak-ness or ignorance in order to induce him or her, for example by means of doorstep selling or phone solicitations, to commit to something in cash or on credit in any form whatsoever (Arts L. 121-8 to L. 121-10 of the Consumer Code). A similar form of behaviour is sanctioned by the Criminal Code (Arts L. 223-15-2 to 223-15-4 of the Criminal Code).


A commercial practice is deemed to be unfair when it does not meet the standard of professional diligence or when it substan-tially alters the consumers’ economic behaviour (Art. L. 121-1 of the Consumer Code). The effect on consumers is assessed with respect to a consumer who is reasonably well informed and reasonably observant, i.e. the “average” consumer.

As mentioned above, disloyal practices include both misleading or deceptive conduct and aggressive practices. To constitute an infringement, misleading or deceptive conduct may be directed against consumers, professionals or non-professionals and imple-mented, or with effects, in France. It must be misleading in the meaning of Arts L. 121-2 and L. 121-3 of the Consumer Code, which establishes a list of the elements which can be used to char-acterise the conduct, but it also needs to materially distort or be likely to distort the economic behaviour of the consumer. The conduct may deceive the consumer either by action (e.g. false information, deceiving marketing strategy) or by omission (e.g. silence kept on key information). Some practices are presumed to be misleading in any context (Art. L. 121-4 of the Consumer Code), the list of which can be found in the Consumer Code.

For a practice to be sanctioned as aggressive, it must be the result of repeated solicitations or the use of physical or moral constraints imposed on consumers (Art. L. 121-6 of the Consumer Code), which either leads to the substantial modifi-cation of the consumer’s freedom of choice, the vitiating of the consumer’s consent, or the restriction of the use of contractual rights. In addition to this, consideration may be given to the circumstances surrounding the practice, such as the time and place where the practice was conducted, or the use of threats. A list of presumed aggressive commercial practices can be found in Art. L. 121-7 of the Consumer Code.

In addition to this, establishing intent is necessary in theory, since both misleading and aggressive practices may lead to the imposition of a criminal penalty (Art. 121-3 of the Criminal Code). However, in practice, this requirement has been subject to a flexible interpretation by case law when the professional is merely aware of the practice (Cour de Cassation, 29 January 2019, No 17-86876).


Non-food products can be subject to a mandatory product safety recall regime. Where a risk is identified, a professional must report it to administrative authorities and take measures to prevent any consumer harm (Art. L. 423-2 of the Consumer Code).

Food is subject to a specific mandatory safety recall regime under Arts 19 and 20 of Regulation (EC) No 178/2002 of 28 January 2002.

There are also specific product safety recall regimes for given products, such as medicines. For instance, the ANSM can impose injunctions to remove medicine from the market or even destroy it if the product represents a threat to public health.

The concerned undertaking, in cases of threats to public health and safety, must initiate an immediate recall procedure without waiting for the administrative authorities’ injunctions. Businesses may report such an issue on the administration’s website.


Private enforcement. The “Mediator” or “Benfluorex” case has led to the introduction of numerous proceedings before the French courts, including against the French State, for how it managed the crisis. The Mediator was a medicine designed to improve glycaemic control and decrease insulin resistance; however, it emerged that it also caused heart disease. The product has since been withdrawn from the French market and individual private actions have been initiated against the phar-maceutical company Servier, its manufacturer. In a 2017 case (Cour de Cassation, 20 September 2017, No 16-19643), the Cour de Cassation ruled that Servier could not use the risk of development defence and that it was liable under Art. 1245 of the Civil Code which imposes tort liability on the manufacturer having sold a defective product. Public enforcement. The DGCCRF regularly conducts large-scale investigations. In December 2020, the DGCCRF released the results of an investigation carried out with respect to the compliance with EU Regulations in the toy sector in France. In its report, it stated that it had investigated over 3,200 businesses, completed more than 10,000 control operations, and found that 16% of the productswere non-compliant and dangerous. Intotal, 889 warnings were issued, as well as 269 injunctions, and 203,000 toys were either repaired or destroyed.

The French Parliament has also passed bills for specific prod-ucts deemed to be dangerous. For instance, in 2010 and 2012, it passed bills to forbid the use of Bisphenol A (“BPA”) from 2015 (see Law No 2010-729 of 30 June 2010 and Law No 2012-1442 of 24 December 2012).



French consumer law, implementing Directive No 2005/29/EC of 11 May 2005, prohibits unfair commercial practices (“UCP”)

51Ashurst LLP



Private enforcement. The following examples may be provided:■ The Legal Tech company Jurysystem used the term

“lawyer” in a misleading way, leading consumers to believe that they were communicating with accredited lawyers. The French National Bar Association sued the company for misleading commercial practice. As a result, the court granted an injunction to stop the infringing behaviour (Cour de Cassation, 11 May 2017, No 16-13669).

■ TheCour de Cassation ruled that the mere fact of asserting that a product or service increases the chances of winning at gambling is sufficient to characterise the material element as constituting a misleading commercial practice, without it being necessary to demonstrate any alteration in the economic behaviour of a normally informed and reasonably attentive and wise consumer. Consequently, the Cour de Cassation upheld the Court of Appeal’s decision which fined the founders of a website offering to buy grids of the Loto and Euromillions games that were supposed to give a greater chance of winning than those acquired outside, due to the use of a scientific method of calcula-tion, and imposed a five-year professional ban on them (Cour de Cassation, 28 January 2020, No 19-80496).

■ ThePoitiersCourtofAppealfinedacompanyEUR2,500in damages for making a consumer sign a large number of purchase orders, following repeated and insistent solic-itations resulting from intensive canvassing at home (i.e. aggressive commercial practice) (Court of Appeal of Poitiers, 31 October 2017, No 13/12129).

Public enforcement. The DGCCRF conducts regular investigations aimed at identifying UCP. In November 2020, it published the results of its investigations of 555 establishments active in the furniture retail sector. It found that a number of misleading and aggressive practices were used (20% of iden-tified anomalies concerned the fairness of commercial prac-tices). In total, the consumer authority found that more than half of establishments investigated presented at least one irreg-ularity with respect to consumer protection law, and issued 169 warnings and 101 corrective measures. In addition, 29 criminal minutes and 13 administrative minutes were drawn up.



There are numerous provisions designed to enhance consumer protection in French law.

Specific rules exist regarding advertising. For instance, comparative advertising, i.e. when the professional is comparing products or services in order to promote his own product or service, must comply with a specific legal framework (Art. L. 122-1 of the Consumer Code). Specific and sensitive sectors are also subject to specific regulatory provisions on advertisement and marketing (e.g. tobacco, medicine).

A large number of rules contained in various sources also provide for a framework applying to the promotion of sales, such as discounts and rebates, sales or liquidation, or the regu-lation of commercialisation techniques (e.g. distance contracts).

Abuses of weakness are penalised where the circumstances of the case: (a) show that the victim was not able to appreciate the extent of the commitments being taken or detect the rules or tricks used to convince him/her to make such commitments; or (b) make it appear that the victim has been subjected to a constraint (Art. L. 121-8 of the Consumer Code). This may be the case where the consumer is an elderly person, sick or in a state of intellectual weakness, prior to the solicitation.


There are no exceptions or exemptions to these prohibitions.


Remedies available for a breach of the protection/prohibitions relating to the aforementioned conduct differ slightly due to the specificities of the relevant legal regimes.

First, disloyal commercial practices may be remedied and terminated on the initiative of the agents of the DGCCRF or the civil court on request of the DGCCRF. There is no specific crim-inal penalty in the Consumer Code for these practices. However, it is nonetheless possible for a consumer to seek damages on the basis of the general provisions on extra-contractual liability of the French Civil Code (Art. 1240 of the Civil Code).

Second, misleading commercial practices (Art. L. 132-2 of the Consumer Code) may be subject to a cease-and-desist order from both criminal and civil judges as well as the agents of the DGCCRF. Such practices are then likely to be subject to compensation for damages on the basis of the general provi-sions on extra-contractual liability of the French Civil Code (Art. 1240 of the Civil Code) but also to be criminally sanc-tioned by a two-year prison sentence and a EUR 300,000 fine (EUR 1,500,000 for a legal entity). The amount of the penalty canalsoamountto10%oftheannual turnoverof theunder-taking, calculated on the basis on the last three known years, or 50%oftheexpensesusedtocommittheoffence.Itshouldbeadded that before any public action is taken, the conduct may also be terminated by means of a settlement with the DGCCRF.

Third, aggressive commercial practices (Art. L. 132-11 of the Consumer Code) may also be subject to a two-year prison sentence and a EUR 300,000 penalty (EUR 1,500,000 for a legal entity) may be imposed. The amount of the fine can alsoamountto10%oftheannualturnoveroftheundertaking,calculated on the basis on the last three known years. In addi-tion, where the aggressive conduct leads to the conclusion of a contract, the sanction of the practice is the automatic nullity of the contract (Art. L. 132-10 of the Consumer Code).

The decision, as well as corrective announcements, can be published at the professional’s expense.

Fourth, abuses of weakness are sanctioned in the conditions of Art. L. 521-1 et seq. of the Consumer Code (see answer to ques-tion 7.1 below) but are also subject to criminal sanctions (EUR 375,000 and three years’ imprisonment for natural persons and EUR 1,875,000 for a legal entity (Arts L. 132-14 and L. 132-15 of the Consumer Code)). Where the abuse results in a contract, the latter is void (Art. L. 132-13 of the Consumer Code). Such abuses may also be sanctioned under the relevant provisions of the Criminal Code (Art. 223-15-2 of the Criminal Code).

For all of the practices mentioned above, additional criminal penalties are also available (e.g. interdiction to have a commer-cial activity) for both types of practices.

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euro for unlawful comparative advertising in relation to an advertisement campaign launched in 2016 presenting some of Lidl-branded products as identical to those of major manufac-turers’ brands. The Paris Court of Appeal notably considered that the criterion used for the comparison was not objective and therefore unverifiable for the consumer, since the compar-ison was based not only on the products’ prices but also on their taste, which is by its very nature subjective (Paris Court of Appeal, 31 January 2020, No 18/01091).

Public enforcement. In October 2020, the DGCCRF released the results of investigations conducted in the car rental sector. The DGCCRF looked at 31 professionals and found that42%ofthestructuresthatwerecontrolleddidnotcomplywith their legal obligations. Ten warnings and four injunctions were issued, the majority of which pertained to a general lack of precontractual information on prices and conditions of sale, as well as the presence of unfair clauses in the general terms and conditions of rental. The DGCCRF also referred one of the cases identified to the public prosecutor.



Depending on the nature of the infringement, the DGCCRF agents have either ordinary powers of investigation (Arts L. 512-5 to L. 512-50 of the Consumer Code), or coercive powers in the form of dawn raids carried out under judicial control (Arts L. 512-51 to L. 512-65 of the Consumer Code).

With regard to ordinary powers of investigation, the DGCCRF’s agents may operate in public spaces but also, from 8am to 8pm, in places used for professional purposes or places where a service is provided – including when the place is used for residential purposes. They may request the communication of documents of any nature, collect samples, and make a deposit of certain products pending the results of the necessary checks. They may also interview any person likely to provide informa-tion useful to their findings. Finally, where it is necessary to obtain evidence, the agents are authorised to hide their identity (including online) and disclose their status only at the time they inform the person being inspected of the finding of a breach (Art. L. 512-7 of the Consumer Code).

When such powers of investigation are not sufficient to collect evidence and in relation to certain infringements of consumer law (e.g. misleading commercial conduct, infringements related to comparative advertising, distance contracts, consumer credit, abuse of weakness), the DGCCRF may request authority from a judge in order to carry out dawn raids at one or more premises. In contrast to an ordinary investigation, the DGCCRF is then permitted to use coercive powers to seize documents or prod-ucts, collect samples and interview individuals.

The conduct of an investigation may vary greatly depending on the circumstances of the case; therefore, there are no so-called “key steps” in a typical investigation. However, it is worth mentioning that before carrying out an investiga-tion, the DGCCRF’s agents shall indicate to the person being investigated their identity, unless they are carrying out inves-tigations undercover (Art. L. 512-7 of the Consumer Code). If the DGCCRF intends to carry out dawn raids or to pene-trate against the will of the occupant a premise used for both professional and residential purposes, it shall beforehand obtain authority from a judge (Arts L. 512-6 and L. 512-52 et seq. of the

In addition to this, consumer contracts are subject to specific requirements. There is, for example, a rigorous pre-contractual duty of information imposed on the professional and a strict prohibition of abusive contractual terms (Art. L. 212-1 et seq. of the Consumer Code). Moreover, there are also contracts for which a specific legal framework has been set by the Consumer Code, such as consumer loans (Art. L. 311-1 et seq. of the Consumer Code) and mortgage loans (Art. L. 313-1 et seq. of the Consumer Code).

Aside from this, the Consumer Code also sets a specific legal framework for over-indebted consumers (Art. L. 711-1 et seq. of the Consumer Code).


As mentioned above, the scope of the other protections/prohi-bitions available under French law is very wide and covers numerous practices. For each of these practices, substantive tests and case law provide for specific conditions which must be fulfilled for the practice to constitute an infringement.

Whilst the number of these practices and the conditions related to each of them is too wide for the purpose of this chapter, some examples are set out below.

For instance, for comparative advertising not to constitute a breach of consumer law, the advert must first compare prod-ucts or services answering the same needs or fulfilling the same objectives. Secondly, the comparison must be objective and put essential, useful, verifiable and representative characteris-tics into perspective. Moreover, the advertising must not be misleading or deceptive. It must also not take undue advantage from the reputation of another product or service or create a confusion between distinct products or services. Finally, it must not discredit competitors and their products.

Regarding consumer loans, the legal framework set by the Consumer Code is complex and protective and contains, for instance, precise pre-contractual information, duties as well as a specific right of withdrawal.


There are no exceptions or exemptions to these provisions.


Criminal, administrative and civil law remedies are available depending on the prohibitions. As the scope of these prohi-bitions is very wide, they will not be considered in detail. As a general point, it is necessary to first define the infringement and relevant provisions in order to determine the available remedies.

For instance, as regards comparative advertising, the rele-vant remedies depend on whether the infringement constitutes a misleading or deceptive commercial practice (see the answer to question 4.4 above) and/or an infringement of Intellectual Property rights (Art. L. 716-10 of the Intellectual Property Code).


Private enforcement. In January 2020, the Paris Court of Appeal fined Lidl (a discount supermarket chain) a symbolic

53Ashurst LLP


by the DGCCRF agents, despite three reminders, and who also provided incomplete documents (Cour de Cassation, 16 January 2018, No 17-80291).

Similarly, the French Supreme Court upheld a decision to sanction a farmer for the offence of obstructing DGCCRF agents in the performance of their duties since she had, for 50 minutes, prevented the agents from entering the livestock build-ings, and only gave her agreement after they had notified her of their departure and established an offence report (Cour de Cassation, 18 January 2000, No 99-82406 ).


There is no competition law-style commitment procedure. The only case in which commitments may be relevant is where the DGCCRF offers the offender a settlement. Indeed, provided that the public proceedings have not been initiated against the offender, the DGCCRF may resolve an investigation by proposing a transaction to the offender, in which they agree on the fine to be paid, the time limit for its payment and, if appli-cable, other obligations resulting from the acceptance of the settlement, such as behavioural commitments (Art. R. 523-1 et seq. of the Consumer Code).

Such transaction requires the agreement of the public pros-ecutor and may only take place in relation to certain consumer law infringements, including for instance: most offences sanc-tioned by a fine of less than EUR 3,000 (e.g. non-compliance with the general pre-contractual information obligation); some offences not punishable by a prison sentence (e.g. forced sales, infringements in relation to consumer credit); and misleading commercial practices (Art. L. 523-1 of the Consumer Code).

7 Enforcement


In the event the DGCCRF finds that consumer law rules have been infringed, three types of measures can be adopted by the DGCCRF: pedagogical measures; corrective measures; or sanctions.

Pedagogical measures are favoured by the DGCCRF when the identified breach stems from a lack of knowledge of the rele-vant rules or negligence in their application. In such case, the DGCCRF sends a warning to the professional concerned to inform it of the observation made and then ensures the adop-tion of compliance measures by it in the months that follow.

Corrective measures aim to prompt the professional to comply with the regulation in force more quickly. There are a variety of such measures, including:■ Administrative police measures adopted by the

DGCCRF, in particular to order the professional to adopt measures necessary to comply with consumer law rules, to cease any unlawful conduct, or to remove any unlawful or abusive clause within a set reasonable time limit (Art. L. 521-1 et seq. of the Consumer Code). Order decisions adopted by the DGCCRF against a professional may be published at the latter’s expense (Art. L. 521-2 of the Consumer Code).

Such decisions may only be issued after an adversarial procedure initiated before the DGCCRF.

Consumer Code). Following the investigation, the DGCCRF agents must keep minutes of the investigation (“procès-verbaux ”). When the DGCCRF is not competent to issue a decision, the case will be transferred to the public prosecutor who will decide on the outcome of the investigation.


Investigations may be triggered ex officio or by a complaint filed by a consumer, a professional or an association. Whistleblowing is unlikely to be used in relation to consumer law infringe-ments – French law Sapin 2 restricts whistleblowing to cases of “serious and clear” violation of the law (Art. 6 of Law No 2016-1691 on transparency, the fight against corruption and the modernisation of economic life) – and its utility would be limited since, when reporting a breach to the DGCCRF, the consumer may already need to remain anonymous vis-à-vis the reported professional.


Consumers and professionals may alert the DGCCRF in several ways, by: email; phone; physically going to the DGCCRF offices; or filling in an online questionnaire on the DGCCRF’s website.

In 2019, the DGCCRF also launched an app called “SignalConso” which enables consumers to alert the authority to a large range of problems that may be encountered with a professional. The business concerned is then informed of the problem reported; however, if the problem remains unresolved, is sufficiently serious or has been reported many times, the report may be transferred to the DGCCRF agents for investiga-tion. Nonetheless, there is no individual follow-up following a report as the alert is treated in a collective way.


The length of investigations largely depends on the type of infringement concerned and its complexity. It can range from one month to several years. The law does not impose a specific timeline for the conduct of an investigation; however, claims against the excessive length of time of investigations are rarely successful. In order to accelerate the procedure, a settlement is often offered by the DGCCRF agents; the settlement procedure is, however, available only under certain conditions and in rela-tion to certain infringements of consumer law (see answer to question 6.6 below).


The Consumer Code provides for criminal penalties in case of obstruction of the conduct of an investigation by a DGCCRF agent. Any person guilty of obstruction may be sentenced to two years’ imprisonment, a fine of EUR 300,000 – which may amount to10%oftheaverageannualturnoverinproportiontothebene-fits derived from the offence – as well as additional penalties, such as being banned from exercising the professional activity at issue (Arts L. 512-4 and L. 531-1 et seq. of the Consumer Code).

For instance, the French Supreme Court upheld the convic-tion of a person who failed to provide the documents requested

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■ If the administrative fine incurred for the infringementconcerned does not exceed EUR 3,000 for a natural person or EUR 15,000 for a legal person, the DGCCRF must take action within one year from the date on which the breach or infringement was committed (Art. L. 522-3 of the Consumer Code).

■ Iftheamountoftheadministrativefineincurredexceedsthe thresholds indicated above, the limitation period within which the DGCCRF may act is three years from the date on which the infringement was committed (Art. L. 522-2 of the Consumer Code).

If the DGCCRF has not taken any measure aiming at investi-gating, finding, or punishing an offence within the abovemen-tioned time limit, no further action can be initiated.

The initiation of civil or criminal proceedings by the DGCCRF is also bound by limitation periods. In this respect, it should be noted that:■ For civil actions, the usual limitation period is five years

from the day on which the plaintiff knew, or should have known of, the facts of the infringement (Art. 2224 of the Civil Code).

■ For criminal actions, the starting point of the limitation period commences from the day on which the infringe-ment is committed. However, its duration depends on the nature of the infringement and is as follows: one year for minor offences (“contraventions”); or six years for inter-mediate offences (“délits”) (Arts 8 and 9 of the Criminal Procedure Code). It should, in addition, be specified that according to Art. 40 of the Criminal Procedure Code, the DGCCRF must inform the public prosecutor of any offence without delay, by providing him all relevant infor-mation, reports or acts.


The DGCCRF may directly implement three kinds of enforce-ment powers:■ Warnings sent to professionals, notably to inform of the

fact that practices may be non-compliant with consumer law rules (pedagogical measures).

■ Administrative policing measures, the purpose of which is to obtain from the professional compliance with the regulation in force within a reasonable set time limit (corrective measures).

■ Administrative sanctions, the purpose of which is to sanction an infringement to consumer law rules (repres-sive measures).

Besides such powers, the DGCCRF may also initiate civil or criminal proceedings against a non-compliant professional, without adopting a sanction decision itself.

For more details on the tools available to the DGCCRF, please refer to the answer to question 7.1 above.


In order to determine which power to use, the DGCCRF may consider two issues:1. Which type of infringement has been committed? In consumer law, each type of obligation is defined by

a specific rule of law which sets out the nature of the

In the event of failure to comply with the DGCCRF’s injunction, the professional may in certain cases be subject to an administrative fine or a criminal penalty.

It should also be noted that the Consumer Code provides for other specific types of administrative police measures applicable to products which do not comply with the regu-lation in force, are dangerous to public health or consumer safety (Art. L. 521-5 et seq. of the Consumer Code), or to the provision of services (Art. L. 521-19 et seq. of the Consumer Code).

■ Summonses filed by the DGCCRF before civil courts (or administrative court – although this is rare in practice), which occur in order to ask the relevant judge to order a professional to cease any infringement or unlawful conduct, or to remove any unlawful, prohibited or abusive clause, under a periodic penalty payment where appropriate.

Repressive measures are reserved to cases where the infringement is particularly serious and could be of distinct nature, depending on the type of infringement.

■ Administrative sanctions may be imposed directly by the DGCCRF against a professional. Administrative fines are issued either in case of infringement to obligations laid down by the Consumer Code or in case of failure to comply with a DGCCRF’s injunction relating to such infringement (Art. L. 522-1 et seq. of the Consumer Code). Decisions imposing administrative fines may be published at the company’s expense (Art. L. 522-6 of the Consumer Code).

Such decisions may only be issued after an adversarial procedure initiated before the DGCCRF, during which the professional concerned may have access to the file, be assisted by a counsel of its own choice, and submit written or oral observations within a 60-day time limit (Art. L. 522-5 of the Consumer Code). When this period has expired, the DGCCRF may adopt an administrative fine through a reasoned decision (Art. L. 522-5 of the Consumer Code).

Where the same professional has had several adminis-trative fines imposed on it for different infringements to consumer law rules, these penalties may be enforced cumulatively (Art. L. 522-7 of the Consumer Code).

■ The DGCCRF may ask a civil or commercial court –through the Minister for Economic Affairs – to impose a civil fine on the professional concerned.

■ The DGCCRF may request a public prosecutor beforea criminal court to prosecute and impose a criminal penalty (i.e. a fine or imprisonment) to a professional, by sending him an inspection report (“procès-verbal de constata-tion d’infraction”).

In the event that no criminal proceedings are initiated by the public prosecutor, the DGCCRF may also ask the latter for its approval to offer the professional concerned a settlement, which notably includes the amount of the fine to be imposed on the latter, within three months from the establishment of the inspection report – it being specified that such settlement may only be offered for minor offences (“contraventions”) and interme-diate offences (“délits”) which are not punishable by imprison-ment (Art. L. 523-1 of the Consumer Code). If the public pros-ecutor approves the settlement proposal, the DGCCRF notifies it to the professional, which then has one month to accept it.


The DGCCRF’s action to impose administrative sanctions is subject to a limitation period, the duration of which varies according to the seriousness of the breach committed:

55Ashurst LLP


by at least two consumers who have suffered damages caused by the same professional and having a common origin (Art. L. 622-1 et seq. of the Consumer Code); or (ii) a group action, by which an association may, without any mandate, act in order to obtain damages for consumers having suffered the same loss by constituting a group, to which other consumers concerned by the loss may adhere (Art. L. 623-1 et seq. of the Consumer Code). While a joint representation action may be initiated before any court, a group action may only be filed before a specific civil court, namely the Tribunal Judiciaire.

Finally, it should be noted that in the area of consumer law, there are extrajudicial mechanisms for settling disputes, such as mediation.


Damages actions for infringements to consumer law are time-barred in accordance with statutory limitation periods appli-cable to the case at stake, depending on the nature of the action (civil or criminal). In that respect, please refer to the answer to question 7.2 above.

However, it must be specified that the initiation of a group action suspends the limitation period applicable to individual damages actions.

In addition, specific limitation periods exist for certain infringe-ments to consumer law rules (for instance, actions for a guarantee of conformity must be brought by the consumer within two years from the delivery of the goods by the professional, while the limi-tation period for bringing an action for personal injury is 10 years from the date of consolidation of the damage).


Through the DGCCRF, France is part of the European Consumer Protection Cooperation (“CPC”) network implemented by Regulation (EC) No 2006/2004 of the European Parliament and of the Council of 27 October 2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws, which has since been repealed by Regulation (EU) 2017/2394. This network aims at protecting the collective interests of consumers and putting an end to infringements by developing cooperation between national authorities in charge of the consumer protection via mutual assistance mechanisms and information exchange.

France is also a member of the International Consumer Protection and Enforcement Network (“ICPEN”), a network of different Organisation for Economic Co-operation and Development (“OECD”) countries. The purpose of such network is to share information about cross-border commer-cial activities that may affect consumer interests and to promote international cooperation and cooperation among national agencies in charge of consumer law rules enforcement. In this context, the ICPEN notably shares among its members best practices regarding key consumer protection laws and enforce-ment powers.

France has at times concluded bilateral agreements allowing consumers to lodge a complaint with another country’s consumer protection authority.

sanction(s) incurred in the event of an infringement. Therefore, enforcement tools/powers to be implemented by the DGCCRF may be determined according to the characteristics of an infringement provided for by the rele-vant rule of law (e.g. where an infringement may be sanc-tioned by a criminal fine or imprisonment, criminal courts have jurisdiction).

2. Which action should be taken in response to the infringement: a pedagogical measure; a corrective measure; or a repressive measure?

When the DGCCRF has a choice between several enforce-ment powers/tools following the first step described above, it may analyse the specific circumstances of the case at stake, in order to adopt the most appropriate measures with respect to the seriousness of the infringement (e.g. lack of knowledge of the rules, negligence in the applica-tion of the rules, wilful violation of the rules).


For a description of rules and procedures that must be followed for each enforcement tool/power, please refer to the answer to question 7.1 above.


Actions for damages in relation to consumer law infringements may be initiated irrespective of whether the DGCCRF or a civil, administrative, or criminal court issued a decision establishing the existence of such infringement.

Consumer disputes may be of a civil or criminal nature. Consumer disputes may be initiated before civil or criminal

courts (the court with material jurisdiction being determined on the basis of the infringement concerned: minor offences (“contraventions”); or intermediate offences (“délits”)). From the consumer point of view, the main interest of initiating crim-inal proceedings instead of civil ones lies in the fact that the burden of proof will lie on the public prosecutor. In any event, it should be noted that whatever the nature of the court having jurisdiction, the judge presiding over a consumer dispute may ex officio find that there had been an infringement to a provision laid down by the Consumer Code, even if such provision is not of public policy.

Furthermore, actions for damages may take the form of indi-vidual or collective actions.

More specifically, collective actions may only be initiated by an association which has been approved in view of the fact that its purpose is notably to defend the interests of consumers.

Such an association is entitled to bring two types of actions:■ Actions to protect the collective interest of consumers:

damages actions for the collective loss suffered by consumers may be brought by an approved association before criminal courts (Art. L. 621-1 of the Consumer Code) or civil courts (in such case, the action initiated by the association must be joint with that of one or more consumers (Art. L. 621-9 of the Consumer Code)).

■ Actions to protect the individual interest of consumers: such actions may notably take the form of: (i) a joint representation action by which an association is mandated

56 France


suspension in front of the interim measures administrative court (Art. L. 521-1 of the Administration Procedural Code) under a distinct procedure.

There is no specific provision related to consumer protection in order to suspend the effect of a decision before civil courts or criminal courts, where appeals are in principle suspensory (Arts 539 of the Civil Procedure Code and 708 of the Criminal Procedure Code).



France is part of the same dynamic as the EU with respect to the enforcement of consumer protection law. Indeed, the current trend observed in France is towards a modernisation of consumer protection rules, especially with respect to the digital economy.

The Law 2020-1508, on various provisions aimed at adapting French law in economic and financial matters to EU law, adopted on 3 December 2020, is an illustration of such evolution. In the chapter dedicated to consumer protection, the law implements, within the Consumer Code, Regulation No 2018/302/EU on geo-blocking. It also reinforces the powers of the DGCCRF in the fight against online fraud. In particular, it introduces into the Consumer Code a provision under which in cases of breach of the rules relating to pre-contractual information, or the conformity and safety of products, caused on an online inter-face without its author being identified, the competent admin-istrative authority may require a message to be displayed on the website, warning consumers of the risk which may be incurred when accessing the content of the relevant website.


With the adoption of the Law 2020-1508, the Government has been empowered to adopt ordinances in order to transpose three Directives:■ DirectiveNo2019/770/EUoncertainaspectsconcerning

contracts for the supply of digital content and digital services;

■ DirectiveNo2019/771/EUoncertainaspectsconcerningcontracts for the sale of goods; and

■ the so-called “Omnibus Directive” No 2019/2161/UE,which aims at modernising consumer protection rules.

The Government can also ensure better enforcement of such rules notably through the update of four existing consumer protection Directives: the Unfair Contract Terms Directive No 93/13/EEC; the Price Indications Directive No 98/6/EU; the Unfair Commercial Practices Directive No 2005/29/EC; and the Consumer Rights Directive No 2011/83/EU.

8 Appeals


The appeal process depends on the court or administration that took the decision.

When the DGCCRF issues a decision of sanction (i.e. an administrative sanction such as an injunction or a fine), there are two ways for the professional to contest the sanction. First, the professional may introduce an “administrative” appeal, which is dealt with internally. This appeal may be “for reconsideration” (“gracieux”), wherein it is addressed directly to the person who took the decision, or may be hierarchical, wherein it is addressed to the hierarchical superior of the person who took the decision). The DGCCRF’s website provides for an online form to fill in order to exercise this appeal, both “gracieux” or hierarchical. Second, the professional may choose to resort to a litigious appeal before the French administrative courts (“recours pour excès de pouvoir ”). The professional can do so before the administra-tive court located within the jurisdiction of the establishment whose activity is at the origin of the dispute (Arts L. 211-1, R. 312-10 and R. 421-1 of the Administrative Justice Code).

The litigious appeal before an administrative court must be lodged within two months from the notification of the decision, but this time limit is suspended where the professional has also lodged an administrative appeal (i.e. a “gracieux” or hierarchical appeal). Regarding the administrative appeal, there is no time limit unless the claimant intends to lodge a litigious appeal. In this case, the administrative appeal must be filed within the time limit required to file a litigious appeal, i.e. two months.

When a decision is adopted by a criminal court, the appeal proceeding follows the rules of criminal appeals (Art. 496 et seq. of the Criminal Procedure Code).

Finally, if the infringement has been invoked before a civil court, an appeal of the judgment can be brought following the civil proceeding rules (Art. 538 et seq. of the Civil Procedure Code).


In order to lodge a litigious appeal before an administrative court against a decision taken by the DGCCRF (“recours pour excès de pouvoir”), the claimant must demonstrate an interest in taking legal action, a condition that would be met for the addressee of a decision of sanction. In the case of an appeal against a court judgment, only parties to the proceedings are authorised to appeal.


Appealing before administrative courts does not suspend the effect of the penalty. It is, however, possible to request a specific

57


Ashurst LLP

Michaël Cousin is a Partner in the Ashurst competition and EU law practice. He represents clients in antitrust litigations, merger control, state aid, consumer law, counselling and establishing effective compliance programmes. He is also specialised in distribution law and restrictive trade practices.Michaël has considerable experience in competition and consumer law matters involving the energy, transport and consumer products sectors, and has represented clients in other industries including retail, banking, elevators and private equity.

Ashurst LLP 18, square Edouard VII 75009 Paris France

Tel: +33 1 53 53 56 92Email: [email protected]: www.ashurst.com

Marie Florent is an Associate in the Ashurst competition and EU law department in Paris. She specialises in all areas of French and EU competition law. She has extensive experience in merger control and advises companies in antitrust investigations before the European Commission and the French Competition Authority. She is also specialised in consumer law, distribution law and restrictive trade practices. Marie is a graduate of the University of Paris X (Paris – Nanterre) and of the University of Paris II (Panthéon – Assas) and is a lawyer at the Paris Bar.

Ashurst LLP 18, square Edouard VII 75009 Paris France




www.ashurst.com



58

Germany

Ashurst LLP Dr. Michael Holzhäuser

Dr. Fabian Klein

Germ

any

Chapter 8



Most consumer protection rules require a “consumer contract”, which is defined in sec. 310 para. 3 BGB as a contract between a consumer and an entrepreneur. An “entrepreneur” is defined in sec. 14 BGB as a natural or legal person or a partnership with legal personality who, when entering into a legal transaction, acts in exer-cise of his/her or its trade, business or profession. Other consumer protection rules, e.g. the Act on Product Safety (ProdSG), apply to the manufacturer, importer or distributor of a product.

Consumers that are dealing with other consumers, e.g. in private sales, are mostly not required to comply with consumer protec-tion rules, since these contracts do not qualify as a “consumer contract”. However, this may vary based on the applicable rules.


There is no central or specific consumer protection agency in Germany, and for the most part consumers must enforce their rights themselves (primarily in civil court proceedings).

Administrative consumer authorities, e.g. the Federal Ministry of Justice and Consumer Protection or its equivalents at Federal State level (Bundesländer), do have some, albeit limited, enforce-ment powers. Based on the Act on the Enforcement of Consumer Protection (VSchDG), the German consumer authorities desig-nated therein – mainly the Federal Ministry of Justice and Consumer Protection – are given rights to investigate, impose cease-and-desist orders, receive relevant information, and enforce these measures. This requires, however, an “intra-community infringement”, meaning that the violation of consumer inter-ests must take place in an additional EU Member State to that of where the violation originated or where the violator is located. In addition, specific consumer authorities exist for specific sectors, e.g. the Federal Financial Supervisory Authority (BAFIN), the Federal Institute for Occupational Safety and Health (BAUA), the Federal Office of Consumer Protection and Food Safety (BVL), and the Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway (BNetzAG).

Furthermore, several private institutions and associations, which in part are also subsidised by the Federal State and/or the Bundesländer, may enforce certain consumer protection laws. This applies, for example, to unfair or misleading advertising under the UWG, or in relation to violations of various consumer protection rules under the Injunctive Relief Act (UKlaG).

1 General


Germany does not have a general “consumer protection act”. The various provisions that provide for consumer protection are contained in various legal acts. Moreover, “consumer protec-tion” is not a defined term in Germany; some provisions that qualify as consumer protection regulations have consumer protection as their prime objective, while others provide for consumer protection as a by-product of protecting other inter-ests (e.g. environmental standards, or health and safety issues) or by protecting other groups that include consumers but are not limited to them (e.g. employees).

The most important consumer protection rules are contained in the German Civil Code (BGB). These relate to contracts concluded with consumers, the use of general terms and condi-tions, and special types of consumer contracts (e.g. long-distance contracts, or consumer loans). In addition, the BGB, together with the Introductory Act to the German Civil Code (EGBGB), provide for various information duties when entering into contracts with consumers. Moreover, the German Act against Unfair Competition (UWG) provides for various regulations regarding the conduct towards consumers, particularly in adver-tising, and the Act against Restraints of Competition (GWB) regulates conduct towards market competition.

In addition to these key provisions, a large number of special-ised laws and regulations exist that provide for consumer protec-tion in specific areas, e.g. relating to food, travellers’ rights, product safety, and the protection of personal data.

Many of the consumer protection rules are influenced by EU law. The EU is very active in the field of consumer protec-tion and aims at establishing minimum standards of consumer protection in all Member States. EU rules are often directly applicable in addition to German law (and, in case of a conflict, mostly take precedence).


A consumer is defined as any natural person who enters into a legal transaction for purposes that are predominantly outside his/her trade, business or profession. The definition is in sec. 13 BGB and applies for all national German law.

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The general consumer protection provisions, e.g. regarding a material defect, apply to all goods, and the general provisions regarding a default of services apply to all services. In addi-tion, there are regulations relating to specific types of goods/services, such as regarding consumer loans. In general, however, consumer protection regulations do not differen-tiate between different goods and services, but rather differ-entiate between the situations in which the consumer contract is concluded. Thus, contracts concluded at the home of the consumer trigger different information duties compared with contracts concluded at a store, and only certain contracts trigger the right of the consumer to rescind the contract within (usually) 14 days without cause.


Many information duties do not apply to “everyday contracts” that are fulfilled immediately, such as purchases at bakeries and many purchases in bricks-and-mortar stores.

The right to rescind an agreement without cause does not apply to certain types of contracts; for example, for goods that have been customised for the consumer (e.g. tailor-made shirts), easily perishable goods, goods that have been sealed for hygienic or medical reasons (where the seal is broken), software that has been shrink-wrapped, newspapers or magazines (excluding subscrip-tions), and certain agreements where the price is highly volatile.


In the case of a defective product, the consumer can demand the repair or replacement of the product. If this fails or is impos-sible, the consumer may revoke the agreement or reduce the purchase price. In addition, consumers can claim damages or reimbursement of futile expenditure.

In the case of violation of other consumer protection rules, e.g. information duties, the consumer may, under certain conditions, rescind the contract, and in such circumstances, the commence-ment of the time period within which such breach must be declared does not begin (however, such a customer must gener-ally make any such declaration within a maximum period of, typically, one year). If the missing information relates to costs (e.g. for delivery), the consumer may decline to pay these costs.


The remedies available typically must be pursued by the consumer in individual civil court proceedings. There is no specific enforce-ment regime, and no specific agency is in general authorised to initiate proceedings for a breach.

In specific cases, there are limited possibilities for (i) associa-tions which exist for the promotion of commercial or independent professional interests, or (ii) qualified entities to raise claims in


Yes, there are sector-specific bodies that monitor, and in some cases enforce, consumer protection regulations. The most important ones are the BAFIN, the BAUA, the BVL, and the BNetzAG. In recent years, the Federal Cartel Office (BKartA) has additionally developed a strong focus on consumer protec-tion in the area of competition law, e.g. the investigation of conduct having an impact on consumers, such as Facebook’s data collection activities (see question 4.5).



The BGB determines when purchased goods are deemed to be defective (sec. 434 BGB). According to this provision, a purchased good will be free from material defects if it is of the agreed quality. If the quality has not been agreed upon, the good must be suitable for its intended use, or must be of the same quality as comparable goods, as would be expected by the consumer. Advertising claims are also relevant to these expec-tations. In addition, goods must be free from legal defects (i.e. third parties must not be able to assert any rights against the buyer in respect of the goods). If a material defect in the goods becomes apparent within the first six months, the law provides for a presumption that the goods were already defective at the time they were passed on to the consumer (sec. 477 BGB).

No specific definition exists as regards what constitutes a “defective” or “sub-standard” service, and the general rules on default of performance apply, according to which, the service must comply with the agreed-upon requirements or the require-ments that could have been expected. The test is therefore similar to that for goods.

In addition to the regulations relating to defective goods or sub-standard services, consumers are protected by various information duties imposed on suppliers. The relevant infor-mation must be provided before or at least at the time when the consumer contract is entered into. The information duties include information on the main features of the good or service, the identity of the seller, the terms of delivery, and the main rights of the consumer in case of a default.

Further, consumers are in many cases protected by a right to rescind a consumer contract without cause within (mostly) 14 days (which they must be properly informed about). This right to rescind applies particularly to purchase agreements which were concluded online or where consumers were approached at home, as well as to consumer loan agreements.


There is no specific test for all of the above protections. The requirements vary significantly depending on the consumer protection regulation in question.

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light of specific regulations for individual products (which vary from product to product). In addition, products that require the CE to sign (a certification mark that indicates conformity with health, safety, and environmental protection standards for products sold within the European Economic Area) may only be put on the market if they fulfil the requirements relating to CE marking (sec. 7 ProdSG). Manufacturers must also provide rele-vant information on the use of the product and contact details (sec. 6 para. 1 ProdSG).


The ProdSG applies to all goods provided, presented or used on a commercial basis for the first time on the market (sec. 1 ProdSG).


The Act in principle applies to all goods offered on the market by commercial suppliers to consumers; however, it lists certain exceptions, namely: antiques; products that require refurbishing (if made clear that they require refurbishing); products for mili-tary use; food; animal feed; live plants and animals; medical products (for these, a specific act applies); and plant protection products (for these, a specific act applies) (sec. 1 para. 2 ProdSG).


Fines of up to EUR 100,000 can be imposed for intentionally or negligently breaching the ProdSG (sec. 39 ProdSG). Repeated and persistent violations of individual, specific obligations under the ProdSG are punishable by imprisonment for up to one year or a fine (sec. 40 ProdSG).

In addition, selling goods in violation of the ProdSG may lead to additional legal breaches, e.g. under the UWG, and such goods may be regarded as defective in terms of the BGB. Any such violation can lead to additional claims, e.g. damages claims or cease-and-desist claims by competitors or consumers.


The manufacturer, its authorised representative and the importer are required to immediately inform the competent market surveillance authorities if they know, or should have known on the basis of the information or experience available to them, that a consumer product made available on the market by them presents a risk for the safety and health of persons. In particular, they must inform the market surveillance authority about the measures they have taken to prevent this risk. The market surveil-lance authority shall immediately inform the BAUA about the facts, in particular in the event of recalls (sec. 6 para. 4 ProdSG).


There are no specific legal requirements regarding product recall regimes. Excluding the information duties as regards the competent agencies, the requirements and steps to be taken in

the name of multiple consumers in class action proceedings. Under the UKlaG, such associations/qualified entities (which must fulfil the requirements in sec. 3 and/or 4 UKlaG) may raise claims for cease-and-desist orders against companies that violate consumer protection laws. Under the Model Declaratory Action Act (Musterfeststellungsklagegesetz ), which was introduced on 1 November 2018, certain qualified entities can seek a declaration from a court as to whether certain claims between consumers and entrepreneurs exist. Consumers can therefore use this mechanism as a “first step” to raise their specific claims in subse-quent individual proceedings.


Since enforcement actions for the most part must be taken by individual consumers, there are few cases that stand out. Over the past few years, however, courts have been confronted by a very large number of consumers raising claims against Volkswagen in relation to the use of illegal software to limit the measurement of exhaust emissions (“Dieselgate”). Furthermore, in recent years consumer claims relating to data security issues and violations of the General Data Protection Regulation (GDPR) have risen significantly.

It is notable that the relatively new “declaratory action” model has been used in various instances, including in relation to “Dieselgate”, as well as against various German savings banks (Sparkassen) in connection with illegal stipulations of interest rates in terms and conditions for consumer credits.



The safety requirements of goods and services acquired by consumers are regulated in different acts, the most impor-tant one being the ProdSG, according to which a product may only be made available on the market if it does not pose a risk to the safety and health of persons when used as intended or expected. Several European directives are embodied in this law, e.g. the Directive on the Safety of Toys and the Lift Directive. According to the ProdSG, manufacturers, importers and distrib-utors may only place goods on the market that meet the legal requirements for the health and safety protection of consumers; there are also acts and regulations applicable to specific goods.

In addition to the ProdSG, there are numerous other regula-tions relating to the health of consumers, such as the Food and Commodities Act, and the Medicinal Products Act. In cases where a product is subject to certain industry-specific regula-tions (e.g. the Machinery Directive), these take precedence; however, the ProdSG continues to apply.


The ProdSG sets out various requirements that goods must meet in order to be offered on the German market (sec. 3 et seq. ProdSG). In particular, these include the requirement to ensure the safety of products put on the market and the health of persons (sec. 3 para. 1 ProdSG), which is in turn to be assessed in

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As regards anti-competitive conduct, the BKartA has been given certain powers to investigate compliance with consumer protection in general, i.e. the BKartA is assigned to carry out sector inquiries that serve primarily to reveal any sector-wide consumer protection deficiencies.


There are no specific exceptions.


The possible claims include cease-and-desist, recall/removal of products, damages, and profit absorption. In practice, the claims are often raised in a warning letter and enforced in preliminary injunction proceedings; however, main action proceedings are also possible. Violations of the UWG may also constitute a criminal offence triggering fines of up to EUR 300,000 or imprisonment.

However, claims under the UWG are not open to consumers. They may only be raised by: (i) competitors of the violating entity; (ii) associations which exist for the promotion of commercial or independent professional interests if a considerable number of entrepreneurs belong thereto, and which distribute goods or services of the same or similar type on the same market; or (iii) consumer protection associations that are “qualified entities” pursuant to sec. 4 UKlaG.


Most enforcement is private enforcement by competitors, and there are numerous cases every year. Recent relevant case law includes the question of how advertising must be identified by influencers on online/social media accounts, and the use of fake product reviews.

Examples of public enforcement include TV broadcasting company Sky being fined EUR 250,000 by the Federal Network Agency for repeatedly making unauthorised advertising phone calls to consumers.

In recent decisions, the BKartA has begun to put a stronger emphasis on data and consumer protection concerns, and found that Facebook abused its dominant position by collecting user data in breach of data protection regulations and there-fore harming consumer and data protection rights. Facebook later appealed this decision and requested interim relief. The Higher Regional Court of Düsseldorf granted this request, only for the Federal Court of Justice to overturn this decision later. Thus, Facebook is obliged to cease such business practices on an interim basis; a conclusive decision on the appeal, outside of interim relief, has yet to be reached.

In December 2017, the BKartA launched a sector inquiry in relation to the supply of so-called “Smart TVs”. The purpose of the sector inquiry was to clarify whether and to what extent personal data is collected, disclosed and commercially exploited by the TV manufacturers and whether consumers are informed about this. In particular, the terms of business and data protec-tion conditions were thoroughly examined. The BKartA found that almost all Smart TV manufacturers active on the German market are subject to serious shortfalls in terms of transparency of how the user’s data is stored and used. The BKartA therefore

relation to an individual product recall must be assessed and decided on a case-by-case basis.

The BAUA provides additional information on how to best conduct product recalls. In addition, EU laws may apply.


Most product recalls are voluntary or at least initiated by the manufacturers. The most prominent areas of product recalls are in relation to food and beverages, cars, childcare items and toys. Unsurprisingly, 2020 saw a large number of product recalls and product warnings with regard to health-related items, such as mouth-and-nose masks and hand sanitisers distributed by two major German drugstores.



The most relevant act regulating the conduct of persons towards consumers is the UWG, which provides for various restrictions against aggressive commercial practices and misleading commer-cial practices, in particular misleading advertising and compar-ative advertising. For example, companies may not advertise products with features they do not possess. It also provides for various restrictions on how businesses may approach and contact consumers, e.g. under which circumstances consumers may be contacted with advertising via telephone or email.

The UWG applies to both business-to-consumer (B2C) relationships and business-to-business (B2B) relationships. However, several of its rules apply in B2C situations only, e.g. regarding after-sales services in a different language than that of the country in which the consumer is located.

In addition, the GWB has the objective of maintaining sound market competition by regulating anti-competitive business conduct. The GWB contains various provisions which directly or indirectly aim at consumer protection. Relevant forms of consumer detrimental infringements prohibited under German competition law include the abuse of market power under sec. 19 GWB, particularly by means of exploitative (as well as exclu-sionary) abuses. Sec. 2 para. 1 GWB provides that even a cartel may persist if it, among other criteria, benefits the consumer.


The Code against Unfair Competition requires that the act or omission qualifies as a “commercial practice”. The commer-cial practice is further tested against the understanding of an “average consumer”, i.e. a consumer that is of average under-standing and knowledge (unless specific rules are aimed at protecting individual groups, e.g. children, in which case an average member of that group is used as the benchmark). The additional requirements depend on the individual prohibition that may have been violated.

62 Germany



In the area of data protection rules, there has been a significant increase in investigations and fines within the last year. For example, telecom provider 1&1 was fined EUR 10 million for disclosing personal data of customers in hotline calls.

In 2019, the BKartA launched a sector inquiry into user ratings on the internet. Studies and media coverage frequently point out that user ratings on the internet are not authentic in many cases, e.g. because they were posted by a person who has received something in return. The BKartA has identified this as an issue of unfair competition law, for which it is not compe-tent. Nonetheless, it proposes increased transparency in relation to reviewers’ motivations for rating a product or service. This would in turn enable consumers to better assess the authenticity of a rating.



German consumer authorities have only limited investigation and enforcement powers. Most violations of consumer protec-tion rules must be pursued by the consumers themselves (e.g. where a product is defective).

Specific acts, however, grant the respective competent authority investigation possibilities. This applies most importantly to the ProdSG which provides the competent authorities the rights to request relevant information, initiate investigations, and to enter premises during normal operational hours (sec. 28 ProdSG).

In cases of violations of consumer protection rules in inter-com-munity situations (i.e. where the violation of consumer interests takes place in an EU Member State other than that where the violation originated or where the violator is located), the VSchDG gives the competent consumer authority the right to investigate an alleged or actual violation (sec. 5 VSchDG). This includes the right to be provided with all relevant information from the (alleged) violator, to request contact details from postal or other service providers, to be granted copies of electronic data, and to enter business premises during normal operating hours.

Moreover, the BKartA is authorised to carry out sector inves-tigations even if there is no specific suspicion that any relevant laws were violated. The sector investigations by the BKartA are rather an instrument to reveal sector-wide consumer protec-tion deficiencies in order to take appropriate countermeasures. Typically, the BKartA sends questionnaires to companies in the relevant sector covering e.g. financial numbers or company structures. If companies fail to comply with this request, i.e. do not answer in full or at all, the BKartA may impose a fine of up to EUR 100,000.


In general, investigations may be triggered ex officio, or by complaints of consumers or other third parties. In case of intra-community violations, investigations may also be requested by competent consumer authorities of other EU Member States.

recommended that manufacturers change their market behav-iour and that the legislator tighten regulation for Internet of Things (IoT) devices.

In 2020, two more sector inquiries were launched. The first one deals with publicly accessible charging infrastructure for elec-tric vehicles. As the charging infrastructure does not underlie any specific energy laws, possible restraints of competition may be remedied by the application of antitrust law. This inquiry comes as registrations of electric cars in Germany surge. The second sector inquiry concerns messenger services. As a part of almost every consumer’s daily life, shortfalls with regard to data protec-tion and the security of communications may be encountered.



Since 25 May 2018, the new EU data protection rules (GDPR) have applied throughout Europe. They apply to companies based in the EU, as well as international companies which offer their goods or services in the EU or monitor the behaviour of EU consumers. They provide for various regulations that are aimed at protecting consumers, in particular regarding informa-tion on the collection and use of personal data.

Various regulations also aim to protect consumers in e-com-merce situations, especially by requiring various information to be provided to consumers, but also, for example, via the geo-blocking regulation which requires providers to grant country-specific access to websites. These are mostly EU legislative acts which often apply directly (i.e. without the need to be implemented in national German law).

In addition, competition law is also relevant. The increasing importance of internet platforms raises new and different competition and economic issues which has led to the BKartA focusing on the digital economy. Due to the nature of the online-retailing market, digital platforms often have a dominant market position. Therefore, they tend to pose a strong risk of abuse of market power. Many of the changes in the tenth amend-ment to the GWB were made as a result of this. One of the most important changes is the wholly new sec. 19a GWB. It enables the BKartA to prohibit abusive behaviour of undertakings more effectively, with paramount importance across multiple markets. In this context, the BKartA focuses on the distribution systems of digital marketplaces as well as their terms of business. In addition, it has announced that it is making use of this provision in an investigation of Facebook regarding its practice of linking the Facebook network with their Oculus devices.


There is no uniform substantive test.


The scope of applicability is diverse.


The scope of remedies and/or sanctions is diverse.

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There is no specific time limit to commence proceedings for breaches. However, the general statute of limitations applies, which in most cases is three years. For violations of unfair competition law, the limitation period is as short as six months. Under German cartel law, the limitation period for the pros-ecution of regulatory offences, such as the abuse of market power according to sec. 19 GWB, is five years (see sec. 81g para. 1 GWB). The limitation period begins to run as soon as the infringing conduct has been completed (see sec. 31 para. 3 of the Administrative Offences Act (OWiG)).


Depending on the basis of a claim, the responsible authorities or courts have the power to impose fines. Where the violator is required to act but does not, the necessary steps may be under-taken by a third party (e.g. bailiff, third-party provider). In extreme cases, court or administrative orders can be enforced by imprisonment of responsible persons (e.g. the CEO of a company). The BKartA, according to sec. 32 GWB, may require the termination of a cartel infringement and issue a reimburse-ment order under sec. 32 para. 2a GWB. With the tenth amend-ment to the GWB, another tool was handed to the BKartA; sec. 32a GWB was heavily modified. It enables the BKartA to order interim measures if an infringement of the GWB is very likely and the measures are necessary in order to prevent irreparable harm to another undertaking. This might lead to heightened levels of enforcement, especially in digital markets. In terms of regulatory-offence proceedings, sec. 81 et seq. GWB entitles the BKartAtoimposefinesofuptoatotalamountof10%oftheannual worldwide turnover. Other consumer protection laws, in particular unfair competition law, may be brought before a civil court by way of private enforcement. With regard to unfair competition law, the limitations already mentioned apply (see question 1.4).


One fundamental concept of the German legal system is the principle of proportionality. In general, the authorities must always take the least restrictive measure which is effective.


In the case of civil court actions, the Code of Civil Procedure (ZPO) applies. In the case of administrative actions, theAdministrative Procedure Act (VwVfG) and the Administrative Court Regulations (VwGO) apply, in addition to the special rules set out for the authorities, e.g. GWB and TKG. Individual consumer authorities in addition must follow any specific rules applying to them, e.g. the VDSchG.

The launch of a sector inquiry is within the discretion of the BKartA, provided it has reasonable grounds to suspect substan-tial, permanent or repeated infringements of consumer protec-tion provisions which might harm the interests of a large number of consumers.


There are no specific complaints procedures, either for consumers or for businesses. However, submissions to the BKartA can be made informally. Furthermore, there is a standardised anony-mous notification procedure for cartel participants.


There is no general timeline for an investigation as these are always case specific.


Criminal penalties for non-compliance with consumer law inves-tigations in general do not apply. However, non-compliance with the orders of a consumer authority under the VSchDG may result in a fine of up to EUR 10,000. Furthermore, non-compliance with an investigation under the ProdSG can lead to imprison-ment of up to one year.


For cartel investigations, sec. 32b GWB opens up the possi-bility of the resolution of investigations by way of commitments. In other areas, commitments or other undertakings may be adequate to cure the violation; however, these are not explicitly foreseen as remedies under the relevant acts.

7 Enforcement


Consumer authorities enforce consumer protection rules typi-cally by way of court proceedings (where they have standing to sue). In specific sectors and for intra-community violations, the competent consumer authority is given enforcement powers (e.g. in the VSchDG) by being able to give administrative orders. These orders may also be enforced by the authorities themselves, in particular by setting fines.

The BKartA enforces consumer protection decisions through administrative acts. In addition, the BKartA may act as “amicus curiae” under sec. 90 para. 6 para. 1 GWB in conjunction with sec. 90 para. 2 GWB in cases on substantial, permanent or repeated infringements of consumer protection provisions which, due to their nature or scale, harm the interests of a large number of consumers. This is, however, rarely utilised.

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This depends on the situation, in particular whether the payment was ordered by an administrative authority or by a court.



Following “Dieselgate”, German legislators realised the increasing need for consumers to have access to class actions or to otherwise bundle their interests. By implementing Musterfeststellungsklagegesetz in 2018, German legislation reacted to this requirement. Consumers will also have an additional option under the “New Deal for Consumers” initiative started by the European Union, and the possibility for consumers to unite under a class action led by a qualified entity such as a public body or charity (Verbandsklage) was approved in November 2020. This Directive must be implemented by the individual EU Member States by the end of 2022.


In late 2019, the EU agreed upon the so-called “New Deal for Consumers”, which will require the Member States to imple-ment various new consumer protection rules. Most notably, consumers will be granted direct claims for withdrawal from a contract and/or damages in case of a violation of unfair competi-tion rules (which is not the case in Germany currently). Fines for unfaircompetitionwillbesignificantlyincreasedtoupto4%ofthe annual turnover, or up to EUR 2 million. Additional infor-mation duties will be introduced, e.g. regarding the main param-eters of online search results or listings, and companies will be obliged to ensure that product reviews are in fact done by actual customers. These regulations will have to be implemented by the Member States from November 2021 onwards, and need to be effective within six months of that date at the latest.

Moreover, new European directives enhance consumer rights regarding contracts on digital content and services, as well as for products featuring such digital elements. The directives aim to assure conformity of content with the contract and remedies, in the event of lack of such conformity or failure to supply. They must be transformed into national law by mid-2021.

On a national level, a law for “fair consumer contracts” was presented to the legislator in December 2020 and will likely be approved in 2021. The new law will provide, for example, for additional time limitations for certain types of contracts (e.g. mobile phones, gyms), and introduce several new restric-tions for clauses used in general terms and conditions towards consumers. It will also provide increased protection against contracts concluded via telephone (and related advertising).

In addition, a recent amendment to the GWB touches upon consumer protection. Under the essential facilities doctrine, market dominance can be concluded based on an undertak-ing’s access to competitively relevant data. This is to effectively ensure portability of such data which for consumers is a vital factor when switching between different operators (e.g. in the field of social media). The power of intermediaries may also be considered when assessing whether an undertaking is market dominant. This ensures that equal access is granted to market-places, so that consumers may benefit from more offers.


Most violations of consumer protection rules may be prosecuted in stand-alone actions. Investigations by consumer authorities or actions taken by these in general do not preclude individual claims. Violations of unfair competition rules, however, may only be prosecuted by competitors and different consumer protec-tion associations/qualified entities, not by consumers them-selves. Follow-on rights, where consumers can join investigations and/or enforcement measures taken by consumer authorities, do not exist. However, there are different class-action proceedings that are available to specific consumer protection associations and/or qualified entities where consumers can directly benefit. Regarding cartel claims, sec. 33 and 33a GWB grant the legal entity (including consumers, as defined in question 1.2) affected by the infringement actions for injunction, rectification and damages. However, actions brought by consumers on the basis of a cartel infringement are the absolute exception in Germany due to the typically low damage to the individual and litigation risk.

There have been attempts to establish de facto class action suits by way of transfers of claims to a company. This attempt to circum-vent civil procedure rules has, however, been denied by the courts.


The general statute of limitations applies, which in most cases is three years. For violations of unfair competition law, the limitation period is as short as six months. Claims based on a competition infringement under sec. 33 and 33a GWB become time-barred after five years (sec. 33h para. 1 GWB).


In Germany, Regulation (EU) 2017/2394 on cooperation between national authorities responsible for the enforcement of consumer protection laws applies. This EU Regulation aims to create a more effective framework for cooperation in the field of consumer law enforcement, in order to improve compliance with consumer protection rules in the EU.

8 Appeals


For court decisions and/or orders of consumer authorities, appeal proceedings exist. Depending on the relevant situation, these are mostly before the Higher Regional Courts (appeals against court decisions) or before the administrative courts (appeals against decisions of administrative authorities). Depending on the exact situation, a right of further appeal may exist.


A party against which a court or administrative decision is directed may appeal; third parties in general cannot appeal any such decision. They may, however, initiate an action themselves if they were affected by a company’s wrongdoing.

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Ashurst LLP

Dr. Fabian Klein advises national and international clients in all areas of intellectual property (IP) and commercial law. His practice focuses on trademark law, unfair competition law and the protection of trade secrets. His practice includes the enforcement in contentious and non-contentious proceedings as well as giving advice on complex IP and commercial contracts, such as licence agreements, research and development agreements, and co-operation agreements. In addition, he has extensive expertise in advising on the IP and commercial aspects in M&A transactions. His clients include leading national and international companies from the technology, consumer goods, health-care and aviation industries. Fabian studied law in Tübingen (Germany) and Madrid (Spain). He has almost a decade of experience in the IP/commercial field.

Ashurst LLPBockenheimer Landstraße 2–460306 Frankfurt am MainGermany

Tel: +49 69 97 11 27 18Email: [email protected] URL: www.ashurst.com

Dr. Michael Holzhäuser advises clients on all aspects of EU and German antitrust/competition law. As well as having strong multi-jurisdictional merger control experience, his practice focuses on defending companies in international antitrust proceedings for cartels or abusive practices before the German and European cartel authorities and courts. In addition, he specialises in the defence of companies in private follow-on cartel damages claims.His practice also includes advising enterprises on their commercial agreements (e.g. distribution systems, R&D-licence, JV or specialisation agreements) as well as in regulatory and EU law matters. Michael has extensive experience in developing and implementing comprehensive compliance systems and expert knowledge in conducting and coordinating internal investigations using state-of-the-art legal technology and project management.

Ashurst LLP Bockenheimer Landstraße 2–4 60306 Frankfurt am MainGermany




www.ashurst.com



66

Italy

Ashurst LLP

Gabriele Accardo

Denis Fosselard

Italy

Chapter 9

Giulia Carnazza


Directive 2005/29/EC and amending Directive 84/450/EEC on misleading advertising.


All traders must comply with the rules of the Code concerning unfair business-to-consumer (or micro-enterprises) commercial practices (see answer to question 4.1).

A “trader” is any natural or legal person who is acting for purposes related to their trade, business, craft or profession, as well as anyone acting in the name of or on behalf of a trader (Section 18(1)(b) of the Code).

Manufacturers and distributors must comply with the provi-sions of the Code concerning product quality and safety (Part IV).

A “producer” is the manufacturer of the product in the EU, as well as any other person(s) presenting themselves as the manufac-turer by placing a name, trademark or other distinguishing mark on the product. The definition additionally includes the person who reconditions the product, the manufacturer’s representative if the manufacturer is not established in the EU, the importer of the product, and other persons in the supply chain insofar as their activities may affect the safety properties of a product.

A “distributor” is any professional undertaking which is active in the supply chain and whose activity does not affect the safety properties of a product.


The ICA is the agency entrusted with powers to enforce the Code, either ex officio or following complaints by consumers and consumer associations, as well as micro-enterprises. In some instances, the ICA has intervened following complaints by undertakings other than micro-enterprises.

The ICA is both the investigator and the adjudicator. In practice, a Case Team is tasked with the role of instructing the investigation and bringing evidence before the ICA’s Board of Commissioners. All decisions concerning an investigation, including whether to impose fines, are adopted by the ICA’s Board.

1 General


Consumers’ rights are safeguarded by provisions in the Italian Civil Code and in Legislative Decree No. 206 of 6 September 2005 (hereinafter the “Code” or the “Consumer Code”), implementing EC Directive No. 29/2005.

As a result of Legislative Decree No. 146 of 2 August 2007, implementing Directive 2005/29/EC concerning unfair busi-ness-to-consumer commercial practices in the internal market and amending Directives 84/450/EEC, 97/7/EC, 98/27/EC, 2002/65/EC and Regulation (EC) No. 2006/2004, the Italian Competition Authority (“ICA”) is responsible for enforcement of the Code in relation to unfair business-to-consumer practices carried out before, during and after a commercial transaction.

This chapter sets out enforcement of the Code rules by the ICA in relation to business-to-consumer commercial practices; however, it does not consider the rules on contracts entered into by consumers, which, pursuant to article 1469-bis of the Italian Civil Code, are governed by the general provisions of the Italian Civil Code (Title II), unless amended by the specific consumer protection rules introduced in Italy by the Code, or by other rules that are more favourable to the consumer.


Sections 3(a) and 18(1)(a) of the Code define “consumer or user” as the natural person acting for purposes other than trade, business, craft or profession. However, under Section 5 of the Code, concerning information provided to consumers, a consumer is any individual (natural person) who is the addressee of commercial information.

The protection against unfair commercial practices has been further extended to so-called “micro-enterprises” (see Section 19(1) of the Code), i.e. entities, companies or associations with fewer than 10 employees and an annual turnover that does not exceed EUR 2 million. Micro-enterprises are similarly safe-guarded against misleading advertising, pursuant to Legislative Decree No. 145 of 2 August 2007, implementing Section 14 of

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Typically, unfair commercial practices are subject to monetary fines (see answer to question 4.4 below).

Furthermore, counterfeiting of geographic indications or designations of origin pertaining to agricultural and food prod-ucts constitutes a criminal offence under article 517-quater of the Criminal Code.


The ICA has the competence to enforce the Code in relation to unfair business-to-consumer practices.

The various Ministries apply sectoral regulations concerning product quality on the basis of their specific competences.

In case of a criminal offence, the competent authority is the Criminal Court, and its decisions may be appealed before the Criminal Court of Appeal.


In October 2020, the ICA fined Apple EUR 5 million, alleging that its “waterproof claims” misled consumers regarding the features of certain models of iPhone. In particular, Apple failed to specify that the claims that the products concerned were water resistant for up to 30 minutes at depths of up to four metres only actually applied in controlled lab tests with pure water. In addi-tion, Apple rejected consumers’ complaints of water damage, since these were not covered by the iPhone’s warranty.

In January 2020, the ICA imposed a EUR 5 million fine on ENI in relation to an illegal claim that its Diesel+ fuel allegedly contrib-uted to reducing greenhouse emissions, and that the “green diesel” label for a highly polluting product was misleading in relation to the environmental impact and the characteristics of ENI’s diesel.

In September 2018, the ICA imposed a fine of EUR 5 million fine each on Apple and Samsung in relation to so-called “planned obsolescence practices” concerning their respective smartphone devices, insofar as they did not adequately inform consumers about some essential characteristics of the batteries, such as their average duration and deterioration factors, nor about the correct procedures to maintain, verify and replace batteries in order to preserve the full functionality of their devices.



As noted, the Code prohibits misleading commercial practices that may induce consumers to take a transactional decision that would not have been taken otherwise, e.g., in relation to the product characteristics and the risks involved in its use. See further information in the answer to question 4.1 below.

Part IV of the Code specifically concerns measures addressing the safety of products (other than food products) to be put on the market.

The ICA’s decisions can be appealed before the Regional Administrative Tribunal of Lazio (“TAR”), which can, in turn, be appealed before the Council of State (Administrative Supreme Court).

Moreover, the Ministry of Economic Development (“MISE”) is responsible for consumer protection policies and its local offices are tasked with monitoring compliance of the rules and enforcement powers, notably with regard to the general rules of the Code concerning product quality and safety.

The MISE has supervisory powers both on goods already placed on the market and imports from non-EU countries. The MISE manages the Rapid Alert System – Non-Food (“RAPEX”) and may order the recall and withdrawal of unsafe and risky products.


Other than the MISE, other sector-specific bodies enforcing product quality and safety rules are the Ministry of Health, the Ministry of Economy and Finance, the Ministry of Welfare, the Ministry of the Interior and the Ministry of Infrastructure and Transport (depending on the nature of the product or service involved).

For instance, in relation to food products, the competent authority is the Ministry of Health, which manages the Rapid Alert System for Food and Feed (“RASFF”) and may order the recall or withdrawal of food from the market.



Section 21 et seq. of the Code prohibits so-called “misleading practices”, meaning commercial practices distorting the economic choices of consumers by, for instance, containing false information or omitting relevant information in relation to the existence or nature of the product, or its main charac-teristics (e.g. its availability, benefits, risks, execution, composi-tion, accessories, aftersales assistance and complaint handling, method and date of manufacture or provision, delivery, fitness for purpose, usage, geographical or commercial origin or the results to be expected from its use, etc.). See also the answer to question 4.1 below.


Please see the answer to question 4.2 below.


All goods and services are covered by the protections.


Please see the answer to question 4.3 below.

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Where producers and/or distributors know or ought to know that a product that they have placed on the market poses hazards to consumers which are incompatible with general safety requirements, they are required to notify the competent authorities immediately, specifying the actions taken to prevent risk to consumers (Section 107 of the Code). Non-compliance or delays to report are punished with an administrative fine of between EUR 1,500 and EUR 30,000 (Section 112 of the Code).


The competent authorities can prevent dangerous products from being commercialised or order a ban or recall if the product is already on the market.

If the product can be made compliant with safety requirements, the authorities may order that the manufacturer meets safety requirements before the product can be further commercialised.

Under Section 104 of the Code, a manufacturer may choose a voluntary recall when other actions are not sufficient to prevent risks in the specific circumstances, or when the manufacturers consider the recall to be necessary.

However, where there is an imminent risk to public health and safety caused by a dangerous product, the competent author-ities can prohibit commercialisation and take necessary meas-ures to ensure compliance with any such prohibition. For an unsafe product already placed on the market for which the action already taken by producers and distributors is unsatisfac-tory or insufficient, the competent authorities can order a recall or organise an effective and immediate seizure and withdrawal of the unsafe product from the market. Consumers will then be informed about the risks presented by the unsafe product, with the cost met by the producer. The competent authorities will additionally notify the RAPEX system for an EU-wide recall.


In November 2020, the ICA made mandatory commitments proposed by Amazon to solve the concerns arising from its sales activities of products related to the spread of COVID-19 carried out by third party vendors on its marketplace. Specifically, the commitments related to the publication of advertisements and the use of misleading claims for the sale of products that would have induced consumers to purchase them due to their alleged “anti-COVID-19” characteristics, as well as the considerable increase in prices compared to the pre-pandemic period.

In March 2020, the Ministry of Health ordered the with-drawal and recall of a type of tattoo ink originating from the USA due to an allergenic risk due to the presence of abnormal levels of nickel and brass.

On 17 December 2019, the Ministry of Health ordered the withdrawal and recall of the product Capsule Compatibili Dolce Gusto due to the risk of plastic particles being released from the capsule during the dispensing process.

Pursuant to Section 104 of the Code, producers may only put safe products on the market. “Safe products” can be defined as any product which, under normal or reasonably foreseeable conditions of use, including duration and, where applicable, installation and maintenance, does not present any risk or only the minimum risks compatible with the product’s use, considered to be acceptable and consistent with a high level of protection for the safety and health of persons.

Products that are not safe shall be recalled or may be subject to withdrawal from the market (either voluntarily or upon request of the competent authorities).


With regard to misleading practices, please see the answer to question 4.2.

The MISE can order the recall of unsafe products that are already placed on the market (see answer to question 3.7) or the withdrawal of unsafe products before they are placed on the market. The assessment as to whether a product is unsafe is made on a case-by-case basis.


Pursuant to Section 102(6) of the Code, the provisions in Part IV, Title I of the Code apply to all products other than food products pursuant to Parliament and Council Regulation No. 178/2002/EC of 28 January 2002.


With regard to misleading practices, please see the answer to question 4.3.

As regards the rules that determine only safe products may be put on the market, it is presumed that products bearing the CE marking will typically meet EU health, safety, and environ-mental standards. In the same vein, absent EU rules, a similar presumption applies where the product meets the requirements of the Member State where the product is marketed.

Food products (which fall outside the scope of Part IV, Title I of the Code) must be compliant with relevant EU regulations (e.g. Regulation (EC) No. 1924/2006).


Misleading practices are sanctioned with monetary fines (up to EUR 5 million).

Pursuant to Section 112 of the Code, unless the facts at issue would amount to a more serious criminal law infringement, producers or distributors placing unsafe products on the market may be sanctioned with imprisonment between six months and one year, and a monetary fine between EUR 10,000 and EUR 50,000.

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In general, commercial practices cannot be considered misleading when they are not capable of distorting consumers’ capacity to make an informed choice.

Typically, a one-off conduct that is not widespread would be unlikely to be considered a “practice”.

Pursuant to Section 20(3) of the Code, the common adver-tising practice consisting of exaggerated statements or state-ments which are not intended to be taken literally cannot be considered misleading.


Under Section 27 of the Code, the ICA may launch an investiga-tion ex officio or following a complaint.

Pending the investigation, the ICA can order the interim suspension of the practice as a matter of urgency.

If the ICA finds that the trader has carried out an unfair commercial practice, it will prohibit the dissemination/contin-uation of the practice and may impose a fine of up to EUR 5 million, depending on the seriousness of the infringement. Additional fines can be imposed in case of non-compliance.

In principle, the ICA may (under certain circumstances) close proceedings by accepting commitments proposed by the trader, provided they are considered suitable to solve the orig-inal concerns.

Similar remedies are provided by Section 8(9) of Legislative Decree No. 145 of 2007, in case of misleading and comparative advertising.


In November 2020, the ICA fined HP EUR 10 million for the failure to provide relevant information to consumers purchasing its printers, namely: (i) on the presence of an authentication system which recognises genuine HP cartridges, and does not work with non-original parts, thereby limiting the use of non-original parts on HP printers; and (ii) regarding the collec-tion (without prior consent) of data related to specific cartridges used (in particular if original or not), and refusal to provide assistance if non-original cartridges have been used.

In December 2019, the ICA fined both Wind Tre and Vodafone EUR 5 million in connection with their promotion of “personalised” win-back offers for mobile services, sent by text messages, without informing consumers of the various services and/or options that would be activated in addition to the main offer, with additional costs, and therefore without their prior and express consent.

In November 2018, the ICA fined Facebook EUR 10 million after finding that it misled consumers registering on its platform by not adequately and immediately informing them during the setting up of the account that the users’ data would be used for

On 3 March 2017, the Ministry of Health ordered a prohi-bition on the national sale as well as the withdrawal and recall from the market of flying lanterns imported from China due to the presence of asbestos.



Part II, Title III, of the Code prohibits traders from carrying out unfair commercial practices, which refers to any act, omission, course of conduct or representation, or commercial communi-cation including advertising and marketing by a trader directly connected with the promotion, sale or supply of a product to consumers (Section 18(1)(d) of the Code).

Pursuant to Section 21 of the Code, a commercial practice is misleading if it contains false information and is therefore untruthful or in any way deceives or is likely to deceive the “average consumer” (a consumer who is reasonably well-informed, obser-vant and circumspect), and in either case causes or is likely to cause him/her to take a transactional decision that he/she would not have taken otherwise.

Misleading practices additionally include misleading and/or comparative advertising (Legislative Decree No. 145 of 2 August 2007).

Pursuant to Section 24 of the Code, a commercial practice is aggressive if, by harassment, coercion (including the use of physical force), or undue influence, it significantly impairs or is likely to significantly impair the average consumer’s freedom of choice or conduct with regard to the product and thereby causes him/her or is likely to cause him/her to take a transactional decision that he/she would not have taken otherwise.

A number of misleading and aggressive practices are black-listed, respectively, in Sections 23 and 26 of the Code.


In order to assess whether a commercial practice might be consid-ered misleading or aggressive, the ICA focuses its analysis on whether the practice is in line with the professional diligence typi-cally required and the effects on the average consumer’s economic behaviour, having regard to the product/service which is the object of the commercial conduct.

The ICA typically carries out a case-by-case assessment of whether a commercial practice complies with the duty of professional diligence, taking into account the corpo-rate organisation of the trader in the sector concerned and the information-asymmetry of consumers.

Practices can generally be characterised as misleading if they are capable of preventing the average consumer from making fully informed choices, regardless of whether consumers were actually deceived or the trader intended to deceive them.

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Unfair terms. Some terms, mainly those related to price setting, which are considered unfair by Section 33(2) of the Consumer Code, shall not apply to contracts relating to financial instru-ments or similar financial contracts.

Moreover, terms that have been individually negotiated between the parties cannot be considered unfair, except those: excluding or limiting the trader’s liability in case of a consum-er’s death/harm caused by an action/omission of the trader; excluding or limiting the consumer’s actions or rights against the trader in the event of non-performance or incorrect perfor-mance by the latter; or providing for the consumer’s acceptance of terms that he/she has never acknowledged before entering into the contract.

On-premises contracts. Section 47 of the Consumer Code provides a list of contracts that do not fall within the rules concerning on-premises contracts. Moreover, the pre-contractual information listed in Section 1(1), of the Consumer Code shall not be provided in case of contracts relating to daily transactions which are performed immediately upon their conclusion.

Distance and off-premises contracts. Section 47 of the Consumer Code provides a list of contracts that do not fall within the rules concerning distance and off-premises contracts and Section 59 of the Consumer Code provides a list of cases in which the right of withdrawal is excluded; for instance, in the event of customised products, products with risk of dete-rioration, products whose value depends on fluctuations of the market, etc.

Other consumer protections. There are no applicable exceptions.


Unfair clauses. Pursuant to Section 36 of the Consumer Code, unfair terms shall be void, while the remaining part of the contract remains valid.

If the ICA finds that the terms included in contracts between traders and consumers concluded by adhering to general terms and conditions or by signing forms or templates are unfair, it will order that the amended terms are published on the trader’s websites. If the trader does not comply, the ICA can impose a fine of up to EUR 50,000 (Section 37-bis of the Consumer Code).

On-premises contracts, distance and off-premises contracts and other consumer protections. Section 27 of the Code – as described above in answer to question 4.4 – applies and therefore monetary fines may be imposed.

Rules on class actions shall apply (see the answer to question 7.6 below).


Between October and December 2020, the ICA closed several investigations against football clubs for having breached Section 33 of the Consumer Code in relation to unfair terms and condi-tions for the sale of tickets. Specifically, the ICA assessed the unfairness of those clauses that: (i) do not recognise the right of consumers to obtain reimbursement in cases where the match is delayed/postponed (due to the stadium being closed); (ii) do not recognise the right of consumers to be compensated for

commercial purposes. The information provided by Facebook was too generic and incomplete, and did not adequately make a distinction between the use of data to personalise the service and the use of data to conceive targeted advertising campaigns.

The ICA additionally found that Facebook carried out an aggressive practice, insofar as transmitting their data to third-party websites/apps for commercial purposes, and vice versa, without the express and prior consent of the users, and imposed significant restrictions on users who sought to change the pre-selected consent settings.

See also cases referred to in the answer to question 2.7.



Unfair terms. Section 1341 of the Civil Code and Sections 33–38 of the Consumer Code provide that “unfair terms” in consumer contracts shall be null and void. Unfair terms are contractual terms that cause a significant imbalance in the parties’ rights and obligations arising under the contract to the detriment of the consumer, such as clauses excluding or limiting the consumer’s actions or rights against the trader in the event of non-performance or incorrect performance by the latter, or clauses authorising only the trader to withdraw from the contract.

On-premises contracts. Section 48 of the Consumer Code provides for minimal requirements relating to the information that the trader shall provide to the consumer before entering into a contract.

Distance or off-premises contracts. Sections 49–59 of the Consumer Code provide for specific safeguards for the consumer who has entered into distance or off-premises contracts, notably concerning mandatory pre-contractual infor-mation, formal requirements of the contract and the right of withdrawal without cause at no cost.

Other consumer protections. Sections 61–65 of the Consumer Code provide for further guarantees aimed at avoiding any additional cost or burden for the consumer, notably concerning: (i) the delivery of goods; (ii) the use of payment methods; (iii) the passing of risk; (iv) phone communications with the trader; and (v) additional payments.


Unfair terms. The assessment of the fairness of contractual terms is based on the nature of the goods/services and all the circumstances at the time of entry into the contract, as well as the other terms of the contract or of another contract on which it is dependent.

On-premises contracts. It shall be assessed whether the trader has provided the consumer with all the relevant informa-tion indicated in the law.

Distance or off-premises contracts. It shall be assessed whether the consumer has been provided with all the rele-vant information and the possibility to exercise the right of withdrawal.

Other consumer protections. It shall be assessed whether the contract disregards the safeguards and imposes the additional burdens/costs on the consumer, either directly or indirectly.

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regulatory authority (e.g. the Institute for the Supervision of Insurance, the Italian Communication Regulatory Authority, the Bank of Italy, etc.).

(iv) Decision-making. The final decision is adopted by the ICA’s Board. If the ICA concludes that the practice is unfair, the party is ordered to desist its continuation and to pay a fine. The ICA is additionally competent to accept the trader’s commitments and make them binding (see also the answers to questions 4.4 and 5.4).

Proceedings concerning the assessment of unfair terms and, in general, the legality of consumer contracts follow the same procedure (with a few exceptions, e.g., no fines are imposed in the event of unfair terms).


The ICA may launch an investigation either ex officio, following complaints by consumers, consumers’ associations, micro-en-terprises, competitors, or any individual that may be interested.


There are no specific formal requirements to submit a complaint; however, it is important to describe facts as precisely as possible, including any supporting documentation.

Consumers and businesses may submit a complaint by mail, email or by filling in an online form (contacts and forms are available on the ICA’s website).


The investigation phase shall start within 180 days from the receipt of a complaint. The proceedings should then be concluded within 120 days of the communication of the decision to open the proceedings to the party concerned, or 150 days if the opinion of a regulatory authority is necessary or in proceed-ings concerning unfair terms. If the party has its seat/registered office outside Italy, the terms mentioned above are extended to 180 and 210 days, respectively. These terms for the conclusion of the proceedings can be (further) extended by up to a maximum of 60 days if necessary, taking into account the complexity of the investigation or in case the trader submits commitments.


No, there are no criminal penalties for non-compliance.


Yes, except in the event of serious misleading commercial practice. Following the submission of commitments (within 45 days

from the launch of the proceedings), the ICA may: (i) accept the commitments, making them binding, and therefore close the proceedings without making a finding on the infringement; (ii) grant a deadline to have the commitments improved; or (iii) reject the commitments on the basis that they are deemed unsuitable to meet the concerns raised, or if the practice is manifestly unlawful and serious.

damages if these events are directly attributable to the football club; and (iii) grant the football club the power to unilaterally modify the contractual conditions and not to comply with the rules on jurisdiction over consumer contracts.

In May 2017, the ICA assessed that WhatsApp Inc. applied certain unfair contractual terms, infringing Section 33 of the Code regarding its contractual relationship with consumers.

Specifically, WhatsApp Inc. imposed unfair terms, such as: (i) a broad/general exclusion and limitation of its liability; (ii) its unilateral right to interrupt the service, without reason/notice; (iii) its unilateral right to withdraw from the contract at any time and for any reason; (iv) the right to unilaterally amend the terms of the contract by applying the “silence means consent” mech-anism; (v) the imposition of the laws and courts of California as governing law and competent jurisdiction, respectively; (vi) the possibility to not fulfil “orders” and provide refunds; and (vii) the predominance of the English version of the contract, excluding the most favourable interpretation for the consumer, regardless of the language in which the clause was drafted.

In October 2016, the ICA fined Norwegian Air and Blue Air EUR 170,000 for charging extra fees where payments for online purchases by consumers were made by credit card. For the first time, the ICA implemented article 62 of the Code. The low-cost airlines did not comply with the new rule introduced as a result of the transposition of Directive 2011/83/EU on Consumer Rights into Italian legislation.



The ICA’s investigations are administrative proceedings that typically include the following steps: (i) the pre-investigation phase; (ii) the investigation phase; (iii) closing of the investiga-tion phase; and (iv) the decision-making phase.(i) Pre-investigation. The ICA collects background docu-

mentation and carries out a preliminary assessment in order to determine whether to open formal proceedings (possibly launching an inspection of the premises of the trader). The ICA typically closes the pre-investigation phase without opening formal proceedings if: the complaint is inadmis-sible or ungrounded; consumer law is not applicable; the trader has complied with ICA’s “moral suasion”; the prac-tice was not capable of materially distorting consumers’ behaviour (e.g. negligible dissemination); or if the ICA has other priorities.

(ii) Investigation. The ICA adopts a formal decision to open proceedings, which is addressed to the concerned trader(s) and all the interested parties that are requested to inter-vene. The ICA may additionally impose interim measures ordering the suspension of the alleged unfair commercial practice. The ICA gathers additional documentation and generally requests information from the parties during hear-ings. Within 45 days of the opening of the proceedings, the party under investigation may propose commitments to meet the ICA’s concerns.

(iii) Closing of the investigation. The ICA sends a statement of objections setting out the final charges, indicating the date of the conclusion of the investigation and the dead-line within which the party can submit conclusive obser-vations or documents. When the case concerns regulated sectors, the ICA shall request the opinion of the competent

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There is no stand-alone or follow on right of action in relation to unfair commercial practices, as in antitrust cases.

However, under Section 140-bis of the Consumer Code, it is possible to bring a class action to assess the trader’s liability and seek damages and repayment.

Customarily, consumers have the right to bring an action for damages before civil courts in cases relating to unfair terms, defective products or consumer contracts provisions (on-premises, distance and off-premises contracts as well as other consumer protections).


According to Section 2946 of the Civil Code, action for damages arising from contracts can be brought within 10 years from the infringement. Pursuant to Section 2947 of the Civil Code, action for damages deriving from non-contractual liability can be brought within five years from the event.

In case of defective products, Section 125 of the Consumer Code provides that the right to bring an action for damages can be exercised only within three years from the day the consumer had knowledge or should have had knowledge of the damage.


Italy has been a member of the International Consumer Protection Enforcement Network (“ICPEN”) since 1992, which is an organisation consisting of consumer protection law enforcement authorities from across the world. Specifically, ICPEN activities are aimed at sharing information regarding cross-border commercial activities that may affect consumer interests and encouraging international cooperation and collab-oration among consumer law enforcement agencies.

8 Appeals


Decisions issued by the ICA may be challenged before the administrative courts, notably the TAR (Latium) at first instance and before the Council of State at second instance.

An appeal before the TAR must be submitted within 60 days of the notification of the ICA’s decision. This term is extended by 30 days if the trader has its registered office outside Italy but within the European Union and by 90 days if the trader has its registered office outside the European Union.

The ICA will submit its defence within 30 days of the notifi-cation of the appeal.

The court then schedules the hearing, so the parties can submit: (i) documents 20 days before the hearing; (ii) briefs 15 days before the hearing; and (iii) replies 10 days before the hearing. Following the hearing, the court issues its judgment.

The same deadlines apply to appeals before the Council of State.

Once the commitments are made legally binding, the ICA may automatically reopen the investigation if: (i) the trader has not implemented the commitments; (ii) the underlying facts that led to the acceptance of the commitments have changed; or (iii) the decision making the commitments binding is based on incom-plete, incorrect or misleading information provided by the parties.

7 Enforcement


The ICA is entrusted to adopt administrative decisions. The ICA’s Board is independent from the Case Team which carries out the investigation.

The decisions issued by the ICA are immediately enforceable. Therefore, the traders must immediately refrain from carrying out the concerned conduct and must pay the imposed fine.


Please see the answer to question 6.4.


The ICA has administrative enforcement powers. In particular, the ICA may: (i) carry out dawn raids to search

the trader’s premises; (ii) send requests for information; and (iii) request independent experts to provide technical and/or economic evaluations, if required.

The ICA can order the trader to interrupt the practice and can impose fines of up to EUR 5 million for each unfair commercial practice at issue. In addition, it can order the trader to publish the decision and to adopt all the necessary adjustments/remedies.


The ICA is required to set enforcement priorities. If a commer-cial practice is not a priority, it may use methods such as advocacy or moral persuasion, which require fewer resources.


Rules of procedure concerning misleading and comparative advertising, unfair commercial practices, consumer’s contracts and unfair terms are provided by the ICA’s Decision No. 25411 of 1 April 2015 – Regulation on Investigation Procedures Concerning Consumer’s Protection.

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Overall, the focus of ICA enforcement will likely continue to be on online commercial practices, specifically if such practices are being carried out by “tech giants”. However, the ICA is also careful to assess the conduct of smaller companies when active in the e-commerce sector, particularly with regard to failure to deliver products, the provision of misleading information on the status of an order, or failure to reimburse the cost where an order has been cancelled.

Furthermore, it is notable that Law No. 31/2020, which entered into force in May 2020, provides the ICA with enforce-ment powers to investigate so-called “ambush marketing”, i.e. commercial practices concerning the unauthorised or false asso-ciation of events in the public interest, ultimately interfering with the rights of event organisers and official sponsors. While it is primarily aimed at protecting the rights of events organisers and official sponsors, consumers will additionally be safeguarded against false or misleading advertisement.

Finally, the ICA is keen to tackle new marketing practices. This includes so-called “influencer marketing” on social media, which relies on the endorsement of products without mentioning the existence of a commercial relationship with the trader.


Law No. 31 of 12 April 2019 sets out certain provisions aimed at modifying, inter alia, article 140-bis of the Consumer Code regu-lating class actions, and at amending the Civil Code accordingly. It was originally expected to enter into force in April 2020; however, it has been postponed until May 2021.

Among other provisions, these new rules provide the possi-bility for any entity whose rights have been infringed, including consumers associations, to bring an action for infringement of the Consumer Code, as well as the right for individuals to join the class action.


The addressee of the decision can appeal it before the adminis-trative courts.


The appeal has no automatic suspensive effects. However, the addressee of the ICA’s decision may ask the

administrative court for an interim measure in order to suspend the decision’s effects. As regards the payment of the fine, if any, the court can make the suspension of the payment conditional upon the provision of a guarantee.



In 2020, the ICA’s workload was particularly affected by the outbreak of the COVID-19 pandemic. Many businesses expanded their commercial activities online; however, not always in compliance with consumer law. Hence, the ICA opened several investigations against such businesses and concluded 24 proceedings concerning practices relating to the pandemic; these included the use of misleading claims, conditions on the repayment of loans, and reimbursement for cancelled flight tickets. Post-COVID-19, it is likely that the ICA will strengthen its focus on effective compliance with a broader variety of consumer protection rules, such as cost transparency, the right to withdraw/receive a reimbursement, and the applica-tion of surcharges depending on the payment system.

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Italy

Denis Fosselard is a partner in the Competition and EU Law department. His practice focuses on all aspects of EU and Italian antitrust and consumer law. Denis has more than 20 years’ experience in advising leading European corporates in relation to antitrust behavioural and merger control cases as well as consumer law compliance. In addition, he has significant experience in assisting companies in State Aid investigations. Denis regularly represents clients before both the European Commission and the Italian Competition Authority, as well as the EU General Court and the Court of Justice in antitrust and other community law proceedings.

Ashurst LLPAvenue Louise 4891050 BrusselsBelgium


Gabriele Accardo is counsel in the firm’s Competition and EU Law practice, based in Milan. He has extensive experience in competition and EU law, as well as in developing areas of business law intersecting technological innovation issues, having also worked for more than 10 years in leading international firms in Brussels.He assists clients in EU, Italian and international antitrust merger procedures, cartel enforcement, distribution and dominance issues, as well as unfair commercial practices. He regularly represents clients in investigations before the Italian Competition Authority, the European Commission and related litigation proceedings before EU and Italian Courts.

Ashurst LLPPiazza San Fedele 2 – 20121, Milan Italy

Tel: +39 02 854 23430Email: [email protected] URL: www.ashurst.com

Giulia Carnazza is a senior associate in the Ashurst Competition and EU Law practice, based in Brussels.Her practice focuses on competition law and consumer protection. She provides assistance in merger control, cartel and abuse of dominant position proceedings, misleading and comparative advertising and unfair competition, both before national competition authorities and before the European Commission. She also deals with appeals before national and EU courts. Additionally, Giulia has experience in antitrust damages actions. She regularly provides out-of-court advice on antitrust and unfair competition.

Ashurst LLPAvenue Louise 4891050 BrusselsBelgium

Tel: +32 2 641 9942Email: [email protected] URL: www.ashurst.com




www.ashurst.com


75

Japan

Nagashima Ohno & Tsunematsu Mai Umezawa

Oki Mori

Japan

Chapter 10


For example, the Consumer Contract Act defines a “trader” as “a corporation or association, or an individual who becomes a party to a contract as a business or for business purposes”. However, we use the term “business” in this chapter, unless otherwise noted, to refer to entities which are required to comply with consumer laws.


The Consumer Affairs Agency (the “CAA”) is responsible for investigating and enforcing many consumer protection laws, but such responsibility may differ depending on individual laws.


Other specific agencies, which regulate/enforce consumer protection laws, are described in the table below.

Regulatory/Enforcement Agency Law

Ministry of Health, Labour and Welfare

Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices ( yakki-hou) (the “APMD”) (which covers pharmaceuticals and cosmetics, etc.).

Ministry of Economy, Trade and Industry (the “METI”)

Installment Sales Act (which covers credit transactions, etc.).

Financial Services Agency

Financial Instruments and Exchange Act (kinyu-shohin-torihiki- hou).Money Lending Business Act (kashiking yo-hou).

Ministry of Land, Infrastructure, Transport and Tourism

Real Estate Brokerage Act (takkeng yo-hou).

Ministry of Internal Affairs and Communications/CAA

Act on Regulation of Transmission of Specified Electronic Mail (toku-tei-denshimail-hou) (which regulates spam mail and direct marketing).

1 General


There is no uniform code of consumer law in Japan. The most fundamental law for consumer protection is the Basic Act on Consumer Policies (shohisha-kihon-hou). The act stipulates the fundamental principles of consumer policy and responsibilities of businesses; however, it merely stipulates non-binding targets and political policies to be followed by the national government and does not stipulate the legal rights and obligations of citizens to receive relief through court procedure. Specific rules on consumer protection are set out in a number of individual laws. For instance, there are laws that regulate businesses in specific industry sectors (e.g., the Act on Specified Commercial Transactions (toku-tei-shotorihiki-hou) (the “ASCT”) and the Installment Sales Act (kappu-hanbai-hou)), as well as special laws of the Civil Code (e.g., the Consumer Contract Act (shohisha-keiyaku-hou) and the Product Liability Act (seizobutsu-sekinin-hou)). Among these, with regard to the laws regulating businesses in specific industry sectors, detailed regulations are stipulated in subordinate norms such as Cabinet Orders and Ministerial Ordinances, and in many cases, interpre-tations of these regulations are indicated in guidelines issued by supervisory authorities. Therefore, it is necessary to understand these interpretations in order to correctly understand the contents of the laws and regulations.


There is no unified definition of “consumer” that is common to all consumer protection laws, and consumers or similar targets to be protected are often defined in individual laws. For example, the Consumer Contract Act, which broadly regulates contrac-tual relationships between consumers and businesses, defines “consumers” as “an individual, excluding those who become a party to a contract as a business or for business purposes”. As described above, individuals, excluding those who act as sole proprietors, in principle, are the targets to be protected.


There is no unified definition of entities regulated by consumer protection laws, and the definition is based on individual laws.

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The HGQLA only covers some specific goods, including “textile goods”, “plastic goods”, “electrical appliances and apparatus”, and “miscellaneous manufactured goods” used by general consumers in their daily lives, which are designated by a Cabinet Order as those whose quality is difficult for general consumers to discern at the time of purchase, where there is a particular necessity to discern their quality.

The Food Labeling Act covers all food and drinks. The Food Labeling Standards, which specifically stipulate labelling infor-mation, requires the labelling of nutrients in processed foods, etc.


“Food” covered by the Food Labeling Act includes additives but excludes pharmaceuticals, etc. which are covered by the APMD.


Since these laws are fundamentally administrative laws, when there are violations of these laws, the Commissioner of the CAA, etc. takes administrative actions provided, however, that no administrative actions shall order regulated entities to help victims recover from any damage suffered. In the case of viola-tion of the AUPMR, the Commissioner of the CAA may order the violating business to pay a surcharge; however, the paid surcharge must not be appropriated for consumer recovery. If consumers seek relief from businesses, they must make a claim for compensation based on tort liability, etc. However, in cases where a considerable number of consumers have incurred finan-cial damage according to a contract between the consumer and the business, and where certain requirements are satisfied, a business certified by the Prime Minister (a “Specified Qualified Consumer Organization”) may file a special lawsuit, “Court Proceedings for Redress for Damage”, against a business. If a request by a Specified Qualified Consumer Organization is granted in the Court Proceedings for Redress for Damage, the damages can be recovered by paying a certain amount of money to each consumer. This system came into effect in 2016; however, there have been only four lawsuits filed as of the end of December 2020.

Though it is not a remedy, in order to protect the inter-ests of many unspecified consumers, Qualified Consumer Organizations certified as satisfying the requirements set by the Prime Minister are granted the right to demand an injunction against certain unjust acts of business. In addition to certain acts stipulated in the AUPMR and the Food Labeling Act, the object of a demand for an injunction is limited to certain acts stipulated in the Consumer Contract Act and the ASCT. A Qualified Consumer Organization may file an action in order to exercise its right to demand an injunction.


Essentially, the Commissioner of the CAA holds the authority of investigation and execution on the AUPMR. However, since the CAA does not have offices nationwide, some authorities are delegated to local offices of the Japan Fair Trade Commission (and, in very exceptional cases, the ministry in charge of the business), and the prefectures have the authority to conduct investigation and execution. Consequently, each of these organ-isations may initiate an investigation for a breach.



In relation to laws that regulate labelling related to quality and function, which are necessary for consumers to select products and services, there are laws such as the Act against Unjustifiable Premiums and Misleading Representations (keihin-hyoji-hou) (the “AUPMR”), the Household Goods Quality Labeling Act (katei-yohin-hinshitsu-hyoji-hou) (the “HGQLA”), the Food Labeling Act, and the Health Promotion Act (kenko-zoshin-hou).


The AUPMR regulates misleading representations and the offering of excessive premiums in connection with a transac-tion. Among them, the following three types of regulations are stipulated for misleading representations:I. Representation relating to the content of goods or services

portrayed as being better than the actual content (unjust misrepresentation of the content of goods or services).

II. Representation of trade terms of goods or services portrayed as being more advantageous than the actual terms (unjust misrepresentation concerning trade terms of goods or services).

III. Other unjust misrepresentations (misrepresentations designated by the Prime Minister).

Regulations I. and II. prohibit any representation that (i) misleads general consumers into believing that the content or trade terms of goods or services are significantly better or more advan-tageous than the actual/competitive businesses’ goods or services, (ii) induces customers unjustly, and (iii) is likely to interfere with general consumers’ voluntary and rational choice-making.

Regulation III. governs the labelling of goods’ country of origin. For example, labelling using a country name or a national flag, etc. other than the country of origin is prohibited, as this makes it difficult for general consumers to discern whether a product was produced in the country of origin.

The HGQLA specifically stipulates what must be displayed concerning the quality of household goods used by consumers on a daily basis and how they should be displayed for each product, etc. For example, regarding textile goods such as sweaters, it is stipulated that the composition of fibres, home washing, etc., care labelling, and the name and address or phone number of the labeller shall be displayed.

The Food Labeling Act stipulates labelling standards for food for sale (matters to be labelled (e.g., name, allergen, pres-ervation method, expiration date, ingredients, additives, nutri-tional value and caloric value, country of origin, etc.), and matters to be complied with by businesses when labelling), etc. The concrete standards are stipulated by the Food Labeling Standards (Cabinet Office Order), which are subsidiary stand-ards of the Food Labeling Act, for each category of processed foods, perishable foods, and additives.


The AUPMR broadly covers representations concerning the content and trade terms of goods or services supplied by businesses.

77Nagashima Ohno & Tsunematsu



The Consumer Product Safety Act stipulates regulations below on “Consumer Products” (i.e., any product supplied mainly for use by general consumers in their everyday lives): I. “Specified Products” (Consumer Products which are

found to be highly likely to cause harm, particularly to the lives or health of general consumers, as specified by a Cabinet Order. There are 10 in-scope products, including pressure cookers for household use, riding helmets for two-wheeled motor vehicles or motorised bicycles, and oil heaters, amongst others). Technical standards have been established in order to prevent the occurrence of harm as a result of these products. Manufacturers and importers, etc. of Specified Products are required to inspect the Specified Products; they cannot sell such products without

labelling them with the PSC mark – – which indicates that the products meet the technical standards.

II. “Special Specified Products” (i.e., Specified Products for which the manufacturers or importers thereof have not sufficiently ensured the level of quality necessary to prevent the endangering of the lives or health of general consumers, as specified by a Cabinet Order. There are four in-scope products, including baby beds and lighters, amongst others). Manufacturers and importers, etc. of Special Specified Products shall have their products inspected by a Registered Conformity Inspection Body and may display

a PSC mark – – in order to confirm that the Special Specified Products meet the technical standards.

III. “Specified Products Requiring Maintenance” (i.e., Consumer Products that are found to be highly likely to cause particularly serious harm to the lives or health of general consumers arising from safety troubles, due to deterioration caused by long-term use making the product unsafe, and which are specified by a Cabinet Order. There are nine in-scope products, including bathtub water heating units, indoor installations, and built-in dishwashers, amongst others). For these products, there are two systems that have been established: (i) the Long-term Use Consumer Product Safety Inspection System; and (ii) the Long-term Use Consumer Product Safety Indication System.(i) The Long-term Use Consumer Product Safety

Inspection System stipulates obligations on manufac-turers or importers of Specified Products Requiring Maintenance to set the design standard use period (the standard period of use without any safety trouble), inspection periods, and indication of such periods, etc. on the product. This system also requires the owners of Specified Products Requiring Maintenance to provide the owners’ information with manufac-turers or importers, and to conduct maintenance such as inspections.

(ii) The Long-term Use Consumer Product Safety Indication System requires manufacturers or importers to display warnings about the design standard period of use and deterioration, etc., and is applied to prod-ucts with no high risks of serious accidents due to dete-rioration over time but with a large number of accident reports (there are six in-scope products: fans; venti-lators; air conditioners; CRT TVs; automatic washing machines; and double-drum washing machines).

The HGQLA stipulates the administrative agencies holding authority according to the type of business and the scale of busi-ness to be investigated and enforced. The Commissioner of the CAA has the authority to receive a report submitted by a consumer and to investigate them, regardless of the type and scale of the business. In addition, the Minister of Economy, Trade and Industry has the authority for: nationwide manufac-turers, labelling contractors and wholesale sellers; the Director-General of Economy, Trade and Industry for manufacturers, labelling contractors and wholesale sellers at the level of only one jurisdiction of Economy, Trade and Industry; the prefec-tural governor for retail sellers at the level of only one prefec-ture; and the mayor for retail sellers at the level of only one city.

The Food Labeling Act grants: the Commissioner of the CAA; the Minister of Agriculture, Forestry and Fisheries (excluding Liquor); the Minister of Finance (only Liquor); and the prefec-tural governors the authority to investigate.


The following are examples of the aforementioned protections being enforced:I. In August 2017, the Minister of Agriculture, Forestry and

Fisheries instructed a business which sold two imported processed food stuffs in subdivided packages without labelling the country of origin, as required by the Food Labeling Act, that it should inspect the labelling of all food sold in retail stores affiliated to the business immediately, and should sell food after promptly correcting the label-ling to be in accordance with the Food Labeling Standards.

II. In June 2020, the CAA ordered a cigarette manufac-turer to pay a surcharge of approximately JPY 552 million under the AUPMR, because although the manufacturer had made representations in advertisements displayed at convenience stores, etc. about a limited-period promo-tion to receive discounts, etc., the manufacturer conducted the limited-period promotion repeatedly, changing adver-tisements after the limited period had passed. This is the highest surcharge under the AUPMR so far.



As administrative regulations, there are the Consumer Product Safety Act (shohiseikatsuyo-seihin-anzen-hou), the Act on Control of Household Products Containing Harmful Substances, ( yugaibus-shitsu-kateiyohin-kisei-hou) and the Food Sanitation Act, amongst others. As a civil regulation, the Product Liability Act is of particular importance. Despite not being under the jurisdiction of the CAA, the Electrical Appliance and Material Safety Act (denkiyohin-anzen-hou), the Road Transport Vehicle Act (doro-un-so-sharyo-hou) which regulates the safety of cars, and the APMD are nonetheless important.

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other product, concerning the other product’s design, and where the manufacturer, etc. is not negligent with respect to the occur-rence of such defect.


Since the Consumer Product Safety Act and the Food Sanitation Act are fundamentally administrative laws and regulations, if there are cases that violate these laws, the Minister of Economic, Trade and Industry takes administrative measures based on the former, and the Minister of Health, Labour and Welfare takes on the latter, provided, however, that no administrative dispo-sition shall help the victims recover from the damage. In order for a consumer to seek remedies from a business, it is necessary for the consumer to make a claim for damages on the basis of tort liability or product liability. Additionally, the system Court Proceedings for Redress for Damage described in question 2.5 is not available in cases in which the safety of goods or services is problematic, since it is restricted to contract-related disputes and, furthermore, excludes life and bodily injury.


The Consumer Products Safety Act stipulates that a manufac-turer or importer who comes to know that “Serious Product Accidents” (i.e., a fatal accident, accident in which an injury or disease which requires no less than 30 days for medical treatment has been caused, accident in which a physical disability specified by a Cabinet Office Order has been caused, carbon monoxide poisoning accident, or fire (recognised by the fire authority)) have occurred with any Consumer Products must report to the Commissioner of the CAA the name and type of the Consumer Products, a detailed account of the incidents, and the quan-tity of the Consumer Product that the person manufactured or imported, within 10 days of becoming aware of the Serious Product Accidents with regard to the Consumer Products.

Product Accidents that do not amount to Serious Product Accidents are not subject to reporting obligations under laws and regulations. However, according to the guidelines, manu-facturers, importers, retailers, and repair businesses of prod-ucts are required to submit reports to the National Institute of Technology and Evaluation (“NITE”) in the prescribed format.


The Food Sanitation Act, the Food Labeling Act, the Consumer Products Safety Act, the Road Transport Vehicle Act, etc. stipu-late the recall order based on the law. However, the administra-tive agency has discretion to decide whether or not to issue the recall order. In practice, manufacturers, etc. voluntarily recall in many cases and the recall order is rarely issued. Even if manu-facturers, etc. voluntarily recall the Consumer Products, the busi-ness submits a notice of starting product recall and a periodic report on the progress of the recall, etc. to the METI. However, this is not a legal obligation which is required by the guideline.

In addition, the Food Sanitation Act and the Food Labeling Act, which was amended and will be enforced on June 1 2021, have introduced a new regulation that requires businesses to report information on voluntary recalls to administrative organs.

The Food Sanitation Act prohibits the sale of food and addi-tives that (i) have deteriorated, (ii) contain or are suspected to contain toxic or harmful substances, (iii) are contaminated or suspected to be contaminated with pathogens, or (iv) involve a risk to human health due to contamination by foreign substances, or on other grounds. The Minister of Health, Labour and Welfare can establish the criteria for the methods of producing, processing, using, cooking, or preserving food or additives and establish standards for the ingredients.

The Product Liability Act shall cause the manufacturer or importer, etc. to be liable for damages arising from the infringe-ment on life, body or property which is caused by a defect in the “Product” (a movable property which is manufactured or processed). “Defect” refers to a lack of safety that the Product ordinarily should provide, taking into account the nature of the Product, the ordinarily foreseeable manner of use, the time of delivery, and other circumstances concerning the Product. Product liability is a responsibility without fault of the manu-facturers, etc.


The Consumer Product Safety Act covers “Consumer Products”; namely, any product to be supplied mainly for use by general consumers in their everyday lives.

The Food Sanitation Act covers all food and drinks as well as additives, except pharmaceutical products, etc. In addition, there are also restrictions on (i) apparatus such as tableware, (ii) containers and packaging, and (iii) toys that may harm the health of infants when they touch them.

The Product Liability Act covers “products”; namely, a movable property which is manufactured or processed.


Under the Consumer Products Safety Act, the following prod-ucts have their safety regulated by other individual laws and are subject to such regulations, thus are excluded from Consumer Products (regulatory laws are in brackets below):■ ships(ShipSafetyAct);■ food,additivesanddetergents(FoodSanitationAct);■ machinesortools,etc.subjecttoinspection,andmachines

or tools, etc. subject to self-labelling (i.e., machines or tools, etc. used for fire defence as specified by a Cabinet Order) (Fire Service Act);

■ poisonoussubstancesanddeleterioussubstances(Poisonousand Deleterious Substances Control Act);

■ roadtransportvehicles(RoadTransportVehicleAct);■ containers for filling high-pressure gas (High Pressure

Gas Safety Act);■ huntingguns(OrdnanceManufacturingAct);and■ medicines, quasi-medicines, cosmetics, medical devices

and regenerative medicine products (APMD).The Product Liability Act exempts the manufacturer or

importer, etc. from liability on the grounds that: (i) the defect of such product could not have been discovered given the state of scientific or technical knowledge at the time when the manu-facturer, etc. delivered the product; and (ii) in cases where the product is used as a component or raw material of another product, the defect occurred primarily as a result of the compli-ance with the instructions given by the manufacturer of the



material information, or information related to a piece of material information, would be advantageous to the consumer, and intentionally failing to convey a fact regarding that piece of material information that would be disadvantageous to the consumer.

II. Overwhelming Causing a consumer to manifest an intention to be bound

by the offer of a consumer contract, or by the acceptance of an offer for such contract, as a result of being over-whelmed due to the business. This refers to engaging in an action when soliciting the consumer to enter into the consumer contract such as:(i) failing to leave the consumer’s residence, etc. in defi-

ance of the consumer’s request that the business leave such place;

(ii) inflaming a consumer’s anxiety and telling the consumer that it would be difficult to maintain his/her lifestyle without a contract, knowing that a consumer is excessively anxious about maintaining their current lifestyle due to declining judgment by ageing or phys-ical disorder; or

(iii) making it extremely difficult to restore the orig-inal state, prior to performing the obligations of the contract, by performing all or part of the obligations that must be assumed if the contract were concluded, before the contract is concluded.

The ASCT regulates the specific transactions below which are likely to cause consumer issues:(1) Door-to-Door Sales (transactions such as the sale of goods

or the provision of services at a consumer’s residence, etc., or unscrupulous sales on the street).

(2) Mail Order Sales (transactions for which a business has received a consumer’s offer by postal mail or internet, etc.).

(3) Telemarketing Sales (transactions for which a business telephones a consumer and solicits him/her during the phone call and receives an offer by the consumer).

(4) Multilevel Marketing Transactions (transactions of goods or services, wherein a person is induced to sell such goods or services by the possible receipt of a profit, and trans-actions that involve burden being carried out with such a person).

(5) Provision of Specified Continuous Services (transactions in which continuous services which will increase the recip-ient’s physical beauty, or increase the recipient’s knowledge or skills, etc. exceeding a certain amount, are provided).

(6) Business Opportunity Sales Transactions (transactions in which a consumer is solicited on the grounds that the consumer will receive income through engaging in busi-ness activities and causes the consumer to buy and bear the cost of goods, etc. said to be necessary for such business activities).

(7) Door-to-Door Purchases (transactions in which a business visits a consumer’s residence, and purchases goods, etc.).

(8) Goods Sent in Absence of Sales Contract Therefor (trans-actions in which a seller sends goods to a consumer who has not applied for such goods, deeming that he/she is willing to purchase the goods and charges for them unless he/she returns the goods).

In (1), (3), (4), (5), (6) and (7), delivery of a sales contract is obliged and unjust actions (conveying false information, inten-tionally failing to disclose facts, etc.) are prohibited. In (2), what is to be indicated is stipulated, and misleading advertising and sending email advertising to a person who has not given his/her consent is prohibited.


The following are examples of the aforementioned protections being enforced:I. In response to a fatal accident that was suspected to be

caused by an abnormality in the components of an air bag mounted in a vehicle, in December 2019, the Ministry of Land, Infrastructure, Transport and Tourism instructed seven manufacturers of vehicles with air bags suspected to be the cause of the accident to report the results of inves-tigations on the cause of the accident and the necessity of recall, based on the Road Transport Vehicle Act.

II. In February 2018, the Kyoto District Court gave the first decision on a case where many consumers filed lawsuits nationwide based on the Product Liability Act, insisting that they had allergic reactions to wheat by using facial soaps shipped and sold between 2004 and 2010. The court approved the liability of a soap manufacturer and ordered payment of a total of JPY 9.2 million. Since then, several court decisions have approved the liability of the soap manufacturer; however, as for the liability of the raw material manufacturer, the decisions of the court vary, i.e., some decisions approved liability while others dismissed it.



The Consumer Contract Act regulates unjust solicitations (misleading, overwhelming) and unjust contractual provisions for consumers.

The ASCT prohibits unjust solicitation, obligates delivery of documents, and prohibits false or misleading advertisement for specific commercial transactions such as Door-to-Door Sales, Mail Order Sales, and Multilevel Marketing Transactions, in accordance with the characteristics of each transaction type.


The Consumer Contract Act regulates unjust solicitations and unjust contractual provisions for consumers. As for the undue solicitations, it regulates two categories below:I. Misleading Causing a consumer to be under a mistaken belief and, as a

result of such belief, to manifest the intention to be bound by the offer of that consumer contract or by the accept-ance of the offer for such contract, through the actions below, in which the business engages when soliciting the consumer to enter into the consumer contract: (i) conveying something that diverges from the truth

with regard to a piece of material information;(ii) providing a conclusive assessment of something whose

behaviour in the future is uncertain; or(iii) conveying to the consumer that a piece of

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of the Consumer Contract Act, indicating that a busi-ness stipulated in membership terms and conditions that the business could revoke membership “if the Company reasonably determines that [a member] causes nuisance to other members” and “if the Company reasonably deter-mines that [a member] is not suitable as a member”. In addition, the business stipulated that “even if a member suffers damage as a result of the Company’s action, the Company shall not be liable for any damages whatsoever”. These provisions were significantly vague, and the Court held the provision which stipulated that the business would not be liable for damages to be an unjust provision completely exempting a business from liability to compen-sate a consumer for damage arising from default or a tort by the business.

II. Between December 2019 and January 2021, the CAA ordered administrative dispositions such as business suspension under the ASCT against six business compa-nies as a result of these companies engaging in fraudulent conduct in relation to periodic purchases, such as label-ling in a manner that made it impossible for consumers to easily recognise that such purchases were periodic purchases; this fell under conduct through which a busi-ness sought to cause a consumer to offer a contract against the consumer’s will regarding Mail Order Sales regulated by the ASCT.



The Act on Sales, etc. of Financial Instruments obligates finan-cial instrument providers, etc. to explain a risk of loss of prin-cipal and important portions of the transaction structure when selling financial instruments, such as savings and insurances, and prohibits the provision of conclusive evaluations on uncer-tain matters.

The Installment Sales Act obligates the business to indicate terms and conditions of instalment sales, etc. and prohibits credit sales exceeding the credit limit.

The Money Lending Business Act regulates moneylenders offering products such as consumer loans, and prohibits mali-cious collection and loans exceeding the amount of one-third of annual income.

Additionally, in the revised Civil Code which came into effect on April 1 2020, new rules have been established regarding pre-formulated terms and conditions such as the terms of service of email order services and insurance contracts: “the standard terms of contract” (teikei-yakkan).


The Act on Sales, etc. of Financial Instruments: (i) obligates financial instruments providers, etc. to explain the important facts such as a risk of incurring a loss of principal or exceeding the initial principal, or restrictions on the exercising of rights; and (ii) prohibits the provision of conclusive evaluations on uncertain matters.

The Installment Sales Act stipulates the obligations of the business for each type of contract category. For example, with respect to a contract that uses a credit card – in which the credit


The regulations of Door-to-Door Sales, Mail Order Sales, Telemarketing Sales, Provision of Specified Continuous Services, and Door-to-Door Purchases do not apply to cases in which the person offering the service concludes a contract for business purposes or as a part of business, or to cases in which goods or rights are sold, or services are provided, to persons residing outside Japan, etc.

The Consumer Contract Act does not apply to labour contracts.


The Consumer Contract Act provides two remedies. Firstly, with regard to contracts induced by solicitations that mislead or overwhelm consumers, the right to rescind a contract is granted. It also stipulates that provisions which unjustly harm the inter-ests of consumers shall be null and void. By exercising the right of rescission, consumers are entitled to receive a refund of the amount already paid due to the restoration duty, and as a result, they are able to recover from the damage. Consumers can be relieved from their obligation to make payments, etc., by invali-dation of a contractual clause.

Since the ASCT legislation is administrative in nature, the Commissioner of the CAA imposes administrative dispositions on businesses that violate the ASCT; however, administrative dispositions shall not order businesses to help victims recover from damages. In addition, the ASCT stipulates a cooling-off system, which allows the consumer to cancel the contract uncon-ditionally, within a certain period of time, from the delivery of a contract document describing the matters stipulated by laws and regulations as effective in civil affairs (name of business, date of conclusion of contract, etc.). If the contract document is not delivered, or if there is a defect in the document, the cooling-off period does not commence; thus, the cooling-off period can be set at any time, and the consumer can recover from the damage as a result. Additionally, if a business conveys false information or intentionally fails to disclose facts and the consumer misap-prehends and concludes a contract, the consumer may rescind the contract. Furthermore, if the business has concluded a contract for Door-to-Door Sales or Telemarketing Sales of a quantity that considerably exceeds what is normally required in daily life, and the seller has been aware of the excessive amount, the consumer may rescind the contract within one year from the time of the conclusion.

In addition, the Court Proceedings for Redress for Damage conducted by a Specified Qualified Consumer Organization, as described in question 2.5, may be available.

While it is not a remedy, a demand of injunction by a Qualified Consumer Organization is stipulated for specific acts indicated by the Consumer Contract Act and the ASCT.


The following are examples of these protections being enforced:I. In November 2020, the Tokyo High Court upheld a claim

seeking an injunction on the conclusion of consumer contracts including a provision which was in violation



is disadvantageous to consumers, and if this amendment does not satisfy the conditions that the amendment runs afoul of the purpose of the contract and is reasonable in light of the circum-stances concerning the amendment, etc., the amendment will not bind the counterparty.


Recent examples of these protections being imposed include:I. In January 2020, the Tokyo Metropolitan Government

issued to a corporation an order for business improvement, on the ground that the corporation which provided loan services for individuals provided loans which exceeded one-third of the annual income regulated by the Money Lending Business Act.

II. In February 2019, the METI ordered a registered indi-vidual credit purchase intermediary to take necessary measures to improve their business operations according to the Installment Sales Act because it did not prop-erly investigate the cause of complaints from purchasers regarding unjust solicitation, etc.



Each law stipulates the investigative authority of each admin-istrative organ. For example, the ASCT gives the competent minister the authority to: (i) order businesses to submit reports and to submit books and documents; (ii) conduct on-site inspec-tions of places of business such as stores; and (iii) question workers. Similar authority is often given to administrative organs under other consumer laws. In practice, however, it is often the case that businesses are asked to cooperate in investi-gations (so-called “voluntary investigations”) before exercising such right to investigate.


There are various ways in which investigations are triggered, such as the provision of information from related businesses or organisations and general consumers, ex officio detection, and whistleblowing.

In order to collect and compile records of complaints regarding consumer affairs, the “PIO-NET” system has been established for the purpose of connecting the National Consumer Affairs Center with Consumer Affairs Centers nationwide. Through the information collected on PIO-NET, Consumer Affairs Centers are able to inform the CAA of matters worthy of attention/investigation.

The Consumer Product Safety Act and the ASCT, etc. stip-ulate that if any person finds it to be likely that the interests of consumers will be prejudiced, the person may notify the compe-tent minister to that effect and request that appropriate meas-ures be taken, and, if the minister finds the report compelling, he/she is obligated to conduct the necessary investigations and take measures.

card is used to purchase goods by presenting the card to a seller after predetermining the usage limit amount and payment terms, etc. – the obligation to deliver a document stating the transac-tion terms and to investigate the payable amount are stipulated.

The Civil Code stipulates that in order to conclude contracts by the standard terms of contract, it must be agreed that the standard terms of contract as the terms of contract will be applied. Alternatively, the intention to apply the standard terms of contract as the terms of the contract must be made apparent to consumers in advance. If a business amends the standard terms of contract in a manner that is disadvantageous to consumers, the amendment must not run afoul of the purpose of the contract and must be reasonable considering the circum-stances concerning the amendment, etc.


The provisions of explaining the duty of the Act on Sales, etc. of Financial Instruments do not apply when a customer is a person specified by a Cabinet Order as having expert knowledge and experiences on sales, etc. of financial instruments.

Many provisions of the Installment Sales Act do not apply in cases where a person concludes contracts for business purposes or as a part of its business.

The regulations under the Civil Code in respect of the standard terms of contract only apply to cases where terms and conditions fall under “the standard terms of contract” (teikei-yakkan). The Civil Code sets forth that “the standard terms of contract” are a collection of provisions prepared by a specific person with the purpose of applying them as the terms of a contract for a standard transaction. A “standard transaction” as defined here refers to a transaction conducted by a specified person with an unspecified and large number of persons as the counterparties, in which the uniformity of the whole or part of the transaction is reasonable to both parties. Therefore, in cases where terms and conditions do not fall under this definition, the regulations in respect of the standard terms of contract will not apply.


Under the Act on Sales, etc. of Financial Instruments, a customer may claim damages from the providers, etc., of the financial instru-ments in the event of a violation of the provisions concerning the obligation of explanation and provision of conclusive evaluations. In this case, the providers, etc. are liable without fault, and the loss of principal is presumed to be the amount of damage incurred to the customer.

The Installment Sales Act stipulates the cooling-off of indi-vidual credit agreements used for Door-to-Door Sales, etc. Furthermore, the act stipulates: the right to rescind the case of conveying false information; that the right to terminate the indi-vidual credit contract will be granted in the case of excessive sales; and that consumers are entitled to receive a refund of the advance payment by exercising these rights.

As for the regulations regarding the standard terms of contract under the Civil Code, if a business fails to agree to apply the standard terms of contract as the terms of contract, or fails to make the intention to apply the standard terms of contract as the terms of the contract apparent to consumers in advance, the provisions of the standard terms of contract will not be applied as the terms of a contract. In addition, if a busi-ness amends the standard terms of contract in a manner that

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It depends on individual laws. Many laws that regulate busi-nesses in specific industry sectors, such as the Installment Sales Act and the Money Lending Business Act, stipulate criminal penalties in addition to administrative guidance and dispo-sitions. The Consumer Contracts Act, which is a civil law, provides only for civil remedies, such as the right to rescind or the invalidation of contract provisions (except for the proce-dures for the certification of Qualified Consumer Organizations and Specified Qualified Consumer Organizations). The ASCT provides, in addition to civil remedies such as cooling-off and cancellation rights, for administrative measures in case of viola-tion, as well as criminal penalties.


Essentially, administrative agencies have the discretion to decide whether to impose administrative dispositions, to limit them to administrative guidance, or to decide what kind of meas-ures should be taken in the case of administrative dispositions. However, with regard to the payment order for surcharge under the AUPMR, the Commissioner of the CAA has no discretion and must issue the surcharge order when the case meets the requirements of the law.


In general, when the competent minister imposes administra-tive dispositions stipulated in the consumer laws, the compe-tent minister must comply with the Administrative Procedure Act, which provides that in the case of adverse disposition, such as an order for business suspension, the minister shall provide the person to whom the adverse disposition is to be designated with the reasons for the disposition and provide an opportunity for explanation.


There are no follow-on actions in Japan. However, under the Act on Special Measures Concerning Civil Court Proceedings for the Collective Redress for Property Damage Incurred by Consumers, the “Court Proceedings for Redress for Damage” system has been established in order to address lawsuits. Under the proceedings, in order to collectively recover the damage suffered by a considerable number of consumers, a Specified Qualified Consumer Organization (a Qualified Consumer Organization that meets additional requirements) seeks declara-tory judgment on common obligations to consumers at the first stage, and, if a judgment upholds the obligation of a business to pay money, at the second stage, the amount of the claim is deter-mined through Simple Determination Proceedings in which the consumer participates, and the amount of the claim is finally determined. The amount is then paid to the consumers through the Specified Qualified Consumer Organization.


The procedures for filing a complaint are stipulated in the Administrative Procedure Act, which specifies common rules for administrative activities. Where an administrative agency renders adverse dispositions under laws and regulations to a designated specified person (business), the administrative agency shall take procedures for statements of opinions. There are two types of procedures for a statement of opinions: (i) procedures for hearings; and (ii) grants of opportunity for explanation. This is, however, provided that there are no specific consumer complaint procedures for investigation into the business.


In general, the authority to investigate under laws and regula-tions is rarely exercised; voluntary investigations are carried out first, and the authority to investigate laws and regulations may be exercised as necessary. Under the ASCT, the Commissioner of the CAA initially requests consumers and businesses to submit materials voluntarily and to explain their circumstances. If it is deemed necessary to enforce the ASCT, the orders are issued to businesses, etc. for the collection of reports, the submission of materials, etc., and on-site inspections. The period of inves-tigation varies depending on the laws and regulations or cases; however, in recent years it is not uncommon for investigations to last for over a year.


Individual laws by jurisdiction may stipulate criminal punish-ment in the event of refusal to cooperate with investigations, false reports, obstruction, or evasion of on-site inspections, etc. For example, under the ASCT, if a seller, etc. fails to submit a requested report, provides a false report, or avoids an on-site inspection, the seller, etc. is subject to imprisonment for not more than six months or a fine of not more than JPY 1 million.


There is no such system in Japan.

7 Enforcement


In Japan, there is no system of filing to enforce consumer laws; however, the competent minister may enforce consumer law by administrative decision.


There is no time limit for the commencement of procedures by the competent minister.




The filing of a request for review or an administrative lawsuit does not automatically suspend the liability to pay penalties, etc. In order to prevent the entry into force of an administra-tive disposition, it is necessary to file a provisional disposition with the court requesting a stay of execution, based on which the court has the authority to uphold the claim and issue an order of suspension of execution.



With the spread of COVID-19, the CAA called consumers’ atten-tion three times to health foods claiming prevention of COVID-19, and to disinfectant or antibacterial sprays. The CAA also gave administrative guidance actively and issued administrative guidance in relation to five businesses which sold portable air disinfection goods and six businesses which sold antibody detec-tion kits because they could be in violation of the AUPMR.


The Act on Sales, etc. of Financial Instruments will be revised drastically and the name of the Act will be changed to “the Act on Provision of Financial Services”. The revised Act will establish a new category of business of “Financial Services Intermediation”, which will be subject to the regulations of the Act. In addition, the Act on Sales, etc. of Financial Instruments is a law comprising solely 10 articles, while the revised Act will comprise over 100 articles and establish detailed regulations for businesses. The revised Act will come into effect in the Autumn or Winter of 2021.

The CAA plans to submit bills in respect of the revised Act on the Deposit, etc., Transaction Agreements of Specified Commodities, etc., and the revised ASCT to the Diet in 2021 in order to prohibit, in principle, deposit, etc., transaction agree-ments which have caused widespread damage to consumers, as well as to reinforce regulations in respect of fraudulent periodic purchases. The deposit, etc. transaction agreements which have caused widespread damage to consumers concerns transaction agreements where businesses sell goods, etc.; at the same time, the business accepts deposits of such goods, runs a business to operate the goods by themselves or rents the goods to third parties, etc., thereby returning profits to consumers through dividends, etc., or purchasing goods, etc., at a certain price at the expiration of the contract period. Additionally, the CAA is considering making a new law in order to ensure an environ-ment wherein consumers can make transactions on digital plat-forms safely and securely. The new law will include a definition of “digital platform regarding transactions” and will provide for development of a framework for resolving problems. The bill for this new law is planned to be submitted to the Diet in 2021.


Claims subject to Court Proceedings for Redress for Damage are limited to certain monetary payment obligations borne by a business against a consumer concerning consumer contracts, and claims such as those for consolation money, medical expenses, and lost profits are excluded from the scope of claims.


Japan is a member of the Organisation for Economic Co-operation and Development (“OECD”) Committee on Consumer Policy (“CCP”) and the International Consumer Protection and Enforcement Network (“ICPEN”). Four consumer organisations, including Consumers Japan, are members of Consumers International (“CI”). In addition, the Cross-border Consumer center Japan (“CCJ”) has been estab-lished as a consulting service for consumers who encounter troubles in trading with overseas businesses. The CCJ works in collaboration with organisations such as the Better Business Bureaus (the United States, Canada and Mexico), the Chartered Trading Standards Institute (the United Kingdom), and the Korea Consumer Agency (the Republic of Korea).

8 Appeals


In order to challenge the legality of administrative disposi-tions undertaken by administrative agencies, there are appeal processes concerning such dispositions, including complaints under the Administrative Complaint Review Act and actions for revocation under the Administrative Case Litigation Act.


When a business subject to an administrative disposition wishes to seek revocation or modification of a disposition by an admin-istrative agency, it may file a complaint under the Administrative Complaint Review Act. Such request for review of a disposition is not a lawsuit and does not involve the court. Within three months from the day following the day on which the business comes to know of the disposition, the business files a request for review with the administrative agency that made the disposi-tion, and, thereafter, review officers review the disposition and determines, based on the documents provided, as to whether the agency should review it or not. In addition, if a business wishes to seek the revocation of a disposition, it may file a lawsuit for revocation under the Administrative Case Litigation Act. In principle, a business can choose freely whether to file a request for review or a lawsuit for revocation. If a business wants to file a lawsuit for revocation, the business must file a lawsuit with the court within six months from the date when the business became aware of the disposition.

Consumers are not entitled to appeal administrative dispositions.

84


Japan

Oki Mori is a partner at Nagashima Ohno & Tsunematsu. He practises in a wide variety of civil litigation and other dispute resolution proce-dures including, but not limited to, consumer litigation, corporate litigation, commercial litigation, real estate litigation, finance litigation, labour litigation and tax litigation. Moreover, he specialises in consumer law such as cases involving the Act against Unjustifiable Premiums and Misleading Representations, food labelling, product recalls/accident reports, the Product Liability Act, the Consumer Contract Act and the Act on the Protection of Personal Information. He has extensive experience in responding to emergency situations involving governmental authorities such as the Consumer Affairs Agency, mainly in consumer law. In addition, he has obtained many judgments/orders in his favour in administrative litigation and appeal procedures. Furthermore, he was awarded the honour of being named the Dispute Resolution Lawyer of the Year at the ALB Japan Law Awards 2019 hosted by Asian Legal Business.

Nagashima Ohno & TsunematsuJP Tower, 2-7-2 MarunouchiChiyoda-ku, Tokyo 100-7036Japan

Tel: +81 3 6889 7000Email: [email protected]: www.noandt.com

Mai Umezawa is an associate at Nagashima Ohno & Tsunematsu. Since joining the firm, she has engaged in a wide variety of civil litigation and other dispute resolution matters, including commercial litigation, matters regarding trading by consumers and businesses, intellectual property matters, labour disputes, and international arbitration. In addition, she has experience in matters involving governmental authorities in Japan, such as the Consumer Affairs Agency and the Personal Information Protection Commission.She graduated with an LL.B. from the faculty of law of Waseda University in 2013, and a J.D. from Waseda Law School in 2016, and was subsequently admitted to the Bar of Japan in 2018.

Nagashima Ohno & TsunematsuJP Tower, 2-7-2 MarunouchiChiyoda-ku, Tokyo 100-7036Japan

Tel: +81 3 6889 7000Email: [email protected]: www.noandt.com

Nagashima Ohno & Tsunematsu is the first integrated full-service law firm in Japan and one of the foremost providers of international and commercial legal services based in Tokyo. The firm’s overseas network includes offices in New York, Singapore, Bangkok, Ho Chi Minh City, Hanoi and Shanghai, and collaborative relationships with prominent local law firms. In representing our leading domestic and international clients, we have successfully structured and negotiated many of the largest and most significant corporate, finance and real estate transactions related to Japan. In addition to our capabilities spanning key commercial areas, the firm is known for path-breaking domestic and cross-border risk manage-ment/corporate governance cases and large-scale corporate reorganisa-tions. Over 500 lawyers of the firm work together in customised teams to provide clients with the expertise and experience specifically required for each client matter.

www.noandt.com



Chapter 11 85

Mexico

Gonzalez CalvilloEnrique Muñoz

Lucía Fernández

Edgar Grajeda

Jorge Mondragón

Mexico


as such per the applicable laws, may be consumers under the LFPC if they acquire, store, use or consume goods or services with a purpose to integrate them into any process of produc-tion, transformation, marketing or the provision of services to third parties. In this second case, the LFPC only grants micro-companies or members of micro-industries the possi-bility of exercising certain rights set forth in such law.


All suppliers must comply with the LFPC. Article 2 of the LFPC defines a “supplier” as any physical or legal entity (as such legal figures are defined in the Mexican Federal Civil Code) that regularly or periodically offers, distributes, sells, grants the use or enjoyment of, or leases any goods, products or services. Considering the definition of individual and legal entity in the Mexican Federal Civil Code, it could be construed that foreign individuals and legal entities could also be considered suppliers if they carry out the abovementioned activities in Mexican terri-tory or cater to Mexican consumers.

The provisions of the LFPC: (i) are matters of public order and social interest and must be adhered to throughout Mexico; and (ii) cannot be waived, and no person can allege to have customs, uses, practices, agreements or stipulations preventing their observance.


The Procuraduría Federal del Consumidor (Federal Consumer Protection Agency or “PROFECO”) is the agency that is responsible for enforcing the LFPC.

The Instituto Nacional de Transparencia, Acceso a la Información y Protección de Datos Personales (National Institute for Transparency, Access to Information and Personal Data Protection or “INAI”) is responsible for the enforcement of the Mexican DPL which, as previously mentioned, regulates the processing of personal data of individuals in Mexico, including consumers.


The following are the main agencies that enforce consumer protection laws in specific sectors in Mexico:■ theComisión Nacional para la Protección y Defensa de los Usuarios

de Servicios Financieros (the National Commission for the

1 General


The most relevant legislation, regulations and guidelines for consumer protection in Mexico are the Ley Federal de Protección al Consumidor (Federal Consumer Protection Law or “LFPC”) and its Regulations (the “LFPC Regulations”).

Notwithstanding the foregoing, there are many other relevant laws, regulations and guidelines that relate to consumer protec-tion, including:a. The personal data protection laws in Mexico that regulate

the processing of personal data of all individuals in Mexico, including consumers (the “Mexican DPL”), particularly: i. the Ley Federal de Protección de Datos Personales en Posesión

de los Particulares (Federal Law on the Protection of Personal Data Held by Private Parties or the “DPL Law”);

ii. the DPL Law’s Regulations (the “DPL Regulations”); and

iii. the Lineamientos del Aviso de Privacidad (Privacy Notice Guidelines).

b. Laws that regulate consumer protection in specific indus-tries, for example:i. the Ley de Protección y Defensa al Usuario de Servicios

Financieros (the Law for the Protection and Defense of Users of Financial Services) or “LFPDUSF”, as appli-cable to the financial industry; or

ii. the Ley Federal de Telecomunicaciones y Radiodifusión (Telecommunications and Broadcasting Federal Law or “LFTR”), as applicable to broadcasting.

c. Laws, regulations and other legislation that regulate the publicity, labels and information to be provided to consumers in connection to food, beverages, cosmetics, medicines, and medical devices, among others, including the Ley General de Salud (General Health Law or “LGS”) and its different regulations, such as: i. regulations of the LGS in publicity matters; and ii. regulations of sanitary control of products and services.


Article 2 of the LFPC defines “consumer” as the physical or moral person who acquires, carries out or enjoys goods, prod-ucts or services as the final beneficiary. Micro-companies or members of micro-industries, which will be considered

86 Mexico


are non-binding technical norms as established in the law that specifically regulates the scope and the nature of this type of standard; or (ii) the methods or procedures that are determined by the Ministry of Economy or the applicable governmental agency, prior to an audience with the interested parties.


The protection of the LFPC applies to all products, goods and services provided by suppliers (as the term is defined in the law).


The LFPC fails to establish general exceptions to these protec-tions; however, exceptions may be applicable to specific goods, products, services, industries, or sectors, which should be included in the NOMs or any other specific legislation appli-cable there.


All consumers have the right to file a claim or complaint against a supplier before PROFECO. PROFECO then starts a concil-iation procedure between the consumer and the supplier. The conciliation procedure is not mandatory per se; however, if the supplier fails to attend the conciliation hearing(s), PROFECO can fine the supplier assuming that the claim or complaint filed by the consumer is true. PROFECO can also issue an opinion (dictamen) regarding the monetary amount resulting from the unfulfilled obligation, which is considered an enforceable instrument (título ejecutivo) in favour of the consumer, and which could include a quantification of the bonification or compensa-tion owed to the consumer.

The following are some of the most relevant remedies avail-able for a breach of the protections in relation to the quality and function of goods and services:a. In the event that products, services or goods which are

the subject of a contract have hidden defects or flaws that make them unsuitable for their traditional use, diminish their quality or their possibility of use, and fail to provide the security that is typically expected of them, consumers have the right to request:i. the return of the goods, product or service; ii. the reduction of the price; oriii. the early termination of the applicable contract, in the

understanding that the supplier must return the amounts paid by the consumer, plus interest, if applicable.

b. Consumers will be entitled, when appropriate, to the replacement of the product or the return of the amount paid when: i. the content or quantity of a product is less than the one

indicated;ii. the goods do not correspond to the quality, brand or

specifications under which they were offered or do not comply with any applicable NOMs; and

iii. the repaired goods are not in a suitable state for their use or destination within the warranty period.

c. Consumers will be entitled to request the indemnification of any damages and losses sustained.

Protection and Defense of Users of Financial Services or “CONSDUSEF”), which regulates consumer protection in the financial sector;

■ the Instituto Federal de Telecomunicaciones (Federal Telecommunications Institute or “IFT”), which regu-lates consumer protection in the telecommunications and broadcasting sector; and

■ theComisión Federal para la Protección contra Riesgos Sanitarios (Federal Commission for the Protection against Sanitary Risks or “COFEPRIS”), which protects consumers against risks related to the use and consumption of health-related products and services.



The main protections under the LFPC regarding quality and functions of goods and services are as follows:a. Any goods or services offered with a warranty must be

issued as per the provisions of the LFPC and the agree-ment between supplier and consumer, and must: (i) be effective for at least 90 days from the date of delivery; and (ii) contain at least the scope, period, conditions and mechanisms of the goods or services in order to make such warranty effective, as well as an address for complaints.

b. The consumer can request the fulfilment of a warranty to the producer, importer and distributor of the goods or services, without distinction.

c. In the event that the product has been repaired or serviced and it shows deficiencies attributable to the person that carried out the maintenance or repair, the consumer shall be entitled to have the product repaired or serviced again free of charge, within 90 calendar days of delivery.

Furthermore, the Normas Oficiales Mexicanas (Mexican Official Standards or “NOMs”) are mandatory technical regulations issued through the competent governmental entities in connec-tion with various subjects, including the characteristics (and in some cases their verification methods) that products, goods or services must meet and comply with in connection to security, health, terminology, labelling and measurements, among others. There are a significant number of NOMs that have been issued in Mexico and they are applicable to a vast number of products and services, including telecom services, electrical and house-hold products and medical devices. Suppliers, manufacturers or producers of products, goods or services must comply with any applicable NOMs.

The LFPDUSF and LFTR and their related legislation and norms, as well as other laws and norms applicable to consumer protection in specific sectors or industries, may have their own protections regarding the quality and function of goods and services acquired by consumers in the applicable sectors or industries.


Per the LFPC and the LFPC Regulations, PROFECO’s test of the quality, specifications or any other characteristic of goods, products and services shall be carried out in accordance with any applicable NOMs, otherwise per: (i) the NOMs, which

87Gonzalez Calvillo


c. Order calls for review addressed to suppliers and make known those of other authorities on products or services that are defective, harmful or that threaten consumer life, health or safety.

d. Withdraw from the market goods or products that threaten consumer life, health or safety, when this has been reliably determined by the competent authority.

e. Order the repair or replacement of products or services that threaten consumer life, health, safety or the economy.


Per the LFPC and LFPC Regulations, PROFECO’s test of the quality, specifications or any other characteristic of goods, products and services shall be carried out in accordance with any applicable NOMs, otherwise per: (i) the NMX, which are non-binding technical norms as established in the law that specifically regulates the scope and nature of this type of standard; or (ii) the methods or procedures that are determined by the Ministry of Economy or the applicable governmental agency, prior to an audience with the interested parties.


The protection of the LFPC applies to all products, goods and services provided by suppliers (as the term is defined in the law).


When dealing with the safety of goods and services, the LFPC and the applicable NOMs do not consider any exceptions.


Please refer to question 2.5.


Yes, a compliance certificate in accordance with the applicable NOM must be secured to be able to import or commercialise products within the Mexican territory.

There is a catalogue of NOMs, depending on the type of product or service to be developed, and these must be complied with.


Any supplier is entitled to communicate to PROFECO volun-tarily that he/she/it has detected some type of risk in prod-ucts, e.g. the designed product does not fully satisfy a company’s internal standards, even if it complies with the applicable NOMs.

The companies must inform PROFECO and consumers by issuing a “Call for Review” or “Alert” through the micro-site http://www.alertas.gob.mx.

d. In the foregoing events, and other specific events (e.g. if services rendered were deficient or were never rendered for causes attributable to the supplier), consumers have the additionalrightto:(i)bonificationofnolessthan20%ofthe price paid by the consumer; and/or (ii) compensation of5%ofthecostofthereparationofthegoodsor,intheeventofmajordefectsor faults,20%of thepriceof thegoods as set out in the applicable contract.


PROFECO can initiate proceedings for any breach under the LFPC. CONDUSEF and IFT have standing to initiate proceed-ings for breaches under the LFPDUSF and LFTR, respectively, and any related laws, NOMs and other legislation.


■ In2019,PROFECOreceivedmorethan1,677complaintsagainst various airlines. The main reasons for filing complaints were cancellations, flight delays, improper charges and lost or damaged luggage. For this reason, PROFECO imposed penalties of more than $7.5 million pesos in total on various companies, including Aeromexico, Volaris, Interjet, Aerobus and Aeromar.

■ In2020,971gasstationswerefineda totalsumof$357million pesos due to the failure to deliver full litres of gasoline.

■ InAugust2020,PROFECOinitiatedsanctionproceduresagainst 550 businesses (supermarkets and pharmacies, among others) for abuses in prices and services during the COVID-19 pandemic; most of these related to unjust increases in prices or failing to conform to the prices exhibited by the suppliers.

■ In late 2020,NOVIRSAwas sanctioned by PROFECOfor using misleading advertising to promote its products, since the company claimed their use created physical and health changes with no technical or scientific evidence thereof. As a result, PROFECO ordered the suspension of the advertisement of these products.

Excluding the last point, the above information was reported by the media since PROFECO’s yearly reports do not provide such information.



Regarding safety of goods and services, PROFECO is entitled to: a. Publish by any means the goods and services that have

been detected as risky.b. Issue alerts addressed to consumers and help other author-

ities or agencies in the publication of their alerts regarding products or services that are defective, harmful or that threaten consumer life, health or safety.

88 Mexico


celebrated in the national territory are only valid if they are in written form, in Spanish, with readable characters and with a uniform size and type of font. Standard contracts may not include disproportionate duties for consumers, unfair or abusive obligations or any other clause or text that violates the provisions of the LFPC.

The following are the most relevant clauses that are prohibited under the LFPC for standard contracts: i. Clauses that allow the supplier to unilaterally modify

the content of the contract, or unilaterally withdraw from its obligations.

ii. Clauses that release the supplier from civil liability, except if the consumer breaches the contract.

iii. Clauses that transfer civil liability to a third party that is not part of the contract.

iv. Clauses that foresee prescription terms that are shorter than the legal terms.

v. Clauses that require the consumer to waive the protec-tion of the LFPC or submit to the jurisdiction of foreign courts.

c. Protections/prohibitions in e-commercei. The suppliers will use the information provided by the

consumer in a confidential way, so it will not be able to disseminate it or transmit it to suppliers unrelated to the transaction, except with the express authorisation of the consumer or at the request of a competent authority.

ii. The suppliers will use available technical elements to provide security and confidentiality to the informa-tion provided by the consumer and will inform the consumer, prior to the conclusion of the transaction, of the general characteristics of such elements.

iii. The suppliers must provide the consumer, before concluding the transaction, with their physical address, telephone numbers and other means to which the consumers can file their claims or request clarifications.

iv. The suppliers will avoid misleading commercial prac-tices regarding the characteristics of the products; they must comply with the provisions related to the infor-mation and advertising of the goods and services the supplier offers, as indicated in the LFPC and related legislation.

v. The consumers will have the right to know all infor-mation regarding the terms, conditions, costs, addi-tional charges (if any), and forms of payment for the goods and services offered by the supplier.

vi. The suppliers will respect the consumer’s decision regarding the quantity and quality of the products the supplier wishes to receive, as well as that of not receiving commercial notices.

vii. The suppliers must refrain from using sales or adver-tising strategies that do not provide the consumers with clear and sufficient information regarding the services offered, particularly in the case of marketing practices directed at the vulnerable population, such as children, the elderly and the sick, incorporating mech-anisms that warn when the information is not suitable for that population.

viii. The suppliers that offer, market or sell products or services through electronic means shall “guide them-selves” by the provisions of a Norma Mexicana (Mexican Norm or “NMX”) that was issued in connection with e-commerce in Mexico, the NMX-COE-001-SCFI-2018. Notwithstanding the foregoing, as previ-ously mentioned, NMXs are non-binding, as expressly stated in the law that specifically regulates the scope and nature of this type of standard.


■ In2017,PROFECOissuedaCallforReviewforapossiblefailure in the assembly of the Britax B-agile stroller as it could cause falls in minors. Although a total of 4,561 strollers had been sold in Mexico, the products remaining in stores were immobilised.

■ In2020,PROFECOimmobilisedthesaleofantibacterialand mouth covers since such products lacked commercial information and therefore could be unsafe when used (i.e. they were not disinfected or did not meet their purpose).

■ In 2021, PROFECO ceased the distribution of 2,198food and drink products for non-compliance with frontal legends about excess calories, fat, sodium, and sugars. There is no formal resolution thereof yet.



The following are some of the most important protections/prohibitions relating to the conduct of suppliers under the LFPC: a. Protections/prohibitions relating to misleading adver-

tising and informationi. All information and advertisements in connection

with goods, products and services that are dissemi-nated through any means must be truthful, ascertain-able or measurable (comprobables), clear and with no text, dialogue, sounds, images, trademarks or other deceitful or abusive descriptions that create or may induce error because they are misleading or abusive.

ii. Misleading advertising ( publicidad engañosa) is prohib-ited; this is defined in the LFPC as advertising that refers to characteristics or information related to goods, products or services that, real or unreal, induce a consumer to error or confusion, due to the inac-curate, false, exaggerated, partial or contrived way it is presented. Furthermore, the information and publicity that compares products and services may not be deceitful or abusive in terms of the foregoing.

iii. Any legend or information in advertising or other material that advertises a product or service, which indicates that such product or service has been endorsed, approved, recommended or certified by entities or professional associations, is prohibited when the supplier/advertiser fails to have the appro-priate documents that support, “with scientific, objec-tive and reliable evidence”, the qualities or properties of such product or service, as well as any other requi-site required by law.

b. Protections/prohibitions in standard contracts (con- tratos de adhesión)

Standard contracts are defined in the LFPC as documents drafted unilaterally by suppliers to establish uniform formats with the terms and conditions applicable to a product or service, even if such document lacks the ordi-nary clauses included in contracts. Standard contracts

89Gonzalez Calvillo


xi. The suppliers must provide a manual when selling dangerous products or remodelling services.

The NOMs can consider additional protections/prohibitions relating to the conduct of suppliers.

The LFPDUSF and LFTR and their related legislation and norms, as well as other laws and norms applicable to consumer protection in specific sectors or industries, may have their own protections regarding the quality and function of goods and services acquired by consumers in the applicable sectors or industries.


Please refer to question 2.2.Furthermore, PROFECO reviews publicity per the terms

of the Lineamientos para el Análisis y Verificación de la Información y Publicidad (Guidelines for the Analysis and Verification of Information and Publicity), which requires all advertising to comply with the following: a. All information in connection with advertised goods,

products or services must be verifiable and ascertainable or measurable (comprobables), as well as any claimed effects or benefits thereof.

b. All objective affirmations must be verifiable and measur-able (comprobables).

c. No categoric or superlative terms in connection with the performance, characteristics or the conditions of the publicised goods, products or services, which may induce consumers to error or confusion, may be used. If such terms, along with objective affirmations, are used, or reference is made to studies, samples and/or tests, such information must be verifiable and ascertainable or measurable (comprobable).

d. Advertising that compares goods, products or services must not cause error or confusion in consumers, since such comparison is unverifiable or lacks objectivity.

In addition to the foregoing, PROFECO has internal guides in connection with the criteria that must be followed internally when reviewing advertising, which are not obligatory for indi-viduals or private companies.

Finally, the LFPC Regulations permit suppliers to prove the veracity of any information in connection with goods, prod-ucts and services, through documents issued by international or national organisations of “proven scientific and technical capacity”, when there are no applicable regulations within the Mexican territory. The LFPC Regulations also state, in connec-tion with the Conduct described in point a.iii. of question 4.1, that technical and scientific studies that contain the report of the original results of an investigation will be considered “scien-tific, objective and reliable evidence” if they comply with specific requirements set forth in the LFPC Regulations.


There are no general exceptions to these protections; however, exceptions may be included in the NOMs or other legislation appli-cable to specific goods, products, services, industries or sectors.


All consumers have the right file a claim or complaint against a supplier before PROFECO, as mentioned in question 2.5.

d. Protections/prohibitions relating to marketingi. If required by consumers, suppliers must confirm the

information the supplier has in its databases of such consumers.

ii. Publicity sent to consumers by suppliers must include the name, address, telephone number, or email of the supplier and the contact data of PROFECO.

iii. PROFECO administers the Public Consumer Registry (the “REPEP”) where consumers who do not want to receive publicity can register their phone number and, per a very recent legal reform to the LFPC Regulations that has yet to be implemented by PROFECO, their email. PROFECO provides suppliers access to this list. Per the LFPC, suppliers and marketing compa-nies must not send advertising to persons that have expressed that they do not want to receive publicity and those who are registered in the REPEP.

iv. Suppliers and companies that use consumers’ informa-tion for marketing or publicity purposes are prohibited from using such information for other purposes.

e. Other protections/prohibitions under the LFPCi. The information of the products or their labels,

containers and packaging and the respective adver-tising, both of national manufacture and of foreign origin, will be expressed in Spanish and their price in national currency in understandable and read-able terms according to the general system of units of measurement, in the understanding that they may also be expressed in another language or another measure-ment system.

ii. Suppliers may apply neither coercive and unfair commercial methods or practices, nor abusive or imposed clauses or conditions in the supply of prod-ucts or services.

iii. Suppliers may neither provide additional services to those originally contracted that have not been expressly requested or accepted, in writing or electron-ically, by the consumer, nor may they apply charges without the prior consent of the consumer or that are not derived from the corresponding contract.

iv. Suppliers may not unreasonably increase prices for natural, meteorological or health contingencies.

v. Suppliers are obliged to deliver the invoice, receipt or “proof of purchase” to the consumer, stating the specific data of the sale, service provided or operation carried out.

vi. Suppliers must inform PROFECO or obtain a permit if they want to carry out certain types of promotions (e.g. collectibles) and raffles.

vii. Any legends that restrict or limit the use of goods or services must be set out clearly, truthfully and unambiguously.

viii. The legends “guaranteed”, “guarantee” or any other equivalent may only be used when they indicate what such “guarantee” consists of and how the consumer can make it effective.

ix. Publicity of promotions and offers must include specific information set forth in the LFPC and any consumer that meets the applicable criteria will have the right to obtain the applicable promotion or offer.

x. Credit transactions, property-related operations, service suppliers and door-to-door suppliers or those who sell outside the commercial establishment or indi-rectly must comply with specific requirements set forth in the LFPC.

90 Mexico












According to articles 96 and 97 of the LFPC, PROFECO has the power to initiate investigations and sanction procedures by itself and derive from anonymous complaints by affected parties. In case the procedure is initiated by an anonymous complaint, PROFECO notifies the potential offender and then opens a conciliation process; if they do not reach an agreement, PROFECO initiates a proper sanctioning process, in which the opportunity to present grounds and evidence is given to the offender, and then PROFECO issues the final resolution in which sanctions can be imposed.

Please note that, according to the Civil Procedures Federal Code, private plaintiffs, government entities, and certain non-profits may bring consumer claims as class, or “collective”, lawsuits.


PROFECO has the authority to initiate the investigations by anonymous complaint or ex officio through a verification visit. In case of ex officio investigations, PROFECO does not have the obligation to justify the reason for its investigation; therefore, in practice, it is common for PROFECO to order verification visits derived from whistleblowers or public information contained in TV, radio and/or social media.


The complaint procedure is the same for consumers and busi-nesses, provided they are considered consumers under the LFPC. The procedure commences with the filing of the

The following are some of the most relevant remedies avail-able for a breach of the protections/prohibitions relating to the Conduct described above:a. In the event that information, instructions, data and condi-

tions promised or suggested by the supplier are untruthful, the consumer has the right to request what was actually offered and, when that is not possible, the replenishment of the consumer’s expenditures and if applicable, the boni-fication and compensation as set forth in question 2.5.

b. In the event that the author of a promotion or offer fails to honour his/her/its offering, the consumer may opt for its compliance, accepting equivalent goods or services, the early termination of a contract and, if applicable, the right to be paid the difference between the offered price of the goods or services and its normal price. The fore-going is in addition to the bonification and/or compensa-tion described in question 2.5.

c. In the event that, after a warranty is executed, and the defects or faults of goods or services persist, the supplier must repair them again immediately and provide the consumer the compensation described in question 2.5.

d. If suppliers fail to provide a manual when selling dangerous products or rendering services, they will be liable for any damages and losses caused by this omission, plus the boni-fication and compensation described in question 2.5.

e. Consumers will be entitled to request the indemnification of any damages and losses they have sustained.


■ In 2018, PROFECO imposed a fine on Uber for an approximate amount of $3.97 million pesos. This was due to the following violations of the LFPC: (i) the company was applying a standard contract which contained unfair and abusive provisions to the disadvantage of consumers and other provisions prohibited under the LFPC; and (ii) PROFECO considered their guarantee of a “safe service” of transportation as false advertising.

■ In 2018, PROFECO initiated investigation proceduresfor infractions to the LFPC by Colgate-Palmolive Universidad Intercontinental, Merkatari, Mead Johnson Nutricionales de México, Tempure Sealy México, Spring Air México and others, particularly in connection with the advertisement of certain of their products having been endorsed, approved, recommended or certified by entities or professional asso-ciations, without the appropriate documentation that supported such claims.

The above is information reported by the media, since PROFECO’s yearly reports do not provide such information.




91Gonzalez Calvillo



In order to apply and enforce the provisions of consumer protection regulation, PROFECO can carry out surveillance and verification of the places where products or merchandise are managed, stored, transported, distributed or sold, or at the places where services are rendered, including those in transit. Furthermore, PROFECO has the power to impose sanctions stipulated in the LFPC, for which PROFECO shall give notice to the alleged infringer of the procedure’s facts and shall grant a term of 10 business days to introduce evidence and refute them in writing. PROFECO has the authority to impose all sanc-tions in the administrative field, which are listed in the LFPC as follows: (i) economic fines; (ii) total or partial closure; and (iii) prohibition on marketing goods or products.


To determine which powers to use, PROFECO must determine the seriousness of the case. In such respect, article 128 or the LFPC establishes those cases that are particularly serious, which are:a. Cases where the rights and interests of a group of consumers

could be affected if the supplier continues to operate. b. When the infringement in question could endanger the

life, health or safety of a group of consumers. c. Infringements committed in relation to goods, products

or services that, due to the season or special circumstances of the market, adversely affect the rights of a group of consumers.

d. Conduct committed by advantage of shortages, remote-ness or difficulty to supply goods or to render a service.

e. Acts with respect to basic commodities of generalised consumption, such as food, natural gas or liquefied petro-leum gas, gasoline or other products subject to a maximum price or prices or fees established or registered by the appli-cable Ministry or by any other competent authority.

f. Recidivism in the commission of infringements indicated in article 128 of the LFPC.


The procedure is administrative. In order to establish a viola-tion of the provisions of the LFPC and, if applicable, the impo-sition of sanctions, PROFECO shall give notice to the alleged infringer of the procedure’s facts and shall grant a term of 10 business days to introduce evidence and refute them in writing.

Otherwise, PROFECO shall issue a decision pursuant to the evidentiary means that have been made available to it.

When PROFECO detects infringements to the NOMs and initiates against a supplier the abovementioned procedure in connection with the marketing of goods or products that are not in compliance with such standards, it shall also give notice to the manufacturer, producer or importer of such goods or prod-ucts on the initiation of the procedure set forth in article 123 of the LFPC.

PROFECO shall establish the sanctions that may be legally admissible once the procedure in question is completed.

complaint, which can be in writing, verbally, by telephone or electronically. Once the complaint is received, PROFECO noti-fies the potential offender and requires a written report related to the facts which are the object of the complaint. Following this, PROFECO opens a conciliation process, and if the parties do not reach an agreement, PROFECO initiates a proper sanc-tioning process against the potential offender.


The timeline for a typical investigation ranges between 15 and 60 working days, depending on the kind of products or services that are investigated, and if a conciliation process is commenced.


Not directly. According to article 24, section XVII of the LFPC if, exercising its powers, PROFECO detects the poten-tial commission of a crime, it is obliged to inform the prosecu-tion service (Ministerio Público), which would initiate the criminal process according to the applicable Criminal Code.


Yes, during the conciliation process, the parties – the consumer and the potential offender – can reach an agreement in which commitments and undertakings are established, and PROFECO then gives that agreement the character of administrative reso-lution. In case of non-compliance with such agreement, the affected party could initiate a claim to PROFECO, which has the authority to enforce the agreement.

7 Enforcement


PROFECO enforces consumer regulation by administrative resolutions. Prior to issuing an administrative resolution to enforce consumer regulation, PROFECO follows an adminis-trative process which has different stages: (i) investigation/veri-fication; (ii) conciliation; (iii) sanctioning process; and (iv) reso-lution (sanctioning or not).

Please note that according to the Civil Procedures Federal Code, private plaintiffs, government entities, and certain non-profits may bring consumer claims as class, or “collective”, lawsuits.


Yes, according to article 14 of the LFPC, PROFECO has one year to initiate the investigation process. In that event, the proce-dure is initiated by an anonymous complaint, and the one-year period is interrupted when the complaint is filed. There is an exemption in which, when the proceeding relates to sanctioned breaches that may have effects on children’s rights, the limit is extended to 10 years.

92 Mexico




PROFECO has been active throughout the pandemic; it has imposed a significant number of sanctions in connection with unfair practices and abuses by suppliers, particularly unjustified price increases or failing to comply with publicised prices. Its focus has been on the industries that have been relevant during the COVID-19 pandemic; for example, funeral homes, oxygen devices, pharmacies, food suppliers and supermarkets, among others. Furthermore, last year a new NOM regarding food and drink legends came into force and PROFECO has been purposefully investigating the compliance thereof.


The Mexican Senators Chamber has issued an initiative to modify the direct marketing-related provisions of the LFPC, which was approved in October 2019. Such initiative has been sent to the Chamber of Deputies and, if approved, it will become law, unless the Executive Power uses its veto power to reject it. We do not presently have information regarding the date in which this proposal will be discussed in the Chamber of Deputies.

In general terms, the initiative modifies the LFPC to state that:■ Itisstrictlyprohibitedforcompaniesandsupplierstouse

or share any kind of information about consumers for advertising or marketing purposes. These advertising and marketing practices will be permitted only after a request made from the consumer by means of previous, expressed and informed consent, which may be revoked at any given moment.

■ Suppliers and companies will be responsible for themanagement of consumer information when such adver-tising is communicated by themselves or through a third party.

■ ThemodeloftheREPEPwillevolve.Thisregistry(ortheregistry that will replace it) will refer to the consumers that have granted their consent for suppliers to use their infor-mation for marketing purposes and publicity. The compa-nies and suppliers shall inform PROFECO of the list of consumers that have granted such consent.

■ The amendment mandates that the origin of marketingcalls and messages must be fully identifiable and that these can only be issued at reasonable hours of the day.

■ The fines are increased for unsolicited marketing andthose who violate these provisions.

PROFECO shall admit the evidence it deems advisable and shall proceed to introduce it. Likewise, it may request from the alleged infringer or from third parties other evidence it may deem advisable.

Once the introduction of evidence concludes, PROFECO shall give notice to the alleged infringer so that it may submit arguments within the next two business days. PROFECO shall then render a decision within the next 15 business days.


The LFPC does not establish the right of stand-alone action.




There is not any international mechanism in which Mexico is involved in the enforcement of consumer protection.

8 Appeals


The resolutions issued by PROFECO imposing sanctions can be challenged by a motion for review, under the terms of the Federal Administrative Procedure Law. This motion is substan-tiated before PROFECO and it is solved by the hierarchical superior of whoever issued the challenged resolution.

Another challenging option is through a nullity trial before the Federal Administrative Justice Court. This is a jurisdic-tional process, in which a collegiate and a specialised court review whether the resolution was issued in accordance with the consumer law and administrative procedure law.


Yes, through the processes mentioned in question 8.1. Affected parties (consumer or manufacturer) can initiate an Amparo proceeding against the resolution issued by the Federal Administrative Justice Court.


Yes, if the plaintiff requests the suspension of the effect of the penalties; however, the amount of the fines must be guaranteed.

93Gonzalez Calvillo


Edgar Grajeda is a partner at the firm and a leading practitioner in civil, commercial and administrative litigation, representing clients before State and Federal courts, arbitration panels and all kinds of governmental authorities.He has developed a strong practice in consumer protection matters and represents clients before the PROFECO, including complaints filed by consumers and conciliatory procedures, as well as in administrative and jurisdictional procedures related to sanctions imposed by admin-istrative authorities in connection with consumer protection matters.

Gonzalez Calvillo Montes Urales 632, Lomas de Chapultepec 11000, Mexico CityMexico

Tel: +52 55 5202 7622Email: [email protected]: www.gcsc.com.mx

Jorge Mondragón is managing partner of Gonzalez Calvillo. Throughout his over 26 years of experience, he has developed a commercial legal practice with a focus on corporate, franchising, distribution, IT and data protection matters.Additionally, he has focused his practice on consumer protection matters in a wide range of industries and has strong experience counselling product and service providers for compliance purposes.Jorge is an active member of several local and international associations, including the IBA, ABA, IFA and the ANADE.



Enrique Muñoz is counsel at the firm and has more than 15 years of experience in environmental, life sciences and consumer protection matters. He has experience advising clients from health, MedTech, medical devices, food, beverages, cosmetic and innovative products industries, particularly in advertising, promotions, warranties, packaging, labelling and commercial agreements, among others.Likewise, he advises companies in identifying and obtaining environmental permits, licences, authorisations and concessions required for the development of infrastructure projects in diverse industrial sectors.



Lucía Fernández is counsel at the firm and has more than 15 years of experience in commercial and corporate matters, including franchising, IT and data protection, as well as regulatory matters, advising particularly in connection with consumer protection and advertisement.She advises clients with online terms and conditions, privacy notices, and their compliance with consumer protection laws, privacy laws and other laws in connection with advertising, e-commerce and personal data processing.



For over 30 years, Gonzalez Calvillo has challenged the standards and rewritten the full-service firm model with a solution-oriented approach, evolving the practice of law in Mexico.The firm is driven by the commitment of doing things differently, having a deep knowledge of the Mexican legal ecosystem, its behaviour and interac-tion with today’s globalised business environment.Our services are designed to help our clients solve the toughest and most complex legal issues while finding the best solution for each case. By understanding clients’ business culture and strategy, we establish a close and strategic alliance to enable them to achieve more.Our client roster is well diversified, as we represent a blend of local and multinational corporations across regulated and non-regulated industries, such as domestic and international financial institutions, governmental entities and individuals, including a substantial number of Fortune 500 companies, in a wide variety of legal matters.

Our firm’s solution-centred approach allows us to advise clients on all issues related to the regulatory and commercial aspects of products and services, with a focus on consumer protection matters, both from the advi-sory and legal defence standpoint.

www.gcsc.com.mx



94

Nigeria

Banwo & Ighodalo Mavis Abada

Azeezah Muse-Sadiq

Nigeria

Chapter 12



The FCCPA defines a consumer in section 167(1) to include any person: (a) who purchases or offers to purchase goods other than for

the purpose of resale, but does not include a person who purchases any goods for the purpose of using them in the production or manufacture of any other goods or articles for sale; or

(b) to whom a service is rendered.


The FCCPA applies to and binds all undertakings (that is, any person involved in the production of or the trade in goods, or the provision of service) and all commercial activities within, or having effect within Nigeria, including:(a) a body corporate or agency of the Government of the

Federation or of a sub-division of the Federation, if the body corporate or agency engages in commercial activities;

(b) a body corporate or agency in which the Government of the Federation or Government of a State, or a body corporate or agency of the Government of the Federation or any State or Local Government, has a controlling interest, where such a body corporate engages in economic activities; and

(c) all commercial activities aimed at making profit and geared towards the satisfaction of demand from the public.

In addition, the provisions of the FCCPA apply to certain conducts occurring outside Nigeria where such conduct is by:(a) a citizen of Nigeria or person ordinarily resident in Nigeria;(b) a body corporate incorporated in Nigeria or carrying out

business within Nigeria; and (c) any person in relation to the supply or acquisition of goods

or services by that person into or within Nigeria.


Enforcement/Regulatory AgencyThe FCCPC, as stated in the answer to question 1.1, is estab-lished by the FCCPA to administer and enforce the provisions of the FCCPA.

1 General


The Federal Competition and Consumer Protection Act, 2018 (“FCCPA”) is the primary legislation which governs and protects the rights of consumers in Nigeria. The FCCPA established the Federal Competition and Consumer Protection Commission (“FCCPC” or “Commission”) to, amongst others:(a) protect and promote consumers’ interest and welfare by

providing consumers with a wider variety of quality prod-ucts at competitive prices; and

(b) prohibit restrictive or unfair business practices which prevent, restrict or distort competition or constitute an abuse of a dominant position of market power in Nigeria.

Prior to the enactment of the FCCPA, the principal legisla-tion that protected the rights of consumers in Nigeria was the Consumer Protection Council Act, 2004 (“CPA”) which estab-lished the Consumer Protection Council (“CPC”); however, the FCCPA repealed the CPA and the FCCPC assumed all rights, interests, obligations, assets, and liabilities of the CPC.

To aid the FCCPC in discharging its functions and duties, the FCCPA empowers the FCCPC in section 163 to make rules and regulations for the effective implementation and operation of the provisions of the FCCPA. The provisions of the FCCPA further stipulate that any regulation, order, bye-law or notice that was issued by, or for the purpose of, the CPC under the CPC Act shall be deemed to have been made or issued by, or for the purpose of, the FCCPC and shall continue in force until revoked or amended by the FCCPC. Thus, in addition to the provi-sions of the FCCPA, there are: (i) the FCCPC (Sales Promotion) Registration Regulations, 2005; (ii) the FCCPC Guidelines for Sales Promotion Registration; and (iii) the FCCPC Business Guidance Relating to COVID-19 on Business Co-Operation/Collaboration and Certain Consumer Rights Under the FCCPA, 2020 (“Business Guidance”). Further, the FCCPC adopted the Guiding Principles for Sustainable Consumption proposed at the annual World Consumer Day of 2020 (“Sustainable Consumption Principle”).

Please refer to the answer to question 1.5 for other legislation, regulations and guidelines that are relevant to consumer protec-tion in Nigeria.

95Banwo & Ighodalo


to, amongst others, ensure: (i) that the prices charged by electricity supply/distribution licensees are fair to those consumers; and (ii) the safety, security, reliability and quality of service in the production and delivery of electricity to consumers. The NERC issued the NERC Customer Service Standards of Performance for Distribution Companies, 2007 and the Customer Complaints Handling: Standards and Procedure, 2006 in order to establish an expected standard of performance, as it relates to consumers, for electricity distribution companies and also to establish a procedure for the handling of customers’ complaints.

(d) National Agency for Food and Drug Administration and Control (“NAFDAC”):

The NAFDAC Act, 2004 established NAFDAC, an agency under the Nigerian Federal Ministry of Health, which ensures consumer protection by regulating and controlling the manufacture, importation, advertisement, distribution, sale and use of food, drugs, cosmetics, medical devices, chemicals and packaged water and beverages in Nigeria.

(e) Standards Organisation of Nigeria (“SON”): The SON, which was established by the SON Act, 2015,

is empowered by the legislation to amongst others, ensure that: (i) locally manufactured products in Nigeria give the required degree of satisfaction to consumers; and (ii) prod-ucts imported into Nigeria are safe and import conditions are met.

(f ) Nigerian Broadcasting Commission (“NBC”): The NBC was established by virtue of the NBC Act,

2004, and as part of its regulatory role, it is vested with the responsibility to, amongst others, receive, consider and investigate complaints of consumers in respect of broad-casting services.

(g) Nigerian Civil Aviation Authority (“NCAA”): By virtue of the Civil Aviation Act, 2006, the NCAA

has regulatory oversight over the aviation industry in Nigeria. As part of its regulatory role, the NCAA created a Consumer Protection Department which ensures that all consumers in the aviation industry obtain the best services in air transportation, and issued the Nigeria Civil Aviation Regulations, 2015, which broadly address consumer protection issues including compensation for denied boarding, delays and cancellation of flights.

Accredited consumer protection groups may also commence actions to protect the interest of consumers.

In addition, the Securities and Exchange Commission and all self-regulatory organisations have regulatory oversight over capital market operators in relation to complaints by their clients.



The FCCPA provides that the consumer has a right to services performed in a manner and quality that reasonable persons are generally entitled to expect.

In relation to the quality of goods, the FCCPA states, amongst others, that every consumer has a right to goods that are of good quality, in good working order, free from defects, and which comply with any applicable standards set by the industry sector regulator. In addition, there is an implied warranty in any transaction that the goods comply with the applicable quality

Adjudicatory AuthorityThe Competition and Consumer Protection Tribunal (“CCPT”) was established pursuant to section 39 of the FCCPA to adjudi-cate conduct prohibited under the FCCPA.

The CCPT (as it relates to the protection of consumers) has, amongst others, the powers to:(a) hear appeals from or review any decision of the FCCPC

taken in the course of implementation of any of the provi-sions of the FCCPA;

(b) hear appeals from, or review any decision from, the exercise of the powers of any sector-specific regulatory authority in a regulated industry, in respect to consumer protection matters; and

(c) issue such orders as may be required of it under the FCCPA.

For the purpose of proceedings of the CCPT, the CCPT is to be constituted into panels of at least three members and its deci-sion will be taken by a majority of the members of the panel.

The order, ruling, award or judgment of the CCPT is binding on the parties and must be registered with the Federal High Court of Nigeria solely for the purposes of enforcement. Appeal of an order, ruling, award or judgment of the CCPT is to be made within 30 days to the Court of Appeal of Nigeria, the second-highest court in Nigeria.

Please note, however, that all appeals or requests for review of the exercise of the power of any sector regulator, as it relates to consumer protection, shall be heard and determined by the FCCPC before such appeals can lie before or be determined by the CCPT.


There are other sector regulators who, by virtue of their estab-lishing/enabling laws in addition to their primary responsi-bilities, have responsibilities to protect consumers in Nigeria. Although the FCCPA recognises other consumer protection legislation, rules and regulations, they are to be read with such modifications as are necessary to bring them into conformity to the provisions of the FCCPA.

In addition, the FCCPA states that other sector regulators with consumer protection oversight shall be deemed to have a concurrent jurisdiction with the FCCPC, and in the event of conflict between the FCCPC and a sector regulator, the FCCPC will have precedence over the said sector regulator.

Such sector regulators include:(a) The Central Bank of Nigeria (“CBN”): Pursuant to powers conferred on it by the CBN Act (as

amended) and the Banks and Other Financial Institutions Act, 2020, the CBN issued the Consumer Protection Regulations, 2019 to guide the effective regulation of consumer protection practices of financial institutions under the regulatory purview of the CBN.

(b) Nigerian Communications Commission (“NCC”): The NCC, as the apex regulator of the Nigerian commu-

nications industry, is vested with powers to protect and promote the rights and interests of communication services consumers against unfair practices in Nigeria. The NCC issued the General Consumer Code of Practice, 2018, which has detailed provisions on the protection of the rights and interests of communication services consumers.

(c) Nigerian Electricity Regulatory Commission (“NERC”): The NERC, which was established by the Electric Power

Sector Reform Act, 2005, is empowered by the legislation

96 Nigeria


Furthermore, a consumer can file a complaint in accordance with the provisions of the FCCPA. Please refer to the answers to questions 6.1 and 7.1 for further details.

In addition, where a damage is caused wholly or partly by defective goods or the supply of a service, the undertaking that supplied the goods or service is liable for the damage. Such damage may include personal injury and damage to the consum-er’s property.


An aggrieved consumer, an accredited consumer protection group, an industry sector regulator, and the FCCPC can all initiate proceedings for a breach.


Within the last 12 months, the FCCPC has been investigating companies/businesses operating in Nigeria for anti-consumer violations.

In May 2020, the FCCPC in furtherance of a reasonable suspi-cion of illegal activities, sealed (pending further inquiry) Med Contour Ltd (a plastic surgery centre) and assisted in bringing a five-count charge against the surgeon based on contravention of sections 33(3)(a) and 113(4)(a) of the FCCPA. Furthermore, there is an ongoing investigation against a multinational tobacco company operating in Nigeria for anti-consumer protection, public health and anti-competition violations.

In March 2018, prior to the enactment of the FCCPA, the CPC (the hitherto consumer protection agency) issued a warning to power companies across Nigeria to desist from the imposition of arbitrary charges on consumers. The warning was as a result of reported cases of arbitrary billing and unlawful disconnection of customers’ electricity without due process, which amounted to acts of sabotage and a gross abuse of consumer rights.

Moreover, on June 17, 2018, the CPC filed an action against MultiChoice Nigeria Limited (“Company”), for breaching a consent order that dealt broadly with consumer protection and service responsiveness/quality issues. The consent order provided that no material terms of the subscription agree-ment between the Company and its consumers would change during an agreed period of supervision by the CPC. However, the Company proceeded to arbitrarily increase its subscription rates. In an action commenced by the CPC, the court granted an interim injunctive relief against the Company; however, the suit was struck out on May 16, 2019. Notwithstanding, the FCCPC on June 13, 2019 issued a final order mandating the Company to observe the rules laid down therein.



Please refer to the answer to question 2.1. Additionally, where an undertaking or distributor becomes

aware of any unforeseen hazards arising from the use of goods placed in the market, it shall immediately notify the general public of such risk or danger and cause such goods to be with-drawn from the market.

standards set out in the FCCPA, and the customer has a right to return the goods within a prescribed period for failure to comply with the foregoing.

Please note that other sector consumer regulations have provisions similar to the foregoing.


The reasonability test is used in determining whether or not the goods or services are of the intended quality. The FCCPA provides that the consumer has the right to receive goods that are “reasonably suitable” for the intended purpose whilst the quality of service must be such that a “reasonable person” is generally entitled to receive. Further, where the consumer has specifically informed the seller of the particular purpose for which the consumer intends to use the product and the supplier ordinarily offers such goods or acts in a manner that suggests that he has knowledge, the consumer has a right to expect that the goods are reasonably suitable for the specific purpose he has indicated. Where there is an allegation of defective goods or service, the onus of proof is on the undertaking that supplied the goods or service.

In addition, the FCCPC has the power to order quality tests to be conducted on consumer goods as it deems necessary and seal up any premises on reasonable suspicion that such premises contain, harbour, or are being used to produce or disseminate goods or services that are fake, substandard or inimical to consumers’ welfare, in collaboration with relevant sector regulations.


The provisions of the FCCPA relating to the quality of goods and services include almost all types of products, goods and services. For instance, the definition of goods as provided for in the FCCPA includes ships, aircraft, vehicles, minerals, trees and crops – whether attached to land or not – as well as gas and electricity.

Service is defined broadly to include service of any descrip-tion, whether industrial, professional or any other service, and the sale of goods, where the goods are sold in conjunction with the rendering of a service.


There are no exceptions to the protections available to a consumer in relation to the quality of goods under the FCCPA. However, the FCCPA seems to exempt from liability any under-taking in the regulated industry that has violated any provision of the FCCPA, where such undertaking is able to demonstrate that the violation was ordered or required by a regulatory agency possessing jurisdiction over the regulated industry.


The available remedies include penalties/fines, monetary restitu-tion or compensation (for an aggrieved consumer) and/or term of imprisonment. More specifically, the consumer has a right to return defective goods within three months, and the under-taking is expected to repair or replace such goods or return a portion of the purchase price.

97Banwo & Ighodalo


In addition, other sector regulators have directed manufac-turers to recall unsafe products and issued warnings to consumers in that regard. For instance, on June 30, 2019, NAFDAC directed Nigerian Bottling Company Limited to recall Eva Premium Table Water 75cl as a precautionary step, pending investigation by the agency following a voluntary report by the company on June 20, 2019 about a change in colour of the product from colourless to light green and the presence of particles in two lots.



The FCCPA prohibits business practices/conducts that are misleading, fraudulent, unconscionable or generally anti-com-petitive. Some of such conducts include the following, amongst others: (a) issuing a false or wrong advertisement;(b) altering, defacing, covering, removing or obscuring a

trade description, or trade mark applied to any goods in a manner calculated to mislead consumers;

(c) giving false, erroneous, misleading or likely to be misleading in any material respect, fraudulent or decep-tive representations concerning any material fact for the purpose of promoting or marketing a product;

(d) giving representations in the form of a statement, warranty or guarantee of the performance, efficacy or length of life of products which are not based on an adequate and proper test of the goods or services; and

(e) offering to supply, supplying or entering into an agreement to supply any goods or services on unfair, unreasonable or unjust contract terms.


A transaction, agreement, term or condition will be deemed to be unfair, unreasonable or unjust if:(a) it is excessively one-sided in favour of any person other

than the consumer or other person to whom goods or services are to be supplied;

(b) the terms of the transaction or agreement are so adverse to the consumer as to be inequitable;

(c) the consumer relied upon a false, misleading or deceptive representation or a statement of opinion provided by or on behalf of the undertaking that supplied the goods or services concerned, to the detriment of the consumer; or

(d) the fact, nature and effect of a term, condition or notice was not drawn to the attention of the consumer.


The FCCPA provides a few exceptions to some of the prohib-ited conducts under the FCCPA. For instance, a business can be exempted from the general prohibition against “tying and bundling” where it demonstrates that:

Furthermore, where the FCCPC has reasonable grounds to believe that any goods may be unsafe, or there is a poten-tial risk to the public from the continued use of or exposure to the goods, and the undertaking that produced, distributed or imported those goods has not taken any steps required by an applicable code contemplated in the FCCPA, the FCCPC, by written notice, may require the undertaking to recall the goods in any terms required.


Please refer to the answer to question 2.2.








Although the FCCPA does not provide for mandatory reporting requirements, by the provision of the FCCPA, the FCCPC may compel manufacturers, suppliers, dealers, importers, wholesalers, retailers or other undertakings, where appropriate, to certify that their goods and services satisfy all standards and give public notice of any health hazards associated with their goods and services.


Please refer to the answer to question 3.1. In addition, the SON Act provides that the supplier of a

defective product may be required by the Honourable Minister of Industry, Trade and Investment (upon the recommendation of the SON) to, among other things, recall the product or notify the public of the nature of the defect in the commodity, the circumstances in which the use of the commodity is dangerous, as well as procedures for the disposal of the commodity.


The provisions of the FCCPA are yet to be fully tested by the FCCPC; in the past five years, however, the then consumer protection regulator (CPC pursuant to the CPA) issued notices in respect of recall of unsafe products that originated outside of Nigeria and worldwide recall.

98 Nigeria


consumer of the class of persons for whom the notice or representation is intended, with average literacy skills and minimal experience as a consumer, can understand the content. The FCCPC is empowered to publish guidelines on methods for assessing whether a notice complies with the provisions of the FCCPA.

Prices are deemed to be adequately displayed if written price indication, expressed in Nigerian Naira, written, printed or stamped, is annexed or affixed to the goods or services or to any shelf or item used in connection with the goods or service.


There are no exemptions.




There are no available public records in respect of this.



The FCCPC is conferred with investigative powers to carry out investigations or inquiries it considers necessary or desirable in connection with any matter falling within the purview of the FCCPA (see section 17(e)). Additionally, the FCCPA specifically empowers the FCCPC to: (i) summon and examine witnesses; and (ii) call for and examine documents, etc. (see section 18(4)).

The key steps in a typical investigation, as set out in sections 148–150 of the FCCPA, are as follows:(a) a complaint is initiated or received by the FCCPC;(b) upon receipt of the complaint, the FCCPC may: (i) issue a

notice of non-referral (for frivolous complaints or complaints which do not entitle such consumer to any remedy in the FCCPA); (ii) refer the complaint to the applicable industry sector regulator for investigation or resolution of the complaint; or (iii) direct an inspector to investigate the complaint;

(c) where an inspector is directed to investigate the complaint, upon completion, the inspector will submit a report to the FCCPC;

(d) the FCCPC will determine whether to: (i) issue a notice of non-referral to the complainant; (ii) make an order; or (iii) issue a compliance notice to the erring undertaking; and

(e) where the FCCPC decides to make an order and the erring undertaking agrees to the terms of the order, such consent order will be made by the FCCPC and it can be registered with a competent court.

(a) the convenience to the consumer in having those addi-tional/bundled goods or services outweighs the limitation of the consumer’s right to choice; or

(b) the bundling of those goods or services results in an economic benefit for the consumer.


The available remedies include penalties/fines, monetary resti-tution or compensation (for an aggrieved consumer) and term of imprisonment.

Please refer to the answers to questions 3.1 and 3.7 for more information.

Specifically, the provisions of the FCCPA (see section 52) empowers the CCPT to make an order directing any under-taking to sell any portion or all of its shares, interest or assets if the prohibited practice or conduct cannot adequately be reme-died under any other provision of the Act, or is substantially a repeat by that undertaking of conduct previously found by the CCPT to be a prohibited practice.


In 2020, the FCCPC launched an investigation against companies following allegations of discriminatory practices and conducts. The investigation has thus far resulted in the temporary shutdown of an outlet.

In September 2018, the CPC and NCC launched a joint regu-latory investigation into the Nigerian telecommunication sector to ensure the rights of consumers in the telecommunication industry were adequately protected. This was due to the inces-sant and persistent complaints by consumers of practices such as call masking, unsolicited subscriptions, etc. By December 2018, plans were made to, amongst others, sanction telecommu-nication operators involved in the forceful subscription to value-added service and illegal airtime deduction of up to NGN36 billion. However, the extent of FCCPC and NCC’s enforcement is yet to be made public.



In addition to the conducts in answer to question 4.1, the FCCPA also imposes an obligation on manufacturers to ensure that the notice on any product must be in accordance with the prescribed form or in plain language, where no form is prescribed for that notice. Furthermore, an undertaking is obliged to adequately display the prices of goods and services on sale.


A notice, document or visual representation is deemed to be in plain language if it is reasonable to conclude that an ordinary

99Banwo & Ighodalo


can enforce consumer laws. With respect to the FCCPC, it can enforce the provisions of the FCCPA as set out below:(a) by making an order against an erring undertaking, which

includes consent orders, compensation for injury suffered and award of damages in favour of the complaining consumer;

(b) by issuing a compliance notice which will state the details and nature of the non-compliance, steps to be taken to rectify the non-compliance and the penalty that will be imposed if the necessary steps are not taken;

(c) by obtaining a satisfactory written assurance from an undertaking that has persisted in a course of conduct which is detrimental to consumers; and

(d) where the FCCPC is unable to obtain the written assur-ance, or the undertaking has failed to comply with its written assurance or breach of compliance notice, the FCCPC may: (i) institute an action against the undertaking in a competent court; or (ii) order temporary closure of any premises or facilities where the contravention takes place.


The FCCPA does not stipulate a time limit to commence action/compliance, and as such, the prescribed period in a relevant limi-tation law will apply. Generally, the limitation laws in Nigeria provide for six years’ limitation period for tortious and contrac-tual actions.


With respect to the FCCPC, in addition to the answer to question 7.1, the FCCPC in enforcing the provisions of the FCCPA may: (a) shut down or close the premises of a defaulting under-

taking until such undertaking complies with a compliance notice;

(b) commence and prosecute a suit against a defaulting under-taking in a competent court; and

(c) impose an appropriate administrative penalty on a defaulting undertaking.

Where its Orders or Summons are disobeyed, the FCCPC can make referral to the Office of the Attorney General for prosecution.


Generally, by virtue of section 51(3) of the FCCPA, the CCPT may impose administrative penalties for prohibited conduct, and when determining an appropriate penalty, the CCPT shall consider: (a) the nature, duration, gravity and extent of the contravention; (b) any loss or damage suffered as a result of the contravention; (c) the behaviour of the defaulting party; (d) the market circumstances in which the contravention took

place and the level of profit derived from the contravention; (e) the degree to which the defaulting party has cooperated

with the FCCPC and CCPT; or (f ) whether the defaulting party has previously been found to

be in contravention of any of the provisions of the FCCPA.The FCCPC will likely take into consideration factors similar

to the foregoing.


Investigation can be triggered based on a complaint filed by an aggrieved consumer, an accredited consumer protection group, and an industry sector regulator. The FCCPC can also commence an investigation on its own motion.


Please refer to the answers to questions 6.1 and 6.2.Furthermore, an aggrieved consumer may elect to have direct

recourse to lodge a complaint to the undertaking he/she has a grievance against for a resolution of such complaint.

As an alternative to initiating a complaint with the FCCPC or the undertaking, an aggrieved consumer may elect to lodge his/her complaint with an industry/sector regulator who exercises regulatory control over such undertaking. Such complaint(s) will be resolved in accordance with the rules and regulations applicable in that industry.


The FCCPA does not stipulate a specified timeline for an inves-tigation but provides that an investigation by an inspector (a key step in the investigation process) should be carried out “as quickly as practicably possible”. The FCCPC states that it is committed to providing speedy redress to valid complaints and puts its redress time between one (1) to forty-five (45) days. Nonetheless, this is determined on a case-by-case basis and could exceed the given timeframe.


There are prescribed criminal offences in the FCCPA and crim-inal penalties which range from a fine and term of imprison-ment, in the case of an individual, to fines, in the case of a corporate body. The prescribed criminal offences include: (i) failure to comply with a compliance notice issued by the FCCPC with regard to an investigation process; (ii) failure to appear as a witness to give evidence or produce a requested document or information; and (iii) obstruction of an employee of the FCCPC.


The FCCPA provides for resolution of complaint and investiga-tion in the form of a consent order (with the erring undertaking). The consent order can be registered with a competent court.

7 Enforcement


The Nigerian consumer laws, including the FCCPA, provide for various methods by which the relevant regulatory authority

100 Nigeria


8 Appeals


Any party aggrieved with the decision of the FCCPC should file an application with the CCPT. Following the decision of the CCPT, if such party is still aggrieved it may within 30 days of the judgment/order/decision of the CCPT appeal to the Court of Appeal (see sections 49–55 of the FCCPA).




Although the FCCPA is silent on this, generally under Nigerian law an appeal does not operate as an automatic stay of execution of a judgment. In order to suspend the effect of any penalty or requirement, an order of the court directing a stay of execution of the judgment appealed against, pending the determination of the appeal, must be obtained.



As an immediate aftermath of the COVID-19 pandemic in the first quarter of 2020, some suppliers and retailers took undue advantage of the pandemic and engaged in unacceptable trade practices, including price gouging of basic safety and protec-tive apparel and personal hygiene products. The FCCPC, in prompt response, issued warnings and compliance notices to retailers, suppliers and online platforms as detailed in the FCCPC’s Release of February 28, 2020 and March 23, 2020. The FCCPC also issued the Business Guidance which reiterates certain consumer rights, and generally aims at ensuring compli-ance with consumer protection laws.

Moreover, the FCCPC recently opened investigation and temporarily sealed businesses (pending detailed inquiry) on reasonable suspicion of illegal activities. Likewise, the FCCPC had assisted in the prosecution of: (i) some retail pharmaceutical outlets which refused to comply with its warnings and notices; and (ii) business owners allegedly involved in illegal activities.

In addition, the FCCPC has indicated interest in enforcing consumer protection related orders from other regulators. An example is the NERC order to cap the amount that certain cate-gories of unmetered electricity consumers in Nigeria would pay for their monthly electricity consumption. The FCCPC has in this regard indicated that it will launch a billing capping order enforcement; however, enforcement actions are yet to commence.


The FCCPC is required to comply with the provisions of the FCCPA and its regulations, rules and guidelines in exercising its powers and functions. Furthermore, other industry sector regu-lators must adhere to the laws establishing them and other appli-cable regulations, rules, and guidelines.


The FCCPA provides for a right to a stand-alone action and follow on right of action, as an aggrieved consumer can initiate a complaint with the FCCPC and has the right to directly institute an action in a competent court to seek redress.

Additionally, where a complaint was first initiated with the FCCPC, upon the conclusion of an investigation by the FCCPC where it is proved that the consumer’s rights have been violated or any wrongdoing has been committed, the consumer has a right to institute a civil action for compensation or restitution in a competent court.




In October 2020, the FCCPC signed an updated tripartite Memorandum of Understanding (“MOU”) with the Nigerian Economic and Financial Crimes Commission, and the United States Federal Trade Commission (“USFTC”) for the purpose of strengthening cooperation and collaboration in addressing mutual cross-border consumer protection/fraud concerns and problems. The updated MOU seeks to reaffirm the parties’ intention to work together and establish a Joint Implementation Committee to develop joint training programmes and provide assistance on specific investigations.

Moreover, the FCCPC participated in the African Consumer Protection Dialogue Conference (“Conference”) which is a joint initiative of African Competition and Consumer Protection regulators and the USFTC. The Conference provides a plat-form to promote consumer protection and cross-border cooper-ation as well as to discuss ongoing work on consumer complaint sharing, business education and consumer protection.

Once more, the FCCPC participates in the activities of and has served on technical committees to review relevant guidelines of the United Nations Conference on Trade and Development which is the focal point in the United Nations for competition law and policy, and consumer protection issues.

101Banwo & Ighodalo


that there will be major reforms within the next 12 months, beyond addressing any gap that exists in the current regulatory regime, particularly with respect to enforcement actions by FCCPC. However, we expect that the FCCPC will issue several guidance notes and regulations to fill some of the gaps in the FCCPA and provide more clarity on the provisions of the FCCPA, whilst also addressing consumer protection challenges arising from unprece-dented events like the COVID-19 pandemic.

AcknowledgmentsThe authors would like to thank Esther Adeniji, Tosin Oyebanjo, Thelma Okorie and Tobi Ojuri for their contributions to this chapter.

Another recent enforcement trend is the FCCPC inauguration of the Task Force on Sustainable Consumption charged with developing an enforceable framework from the self-regulatory and public regulation perspectives. However, the Task Force is yet to issue the enforcement framework.

Information on the website of the FCCPC indicates that it has successfully protected consumers who have lodged complaints against banks, electricity service providers as well as telecom-munication providers.


As the introduction of the FCCPA is still a major reform recently implemented in consumer law and policy in Nigeria, it is less likely

102


Nigeria

Azeezah Muse-Sadiq is a partner in the Corporate, Securities & Finance (“CSF”) group of the firm, and one of the firm’s partners leading the Capital Markets, Mergers & Acquisitions and Competition and Consumer Protection practice areas. Azeezah advises companies in the Fast Moving Consumer Goods sector, Banks, Pharmaceutical companies, Agriculture and other consumer-facing companies. She acts as a resource person in capacity development trainings and has delivered presentations on diverse subjects within her core practice areas. She is also a member of the Nigerian Bar Association.

Banwo & Ighodalo48, Awolowo RoadSouth West IkoyiLagosNigeria

Tel: +234 906 000 3561 2 / 805 087 5883 / 809 271 4452 / 902 052 4921Email: [email protected] URL: www.banwo-ighodalo.com

Mavis Abada is an associate in the Corporate, Securities & Finance (“CSF”) group of the firm and a pioneer member of the firm’s Competition and Consumer Protection Practice Group, a sub-practice group in the firm’s CSF group. She has experience in Mergers & Acquisitions and Banking & Finance, and co-taught Corporate Law Practice at the Nigerian Law School in the 2017/2018 academic session as an adjunct lecturer. She is qualified to practise in Nigeria and the State of New York.

Banwo & Ighodalo48, Awolowo RoadSouth West IkoyiLagosNigeria

Tel: +234 906 000 3561 2 / 805 087 5883 / 809 271 4452 / 902 052 4921Email: [email protected]: www.banwo-ighodalo.com

Banwo & Ighodalo (“B&I”) is a foremost Nigerian legal services and business solution provider, delivering high-quality services. The firm was established on February 1, 1991 and is renowned for providing innovative, competent, cost-effective and well-timed solutions. B&I is structured as a partnership and is a fairly large Nigerian firm, presently comprising about 80 solicitors. We undertake work for public and private companies, governments, Nigerian and foreign investors, financial institu-tions, foreign law firms and international consultancy firms. Our lawyers are often called upon to serve as resource persons at local and international seminars/workshops and as public and private sector office holders and advisers. We are consistently ranked tier one in The Legal 500 and are ranked in the top three in Nigeria, in areas of Capital Markets, Securities, Mergers & Acquisitions, Corporate Finance & Restructuring, Project Finance, Foreign

Investment & Divestment, Shipping, Aviation & International Trade, Energy & Natural Resources and Intellectual Property. We also have a tested and dependable track record in Commercial Litigation.

www.banwo-ighodalo.com


Chapter 13 103

Russia

ALRUD Ksenia Erokhina

Russia


not limited to first buyers or users; any other national who uses the goods (work or services) on a legal basis (for example, an heir, or a subsequent purchaser, etc.) can also rely upon the rules prescribed by Russian consumer laws.

Self-employed entrepreneurs, being legal entities, can also enjoy protection under Russian consumer laws if they order, purchase or use goods or services for personal, family, house-hold and other needs not related to the entrepreneurial activity. Excluding the above, legal entities are not considered “consumers” under the Consumer Rights Protection Act.


The Consumer Rights Protection Act regulates relations arising between consumers and manufacturers, performers of works or services, importers, sellers and owners of aggregators of infor-mation on goods (services) when selling goods, performing works, or rendering services.

Thus, legal entities (both companies and self-employed entre-preneurs) being manufacturers, performers of works or services, importers, sellers, or owners of aggregators of information on goods (services) must respect the Russian Civil Code, the Consumer Rights Protection Act and the related legislation.

It is important to emphasise that Russian consumer laws belong to the category of mandatory norms of the Russian legis-lation, and therefore apply to foreign companies operating in Russia or directing their activities to the Russian market, even in the absence of a legal presence in Russia. There are a couple of exceptions; namely, the mentioned general rule does not apply to particular types of carriage contracts and works/services agree-ments if the work must be performed or the services must be rendered exclusively in a country other than Russia.


The Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing (“Rospotrebnadzor”) is a key regulator responsible for enforcing consumer protection law. Within each region of the Russian Federation, the highest exec-utive body of the region as well as local government bodies also have certain powers in that regard. Additionally, there are public associations of consumers that actively monitor the protection of the relevant rights.

1 General


Russian legislation on the protection of consumer rights is very complex and consists of a set of regulatory legal acts that are diverse in their nature (collectively – “Russian consumer laws”). The main pillars of Russian consumer laws are the Civil Code of the Russian Federation (“Russian Civil Code”) and the Consumer Rights Protection Act No. 2300-1-FZ ofFebruary 7, 1992 (“Consumer Rights Protection Act”).

Also essential to the protection of consumers’ rights are the norms of the business, administrative, civil procedure, munic-ipal and criminal laws. Here we can specifically identify the Criminal Code of theRussian FederationNo. 63-FZ of June13, 1996, the Code of Administrative Offences of the Russian FederationNo. 195-FZofDecember 30, 2001 and particularFederal laws including the Federal law on technical regulation No. 184-FZ ofDecember 27, 2002, theAdvertisingActNo.38-FZofMarch13,2006,andtheFederalCompetitionActNo.135-FZofJuly26,2006.

Along with Federal laws, the protection of consumers’ rights is also ensured by Government Decrees such as the Decree “On approval of the Rules for the sale of goods under a retail sale and purchase agreement” (established by the Government Decree No. 2463 of December 31, 2020) as well as the legislation imple-mented within specific Russian regions.

It is also worth mentioning the technical regulations enforced within the Eurasian Economic Union (“EAEU”), of which Russia is a member. Most of the related regulations concern the quality and safety of certain types of goods intended for import and sale on the markets of the EAEU member countries.


According to the Consumer Rights Protection Act, a consumer is: “a national (an individual) who has the intention to order or purchase or ordering, purchasing or using goods (work, services) exclusively for personal, family, household and other needs not related to entrepreneurial activity.”

The Supreme Court of the Russian Federation further confirmed that along with Russian nationals, the Consumer Rights Protection Act applies to foreign nationals and state-less persons. Furthermore, the Court has stressed that this is

104 Russia


particular goods (works), which after a certain period may pose a danger to the life or health of the consumer, or cause harm to his property or the environment, the manufacturer must set the relevant service life or shelf life.

The manufacturer is obligated to ensure that a good can be used during the entirety of its service life. For this purpose, the manufacturer shall provide the repair and maintenance services and produce necessary spare parts. In the absence of a deter-mined service life, the manufacturer must comply with the above regulations for 10 years from the date of transfer of the goods to the consumer.

The manufacturer (contractor) can also set a warranty period for the goods (works or services) – i.e., a period during which, if the goods (works) are found to be deficient, the manufacturer (contractor), seller, authorised third party, or importer are obliged to satisfy consumer claims. The seller has the right to establish a warranty period for the goods if the manufacturer does not set it. Both the manufacturer and the seller can accept additional obli-gations to the consumers beyond the warranty period.

It is worth mentioning that despite the fact that the warranty period can be of any duration, Russian consumer law vests consumers with the right to file complaints regarding the quality of goods (works) within two years after their acceptance, subject to distribution of the burden of proof with respect to the iden-tified defects.


By default, Russian consumer laws apply to any relations arising between consumers and business entities that are manufac-turers, performers, contractors, importers, sellers and owners of aggregators of information on goods (services) in connection with the sale of goods, or the performance of works or services. A general exception from said rule are gratuitous contracts (including free apps). There are also some other exceptions either directly mentioned in law or elaborated in case law; for example, relations which have arisen in connection with a loan agreement concluded between a credit cooperative (being a non-profit organisation) and an individual shareholder.


A manufacturer, seller, importer, performer or contractor is not responsible for the defects in the goods, works or services for which the warranty period is not established, if the consumer fails to prove that such defects arose before the goods, works or services were accepted by the consumer or due to reasons arising up to this point.

Furthermore, a manufacturer, seller, importer, performer or contractor shall be released from liability in connection with defects in goods, works, or services if it can prove that such defects arose after the consumer accepted the goods, works, or services, as a result of a violation of the rules for using the goods or a result of the works (services), actions of third parties or force majeure.


We have divided our answer into three parts: (1) remedies avail-able in case of defective goods; (2) remedies available in case of defective works or services; and (3) general remedies.


Yes; in particular, economic sectors have specific authorised bodies and organisations, which support the activities of the Rospotrebnadzor in the field of consumer protection. Additionally, in the financial services market there is the Bank of Russia and the Deposit Insurance Agency of Russia. While the Rospotrebnadzor works directly with nationals, the Bank of Russia supervises the activities of local banks and insurance agencies, and the Deposit Insurance Agency of Russia makes compensation payments to depositors in connection with insured events, etc.



The Russian Civil Code (Articles 469 and 721) and the Consumer Rights Protection Act (Article 4) prescribe that a seller (performer or contractor) must only transfer goods (render services or perform works) that comply with quality requirements prescribed by law and by consumer contracts.

In the absence of quality requirements in law or in a contract, a seller (performer or contractor) is obliged to transfer goods (render services or perform works) that are suitable for the purposes for which the goods (works or services) of this kind are usually used.

If a consumer communicates to a seller (performer or contractor) specific goals of acquiring goods (performing works, rendering service), a seller (performer or contractor) is obliged to transfer the goods (perform works, render services) suitable for use in accordance with these goals.

Furthermore, if goods are sold according to a sample and/or description, a seller is obliged to transfer to a consumer the goods that correspond to the relevant sample and/or description.


The Russian consumer laws distinguish two types of shortages in goods, works or services:1. Regular defects – whereby goods (works or services) do

not comply with: mandatory legal requirements; contrac-tual terms; the purposes for which the goods (works or services) of this kind are usually used; or with the purposes of a particular consumer if such purposes were communi-cated to the seller (contractor).

2. Essential defects – whereby the defects in goods (works or services) which are: irreparable; cannot be eliminated without disproportionate costs or time; are detected repeatedly; appear again after their elimination; or other similar defects.

In summary, a regular defect does not impede further use of the goods, works or services (for example, a defect in the rear window heating in a new car), while in the case of an essential defect, the goods, works or services cannot be used for their intended purpose (for example, a broken engine in a new car).

For goods (works) intended for long-term use, a manufacturer (contractor) can set a service life – the period during which the manufacturer (contractor) undertakes in order to provide a consumer with an opportunity to use the goods (works) for the intended purpose and will be liable for essential defects. For

105ALRUD


the Rospotrebnadzor and its territorial bodies; other authorised bodies in cases of prescribed law; local authorities; and public consumer associations which have the status of a legal entity.


Illustration No. 1Year: 2019Parties: consumer and legal entity (large electronic household appliances store)The essence of the dispute: the plaintiff purchased a juicer product as part of a promotion held in the defendant’s stores, which provided for additional opportunities for the buyer to exchange goods of proper quality, an increase in the exchange period in comparison with the established Law of the Russian Federation “On Consumer Rights Protection”, as well as the exchange of goods in respect of which the buyer is not enti-tled to make such a claim by law. However, the plaintiff filed claims for a refund of the amount of money paid for the goods in connection with the return of the goods.Decision: the court refused to satisfy the claim for the protec-tion of consumer rights, since the rights of the consumer when exchanging and returning goods within the framework of the Law of the Russian Federation “On the Protection of Consumer Rights” are limited by the exchange period, the possibility of exchanging only for a similar product, as well as the list of goods not subject to exchange. At the same time, the plaintiff did not exercise the right to exchange the goods for any other goods of equal or greater value, granted to him by the said Law and the terms of the promotion, but made claims for the return of the amount of money paid for the goods in connection with the return of the goods. The court also noted that the juicer is an electrical household appliance and refers to technically complex household goods. These types of goods are included in the list of products that are not subject to exchange.

Illustration No. 2 Year: 2019Parties: consumer and legal entity (clothing store)The essence of the dispute: the consumer purchased a fur product of an inappropriate size, in connection with which she tried to exchange the purchased goods within the time limit established by law and with the preservation of the presenta-tion, but the store refused to exchange the fur product. The consumer filed a claim for recovery from the defendant in connection with the refusal to perform the contract of sale, recovery of compensation for moral damage, compensation for the provision of legal services and a fine for refusing to satisfy the requirements of the consumer voluntarily.Decision: the court satisfied the claim for consumer protection partially, since the plaintiff appealed to the defendant with an application for the exchange of the purchased goods (fur prod-ucts) within the established 14-day period, the product was not in use, and seals, labels and control identification marks were retained. Thus, the defendant had no grounds to refuse to replace the goods with a similar product of the required size. As a result:■ compensationfordamageswassatisfiedinfull;■ thepenaltyforrefusingtovoluntarilymeetthecustomer’s

requirements was fully met;■ the amount of compensation for non-pecuniary damage

was reduced in comparison with the claims initially stated by the plaintiff; and

1. Defective goods – applicable remedies According to Article 18 of the Consumer Rights Protection

Act, in case of defects in goods (if a consumer was not aware of such defects), a consumer may choose one of the following remedies: i. replacement of the defective goods with goods of the

same or a different brand (model, article) with a corre-sponding adjustment to the purchase price (if applicable);

ii. corresponding reduction in the purchase price; iii. gratuitous elimination of the defects or recovery of

expenses incurred by the consumer in connection with the elimination of such defects; or

iv. unilateral termination of a sale-purchase contract with a respective refund.

At his sole discretion, a consumer can apply, with the listed claims, to a manufacturer, seller, importer, or any author-ised third party within a warranty period declared by the manufacturer. If the warranty is not determined, or if the warranty period is less than two years, then the claims can be made within a two-year period.

In relation to technically complex goods, a list of which is determined by the Decree of the Government of the Russian Federation of November 10, 2011 No. 924, the rules are slightly different. Namely, in case of revealed defects in such goods, a consumer can terminate a contract with a full refund or require a replacement. These claims should be made within 15 days, but may be made later in the case of essential defects.

2. Defective works or services – applicable remedies According to Article 29 of the Consumer Rights Protection

Act, in case of revealed defects in works or services (if a consumer was not aware of such defects), a consumer may choose one of the following remedies: i. gratuitous elimination of the defects in the works

performed (services rendered);ii. corresponding reduction in the price of the works

performed (services rendered);iii. repetition of the works or services at no additional

cost; oriv. recovery of expenses incurred by the consumer in

connection with the elimination of shortcomings in the works performed (services rendered).

Should a contractor or performer fail to satisfy the claims of a consumer, or in case of essential defects in the works or services, a consumer might unilaterally terminate the contract.

A consumer can make claims related to the shortcomings of the works performed (the services provided) if they are revealed during the warranty period, and in the absence of a warranty period, within two years from the day the works or services were accepted by the consumer, or within five years if there are defects in a real estate object.

3. General remedies In addition to the specific remedies listed above, a

consumer is also entitled to full compensation of losses incurred in connection with the sale of defective goods or provision of defective works or services. Moreover, a consumer can also require compensation for moral harm.


The following parties can appeal to the state court in connection with the violation of consumer laws: consumers (i.e. Russian and foreign nationals, as well as stateless persons); the prosecutor;

106 Russia


subject to compliance with the Food Quality and Safety Act No. 29-FZofJanuary2,2000andTechnicalRegulationsNo.880ofDecember 9, 2011 “On Food Safety”.


A manufacturer or seller (performer or contractor) is exempted from liability if he proves that the damage caused to the consumer is due to force majeure or violation by the consumer of the established rules for the use, storage or transportation of the goods (works or services).


Please refer to question 2.5.Additionally, Article 14 of the Russian Consumer Protection

Act and Article 1095 of the Russian Civil Code prescribe that sellers and manufacturers, as well as performers and contrac-tors, must reimburse consumers for any damage caused to their life, health or property due to constructive, prescriptive or other defects of goods, works or services.

There are also administrative and criminal penalties associ-ated with selling goods (works) which do not comply with the mandatory safety requirements.


A manufacturer (contractor, seller, person performing the func-tions of a foreign manufacturer) who becomes aware of the non-compliance of goods with the requirements of technical regulations is obliged to inform a competent state authority within 10 days.

A seller (performer, person performing the functions of a foreign manufacturer) upon receiving said information, must bring it to a manufacturer within 10 days.

Any third party who is not a manufacturer (contractor, seller, person performing the functions of a foreign manu-facturer) may also report to a competent state authority about the non-compliance of goods with the requirements of tech-nical regulations. Upon receipt of such information, the state authority must notify the manufacturer (seller, person acting as a foreign manufacturer) of its receipt within five days.

The manufacturer (seller, person acting as a foreign manufac-turer) must verify the accuracy of the received information and undertake the necessary measures to ensure that the possible damage associated with the goods does not increase until the verification is completed. If, upon the result of the verification procedure, it is confirmed that the goods do not comply with mandatory requirements, the manufacturer (seller, person acting as a foreign manufacturer) must develop a programme of meas-ures to prevent potential harm and confirm such programme with a competent state authority.

If the developed programme does not eliminate possible harm, the manufacturer (seller, person acting as a foreign manu-facturer) must immediately suspend the production and sale of the goods, recall the goods and reimburse buyers, including consumers, with the relevant losses.

In case the manufacturer (seller, person acting as a foreign manufacturer) fails to comply with the above requirements, the state authority can apply to the court with a claim for forced recall of the goods.

■ the reimbursement of court costs for the services of arepresentative was reduced in comparison with the orig-inal claims made by the plaintiff.



Pursuant to Article 7 of the Consumer Rights Protection Act, consumers have the right to ensure that the goods (works or services) – under normal conditions of use, storage, transpor-tation and disposal – are safe regarding the life and health of the consumer, as well as the environment. Moreover, the goods (works or services) should not harm the consumers’ property.

Particular types of goods (including food products, clothes, etc.) are also subject to compliance with specific procedures of conformity with mandatory safety requirements. Compliance of the goods shall be confirmed by a certificate, declaration of conformity, or a registration certificate. The details of the relevant procedures are stipulated in the technical regulations enforced within the EAEU.


The manufacturer (contractor) must ensure the safety of the goods (works or services) during the determined service life or shelf life of the goods (works or services), or within 10 years from the date of production (if the manufacturer or contractor does not determine service life or shelf life for its goods, works or services).

If it is necessary to observe special rules in order to ensure the safe use of the goods (works or services), as well as their storage, transportation and disposal, the manufacturer (contractor) must indicate these rules in the accompanying documentation for the goods (works or services), either on the label or by other means, and the seller (contractor) is obliged to bring these rules to the attention of the consumer.

If it is established that, despite observance of all prescribed rules, the goods (results of works) may still cause harm to the life, health and property of the consumer, or the environment, the manufacturer (contractor, seller) must immediately suspend production (sale) of such goods (results of works), and, if neces-sary, take measures to remove such goods (results of works) from circulation and recall them from the consumer(s).

If the cause of harm cannot be eliminated, the manufacturer (contractor) is obliged to remove such goods (works or services) from production. If the manufacturer (contractor or performer) fails to do so, Russian public authorities shall take measures to recall the relevant goods from the domestic market and/or from the consumers.

Any damage caused to consumers in connection with the recall of goods (works or services) shall be compensated by the manufacturer or contractor.


Please refer to question 2.3.For certain types of goods, there are specific statutory laws

as well as technical regulations of the EAEU stipulating safety requirements and criteria; for example, food products are

107ALRUD


services) at a higher price than indicated on a price tag, on the labelling of the goods (works or services), or what was determined by state authorities;

4. misrepresentation regarding consumer properties or the quality of goods (works or services) – sale or transfer of goods (performance of works, provision of services) in violation of the requirement to indicate consumer prop-erties and provide accurate information about consumer properties or the quality of goods (works or services), as well as abuse of consumer confidence; and

5. other consumer fraud – violation of other conditions of contracts; for example, sales of counterfeit goods or sales of goods wherein the information about the country of origin is not true.


According to Article 10 of the Consumer Rights Protection Act, a manufacturer (seller, contractor or performer) must, in a timely manner, provide the consumer with necessary and reli-able information about the goods (works or services), ensuring the possibility of their correct choice.

The list of information includes, inter alia, information on the basic consumer properties of the goods (works or services), total purchase price (in Russian rubles), warranty period – if estab-lished, etc.

The relevant information shall be brought to the attention of consumers in the technical documentation attached to the goods (works or services), on labels, or in any other way accepted for certain types of goods (works or services). The relevant infor-mation must be provided in the Russian language and in a read-able format.

In relation to specific types of goods (works or services), the list and methods of bringing information to the consumer are established by the Government of the Russian Federation.

If the manufacturer (seller, contractor or performer) does not fulfil these obligations, he shall be liable as specified at ques-tion 4.4 below.


The manufacturer (seller, contractor or performer) may be exempted from liability for damages if it is proved that the missing information on the goods (works or services) is classi-fied as well-known data that the consumer should know about and does not require special knowledge.


According to Article 12 of the Consumer Rights Protection Act, if the consumer is not provided with necessary and reliable information, he is entitled to claim damages or may unilaterally terminate the contract and request a refund.

Additionally, should the lack of necessary information lead to defects in the goods (works or services), the consumer shall also be entitled to the remedies stipulated at question 2.5 of this chapter.

Failure to provide necessary and reliable information to the consumer may also lead to administrative liability for the manu-facturer (seller, contractor or performer) in accordance with the Code of Administrative Offences of the Russian Federation.


Please refer to questions 3.1 and 3.6.


Illustration No. 1Year: 2020Parties: Rospotrebnazor and individual entrepreneurThe essence of the dispute: The Rospotrebnadzor carried out labo-ratory tests in relation to the defendant’s products sold, namely liquids for refueling electronic cigarettes, as part of the admin-istrative investigation. It turned out that the use of these prod-ucts, accompanied by the release into the environment of various chemicals identified in liquids, poses a threat of harm to the life and health of citizens. As a result, the samples do not correspond to the information for the consumer printed on the label.Decision: the Court found that the guarantees related to the safety of the goods were violated. The individual entrepre-neur was brought to administrative responsibility, and a fine of 30,000 RUB (approx. 396 USD) was imposed.

Illustration No. 2 Year: 2019Parties: The Rospotrebnadzor and legal entityThe essence of the dispute: it was found that the defendant sells children’s shoes, during the wearing of which children experienced pain and allergic reactions. According to the results of the examination, the products pose a threat to the life and health of consumers. Nevertheless, there is an indication of 100%polyester in the shoes on themarkingon the liningside. The Rospotrebnadzor imposed an administrative penalty in the form of a fine, the total amount of which was 410,000 RUB (approx. 5,412 USD).Decision: the court agreed with the position of the Rospotrebnadzor establishing that the products sold by the company do not meet the requirements of technical regulations and pose a threat to the life and health of children. The court also rejected the compa-ny’s arguments that since these are children’s sports shoes, they assume short-term wear. Thus, the guilt of the legal entity was proved.



Russian law prevents manufacturers, sellers and performers (contractors) from misleading and deceptive conduct.

There are several forms of such conduct, namely: 1. false measurement – sales of goods of a smaller volume

than determined by a contract; 2. false weight – sales of goods of less weight (volume) than

determined by a contract; 3. cheating in accounts – charging at a higher price than

determined by a contract, or sales of goods (works or

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legislation, dietary supplements are included in the list of products that are considered unsuitable for their intended use after the expiration date. Evidence confirming that the necessary information was brought to the attention of the plaintiff was not provided.

As a result, the court partially satisfied the plaintiff’s claims:■ compensationfordamagesinfull;■ reimbursementoflegalexpenses;■ the amount of compensation for non-pecuniary damage

was reduced; and ■ thepenaltyandfinewererefused.

Illustration No. 2 Year: 2021Parties: consumer and legal entityThe essence of the dispute: the consumer had entered into a contract for the provision of legal services with the defendant. She believed that the services under the contract were not fully rendered, and she was misled about the scope and cost of the legal services provided to her. The consumer appealed to the court with a claim for termination of the contract, recovery of funds paid under the contract and compensation for non-pecuniary damage.Decision: the court refused to satisfy the claims. The services under the contract were rendered by the defendant in full, as evidenced by the act of services performed, signed by the plain-tiff. The consumer did not send any comments, including those related to the quality and volume of services rendered, within 10 days from the date of receipt of the act, and therefore accepted the volume and quality of services performed in full. The court found no grounds for misleading the consumer.



The Consumer Rights Protection Act also prevents a business from committing the following actions:1. It is prohibited to include terms that infringe the consumers’

rights, in comparison with the rules established by laws or other legal acts of the Russian Federation, in the contracts with consumers. A consumer may apply before the court to declare such terms void and require a business to compen-sate all losses incurred by the consumer due to the above.

2. It is prohibited to condition the purchase of particular goods (works or services) by the purchase of other goods (works or services). For violation of this rule, a consumer shall be entitled to compensation of his losses in full.

3. It is prohibited to condition the satisfaction of the consumers’ claims made during the warranty period with any other condition not related to the defects in the goods (works or services).

4. A seller (contractor) is also not entitled to perform addi-tional works or services for a fee, unless there is explicit written consent from the consumer. Otherwise, the consumer has the right not to pay for such works (services).

It is also worth mentioning that the Consumer Rights Protection Act stipulates specific terms for performing works and services under a consumer contract, and the corresponding statutory penalties for violation of the terms. The law also stip-ulates a penalty for refusing to satisfy consumers’ claims volun-tarily,andthisfineisequalto50%oftheamountofconsumers’ claims subsequently satisfied by the court.


Illustration No. 1Year: 2016Parties: consumer and legal entityThe essence of the dispute: the consumer signed a contract for the purchase and sale of a Biomedis device at the suggestion of a representative of the company who arrived at the apartment at the location of the plaintiff. A few days later, the plaintiff received a call from another representative of the legal entity, who introduced himself as a doctor and offered to undergo a medical examination at the private clinic. According to its results, the consumer was informed about the possibility of having cancer and recommended treatment. Being under the impression of the information, a contract for the purchase and sale of a number of drugs was signed with the company’s courier who arrived at the apartment of the plaintiff. The consumer assumed that he was buying medicines. Later it turned out that he was prescribed dietary supplements. After visiting the state hospital, the plain-tiff became aware of the absence of grounds for making the above diagnosis, performing procedures using the Biomedis device and using drugs purchased under the influence of deception, which was immediately reported to the company with an offer to volun-tarily return the money and get the goods back.

The plaintiff asked the court to recover the 414,800 RUB (approx. 5,476 USD) paid for the goods, the penalty for refusing to satisfy the buyer’s claims voluntarily in the amount of 400,000 RUB (approx. 5,280 USD), compensation for non-pecuniary damage for 70,000 RUB (approx. 924 USD) as well as court costs.Decision: the Court pointed out the following:■ Inthecontractsforthepurchaseandsaleofdrugsandthe

device, it was stated that the seller provided the buyer with information about the main consumer properties of the product before entering into the contract. However, the defendant did not provide evidence of what information was brought to the consumer, and whether the plaintiff could conclude from the complex of information provided that it was necessary to purchase this product.

■ The method of selling the goods during a visit to theplaintiff’s apartment deprived the consumer, taking into account his elderly age (95 years), of the opportunity to obtain information about consumer qualities and charac-teristics before entering into a contract of sale. There is no certainty that the choice was reasonable and free.

■ Itdidnot follow that theconsumerwas informedaboutthe consumer properties of the product, ensuring the possibility of its correct choice. The defendant had not provided any evidence confirming the proper perfor-mance of the obligations under the contract of purchase and sale of the device.

■ Furthermore, theplaintiffhadnointentionstopurchasethe above-mentioned goods and did not perform any inde-pendent actions aimed at searching for similar goods and visiting places of sale before receiving information about the threat to life and health. When signing sales contracts, the consumer was guided by the recommenda-tions received by phone that the drugs necessary for treat-ment are medicines.

■ Theshelflifeofdietarysupplements,takingintoaccountthe fact that the plaintiff was intended to take 180 capsules, went beyond its limits. According to the Russian

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the insurance service in rubles is not specified in the loan agree-ment, and this information is not included in the documents that are integral parts of the loan agreement. The plaintiff believed that the bank thereby violated the Law of the Russian Federation “On Protection of Consumer Rights”, according to which the consumer, as a person who does not have special knowledge, should not make mathematical calculations to set the price of a service or product.Decision: the court refused to satisfy the claims. Within the meaning of the law, the case was deemed a refusal to perform the contract, because it was concluded without providing the necessary information that allowed the plaintiff to evaluate all the conditions and make the right decision about whether he was ready to enter into an insurance contract with a particular company, or wanted to apply to another, or did not want to insure the risks at all, possibly within a reasonable time. The consumer used the presented package of insurance services for 24 months, with the validity period of the loan agreement and the insurance contract for 36 months, and the claims for refusal to perform the insurance contract and refund of the insurance premium were declared much later. Accordingly, the criterion of a reasonable time for refusal of the contract by the plaintiff was not met and the court had no grounds for collecting funds and satisfying derivative claims.



Like many other Russian public authorities, the Rospotrebnadzor is entitled to conduct examinations (inspections) of business entities aimed at ensuring compliance of their activity with the applicable laws. The Rospotrebnadzor and its territorial bodies carry out such activities in the field of compliance with Russian consumer laws.

The Rospotrebnadzor carries out: 1. regular inspections of businesses every three years (or

more frequently in certain cases), in accordance with a pre-approved schedule, which is publicly available; and

2. unscheduled inspections (investigations) in cases stipu-lated by law, for example upon a consumer’s complaint.

Inspections could be further divided into the categories of documentary and field.

Generally, any inspection carried out by the Rospotrebnadzor consists of the following steps:1. Preparatory stage (plan approval, getting necessary

approvals from the prosecution office, notification of the businesses (within 24 hours to three days before the inspection) and briefing the businesses with an order on the inspection and related information, if required by law).

2. Stage of inspection (review of documents, examination of the territories, buildings, and structures, sampling and testing, expert examinations and investigations aimed at establishing a causal link between the revealed violation of mandatory requirements and the inflicted harm).

3. Reporting the results of the inspection (preparing an inspection report and sending it to the inspected entity and the prosecution office (if required by law). In case violations are identified as a result of the inspection, the Rospotrebnadzor and its territorial bodies take measures aimed at holding the responsible business entity liable in accordance with the current legislation).


Please see question 5.1.


General exceptions apply.


Please refer to question 5.1 of this chapter. Along with consumers’ claims, any mentioned violation of

the Consumer Rights Protection Act may lead to administrative liability for the business.


Illustration No. 1Year: 2018Parties: consumer and legal entities The essence of the dispute: the consumer entered into a contract for the provision of services for the implementation of a tourist trip to Italy in the manner and on the terms set out in the contract. However, the services were not provided to him, since the tour to Italy did not take place, due to the refusal of the Consulate of the Italian department to grant him a visa. The consumer believed that the tour operator did not ensure the proper processing of visa documents with the justification of the purpose and conditions of the planned stay, which resulted in the refusal to grant him a visa and causing losses.Decision: the court found that the tour operator was respon-sible for providing services of inadequate quality in case of failure to provide the consumer with the necessary informa-tion on the preparation of documents under the contract for the sale of a tourist product, which resulted in the refusal to issue a tourist visa. The consumer has the right to demand full compensation for the losses caused to him in connection with the lack of the rendered service, including the failure of the contractor to provide the consumer with necessary and reliable information on the preparation of documents for obtaining a visa to enter the country of temporary residence timely. As a result, the plaintiff’s claims were partially satisfied:■ fullcompensationfordamages;■ interestwascollectedfortheuseofotherpeople’sfunds;■ finecollected;■ recoveryofcompensationfornon-pecuniarydamage(the

amount was reduced); and■ compensation for legal expenses for legal services was

refused.

Illustration No. 2Year: 2016Parties: consumer and legal entity (bank)The essence of the dispute: a contract was concluded between the consumer and the bank, under the terms of which the plain-tiff was granted a loan. On the day of its conclusion, the borrower was charged a fee for connecting a package of personal insur-ance services. The amount of the payment for the activation of

110 Russia



The Rospotrebnadzor and the defendant can conclude a settlement agreement, but it must be approved by the court. The settle-ment agreement must not contradict the law or violate the rights and interests of others. Further, the court will not support the agreement if there is no proper expression of the will of the parties or it contains uncertain and unenforceable conditions.

7 Enforcement


The Rospotrebnadzor has a whole set of mechanisms and tools with which it can ensure the enforcement of consumer law including through both administrative decision and by commencing proceedings in court.


There is a two-month statutory limitation period to commence the enforcement proceedings in connection with violations of Russian consumer law if such proceedings are initiated by the territorial bodies of the Rospotrebnadzor, and a three-month period if the relevant proceedings are initiated by the court.

In case of a continuing administrative offence, the terms are calculated from the day the administrative offence was revealed.


The Rospotrebnadzor may bring business entities to administrative liability for violations of Russian consumer law. In particular, the Rospotrebnadzor may apply the following sanctions: warnings; fines; suspension of business activities; and confiscation.

Consumers and the Rospotrebnadzor can apply to the court, which can oblige the infringer to pay penalties and compensate for damages, moral harm, other harm caused by defective goods (works or services) and other violations of Russian consumer law.

There are also criminal penalties prescribed by the Criminal Code of the Russian Federation, which could be applied by the state courts in connection with particular violations of Russian consumer law. The respective penalties could involve: fines; deprivation of engagement in certain activities; compulsory, corrective, or forced labour; a legal sentence; or imprisonment.


According to the Code of Administrative Offences of the Russian Federation and the Criminal Code of the Russian Federation, when imposing an administrative or criminal punishment, the nature of the violation, the identity of the perpetrator, his prop-erty status (if this is an individual), the mitigating circumstances and the aggravating circumstances are taken into account.


In accordance with the Rospotrebnadzor order No. 764 of July 16, 2012 establishing an administrative regulation of inspections, territorial bodies of the Rospotrebnadzor shall conduct regular inspections based on the annual scheduled plan.

The bases for an unscheduled investigation are the following:i. expiry of the term for elimination of violations revealed

during the previous inspections;ii. complaints submitted by individuals (consumers), legal

entities, or self-employed entrepreneurs, or information from state authorities, local authorities, or the media about the following facts:a. a threat of harm to the life and health of consumers, as

well as a threat of emergency situations of a natural or man-made environment;

b. infliction of harm to the life and health of consumers, as well as the occurrence of emergency situations of a natural or man-made environment; or

c. violation of consumer rights (upon complaint of the consumer whose rights were violated);

iii. an order (instruction) from the head of the Rospotrebnadzor issued in accordance with instructions from the President of the Russian Federation or the Government of the Russian Federation; and

iv. a request from the prosecution office.


A consumer or business may file a written complaint to the Rospotrebnadzor in person, by post, by fax or electronically through the official website. The claims should be considered within a 30-day period in accordance with the Law on the Procedure for ConsideringApplicationstoStateAgenciesNo.590-FZofMay2, 2006. In exceptional cases, the term of consideration can be prolonged for an additional 30 days.


By default, an investigation should be completed within 20 working days. In certain cases, the term can be longer or shorter.


Yes, in Russia, criminal penalties for non-compliance with a consumer law investigation may be imposed. Criminal liability for violation of consumer rights is provided, in particular:■ forviolationofsanitaryandepidemiologicalrules;■ for the production, storage, transportation or sale of

goods, performance of works or provision of services that do not meet safety requirements; and

■ forthecirculationofcounterfeit,substandardandunreg-istered medicines, medical products and the turnover of falsified dietary supplements.

For these crimes, a wide variety of punishments are provided (from a fine to imprisonment).

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■ thereare10daysfromthedateofdeliveryorreceiptofa copy of the resolution (the period can be restored on certain occasions); and

■ the complaint can be sent either immediately withall the materials of the case to the higher body of the Rospotrebnadzor, or to the official who made the initial decision on the case so that he/she by his/herself will forward the materials up to the instance (he/she has three days for that).

2. If there is an appeal against decisions and actions (inac-tion) of officials of the Rospotrebnadzor in the exercise of state control, then:■ acomplaintisfiled;■ thereare15daysfromthedateofreceiptoftheinspec-

tion report;■ theobjectionisconsideredbyahigherstructure;and■ the totalperiodofconsideration isnomore than30

calendar days from the date of registration of the complaint. However, sometimes the deadline may be extended by more than 30 days, and the applicant must be notified of that.

The appeal process within the courtAs a general rule, the appeal takes place in the arbitration court. There are three months to appeal from the date of making deci-sions or performing actions by officials of the Rospotrebnadzor during the exercise of state control or from the day when consumers became aware of the violation of their rights, free-doms and/or legitimate interests.


Yes, that is possible (please see question 8.1 above).


The appeal process within the consumer authoritySuspension of the term of execution of the order is possible.

The appeal process within the courtThe orders are automatically suspended until the decision on the case comes into force, and during this period the supervisory authority has no right to check the execution of the contested order, even if it is recognised as legal.

When appealing a part of an order, the non-contested part of the order is subject to control, and the execution of the appealed points is suspended.



Every year, the Rospotrebnadzor publishes state reports on the protection of consumer rights in the Russian Federation. At this point, there is no report for 2020. Moreover, the information for the previous year is not entirely indicative due to the global COVID-19 pandemic, as the associated decline in law enforce-ment is obvious.


Please refer to questions 6.1–6.3 of this chapter.


Russian law does not recognise such concepts in the field of consumer law.

Based on the Consumer Rights Protection Act, a consumer can independently appeal to the court to initiate civil proceed-ings against businesses in connection with the violation of consumer rights, or appeal to a competent state authority (including the Rospotrebnadzor), which will either conduct the investigation and bring the business to administrative liability, or apply before the court to protect the consumer’s rights through legal proceedings.


Depending on the nature of the particular claim, a consumer is entitled to apply before the court within the warranty period, service life, or within general statutory limitation periods, which could be one or three years.

In relation to the statutory limitation terms to apply adminis-trative penalties, please refer to question 7.2.


Russia participates in the following international structures actively:■ the United Nations (“UN”) including the World Health

Organization (“WHO”) and the United Nations Conference on Trade and Development (“UNCTAD”);

■ the Organisation for Economic Co-operation andDevelopment (“OECD”);

■ the International Financial Consumer ProtectionOrganisation (“FinCoNet”);

■ theInternationalConsumerProtectionandEnforcementNetwork (“ICPEN”);

■ theG20;■ theShanghaiCooperationOrganization;■ BRICS;■ theAdvisoryCouncilonConsumerRightsProtectionof

the CIS participating States; and■ theAdvisoryCommitteeonConsumerRightsProtection

of the Member States of the Eurasian Economic Union.

8 Appeals


The appeal process within the consumer authority1. If there is an appeal against decisions in cases of adminis-

trative offences, then:■ acomplaintisfiled;

112 Russia


■ Draft law on the protection of consumer rights in theconclusion of credit agreements is currently being consid-ered. Banks will be prohibited from signing agreements with borrowers where there will be pre-printed marks of consent to the terms of lending or the purchase of addi-tional services. Moreover, all the provisions must be spec-ified directly in the concluded agreement, without sending them to the bank’s website for review.

■ TheRospotrebnadzor proposes making a number of changes. If goods or services do not have a warranty period, the seller or manufacturer will be responsible for their quality during the year. If they do not want to change the goods with a defect or return money for poorly performed services, then the seller or manufacturer will have to prove that the buyer has just damaged the goods.

■ Itisalsoproposedthatotherlawsmayprovideadditionalguarantees of consumer rights; however, the reduction of the guarantees of consumer rights established by the Law “On the Protection of Consumer Rights” is not permitted. Rules on the rights of consumers that worsen the situation of consumers or establish lesser guarantees in comparison with the rules established by this law are not subject to application.

■ Someamendmentsprovidedby theRospotrebnadzor relate to the rules on service life and warranty periods.

■ Itisalsoproposedasageneralruletofixthelawtoensurethat the penalty for late performance by the seller (manu-facturer, authorised organisation or authorised sole propri-etor, importer) of consumer requirements in respect of goods may not exceed the total price of the goods. In case of a long-term violation, the consumer will be able to claim a penalty in the amount of five times the price of the product for each month of delay.

■ There is aproposal toobligebusinessentities to informconsumers about the address of their website and email (if available).

■ Finally, there is a proposal to introduce a conditionfor the release of an economic entity from a fine for non-compliance with the requirements of the consumer voluntarily (currently, there are no such conditions). For example, if the seller proves that he could not satisfy the consumer’s claim due to the consumer’s fault or force majeure.

If we focus on 2019, before COVID-19, the following trends in law enforcement practice should be distinguished:■ Thetrendofthelastthreeyears(before2019)ofaslight

increase in the receipt of complaints to the Rospotrebnadzor onconsumerprotectionissuescontinued(by13.1%morethan in 2018).

■ Thetrendtowardsanincreaseinthenumberofrequestsfrom state authorities and local self-government bodies continued, which indicates the strengthening of interac-tion between all the links forming the national system of consumerprotection(18.6%morethanin2018).

■ In2019,359,664appealswereconsidered,15,084reportson administrative offences were drawn up on the facts of identified violations (in 2018, 319,456 appeals were consid-ered, 15,036 reports on administrative offences were drawn up), 3,436 claims (applications) were filed with the judicial authorities (in 2018 – 3,411 claims), and 105 mate-rials related to violations of mandatory requirements were sent to resolve the issue of initiating a criminal case (in 2018 – 70 materials).

■ TheRospotrebnadzor conducted 85,213 inspections in 2019 (41.4%morethanin2018).However,despitetheincreasein the number of inspections in 2019 compared to 2018, general statistics show a steady decline in the total number of inspections over the past 10 years.

■ AmongtheviolationsqualifiedundertheprovisionsoftheLaw “On Consumer Rights Protection”, a high proportion of violations of consumer rights to information remains, namely64%(in2018–58.9%).

In 2019, 38 materials were sent to law enforcement agencies to initiate criminal cases (in 2018 – 41).


Yes, which are as follows:■ Draft law on alternative settlement of consumer claims.

In particular, the Draft law provides for the creation of an online dispute resolution service for consumer protec-tion which would provide a process for filing, examining and settling consumer claims in pre-trial settlements of disputes relating to the sale of goods (works, services) via the internet.

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Ksenia Erokhina is a Senior Associate of Commercial Practice at ALRUD Law Firm. Ksenia advises clients on various aspects of commer-cial and contract law, including e-commerce, consumer protection, and procurement law (including State procurement). In addition, Ksenia represents clients in commercial disputes, as well as at the stage of pre-trial settlement and during the mediation processes. Ksenia also has extensive experience in advising and representing clients in anti-dumping investigations, initiated by the Eurasian Economic Commission, in relation to foreign suppliers of goods, for various purposes.

ALRUD17 build. 2, 6th FloorSkakovaya StreetMoscow 125040Russia

Tel: +7 495 234 96 92Email: [email protected] URL: www.alrud.ru

ALRUD is one of the leading full service Russian law firms, serving domestic and international clients. We stand for high quality advice, excellent service and rigorous ethical standards.Established in 1991 by Senior Partners Maxim Alekseyev and Vassily Rudomino, ALRUD is widely recognised as one of the leading and most reputable Russian law firms. We provide full scope of legal services to local and international clients in the areas of corporate/M&A, competition/anti-trust, banking & finance, intellectual property, commercial law, data protec-tion/cybersecurity, dispute resolution, inward investment, employment, restructuring/insolvency, real estate and tax. Our clients include blue-chip multinationals, privately owned companies and Russian State-owned enterprises. Outside of our domestic market, our clients are spread across Europe, Asia, North and South America. ALRUD serves clients across a

range of industries including energy and natural resources, mining, banking and finance, consumer goods and retail, investment management, govern-ment and public services, healthcare and pharmaceuticals, industrials, chemicals, technology, media and telecoms, transport and logistics.

www.alrud.ru



Chapter 14114

Spain

Bojorge & Associates Marla Vanessa Bojorge Zúñiga

Spain


consumer protection law.


Consumer and user associations that meet the requirements of national law, or the requirements of Autonomous Communities that have autonomous law, are in charge of defending the legitimate rights and interests of consumers, including their information, training and education, either generally, or in rela-tion to certain products or services. They are also the only ones authorised to act on behalf of and represent consumers and users.


Yes. There are specific bodies for: banks and financial entities; investments and insurance; telecommunications; air transporta-tion; supply companies; protection of personal data; and certain other sectors.

In January 2021, the updated Consumer Law states that in relation to commercial practices related to financial services and real estate, and in the fields of telecommunications or energy, legal or regulatory standards may be established in order to offer greater protection to the consumer or user.



There is cooperation in matters of quality control with the Public Administration, through information, studies, surveys, etc.

Before the consumer and user is bound by a contract and corresponding offer, the entrepreneur must provide them, in a clear and understandable way unless it is evident by the context, with relevant, truthful and sufficient information on the main characteristics of the contract, in particular on its legal and economic conditions.

Without prejudice to the sectoral regulations that may be applicable, the terms in which said information is provided, mainly in the case of vulnerable consumers, in addition to being clear, understandable, truthful and sufficient, will be provided in an easily accessible format, guaranteeing where appropriate the

1 General


There is general legislation for the entire Spanish territory and specific legislation for each Autonomous Community, which only applies to that territory. In addition, some rules by sector and European Union legislation must be added.

By way of national legislation, there is the Spanish Constitution of 1978 and the Consumer Law approved by Royal Legislative Decree:■ The Spanish Constitution of December 27, 1978, in

article 51 sections 1 and 2, establishes: “The public powers will guarantee the defense of consumers and users, protecting, through effec-tive procedures, their safety, health and legitimate economic interests. They will promote the information and education of consumers and users, they will promote their organizations and will listen to them in matters that may affect them, in the terms established by law.”

■ Royal Legislative Decree 1/2007 of November 16 approved the consolidated text of the General Law for the Defense of Consumers and Users, and other complemen-tary laws.

■ Royal Decree-Law 1/2021 of January 19, on the protec-tion of consumers and users against situations of social and economic vulnerability.


According to article 3 of the Consumer Law: “Consumers or users are individuals who act for a purpose other than their commercial, business, trade or profession. Consumers for the purposes of this rule are also legal persons and entities without legal personality that act non-profit in an area unrelated to a commercial or business activity.”

The new update to the Consumer Law added a new category, “vulnerable consumers”, referring to individuals who, individu-ally or collectively, due to their characteristics, needs or personal, and economic, educational or social circumstances, are, even if territorial, sectoral or temporarily, in a special situation of subordination, defencelessness or have a lack of protection that prevents them from exercising their rights as consumers under equal conditions.


It is mainly companies who are required to comply with

115Bojorge & Associates


acquire it in those establishments that guarantee correct and complete information on food. TO THE SECTOR: It is necessary that the sector involved in the commercialization of olive oil, especially virgin and extra virgin olive oil, has an exhaustive knowledge of the regula-tions applicable to the activity carried out for the purpose to observe strict compliance with existing requirements. Likewise, from their responsibility as a professional, they are obliged to carry out correct practices, providing the consumer with properly labeled products, as a means of guaranteeing appropriate information.”

■ OnMarch2,2020,theProvincialCourtinValenciadeclaredthe expense clause null (within the blacklist of abusive clauses of consumer law). The financial institution is obliged to return what was charged for the appraisal/valuation of the mortgaged property, as it is an abusive clause.



Goods or services are required to be safe. Goods or services that, under normal or reasonably foreseeable conditions of use, including their duration, do not present any risk to people’s health or safety, or only the minimum risks considered safe and compatible with the use of the good or service, are considered safe. They are admissible within a high level of protection of human health and safety.


The substantive tests are as follows:a) A prohibition on having or storing products that are not

legally permitted or are prohibited, in the premises or facilities of production, transformation, storage or trans-portation of food or beverages.

b) Maintaining the necessary control so that the origin, distri-bution, destination and use of potentially unsafe goods, those containing substances classified as dangerous or those subject to traceability obligations can be quickly and efficiently verified.

c) The prohibition of home sales of beverages and food, without prejudice to the delivery, distribution or supply of those acquired or ordered by consumers and users in commercial establishments authorised to sell to the public, and the authorisation regime for direct home sales that are traditionally practised in certain areas of the national territory.

d) Compliance with the regulations established by local enti-ties or, where appropriate, the Autonomous Communities on the cases, modalities and conditions under which the street sale of beverages and food may be carried out.

e) A prohibition on supplying goods that lack the mandatory security marks or the minimum data that allow for identi-fication of the person responsible for the property.

f ) The obligation to withdraw, suspend or recover from consumers and users, through effective procedures, any goods or services that do not meet the required conditions and requirements or that, for any other reason, pose a fore-seeable risk to the health or safety of consumers.

g) A prohibition on importing products that do not comply with the provisions of this standard and the provisions that develop it.

necessary assistance in such a way to ensure the consumer has an adequate understanding and to allow optimal decision-making for their interests.


As examples:■ Forsecureonlinepurchases,therearechecksastowhether

the store has the “https” protocol page.■ Fortoys,therearechecksastowhethertheyhavetheCE

symbol on the label. These requirements must be accred-ited by companies deserving of state quality awards or distinctions.

All goods and services made available to consumers and users must be easily accessible and understandable and in any case incorporate, accompany or allow to obtain in a clear and under-standable way, truthful, effective and sufficient information on its essential characteristics.


The protections cover those that are offered in the market to users and consumers.


Data obtained at the request of another Public Administration cannot be published if there is express opposition to their publication.


See question 3.5 below.


The recipient of damages has standing to initiate such proceed-ings. Please also see question 8.2.


The following are examples of the aforementioned protections being enforced:■ In2018,therewasanationalcampaigntoreviewcompli-

ance with regulations for virgin and extra virgin olive oil, which involved a review of its label and commercial cate-gory analysis.

The result was as follows (“information note from the Consumer Cooperation Commission”):

“TO THE CONSUMER: The consumer must know the rights that assist him in the matter of labeling of olive oil, with special atten-tion to virgin and extra virgin olive oil, in order to be able to choose to

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An example of these protections being enforced, regarding health, involved the withdrawal of COVID-19 tests that did not pass the quality tests. There was a new batch request to the same Chinese company during the state of alarm, and the new order was received without problems.

An order was published on April 19, 2020, which guaran-teed that all consumers in Spain would have access to means of protection (masks, gloves, gels) and that the maximum market prices would be set. The content description would also be entered on their labels.



The following protections include any conduct that is contrary to good faith, taking the average consumer as a reference.

Among others, these protections include: “[ T]he introduction of abusive clauses in contracts, unjustifiably limiting the consumer’s right to end the contract for the provision of services or the supply of products of a continuous successive tract, hindering the exercise of such consumer right through the agreed procedure, not foreseeing this procedure, not communi-cating to the user the procedure to unsubscribe from the service, refusing to satisfy the requests of the consumer or user whatever their nationality, place of residence, when it is within the availability of the employer, as well as any discrimination in relation to consumer requests, the use of unfair commercial practices with consumers or users, discriminatory behaviour in the access of goods and the provision of services, obstruction or refusal to give the general contracting conditions.”

The rights of vulnerable consumers will enjoy special atten-tion, which will be collected by regulation and the sectoral regu-lations that are applicable in each case. The public authorities will promote policies and actions aimed at guaranteeing their rights under conditions of equality according to the specific situation of vulnerability in which they find themselves, trying to avoid, in any case, procedures that may hinder the exercise of these rights.


According to the Consumer Law, “the regime of verification, claim, guar-antee and possibility of waiver or return established in the contracts, must allow the consumer and user to ensure the nature, characteristics, conditions and utility or purpose of the good or service; can claim effectively in case of error, defect or deterioration; can make effective the guarantees of quality or level of service offered, and obtain the fair return of the market price of the good or service, totally or partially, in the event of non-compliance or defective compliance”.



h) The control requirements of manufactured products that may affect the physical safety of consumers, paying due attention in this regard to repair and maintenance services.

i) A prohibition on using ingredients, materials and other elements that may generate risks to consumers’ health and safety. In particular, there is a prohibition on using such materials or elements in the construction of houses and premises for public use.


Food or beverages, security-branded goods, imported products, manufactured goods and health products are covered by these protections.


Cosmetic and personal care products are governed by their own regulations. However, in case of serious risks regarding cosmetic products, they would be included in the European Rapid Information Exchange System (RAPEX) for the knowl-edge of the European Commission and the competent authori-ties of other Member States.


Please see question 3.7 below.


In the event of a risk to safety or health, the Public Administration may provide consumers with information regarding the product, the nature of the risk and the measures adopted. At European Union level, there is the RAPEX system between the other Member States. Specifically, the State and the Autonomous Communities will establish collaboration, cooper-ation and coordination mechanisms to guarantee the application of the duty to put on the market and distribute only safe prod-ucts. In addition, there is a state system for the rapid exchange of information, in the form of a network, integrated into the RAPEX system, with the aim of facilitating rapid communica-tion and exchange of information on actions taken in the event of serious risk.

In relation to the security of services, there are also studies through campaigns which require the consent of the employer to participate in their publication.


The Public Administration, in the case of a sanction, may agree to the confiscation of any adulterated, deteriorated, falsified, fraudulent or unidentified merchandise, or merchandise that may pose a risk to the consumer or user. All expenses will be paid by the offender, plus transportation, distribution and destruction expenses.



■ Therightforself-employedworkers,whohaveceasedtheiractivity or have reduced their turnover, to receive their social bonus. Self-employed or professional consumers who demonstrate, after March 14, 2020, the total cessa-tion of professional activity or for having a billing prior to the month in which the social bonus is requested, of at least75%inrelationtothebillingaverageoftheprevioussemester, are entitled to the benefit. This protection lasts six months; if a worker needs more time, they must make a request following other regulation.

■ Thesupplyofelectricalenergy,petroleumproducts,naturalgas and water are all guaranteed. During the state of emer-gency, supplies – including manufactured gases and lique-fied gases from petroleum, natural gas and water – may not be suspended to individuals in their habitual residence.

■ The right of consumers and users to terminate certaincontracts without penalisation within 14 days is estab-lished if, as a consequence of the measures adopted during the validity of the state of emergency, compliance is not possible for purchase and sale contracts for goods or provi-sion of services, and those of successive tract. If compli-ance is impossible, the employer must return the sums paid by the consumer or user in the same way that payment was made within a maximum period of 14 days.

In the case of contracts for the provision of services of succes-sive tract, the company can offer recovery options for the service at a later time. Only if the consumer is unable or unwilling will the company return the amounts already paid, and they will not charge new monthly payments until the service returns to normal.

Regarding combined travel contracts cancelled due to COVID-19, the organiser can give the consumer or user a voucher to be used within one year from the end of the emer-gency status and its extensions, for an amount equal to the refund. If the consumer or user does not use the voucher after the year, they may request a full refund of the amount. The organiser or retailer will do so within 60 days from the termina-tion of the contract.

There are very specific sectors that have their own institu-tions to claim and with a much easier method for the consumer than going to court. For example, the air sector in terms of cancellation of flights due to COVID-19 (AESA), in the case of land transportation such as vehicle rental ( Juntas Arbitrales de Transportes), and in the case of the stock market (the National Securities Market Commission – CNMV) among others.


The definition of a vulnerable consumer is regulated in RD 897/2017, from October 6.

In the assumption of the state of the air service, constant surveys are carried out to keep an up-to-date record of any issues and remedies to resolve possible incidents. The user can also use the channels for complaints or suggestions in writing at the AESA electronic headquarters.

If there is a change of an energy or natural gas supplier, the consent and gratuitousness of the change by the new company is regarded as necessary within a maximum period of 21 days.


Power supply can be suspended during the state of emergency in cases regarding the security of supply, people and facilities.


A cessation action to obtain a sentence that orders the defendant to cease the conduct and prohibit its future repetition is avail-able as a remedy.

Among others, the action for annulment, breach of obliga-tions and compensation for damages can also be added.


The following are two examples of these protections being enforced:■ Doctrine of the Supreme Court, sentence of the civil

chamber, dated January 20, 2020. A bank was in charge of returning the totality of the amounts unduly collected by virtue of ground clauses from the date of their applica-tion, plus the legal interests of each collection. The ground clause was declared null in a mortgage loan.

■ Doctrine of the Supreme Court, judgment of the civilchamber, dated November 25, 2015. This was resolved in favour of the recurring individual: “The appeal raises the ques-tion of the usurious nature of a ‘revolving credit’ granted by a finan-cial institution to a consumer at a remunerative interest rate of 24.6% TAE. The appellant invokes as violated the first paragraph of art. 1 of the Law of July 23, 1908 on the Repression of Usury, which estab-lishes: any loan contract stipulating a significantly higher interest than normal money will be void.”



Spain, as a result of the COVID-19 pandemic, dictated a series of temporary measures in various areas to control it.

All of these protections have the backing of the Government, which has given some level of support to the companies and financial entities involved.

Among others, the following are included:■ The suspension of obligations derived from credit agree-

ments without mortgage guarantee, derived from loans or credits without mortgage guarantee, that are in force as of March 31, 2020, when the contractor is a natural person who is economically vulnerable. The guarantors of the main debtor in which the vulnerability is present are included.

The suspension will last three months during the state of alarm, extendable by the Council of Ministers.

The debtor can request this even a month after the end of the state of alarm. The creditor, once the documenta-tion of the debtor and the request have been received, will automatically suspend it. This does not need agreement between the parties.

From that moment, the creditor will not be able to demand the payment of the instalment – neither total nor partial – nor any type of interest, whether ordinary or late interest, nor amortisation of capital.

The contract date will be modified; however, the rest of its conditions will not.

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Employers will make available to consumers and users informa-tion on the postal address, telephone number, fax (where appro-priate), and email address where the consumer and user, whatever their place of residence, can file their complaints and claims or request information regarding the goods or services offered or contracted. Employers will also communicate their legal address if it does not match the mailing address.

As of March 1, 2021, a new encrypted chat has just been approved in order to communicate an anti-competitive prac-tice to the CNMC anonymously and confidentially. This can be carried out by both a citizen and a company. Furthermore, the complaint can be made by phone or by email anonymously following a few steps.


The company/trade has one month to respond from the moment the claim is received.


Submission to arbitration by the business or company is volun-tary. If the company rejects the consumer’s claim, this proce-dure ends and the affected party can go to court, which may entail criminal consequences if the judgment is disobeyed.

These consequences include fines, obligations to perform or not perform, etc.


Yes, before going to court it should be reviewed whether the company or professional is publicly and voluntarily adhering to a code of conduct. They will be asked to cease or rectify this business practice and give a commitment to refrain from carrying out such unfair act or practice, when these have not yet occurred.

7 Enforcement


The competent Public Administrations exercise the sanctioning power for an infraction in the defence of consumers and users through an administrative decision, without closing the channel to the judicial route.

The moment that an investigation is started for the same facts before the court, for civil, criminal or other liability, the admin-istrative sanction file is paralysed.

The “ne bis in idem” principle applies – not to impose a double sanction for the same facts.


A claim may be entered at the office for consumers or through the judicial route.


A national review by the Spanish Ministry of Consumer Affairs is ongoing through a study of 2019 and 2020, pending results, of the following products and services, among others: breakfast cereals; cheeses; wines; honey; commercial electronics; abusive clauses in contracts; language courses abroad; parking lots; kindergartens; funeral services; footwear; toothbrushes; car rental; laundries; events websites; and “unofficial technical assistance services brands” of mobile phone equipment repair.

In March 2021, the National Commission on Markets and Competition (CNMC) imposed a fine of 155,000 euros on Endesa, Iberdrola, Gas natural for having entered into contracts with seven clients without their consent.



The consumer authority is self-governed and can impose economic sanctions and/or restore a situation to its previous state, with compensation for damages where appropriate. The investigation is not like a judicial investigation although, as it is a free procedure for the parties, this makes it easier for anyone to be heard in their claim. The instructor communicates by certi-fied letter, requesting that they provide evidence, generally in writing (proof of payment, receipts, invoices, delivery notes, etc.). If it is considered that there is no administrative consumer offence, the investigation entailing the possibility of going to court will be closed.

It is easier to get a positive response to a consumer complaint when many people have been affected or where there is a previous study by a consumer association of a similar violation of consumer law.


Generally, an investigation is triggered by a consumer complaint from filling in one of the complaint forms that must be made available to the public in shops, although an investigation may also be triggered by a complaint from an authority.

An establishment may demonstrate its adherence to the consumer arbitration system by displaying the following logo:



prescribed by law. It is resolved by an award and there is a register of companies adhering to consumer arbitration and awards.

The principles by which the procedure of consumer arbitra-tion is governed are those of audience, contradiction, equality between the parties and gratuitousness. The arbitrators, medi-ators, parties and those who serve in the Consumer Arbitration Boards are obliged to maintain confidentiality.


Yes, there is a right to this in disloyal competition law.The National Institute of Consumer Affairs, consumer and

user associations, the Public Prosecutor and some others all have standing to bring these actions.


Yes, there is a statute of limitations.


At the national territory level, there is cooperation with the Autonomous Communities through the Consumer Sector Conference and the Consumer Cooperation Commission. In addition, there is communication and preparation of docu-ments with other Units of the General State Administration, the Bank of Spain and the National Securities Commission. The Municipalities and Provinces, through the Spanish Federation of Municipalities and Provinces, distribute relevant information to the municipal consumer offices.

Outside of Spain, consumer law provides for cessation actions in other Member States of the European Union, among other mechanisms.

8 Appeals


In consumer protection appeals, the interested parties can file the appeal and can appeal before the competent administrative body within the established period, after having received a reli-able notification.

The writing of the appeal must contain: a) The name and surname of the appellant, as well as his

personal identification.b) The act being appealed and the reason for its challenge.c) The place, date, signature of the appellant, identification

of the medium and, where appropriate, the place to receive the notifications.

d) The organisation, centre or administrative unit to which it is addressed.

e) Any additional specifics required, where appropriate, by the relevant provisions.


In general, the procedure is subject to the principle of expedi-ency and will be promoted, ex officio, in all its procedures and through electronic means, respecting the principles of transpar-ency and publicity.

If the sanctioning procedure adopted is the simplified one, considering that it is a minor offence, the competent body must respond within 30 days.

It can also end immediately if, once the sanctioning proce-dure has started, the offender acknowledges their responsibility.


The competent administrative body may restore the situa-tion altered by the infringement to its original state and, where appropriate, demand compensation for proven damages.

In fact, in the civil, criminal and administrative spheres, they can make use of pressure on patrimony through forced or subsidiary execution if there is an obligation to give this. If there is a very personal obligation to do so and the obliged will not carry it out, then they must compensate for the damages and demand the collection through the administrative channel.


In the case of the Public Administration requiring a person to perform a very personal obligation or to support it, it can only do so in cases where the law expressly authorises it and always with due respect to their dignity and the rights recognised in the Constitution.


First consumers must complain to the supplier of the product or service; if they do not get a satisfactory answer, then there are two types of procedures: ■ theextrajudicialone,whichismadebeforetheconsumer

offices of the city council or of the Autonomous Community; and

■ the judicial procedure, which is before the courts ortribunals.

Consumer arbitration is the extrajudicial procedure for resolving conflicts between consumers and companies without special formalities and with a binding and executive nature for both parties, provided that the conflict refers to poisoning, injury or death, or there are rational signs of criminal activity.

The procedure is through equity arbitration, which must be motivated according to the legal regulations applicable to the contract. The parties must expressly opt for the arbitration decision

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Yes, it does.



Recent enforcement trends include new regulations as a result of the consequences of Brexit.


Yes. The rights of vulnerable consumers will enjoy special atten-tion, which will be collected by regulation and by the sectoral regulations that are applicable in each case.

An error or the absence of qualification of the resource by the appellant will not be an obstacle to its processing, provided its meaning can be deduced.

The vices and defects that make an act voidable cannot be alleged by those who caused them.

If the business or professional is part of the consumer arbitra-tion system and accepts the invitation to resolve the matter by arbitration, then the arbitration award issued by the body has the force of res iudicata as judgment. The award can be appealed to the Provincial Court within two months.


Yes. The following are legitimate parties to do so before the civil jurisdiction: the injured party; consumers; and user asso-ciations, and they can defend the interests of their associates or their association, as well as the general interests of consumers and users. The Public Prosecutor’s Office is also entitled to exer-cise an action in defence of the interests of consumers and users.



Marla Vanessa Bojorge Zúñiga has been recognised by Corporate INTL, ACQ Global Awards, Legal Comprehensive (including recognition in its Top 100 list), Lawyer Monthly (as winner of the Women in Law Award), Acquisition International, Lawyers World, Lawyers Worldwide Awards, Worldwide Financial, Advisor Awards, Corporate Vision (as winner of a European Corporate Excellence Award), Corporate Live Wire, Global Leading Lawyers, Finance Monthly, AI Global Media, Global Business Awards, Corporate Insider (as winner of a Business Excellence Award), Global 100 Awards, ICFM Global Awards, Global Business Insight, and Thought Leaders: Brexit (2017 and 2018). She has also been recognised in the 50 Most Admired Companies of the Year 2019 published by Silicon Review, the 50 Most Innovative Companies to Watch 2020 and Some of the Most Inspiring Women in Business 2020, in Exeleon Magazine and Who’s Who Legal.

Bojorge & AssociatesNavarro Cabanes, no. 61st floor – door 246018 ValenciaSpain

Tel: +34 96 105 9311Email: [email protected]: www.visalawspain.com

Marla Vanessa Bojorge Zúñiga is the owner of Bojorge & Associates, an international corporate and immigration law firm located in Valencia, Spain. The firm specialises in finding the right legal solution for each client’s unique circumstances.Primarily, we practise immigration law and assist with Spanish visas and travel, but we are diverse in capacity. MB Marla Bojorge Zuñiga Lawyer, legal services MARCA NACIONAL Nº 3,666,588, Spanish Patent and Trademark Office 2017.

www.visalawspain.com



122

United Kingdom

Ashurst LLP Christopher Eberhardt

Nigel Parr

United K

ingdom

Chapter 15



The primary agencies responsible for the enforcement of consumer protection law are: ■ theCompetitionandMarketsAuthority(‘CMA’), which is

also the primary competition law regulator in the UK; and■ TradingStandardsServices(‘TSS’). TSS are accountable

to local authorities and therefore have primary responsi-bility for enforcement at a local level. However, Trading Standards agencies can also have responsibility for regional and national-level cases under the control of the National Trading Standards Board in England and Wales, and Trading Standards Scotland in Scotland.

In England and Wales, representatives from TSS and the CMA are all members of the National Tasking Group, which assigns investigations and enforcement work. Whilst most cases are led by TSS in the relevant local area, the CMA is more likely to take the lead role in cases which involve market-wide issues, raise issues affecting consumer choice or involve unfair contract term issues (in relation to which the CMA is the lead enforcer).

Consumers may also bring direct actions to enforce consumer rights and protections through the courts.


The CMA and TSS share enforcement powers with a number of other regulators, including the sectoral regulators (such as the Office of Communications (‘Ofcom’), the Financial Conduct Authority (‘FCA’), the Office of Gas and Electricity Markets (‘Ofgem’) and the Office of Rail and Road (‘ORR’)). The CMA chairs the Consumer Concurrencies Group, which coordinates the activities of all consumer law enforcement agencies in the UK.

2 Protections in relation to the Quality and Function of Goods and Services


The CRA specifies a number of statutory protections which are deemed to be included as terms in relevant contracts. The CRA also contains equivalent provisions relating to digital content.

1 General


The majority of rights and protections for UK consumers can be found in the Consumer Rights Act 2015 (‘CRA’). The CRA, which came into force on 1 October 2015, consolidated and clar-ified various existing UK consumer protection legislation.

Other key sources of consumer protection in the UK include the:■ Consumer Protection from Unfair Trading Regulations

2008 (‘CPRs’), which include a general duty on traders not to trade unfairly, and prohibit misleading and aggressive practices. These set out a ‘blacklist’ of practices which are considered unfair and banned in all circumstances;

■ Consumer Contracts (Information, Cancellation andAdditional Charges) Regulations 2013, which impose various information and other requirements on traders when selling to consumers; and

■ consumer health and safety protections found in theConsumer Protection Act 1987 (‘CPA’) and General Product Safety Regulations 2005 (‘GPSR’).

1.2 What is the definition of ‘consumer’ (i.e., who does consumer protection law protect)?

A consumer is an individual (a natural person rather than a small business or legally incorporated organisation) acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession (CRA s.2(3)). The burden of proof lies with the trader (defined in question 1.3 below) to prove that an individual is not a consumer.


Traders are required to comply with the CRA. A trader is a person (natural person, company or organisation) acting for purposes relating to that person’s trade, business, craft or profes-sion (CRA s.2(2)). Government departments as well as local and government authorities must also comply with consumer protection requirements (CRA s.2(7)).

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The CRA applies only to contracts between a trader and a consumer for the supply of goods, digital content, or services; therefore, consumers are not protected under the Act when entering into agreements which are not contracts, e.g. agree-ments without consideration. Contracts for goods are also exempt from the CRA if: (i) the goods are second-hand goods sold at public auction; and (ii) the individuals have the opportu-nity of attending the sale in person (CRA s.2(5)).

Consumer protections under the CRA also do not apply to anything that renders the quality of goods or digital content unsatisfactory: (i) which is specifically drawn to the consumer’s attention before the contract is made; (ii) where the consumer examines the goods or digital content before the contract is made, and that examination ought to have revealed anything unsatisfactory; or (iii) which would have been apparent on a reasonable examination of the sample, in the case of a contract to supply goods by sample.


For each of the statutory rights provided under the CRA, the Act specifies a number of statutory remedies which are avail-able to consumers. These complement remedies available under general law, including damages and specific performance.

In relation to goods, the main statutory remedies under the CRA include:■ therighttorejectthegoods–ifthegoodsdonotmeetthe

statutory requirements, the consumer is entitled to reject them within 30 days of taking ownership of the goods (CRA ss 20 and 22);

■ the right to a repair or replacement – if the consumerchooses not to reject the goods, they are entitled to claim a repair or replacement, to be provided within a reasonable time, without significant inconvenience to the consumer, and with the trader bearing any necessary costs (including postage) (CRA s.23); and

■ the right to a price reduction and the right to reject – if,following the repair or replacement, the goods no longer conform to the contract, or if the repair or replacement is not provided within a reasonable time or caused significant inconvenience to the consumer, the consumer has the right to either: (i) keep the goods, in which case they can claim a price reduction (up to the full amount paid depending on the circumstances); or (ii) return the goods and claim a refund (CRA s.24).

If the consumer chooses a repair, replacement, price reduction, or to finally reject the goods in respect of a defect discovered within six months of delivery, it is assumed that the fault existed at the time of the delivery, unless the trader can prove other-wise. If more than six months have passed, the burden is on the consumer to prove that the defect existed at the time of delivery.

Similarly, as regards services, the available statutory remedies include:■ therighttorequirerepeatperformanceoftheservice,to

the extent necessary to fulfil the contract (CRA s.55); and■ therighttoapricereduction(includingtherighttoreceive

a refund), for example, if repeat performance is impos-sible, or cannot be carried out within a reasonable time and without causing significant inconvenience. A refund must be provided without undue delay (CRA s.56).

As regards goods: (i) they must be of satisfactory quality (CRA s.9); (ii) they must be fit for their purpose, including any particular purpose the consumer made known to the seller (expressly or by implication) before agreeing the contract (CRA s.10); and (iii) they must match the description given to them by the trader (CRA s.11) or, where sold by reference to a sample or model, must match that sample/model unless any differences were brought to the consumer’s attention (CRA ss 13 and 14).

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 specify certain infor-mation which traders must provide to consumers, with the specific requirements depending on whether the contract is made ‘on-premises’, ‘off-premises’ or as a distance contract. These include, for example, requirements to describe the main characteristics of the goods, the identity and contact details of the trader, the total price (including all taxes) and charges, the trader’s complaint handling policy and whether any after-sales services or guarantees are available, and the applicable condi-tions. Under CRA s.12, these informational requirements (with the exception of the main characteristics of the goods) must be treated as a term of the contract.

In relation to contracts for services, the CRA provides that: (i) the service must be performed with reasonable care and skill (CRA s.49); (ii) if no price is agreed, the consumer must pay a reasonable price and no more (CRA s.51); and (iii) if no time for the service to be performed has been agreed, the trader must perform the service within a reasonable time (CRA s.52). Informational requirements similar to those for goods also apply to service contracts.


Goods or digital content are satisfactory if they meet the standard that a reasonable person would consider satisfactory, taking account of: (i) any description of the goods; (ii) the price or other consideration for the goods (if relevant); and (iii) all other relevant circumstances, including public statements (unless withdrawn or corrected), advertising and labelling (CRA s.9(2)/34(2)). The quality of goods may also include their state and condition, whether they are fit for purpose, appearance and finish, and safety and durability (CRA s.9(3)).

The CRA does not define ‘reasonable care and skill’ under CRA s.49, in order to allow the standard to be flexible between sectors and industries. Similarly, the threshold for when a price or time for performance will be considered ‘reasonable’ is a question of fact (CRA ss 51(3) and 52(3)).


Under the CRA, goods refers to any tangible and moveable items, including water, gas and electricity if, and only if, they were put up for supply in a limited volume or set quantity (CRA s.2(8)). Digital content refers to data that is produced and supplied in digital form (CRA s.2(9)). Chapter 4 of the CRA (Services) applies only to a contract for a trader to supply a service to a consumer (CRA s.48(1)) and does not include a contract of employment or apprenticeship, or specific services which may be specified by the Secretary of State.

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In considering these factors, the normal or reasonably foresee-able conditions of use must be examined, including the duration of use. This should be considered for all stages of engaging with a product (i.e. installation, maintenance, putting into service).

The CPA also provides that producers will be liable for damage caused by a product that is not of the standard of safety which persons are generally entitled to expect (CRA ss 2 and 3). The following factors will be considered in assessing product safety:■ thepurposeoftheproductandhowitwasmarketed;■ theuseofany‘marks’;■ instructionsandwarnings;■ thereasonablyexpecteduseoftheproduct;and■ thetimeofsupply.

Regulation 3(1) of the GPSR provides that UK provisions shall only apply insofar as there are no equivalent enactments or obligations under the NI Protocol covering the same point.

Types of risks protected againstThe concept of ‘risk’ is defined in terms of risks of damage to property, risks of death and personal injury (CPA s.3(1)).

Product-specific standards and regulations Specific legislation exists for products such as toys and tobacco, and is often accompanied by safety standards. In the UK, the Toys (Safety) Regulations 2011 apply alongside a Europe-wide toy safety standard (EN71) overseen by the European Committee for Standardization (‘CEN’). The UK remains an individual member of the CEN, and the standard governs the safety of all toys sold in the UK and within the other National Members of CEN, including the countries of the European Union, European Free Trade Association states, and other indi-vidual members.

Specific regulations also exist for a wide range of prod-ucts, including medical devices, electrical equipment, lifts and machinery.


Producers (importers, manufacturers, own-branders, re-conditioners, etc.) are obliged to provide instructions and warnings to consumers; however, the mere issuance of a warning does not absolve producers from other obligations under the GPSR (regulation 7(2)).

Similarly, distributors (wholesalers, retailers, etc.) are obliged to not supply or agree to supply dangerous products (regulation 8). ‘Dangerous’ products are defined as products that are not safe products (see question 3.1 above for a definition of ‘safe product’).


The CPA defines a ‘product’ as any goods or electricity. This includes component parts or raw materials (CPA s.1(2)(c)).

The GPSR defines a ‘product’ as a product that will be used or is likely to be used by consumers (under reasonably foresee-able conditions), and will have been supplied in the context of a commercial activity. Products need not be new – used or reconditioned products are included (regulation 2). The defi-nition also extends to products supplied or made available to consumers for their own use in the context of providing a service; for example, a hair dryer in a gym that a consumer uses. By contrast, equipment used by service providers themselves to supply a service to consumers are not included; for example, a hair dryer in a hair salon. Equipment on which consumers ride


Consumers may seek to enforce breaches of their statutory rights directly with traders, or by taking action through the courts or alternative dispute resolution. A consumer must bring any claim to court within six years after the breach of the contract arose (usually the delivery date under the contract).

Consumers may also complain to Trading Standards, who can take enforcement action against the trader; however, they cannot assist a consumer in enforcing the statutory remedies (e.g. to a replacement or refund).

Any terms excluding or restricting the statutory rights or remedies (e.g. attempts to restrict a consumer’s right to return faulty goods) are blacklisted and may be the subject of enforce-ment action as unfair terms.


As most cases are dealt with directly between the consumer and the trader, there are limited examples of enforcement of the protections relating to the quality or function of goods. In prac-tice, public enforcement action in this area is generally limited to cases giving rise to unfair trading, or misleading terms or conduct (on which see question 4.5 below).

While enforcers cannot bring actions on behalf of the consumer (e.g. to secure a replacement or refund), they may bring actions following a consumer complaint, which may encourage the trader to take remedial action. For example, in 2019, the Warwickshire County Council’s Trading Standards Service brought a prosecu-tion against Aspi Specialist Cars, after a consumer complained that it had been sold an unroadworthy vehicle. Aspi Specialist Cars pleaded guilty to an offence under the CPRs and was fined £2,000 plus costs. In order to mitigate its conduct, Aspi Specialist Cars also refunded the consumer (https://news.warwickshire.gov.uk/blog/2019/09/16/owner-of-stratford-upon-avon-garage-fined-for-selling-unroadworthy-vehicle/).

3 Protections/prohibitions in relation to the Safety of Goods and Services


Under regulation 5 of the GPSR, producers cannot place (or offer to place) a product on the market or supply a product, unless the product is safe.

What is a safe product? Regulation 2 of the GPSR defines a product as safe if it does not present a risk (or only a minimum risk). The following factors will be considered: ■ product characteristics including composition and pack-

aging, as well as instructions for assembly, installation and maintenance;

■ effectonotherproducts,whereitisreasonablyforeseeablethat it will be used with other products;

■ presentationof theproduct, including labelling, andanywarnings and instructions for its use and disposal; and

■ categoriesofconsumersatriskwhenusingtheproduct;inparticular, children and the elderly.

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Breaching a suspension notice can lead to imprisonment of three months or to a fine not exceeding level 5 on the standard scale. It is possible to bring an appeal against a suspension notice (CPA s.15).


Product recalls are commonplace and can be seen on the UK government’s webpage (http://www.gov.uk/government/news/product-recall) and on more product-specific webpages (see, for example, the webpage on electrical goods – http://www.electrical-safetyfirst.org.uk/product-recalls/ – which lists a number of goods that have been recalled, including baby monitors and hair dryers). Similarly, the UK government’s webpage refers to a separate site for vehicles (http://www.gov.uk/check-vehicle-recall).

The Chartered Trading Standards Institute contains a further list of recalls. By way of example, the Food Standards Agency imposed a recall on Revels chocolate pouches on 2 March 2020, due to potential contamination with metal elements (http://www.tradingstandards.uk/consumers/product -recalls-and-safety-notices).

4 Prohibitions relating to ‘Conduct’ against Consumers

4.1 Please describe any protections/prohibitions relating to the conduct of persons or businesses (e.g., manufacturers/retailers) which sell or supply goods and services to consumers (‘Conduct’). For example, misleading and deceptive conduct, unconscionable conduct, etc.

The CRA also governs unfair contract terms. Unfair contract terms are not binding on consumers (CRA s.62(1)) and may be the subject of enforcement action. The Act provides an indic-ative list of terms which may be regarded as unfair (the ‘Grey List’), as well as a list of blacklisted terms which are automat-ically unenforceable. Blacklisted terms include terms which exclude or restrict liability for death or personal injury resulting from negligence, or terms which seek to exclude or restrict stat-utory rights and remedies.

These protections in the CRA also apply to ‘consumer notices’ (i.e. any notice that relates to rights or obligations between a trader or consumer); in particular, which purport to exclude or restrict a trader’s liability to a consumer.

Unfair marketing or trader activity before and at the time of entering into a contract are covered by the CPRs. The CPRs contain a general duty not to trade unfairly, prohibit misleading actions, omissions and aggressive practices which are likely to cause the average consumer to take a different decision, and includes a ban on 31 specified commercial practices which are considered unfair in all circumstances, including:■ falselyclaimingtobeasignatorytoacodeofconductor

displaying a trust or quality mark;■ falsely stating that the availability of a product will be

limited or that particular terms will only be available for a very limited time, or passing on materially inaccurate information on market conditions;

■ falselystatingorgivingtheimpressionthataproductcanbe legally sold;

■ promotingaproductsimilartoaproductmadebyamanu-facturer, so as to mislead the consumer;

■ falsely claiming that a product is able to cure illnesses,dysfunction or malformations;

or travel, which is operated by a service provider, are also specif-ically excluded; for example, cars used by taxi drivers, or lifts used by an office space provider.


Protection will not be granted under s.4(1) of the CPA where:■ theproductwasneversupplied;■ theproductwasnotsuppliedinthecourseofbusiness;■ there is a defectwhich is attributable to compliancewith

other enactments or which did not exist at the relevant time; ■ the defect could not have been discovered according to

technology available at the time of supply; or ■ theproductformedpartofasubsequentproductthatwas

defective. Regulation 29.1 of the GPSR further provides that if a person

can show that all reasonable steps were taken and all due dili-gence was exercised in the supply of the product, this can be used as a defence.


A prison sentence of up to 12 months or a fine not exceeding £20,000 (or both) may be imposed (regulation 20(1) of the GPSR).

An enforcement authority can recover full costs of enforce-ment from an offender (regulation 27 of the GPSR) and may apply to the court for forfeiture of the product.


If producers or distributors become aware of a product posing a risk to consumers, they must notify an enforcement authority in writing, outlining the action taken to prevent any risk to the consumer (regulation 9 of the GPSR). This rule is subject to exceptions, including antique products.


Under the GPSR, producers and distributors are obliged to inform the relevant market surveillance authority (‘MSA’) if they discover that they have put an unsafe product on the market, including actions they have taken to remove the risk. A voluntary agreement with the MSA may be reached on how to remove the risk. However, if no such agreement exists, compul-sory measures can be taken:■ a‘SuspensionNotice’canbeissued,temporarilyremoving

the product from sale while tests are carried out – under s.14 of the CPA, an enforcement authority can serve suspension notices prohibiting the person on whom it is served from (i) supplying the goods, (ii) offering to supply them, (iii) agreeing to supply them, or (iv) exposing them for supply;

■ a‘RequirementtoMarkandRequirementtoWarn’(markingthe product with warnings);

■ a‘WithdrawalNotice’(topermanentlypreventthefurthersupply of a product); or

■ a‘RecallNotice’canbeissuedwhenaproductisalreadyon the market and there is reasonable evidence that it is dangerous – mandatory product safety recall notices are contained in regulation 15 of the GPSR.

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Consumers are not bound by unfair contract terms. Unfair terms may also be subject to civil or criminal enforcement by regulators.


Throughout 2020, the CMA has been investigating a number of sectors for potential breaches of consumer law arising as a result of COVID-19 and has secured commitments from, in particular, package holiday companies to provide refunds to affected customers (see further the response to question 9.1 below). In 2018, the CMA opened an investigation into Apple, due to concerns that some of its practices may have been in breach of consumer law; in particular, in relation to consumers not being warned clearly that their phone’s performance could slow down following a software update. The CMA accepted certain undertakings from Apple that it would maintain trans-parency regarding its phone’s battery health, unexpected shut-downs and performance management (http://www.gov.uk/cma-cases/apple-iphones-consumer-protection-case).

In 2016, the CMA launched an investigation into potential breaches of consumer law in the online gambling industry. The CMA identified particular concerns in relation to a lack of fair-ness and transparency in promotions offered and play restric-tions, as well as restrictions on withdrawing deposit winnings and unspent deposit funds. The CMA considered that such conduct might breach the CPRs (misleading conduct, unfair commercial practice, breach of professional diligence) and the CRA (breach of requirements of transparency and good faith, unfair terms). The CMA launched enforcement action against certain operators in 2017 and 2018, which resulted in six opera-tors entering into undertakings with the CMA (http://www.gov.uk/cma-cases/online-gambling).

In 2017, the CMA launched an investigation into care home providers in relation to large upfront fees and fees charged after a resident’s death. In 2019 and 2020, the CMA issued court proceedings against Care UK and Barchester under s.217 of the Enterprise Act for breaches of the CRA and CPRs. Whilst these providers had stopped charging the upfront ‘administration’ fees, they did not agree to refund the upfront fees paid. The CMA has therefore sought a court order to secure refunds for residents. At the time of writing, the proceedings against Care UK are scheduled to be heard in the High Court in May 2021. Separately, the CMA announced in October 2020 that Care UK had agreed to refund a ‘shortfall’ amount paid by certain NHS funded residents, who were told that they needed to make up the difference between their NHS funding and the Care UK resi-dential fee, contrary to CRA, CPRs and NHS rules. Several other providers entered into acceptable undertakings with the CMA, including one provider agreeing to pay £2m in compen-sation to resolve the CMA’s concerns (http://www.gov.uk/cma-cases/care-homes-consumer-protection-case).

In 2016, the CMA opened an enforcement investigation into the online secondary tickets market, in relation to consumers not getting the full range of required information when buying tickets (including, for example, who the seller is). In 2017, the CMA announced it would be taking enforcement action against four providers. Three of these providers provided undertakings to the CMA, and the CMA issued court proceedings against the

■ falselydescribingaproductas‘free’or‘withoutcharge’;and■ creatingtheimpressionthattheconsumercannotleavethe

premises until a contract is formed.Contravention of many of the requirements of the CPRs is a

criminal offence. Under the Consumer Contracts (Information, Cancellation

and Additional Charges) Regulations 2013, traders are required to provide certain pre-contract information to consumers and to do so in a clear and comprehensible manner.

In addition to the statutory protections, consumers may be able to claim civil remedies on the contractual law tortious grounds, including breach of contract, misrepresentation, fraud and negligence.


Unfair contract termsA term or notice is unfair if ‘contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer ’ (CRA s.62(4)):■ ‘Significant imbalance’ assesses whether a term is so

weighted in favour of the business that it tilts the rights and obligations under the contract in its favour. This is not limited to an assessment of the financial burden. For example, an imbalance is likely to arise where terms restrict or exclude the consumer’s normal legal rights or their ability to assert remedies.

■ The ‘requirement of good faith’ is a requirement for‘fair and open dealing’, including that terms should be expressed fully, clearly and legibly, that sufficient prom-inence should be given to disadvantageous terms, and that traders should not take advantage of the consumers’ circumstances to their detriment. These concepts have been considered, in particular, by Lord BinGham Cornhill in The Director General of Fair Trading v First National Bank plc [2001] UKHL 52.

■ Whetheratermisfairdependsonthenatureofthesubjectmatter, the circumstances existing when the term was agreed, and all of the other terms of the contract (CRA s.62(5)).

In addition to the requirement of fairness, the CRA also requires that terms be transparent, i.e. that they are clear and intelligible to consumers. Terms should be drafted to ensure that consumers are able to make an informed choice about whether or not to agree to them, or to enter into the contract.

Unfair tradingAs explained above, there are 31 commercial practices under the CPRs which are prohibited in all circumstances. As regards other unfair trading practices, including misleading or aggressive practices, the practice must have, or be likely to have, an effect on the behaviour of the average customer (i.e. a consumer who is reasonably well-informed and reasonably observant and circum-spect, taking into account social, cultural and linguistic factors).


There are a number of exemptions from the fairness assess-ment under the CRA. In particular, a contract term may not be assessed if it specifies the main subject matter of the contract or relates to the adequacy of the price, in each case provided it is transparent and prominent.

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■ The power to enter premises without a warrant. Anenforcer may enter commercial premises, without giving notice and without requiring a warrant, to ascertain compliance with consumer law (including where it reason-ably suspects an infringement). Where enforcers enter premises as part of a routine inspection, they must provide at least two days’ written notice. On the premises, the enforcer may take actions, including inspecting products, testing equipment, seizing and detaining goods, breaking open containers and accessing electronic devices.

■ Thepowertorequirepersonsonthepremisestoprovideassistance, including to provide information or product documents. Officers may also seize documents.

■ Ifaccesstopremisesisrefused,orifitislikelythatprod-ucts or documents would be concealed or interfered with, the enforcer may apply for a warrant to permit entry (including by using reasonable force). An enforcer also requires a warrant to enter a residential dwelling.


An investigation may be started when an enforcer has infor-mation which leads it to suspect that there may have been an infringement of consumer law.


Enforcers will have their own complaints policy. For example, a complaint may be made to the CMA in connection with its conduct and how it is handling an investigation, in accordance with its published policy: http://www.gov.uk/government/publications/competition-and-markets-authority-cma-complaints-policy/cma-complaints-policy.


There is no set timeline for an investigation, and timing will vary depending on the nature of the investigation and the issues involved.


If the recipient of a notice requiring the production of infor-mation fails to comply with its requirements, the enforcer may apply to the courts to make an order requiring that the notice be complied with.

It is a criminal offence for an individual to intentionally obstruct an investigation or fail to comply with a requirement imposed by an enforcer using its statutory investigative powers under the CRA. It is also an offence to intentionally or recklessly make a statement to an enforcer which is false or misleading in a material respect. The maximum penalty is a fine of £1,000.


Yes – see question 7.1 below.

fourth provider, viagogo. In 2018, the CMA secured a court order against viagogo, requiring it to make certain changes to its business to increase transparency for consumers (http://www.gov.uk/cma-cases/secondary-ticketing-websites).

5 Other protections/prohibitions


This is not applicable in the UK.









6 Investigation of potential breaches


The general powers of investigating civil and criminal breaches of consumer law are set out in Schedule 5 to the CRA.

Different investigative powers are available to the various enforcers depending on the legislation they are enforcing. For example, the powers available to an enforcer in an unfair terms case under the CRA may differ from those available to the same enforcer investigating potentially criminal conduct, such as a breach of the CPRs.

The main powers available to an enforcer such as the CMA include:■ Thepowertorequiretheproductionofinformation.An

enforcer may require the production of information and/or documents by way of a written notice. The notice must specify the purpose for which the information is required. Information received following a notice issued under the CRA can only be used in civil proceedings against the recipient (see section 7, ‘Enforcement’, below).

■ Thepowertomaketestpurchases.

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The CMA’s guidance states that it will generally use its crim-inal powers when civil enforcement is unlikely to be effective in achieving a change in behaviour, and/or the breach is consid-ered sufficiently serious to merit a criminal prosecution; for example, in order to provide wider deterrence.

Enforcers seeking to use criminal powers must also satisfy the two stages set out in the ‘Code for Crown Prosecutors’: (i) the evidence stage – is there sufficient evidence to provide a real-istic prospect of a conviction; and (ii) the public interest stage – is bringing the prosecution in the public interest?


An enforcer which suspects an infringement of consumer law will initially seek to consult with the businesses concerned in order to bring the offending conduct to an end and ensure it is not repeated. Under Part 8 of the Enterprise Act, an enforcer must typically allow a minimum of 14 days for consultation with businesses, except in urgent cases.


Affected consumers may bring claims through the courts in rela-tion to breach of consumer laws. For example, a breach of one of the statutory implied terms under the CRA can be enforced through a claim for breach of contract.

There is no formal follow-on right of action (enforcers do not take ‘decisions’). However, undertakings and/or a court order may include consumer redress mechanisms, which can provide for compensation or other redress where consumers have suffered loss, and in principle, an action for breach of statutory duty may be available.

7.7 Is there a statute of limitations for bringing stand-alone or follow on right of actions?

In England and Wales, breach of contract claims are subject to a limitation period of six years from the date of the breach. Under Scottish law, the limitation period is five years.

In respect of claims in relation to defective products, under the CPA claims, the limitation period is three years from the date when the damage occurred or when it came to the knowl-edge of the claimant. However, no claim can be brought more than 10 years after the date the product was put into circulation.


After the end of the transition period, the UK ceased to be a member of the Consumer Protection Cooperation (‘CPC’) Network, which allows cooperation between the enforcers of EU Member States and the European Commission, including by alerting Member States to national trends and enforcement action and through coordinated cross-border action.

7 Enforcement


Depending on the provision which has been infringed, an enforcer may bring either civil actions or criminal prosecu-tion in relation to infringements of consumer law. While the most serious infringements are subject to criminal prosecutions, many suspected breaches are dealt with through civil action. Civil action typically results in undertakings being accepted or the imposition of a court order.


Criminal prosecutions under the Enterprise Act must be brought within three years of the commission of the offence, or 12 months from the date of discovery of the offence by the pros-ecutor, whichever is earlier.


Civil actionAn enforcer may accept undertakings from businesses to change their behaviour. Undertakings can be offered and accepted even where the business does not admit the alleged infringement of consumer law. Details of the case and any undertakings that are accepted will typically be published by the enforcer.

As well as undertakings to stop or not repeat behaviour, busi-nesses may also include ‘enhanced consumer measures’. These measures may include:■ provisionofcompensationorotherredressforconsumers

who have suffered loss;■ compliance measures to prevent or reduce the risk of

future breaches; and■ measurestoenablegreatercustomerchoice.

Non-compliance with undertakings is likely to result in further enforcement action, and will be taken into account by the courts.

If a business is not willing to offer undertakings, or if the undertakings are considered insufficient, the enforcer may apply to the High Court or County Courts for an enforcement order. An enforcement order may also be sought in urgent cases without prior consultation. A court order may impose the same requirements that may be offered by an undertaking (including any enhanced consumer measures). The court may also accept an undertaking instead of making an enforcement order. Breach of an enforcement order or an undertaking given to a court may result in proceedings for contempt of court.

Criminal prosecutionsBreaches of certain consumer legislation, including the CPRs, may be enforced through criminal prosecution. A wide range of penalties are available to the courts, including:■ anunlimitedfine;■ imprisonmentnotexceedingtwoyears;■ confiscationordersundertheProceedsofCrimeAct2002;

and■ disqualificationofdirectorsforupto15years.

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Another area of focus has been in relation to unjustifiable price increases. The CMA released a joint statement with trade bodies including the British Retail Consortium condemning price gouging and has written to a large number of firms about price rises for essential products. The CMA launched a Competition Act investigation in June 2020 into four pharma-cies in relation to excessive prices for hand sanitisers; however, all four of these investigations were closed without any enforce-ment action.

Alongside its COVID-19 work, the CMA has been increas-ingly active in consumer protection in the online review space. In May 2020, the CMA launched a consumer enforcement investigation into several major websites that display online reviews, to establish whether they are taking sufficient action to protect shoppers from fake and misleading reviews. They have secured commitments from Instagram, Facebook and eBay to tackle misleading online reviews. As an area which has grown in importance for consumers during the 2020–2021 lockdowns, with people increasingly reliant on online shopping, it is likely to remain of interest to the CMA.


As explained in the opening Expert Analysis Chapter to the 2020 edition of this guide, a number of reforms have been suggested which would have a significant impact on the enforcement of consumer protection legislation in the UK. In particular, the CMA has requested greater enforcement powers, akin to those it has under the competition law regime. It has been proposed that:■ theCMAshouldbeempoweredtoinvestigateanddecide

whether consumer protection law has been broken, publish this fact, require businesses to cease the rele-vant conduct, and impose fines (both for the infringe-ment itself and for subsequent breach of any undertakings provided to the CMA);

■ theCMAshouldalsobeabletoorderthecessationofprac-tices it suspects may be harming consumers on an interim basis, pending the outcome of its investigation;

■ there could be reforms to improve personal respon-sibility for breaches of consumer protection law (e.g. director disqualification) and potentially a requirement on companies to appoint a board director with responsibility for assessing and reporting on risks to competition and consumer law compliance; and

■ a turnover-based fines regime should be introduced fornon-compliance with information notices.

The UK government has previously stated that it intends to adopt these proposals and the CMA stressed that it will continue to advocate for them in its 2020–2021 Annual Plan. In February 2021, John Penrose MP published an independent report (enti-tled Power to the People) on how the UK’s approach to compe-tition and consumer issues could be improved. The report echoed the calls for the CMA’s consumer enforcement powers to be enhanced, in order to bring them in line with its compe-tition law enforcement powers, and recommended that the role of local Trading Standards bodies be expanded and that they be allocated increased resources. The conclusions of the Penrose Report have been welcomed by the CMA. However, the timing and precise scope of any reforms remains unclear.

Whilst post-Brexit cross-border coordination between the EU and UK (as a third country) will be a matter for negotiation under the CPC Regulation, the CMA is reported to continue to seek to work with EU enforcers as far as possible. They are also seeking to develop relationships with other international counterparts (such as the International Consumer Protection and Enforcement Network (‘ICPEN’)), which could include sharing intelligence or evidence. For example, in November 2020, the CMA announced an investigation into ‘greenwashing’ alongside the Dutch Authority for Consumers and Markets, as part of a wider project with ICPEN.

8 Appeals


Criminal penalties and civil court orders may be appealed through the courts.

A decision to accept undertakings from a company could also be subject to an application for judicial review.


See the answers above.





A key focus of the recent consumer protection work in the UK has been on issues arising as a result of the COVID-19 pandemic. In March 2020, the CMA established a COVID-19 taskforce to monitor market developments and coordinate its response. By mid-May 2020, the CMA had received over 60,000 complaints in relation to COVID-19-related issues, the majority of which concerned unfair practices in relation to cancellations and refunds. The CMA commenced investigations into four sectors of particular concern: weddings and private events; holiday accommodation; package holidays; and nurseries and childcare providers.

The CMA issued a number of open letters to these sectors, as well as issuing warning letters to specific firms. Over the past year, the CMA has secured commitments from a number of holiday firms (including Lastminute.com, TUI and Virgin Holidays) to refund customers whose package holidays were cancelled due to COVID-19. In February 2021, the CMA sent a letter before action to Lastminute.com in relation to its failure to meet its refund commitments.

In December 2020, the CMA commenced an investigation into whether airlines had similarly breached consumers’ legal rights by failing to offer customer cash refunds for flights they could not lawfully take due to COVID-19.

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United Kingdom

Nigel Parr chairs the Ashurst competition and consumer protection practice. He has advised clients in some of the leading consumer protec-tion cases, including Abbey National’s successful appeal to the Supreme Court in connection with the OFT’s bank charges case, as well as the CMA’s investigation into online gambling. He also specialises in UK and EU competition law, including mergers, strategic business advice and competition risk management, cartel and abuse of dominance cases, market/sector investigations, appeals, competition litigation and consumer law. He is listed as a band 1 adviser for competition law and competition litigation in the major directories and appears in The Legal 500 EU and Competition Hall of Fame. Furthermore, he was listed as one of the top 30 antitrust lawyers in the world in Expert Guides’ “Best of the Best” 2018, as an Acritas “Star Lawyer” 2018 (independently nominated by clients), and was awarded 2019 Lawyer of the Year for Competition Law in London in Best Lawyers’ seventh edition.Additionally, he has long-standing experience of judicial review cases before the English Administrative Court and Competition Appeal Tribunal, particularly in relation to procedural failings in regulatory investigations.

Ashurst LLP London Fruit & Wool Exchange 1 Duval Square London E1 6PW United Kingdom


Christopher Eberhardt is a Senior Associate in the competition and consumer protection practice in London and practises all aspects of UK and EU competition law and consumer law. He has experience in dealing with the European Commission, UK regulators and the UK Competition Appeal Tribunal in relation to competition law investigations and merger control. Key matters on which Christopher has advised recently include acting for IHS Markit in connection with its $44 bn merger with S&P Global, Circle Health Group in relation to its acquisition of BMI Healthcare, and Royal Mail in relation to an abuse of dominance investigation by Ofcom and subsequent appeals to the Competition Appeal Tribunal and Court of Appeal. Furthermore, he has experience in advising companies on consumer law investigations work in the UK, including in relation to a recent investigation by the CMA.

Ashurst LLP London Fruit & Wool Exchange 1 Duval Square London E1 6PW United Kingdom





www.ashurst.com


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USA

Cozen O’Connor

Meredith C. Slawe

Michael W. McTigue Jr.

USA

Chapter 16

Marie Bussey-Garza


however, sweep more broadly. For example, under the Texas Deceptive Trade Practices and Consumer Protection Act (“DTPA”), the definition of consumer includes “an individual, partnership, corporation, this state, or a subdivision or agency of this state who seeks or acquires by purchase or lease, any goods or services”. Tex. Bus. & Com. Code § 17.45(4).


Entities governed vary by statute. For example, the FTC Act applies to “persons, partnerships, or corporations, except banks, savings and loan institutions [...], Federal credit unions [...], common carriers [...], and persons, partnerships, or corpora-tions insofar as they are subject to the Packers and Stockyards Act”. 15 U.S.C. § 45(a)(2). The Dodd-Frank Act applies to “any person that engages in offering or providing a consumer finan-cial product or service”, as well as affiliates of such persons. 12 U.S.C. § 5481(6). State consumer protection laws often provide broad prohibitions that apply to anyone engaged in commercial conduct. For example, the Connecticut Unfair Trade Practices Act provides that “[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce”. Conn. Gen. Stat. § 42-110b(a). Many such statutes, however, carve out specific exceptions. For example, the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) does not apply to media entities that publish deceptive advertisements in good faith and without knowledge of the deception. See 73 P.S. § 201–3.


Consumer protection law is enforced by various federal agen-cies, including the Federal Trade Commission (“FTC”), the Consumer Financial Protection Bureau (“CFPB”), the Federal Communications Commission (“FCC”), the Consumer Product Safety Commission (“CPSC”), the Food and Drug Administration (“FDA”), and the United States Department of Agriculture (“USDA”). At the state level, each state’s Attorney General typically has responsibility for investigations and

1 General


Consumer protection is effected through a patchwork of federal and state laws and regulations. Some key federal consumer protection statutes include the Federal Trade Commission Act (“FTC Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the Gramm-Leach-Bliley Act (“GLB Act”), the Truth in Lending Act (“TILA”), the Fair Credit Reporting Act (“FCRA”), the Fair Debt Collection Practices Act (“FDCPA”), the Equal Credit Opportunity Act, the Identity Theft and Assumption Deterrence Act, the Children’s Online Privacy Protection Act (“COPPA”), the Telephone Consumer Protection Act (“TCPA”), the Video Privacy Protection Act (“VPPA”), the Consumer Product Safety Act (“CPSA”), and the Federal Food, Drug, and Cosmetic Act (“FD&C Act”). In addition, most states recognise common law tort claims and have adopted statutes that prohibit unfair or deceptive business and/or debt collection practices. Some states have also enacted privacy laws. Perhaps the best-known examples are the Illinois Biometric Information Privacy Act (“BIPA”) and the California Consumer Privacy Act (“CCPA”), the latter of which took effect on January 1, 2020.


The definition of consumer is statute-specific and varies signif-icantly. For example, under the Dodd-Frank Act, “[t]he term ‘consumer’ means an individual or an agent, trustee, or repre-sentative acting on behalf of an individual”. 12 U.S.C. § 5481(4). Under FCRA, the term simply “means an individual”. 15 U.S.C. § 1681a(c). And, under the FDCPA, the term “means any natural person obligated or allegedly obligated to pay any debt”. Id. § 1692a(3). Notwithstanding the term “consumer” in the title of the TCPA, that statute has been deemed to apply to businesses as well as natural persons.

Under state laws, the definition is often limited to a “natural person who buys goods or services for personal, family or household use”. See, e.g., Ala. Code § 8-19-3(2). Some statutes,

132 USA


including meat, eggs, fruits, and vegetables. See, e.g., 21 U.S.C. § 606 (relating to the inspection of meat products).


Exceptions are sometimes available and vary by law or regula-tion. For example, the UCC generally applies to all commercial sales of goods; however, parties may contractually modify the protections available. See, e.g., UCC § 2-316 (relating to the exclu-sion or modification of warranties).


When a defective product regulated by the FDA has entered the marketplace, the agency can issue a recall. See, e.g., 21 U.S.C. § 350l. Similarly, the USDA has authority to detain and seize defective products for which it has regulatory authority. See id. §§ 672–73. Violations of FDA or USDA regulations may also result in criminal or civil penalties. See, e.g., id. §§ 333 & 335b. Under the UCC, “[t]he measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted”. UCC § 2-714(2). At common law, remedies may include replacement of the defective product, damages, or contractually agreed-to liquidated damages in circumstances where damages are difficult to calculate.


The FDA and USDA have authority to remove defective prod-ucts from the marketplace. In addition, the FDA may coordi-nate with the United States Department of Justice (“DOJ”) to bring an enforcement action that may result in civil or crim-inal penalties. See 21 U.S.C. §§ 333, 335b(b), & 337. The Food Safety Inspection Service (“FSIS”) of the USDA may also bring an enforcement action that results in a food establishment’s loss of ability to produce, sell, or distribute its products in commerce. See 9 C.F.R. § 500.6. For breaches of warranty under the UCC or common law, the injured party may bring a civil action to seek damages or injunctive relief.


On June 28, 2020, Pilgrim’s Pride Corporation recalled approx-imately 60,000 pounds of chicken nuggets due to possible contamination with “flexible rubber material”. See https://www. fsis.usda.gov/recalls-alerts/pilgrims-pride-corporation-recalls-chicken-breast-nugget-products-due-possible. Similarly, on January 24, 2020, Amity Packing Company, Inc. issued a recall for approximately 2,000 pounds of ground beef due to the possible presence of thin, pliable plastic. See https://www.fsis.usda.gov/ recalls-alerts/amity-packing-company-inc.-recalls-raw-ground- beef-products-due-possible-foreign. The health risk associ-ated with both recalls was classified as low, but quality-related recalls often involve safety concerns, which are discussed in the following section.

enforcement with respect to consumer protection laws. In some states, such as California, District Attorneys also have the authority to prosecute consumer protection claims. In addition, many consumer protection laws include a private right of action.


The FTC has eight divisions: (1) Privacy and Identity Protection; (2) Advertising Practices; (3) Consumer and Business Education; (4) Enforcement; (5) Marketing Practices; (6) Consumer Response and Operations; (7) Financial Practices; and (8) Litigation Technology and Analysis. The CFPB regulates entities that provide consumer financial products or services. The FCC implements and enforces federal communications laws. The CPSC enforces federal laws intended to protect the public from hazardous consumer products. The FDA regulates specific consumer products, including food, drugs, biologics, medical devices, cosmetics, and tobacco. In addi-tion, the USDA regulates certain agricultural products.



At the federal level, agencies such as the FDA and USDA prom-ulgate regulations regarding the quality of goods and services. At the state level, many states have adopted the Uniform Commercial Code (“UCC”), which contains provisions relating to express and implied warranties. See UCC §§ 2-313–2-315. Many states also recognise common law claims for breach of warranty with respect to goods and services.


Under federal regulations, the substantive tests for quality vary depending on the goods or services and the regulations or guide-lines at issue. Under the UCC, if the seller makes any promise or provides a description or model relating to the goods, they must conform. See UCC § 2-313. The goods must also: “pass without objection in the trade”; “in the case of fungible goods, [be] of fair average quality”; be “fit for the ordinary purposes”; “run, within the variations permitted by the agreement”; be “adequately contained, packaged, and labeled”; and “conform to the promise or affirmations of fact made on the container or label if any.” Id. § 2-314(2). Furthermore, if the seller had reason to know that the buyer was acquiring the goods for a particular purpose, the goods must be fit for that purpose. See id. § 2-315.


The goods and services covered depend on the source of protection. For example, the UCC applies to commercial goods. See UCC § 2-102. The FDA promulgates Current Good Manufacturing Practice (“CGMP”) regulations for the quality of drug products. See 21 C.F.R. Part 210; 21 C.F.R. Part 211. The USDA sets quality standards for various agricultural products,

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products or services are excluded from safety protections when the full spectrum of legal doctrines is considered.


Remedies include product recalls or seizures and civil or crim-inal penalties. In addition, individuals may seek injunctive relief and/or compensatory and punitive damages through a private civil action.


Yes. Under the CPSA, for example, a manufacturer of a consumer product must immediately report to the CPSC if it “obtains information which reasonably supports the conclu-sion that such product: (1) fails to comply with an applicable consumer product safety rule or with a voluntary consumer product safety standard [...]; (2) fails to comply with any other rule, regulation, standard, or ban under this Act or any other Act enforced by the Commission; (3) contains a defect which could create a substantial product hazard [...]; or (4) creates unrea-sonable risk of serious injury or death”. 15 U.S.C. § 2064(b). In addition, a manufacturer must report to the CPSC if it has three civil actions for death or grievous bodily injury within a 24-month period that involve the same product and result in a settlement or judgment for the plaintiff. See id. § 2084.


When a business realises that a product it has manufactured, distributed, or sold is hazardous, it may conduct a voluntary recall pursuant to the regulations promulgated by the CPSC. A voluntary corrective action plan sets forth specific details regarding the company’s plan to repair or replace the defec-tive item, including the product at issue, a description of the hazard, details regarding the company’s plan to provide notice to the public and affected persons (e.g., a letter, press release, or advertisements), and a statement regarding reasonable steps the company will employ to avoid recurrence. See 16 C.F.R. § 1115.20. When a mandatory product recall is necessary, the CPSC will either issue an adjudicated Commission Order “after parties and interested persons have had an opportunity for a hearing” or “may apply to a U.S. district court [...] for a prelim-inary injunction to restrain the distribution in commerce of a product” it believes to be hazardous. 16 C.F.R. § 1115.21(a)–(b). Similarly, consumer products subject to FDA oversight may be recalled through either voluntary or mandatory processes. See 21 C.F.R. §§ 7.40, et seq.; id. §§ 810.10, et seq.


On March 11, 2021, Melaleuca issued a voluntary recall for certain soy candles after receiving reports of high flames and the wax catching fire. Although no injuries or property damage were reported, the recall was issued out of concern that the candles pose fire and burn hazards. The recall instructs consumers to



At the federal level, the CPSA exists: “(1) to protect the public against unreasonable risks of injury associated with consumer products; (2) to assist consumers in evaluating the comparative safety of consumer products; (3) to develop uniform safety stand-ards for consumer products and to [minimise] conflicting State and local regulations; and (4) to promote research and investi-gation into the causes and prevention of product-related deaths, illnesses, and injuries.” 15 U.S.C. § 2051(b). The Motor Vehicle Safety Act “prescribe[s] motor vehicle safety standards”. 49 U.S.C. § 30101(1). The FD&C Act seeks to ensure the safety of food, drugs, medical devices, and cosmetics. See 21 U.S.C. §§ 301 et seq. There are also numerous federal laws dealing with the safety of various agricultural products. See, e.g., 21 U.S.C. §§ 451 et seq. (relating to poultry inspection and safety); 21 U.S.C. §§ 601 et seq. (relating to meat inspection and safety). In addition, there are various state laws to ensure the safety of consumer goods and services. See, e.g., 16 Tex. Admin. Code § 82.1 et seq. (relating to barber shop regulations); id. § 83.1 et seq. (relating to cosmetology regulations). State and federal laws also affect safety through labelling and disclosure requirements. For example, California Proposition 65 provides that “[n]o person in the course of doing business shall knowingly and intentionally expose any individual to a chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual”. Cal. Health & Saf. Code § 25249.6. Many states also recognise relevant common law claims, including, for example, product liability and negligence.


The substantive tests vary depending on the governing law or regulation and can be incredibly specific. For example, the CPSC determined that it is a substantial hazard for “[c]hildren’s upper outerwear in sizes 2T to 16” to “hav[e] one or more drawstrings”. 16 C.F.R. § 1120.3(b)(1). The related “standard prohibits draw-strings at the hood and neck area of children’s upper outerwear” and imposes specific limitations on the use of drawstrings in the waist or bottom of children’s upper outerwear. See https:// www.cpsc.gov/Business--Manufacturing/Business-Education/ Business-Guidance/Drawstrings-in-Childrens-Upper-Outerwear /Frequently-Asked-Questions-FAQs.


The patchwork of federal, state, and local laws, regulations, guidelines, and ordinances covers a wide range of consumer products and services. With the availability of common law claims, as well, few – if any – consumer products or services are excluded from safety protections.


Individual statutes, regulations, and ordinances may specify exceptions, and in some cases, federal law may pre-empt state law; however, as set forth in question 3.3, few – if any – consumer

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Exemptions vary by statute. For example, the FTC Act does not apply to banks, savings and loan institutions, federal credit unions, and common carriers. See 15 U.S.C. § 45(a)(2).


Remedies vary by statute and may include civil or criminal penal-ties. In addition, some laws allow private actions for injunctive relief and/or compensatory and punitive damages. Consumers may also be entitled to reasonable attorneys’ fees and costs if their claim is successful.


In March 2020, the FTC reached a $6.6 million settlement agreement with BoostMyScore LLC, a purported credit repair company. See https://www.ftc.gov/news-events/press-releases/2020/03/credit -repair-company-settles-ftc-charges-it-deceived-consumers. According to the FTC, the company violated numerous federal laws, including the FTC Act, by charging upfront fees for credit repair services, which they falsely guaranteed would increase consumers’ credit scores by 100 to 120 points in two to six weeks. See id. The company and its CEO “will be prohibited from selling fake access to another consumer’s credit as an authorized user”, “from collecting advance fees for credit repair services”, “from misrepresenting a product or service as being legal”, and “from misrepresenting the terms of a refund or return policy”. Id. Based on demonstrated inability to pay, all but $65,000 of the judgment was suspended.

In September 2020, the FTC reached a settlement agreement with Ponte Investments, LLC, which allegedly misrepresented an affiliation with the U.S. Small Business Administration (“SBA”) during the early months of the COVID-19 pandemic. See https://www.ftc.gov/news-events/press-releases/2020/09/company-charged-posing-sba-lender-settles-ftc-charges-ceases. According to the FTC, the company misled “small businesses to think [it] had an affiliation with the SBA and could offer companies access to the coronavirus relief programs adminis-tered by the agency”. Id. Under the terms of the settlement, the company and its owner are prohibited from “(1) misrepre-senting that they are authorized to accept or process applications for SBA loans and (2) misrepresenting that they are the SBA or are otherwise affiliated or associated with the SBA or the U.S. Government”. Id. In addition, the company and its owner are barred from “disclosing, using, or benefitting from information collected in connection with the marketing of any SBA-related products or services unless they obtain the consumer’s express informed consent”. Id.



Local health departments also play a key role in ensuring consumer safety. For example, the New York City Health

immediately stop using the candles, cut the wicks as short as possible to prevent their use, discard the product, and contact the company for a full refund. See https://www.cpsc.gov/Recalls/2021/Melaleuca-Recalls-Three-Wick-Revive-Candles-Due-to-Fire-and-Burn-Hazards-Recall-Alert.

On April 2, 2020, Manhattan Toy Company issued a voluntary recall of its Musical Lili Llama toy after receiving seven reports of loose screws falling off the toy, including two reports of chil-dren putting the screws in their mouths. The recall instructed customers to immediately take the toy away from children and contact Manhattan Toy for a free repair kit. See https://www.cpsc.gov/Recalls/2020/manhattan-toy-recalls-musical-lili-lla-ma-due-to-choking-hazard.



Both federal and state statutes take aim at unfair or deceptive business conduct. The FTC Act prohibits “unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce”. 15 U.S.C. § 45(a)(2). The FDCPA prohibits the use of “unfair or unconscionable means to collect or attempt to collect any debt”. Id. § 1692f. TILA mandates consumer disclosures “to protect the consumer against inaccurate and unfair credit billing and credit card practices”. Id. § 1601(a). Furthermore, state laws, such as the Pennsylvania UTPCPL, often broadly prohibit “[u]nfair methods of competi-tion and unfair or deceptive acts or practices in the conduct of any trade or commerce”. 73 P.S. § 201–3. For example, the California Unfair Competition Law (“UCL”) targets “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising”. Cal. Bus. & Prof. Code § 17200. Similarly, the California Consumers Legal Remedies Act (“CLRA”) aims “to protect consumers against unfair and decep-tive business practices”. Cal. Civ. Code § 1760.


The substantive test varies by statute. Under the FTC Act, a prac-tice is unfair if it “causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition”. 15 U.S.C. § 45(n). State statutes often provide lists of specific conduct that are considered unfair or otherwise prohibited. See, e.g., 73 P.S. § 201–2(4) (defining unfair and deceptive acts under the UPTCPL); Tex. Bus. & Com. Code § 17.46(b) (defining deceptive acts or practices under the DTPA). These lists typically include conduct such as selling counterfeit items, misrepresenting an affiliation with goods or services, selling old items as new, and misrepresenting the quality of the items or services for sale. See, e.g., 73 P.S. § 201–2(4).

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The FTC has the power “[t]o gather and compile information concerning, and to investigate from time to time the organi-zation, business, conduct, practices, and management of any person, partnership, or corporation engaged in or whose busi-ness affects commerce”. 15 U.S.C. § 46(a). The FTC also has the “power to require by subpoena the attendance and testimony of witnesses and the production of all such documentary evidence relating to any matter under investigation”. Id. § 49. Similarly, the CPSC has the authority to conduct inspections and investi-gations and to employ subpoenas and depositions in connection therewith. See 16 C.F.R. § 1118.1. In addition, State Attorneys General typically have investigatory powers.


Investigations may be triggered in various ways, including ex officio or subsequent to information provided by an internal whistleblower or consumer complaint.


The FTC encourages consumers to file a complaint whenever they have been the victim of fraud, identity theft, or other unfair or deceptive business practices. Consumers can file complaints online at https://www.ftccomplaintassistant.gov or by calling 1-877-FTC-HELP. Consumers may report an unsafe product to the CPSC at http://www.SaferProducts.gov or by calling (800) 638-2772, or (301) 595-7054 for the hearing- and speech-impaired. See https://www.cpsc.gov/Safety-Education/Safety-Guides/Gen- eral-Information/Who-We-Are---What-We-Do-for-You.


A typical FTC investigation may take more than a year, and often longer. CPSC investigations often result in recalls of poten-tially hazardous products and thus, in many instances, proceed quickly. The CPSC also relies on companies conducting their own investigations and complying with reporting requirements. A company must report to the CPSC within 24 hours of learning that it may have manufactured, distributed, or sold an unsafe product. See https://www.cpsc.gov/Business--Manufacturing/Recall-Guidance/Duty-to-Report-to-the-CPSC-Your-Rights-and-Responsibilities.


Although non-compliance with a consumer law investiga-tion may result in criminal penalties, such measures are rarely employed.

Department, like many local health departments, “conducts unannounced inspections of restaurants at least once a year”. See https://www1.nyc.gov/site/doh/services/restaurant-grades.page; see also https://www.phila.gov/media/20181003164012/Food_Facility_Inspections_in_the_City_of_Philadelphia.pdf (describing food facility inspections in Philadelphia).


The specific tests vary by jurisdiction, but health departments often inspect food establishments at least annually, provide a public report regarding the health and safety practices of the establishment, and, when necessary, are empowered to shut down the business until appropriate remedial actions are taken.


Available exemptions vary by jurisdiction. In San Francisco, for example, there are a number of exemptions to the city’s Food Safety Program, including an exception that a “[food service] permit is not required for non-potentially hazardous food and beverage given away as a courtesy to waiting customers where the primary business does not involve food service”. See https://www.sfdph.org/dph/EH/Food/Permits/permitFeeExempt.asp.


Remedies vary by jurisdiction, but health departments typically give restaurants a public health inspection score, can require remedial action, and, in severe cases, can shut down the food establishment.


On August 23, 2019, the New York City Health Department inspected Smiley Bagel & Grill in Manhattan. See https://a816-health.nyc.gov/ABCEatsRestaurants/#/Search/50089296. The Health Department noted numerous violations, including holding foods at unsafe temperatures, failing to maintain a required certification, and storing foods improperly. Id. The restaurant scored 94 points, where 0–13 points is an “A”, 14–27 points is a “B”, and 28 or more points is a “C”. Id. On October 25, 2019, the Health Department conducted a follow-up inspec-tion and closed down the establishment after noting violations sufficient to yield a score of 56. Id.

On October 1, 2020, the Florida Department of Business and Professional Regulation cited Canal St. Chicken & Seafood in Jacksonville, Florida for 19 violations, including two high priority violations, “which could contribute directly to a foodborne illness or injury and include items such as cooking, reheating, cooling and hand-washing”. See https://www.myfloridalicense.com/inspectionDetail.asp?InspVisitID=7433116&id=6329638. The Department required remediation efforts and conducted a follow-up inspection on October 19, 2020, during which no violations were identified. See https://www.myfloridalicense.com/inspectionDetail.asp?InspVisitID=7435381&id=6329638.

136 USA


that a person injured by an unfair or deceptive act or prac-tice “may bring a private action to recover actual damages or one hundred dollars ($100), whichever is greater”. 73 P.S. § 201-9.2(a). Similarly, the California CLRA allows an injured consumer to “bring an action [...] to recover or obtain [...] [a]ctual damages, [...] [a]n order enjoining the methods, acts, or practices[,] [...] [r]estitution[,] [...] [p]unitive damages”, and/or “[a]ny other relief that the court deems proper”. Cal. Civ. Code § 1780(a). The California UCL also provides that an action may be brought “by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition”. Cal. Bus. & Prof. Code § 17204. State common law claims, such as negligence, fraud, or product liability, may also be raised by individual consumers.


Private actions typically have statutes of limitations, which vary depending on the specific claim. Many consumer law claims have statutes of limitations that vary from one to four years.


“The FTC works with more than 100 foreign competition and consumer protection authorities around the world, and coop-erates with foreign authorities on enforcement and policy matters.” See https://www.ftc.gov/policy/international/interna-tional-consumer-protection. Pursuant to the US Safe Web Act, “the FTC relies on 4 key tools: (1) information sharing; (2) inves-tigative assistance; (3) cross-border jurisdictional authority; and (4) enforcement relationships”. Id. In addition, the FTC partic-ipates in numerous international consumer protection groups and initiatives. See id. Similarly, the CPSC works with foreign governments and organisations “to improve manufacturing and regulatory coordination and to encourage alignment of U.S. product safety requirements at a high level of safety”. See https://www.cpsc.gov/Business--Manufacturing/International.

8 Appeals


When the FTC pursues enforcement through the administra-tive process, an initial decision is issued by an administrative law judge, following a hearing. Either party may appeal that decision to the full Commission. A respondent may appeal to the United States Court of Appeals if an order is issued against it by the full Commission. See https://www.ftc.gov/about-ftc/what-we-do/enforcement-authority. The process for appealing an enforcement decision by the CPSC is similar. See 16 C.F.R. §§ 1025.1 et seq. For consumer claims brought in state or federal court, appeals are also generally available.


Yes, appeals are typically available, and the specific procedures vary depending on the jurisdiction and claims involved.


Yes, investigations are often resolved through settlement or, in the case of consumer goods, a voluntary recall programme.

7 Enforcement


Enforcement may be achieved through either administrative or judicial action, or both.


Neither the FTC Act, nor the CPSA, contains its own statute of limitations. Accordingly, the five-year statute of limitations provided in Section 2462 typically applies to such enforce-ment actions where the government seeks monetary penalties or disgorgement. See 28 U.S.C. § 2462; Kokesh v. SEC, 137 S. Ct. 1635, 1639 (2017).


The FTC and CPSC typically enforce their powers through administrative or civil actions. However, they may coordinate with the Department of Justice to seek criminal penalties in certain cases.


Administrative enforcement is typically the first step, with the agencies seeking further relief through the judicial process when needed. Criminal proceedings are typically reserved for egre-gious cases.


Federal agencies may act pursuant to their statutory authority only. Accordingly, they may not exceed the scope of that authority. In addition, when the judicial process is involved, the parties must follow all court rules and procedures.


Many consumer laws, particularly at the state level, provide a private right of action. For example, the UTPCPL provides

137Cozen O’Connor



Consumer protection law in the United States is constantly evolving through proposed rulemakings and changing laws. In June 2020, the FTC issued a proposed rulemaking that would prohibit busi-nesses from using “Made in the USA” on product labels unless all significant processing of the product occurs in the United States and “[a]ll or virtually all ingredients or components of the product are made and sourced in the United States”. See https://www.ftc.gov/news-events/blogs/business-blog/2020/06/ftc-wants-your-feedback-about-proposed-made-usa-rule. In the area of consumer privacy, numerous states have introduced privacy statutes since the CCPA was enacted in 2020. See, e.g., https://malegislature.gov/Bills/192/SD1726. On March 2, 2021, Virginia enacted its own privacy law, known as the Consumer Data Protection Act, which will take effect in 2023. See https://lis.virginia.gov/cgi-bin/legp604.exe?212+sum+HB2307. In November 2020, California voters approved the California Privacy Rights Act, which takes effect in 2023 and amends the CCPA. See https://oag.ca.gov/news/press-releases/california-officials-announce-california-pri-vacy-protection-agency-board. In addition, a bill has been intro-duced in the Illinois General Assembly that would amend BIPA to, among other things, provide businesses with a 30-day notice-and-cure period before consumers could bring private civil claims under the statute. See https://www.ilga.gov/legislation/BillStatus.asp?DocNum=559&GAID=16&DocTypeID=HB&-SessionID=110&GA=102.


The effects of an appeal vary based on circumstances, but, in many cases, the appeal would suspend the requirement to pay a penalty. If damages have been awarded, interest may accrue while the obligation to pay is suspended.



FTC enforcement actions over the past year have been heavily influenced by the ongoing COVID-19 pandemic. The agency has sent hundreds of warning letters and pursued enforcement actions in relation to companies making unsubstantiated claims regarding products that purportedly prevent, treat, or cure COVID-19; scam websites established to trick individuals into believing they were purchasing sanitiser, disinfecting products, and personal protective equipment that was never delivered; and businesses that falsely promised to obtain federal stimulus funds for unsuspecting consumers. See https://www.ftc.gov/reports/annual-highlights-2020/enforcement. In fact, “under a new federal law, the COVID-19 Consumer Protection Act, the FTC has the authority to obtain first-time civil penalties for scams related to COVID-19”. Id. In 2020, the FTC also pursued its first enforcement action related to “scientifically unsupported claims” made by companies selling cannabidiol (“CBD”) prod-ucts. See id. As the market for CBD products is relatively new and growing, further enforcement in this area is likely to follow.

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USA

Michael W. McTigue Jr. is co-chair of Cozen O’Connor’s Class Actions Practice Group. A premier class actions strategist, Mike represents leading companies in the defence of class actions and complex civil litigation in jurisdictions across the country, at both the trial and appellate levels. For more than 25 years, Mike has defended high-stakes litigation for Fortune 500 companies and other businesses across various industries. He also assists clients with class action and litigation due diligence in connection with corporate transactions and represents global businesses in international arbitration proceedings in the United States and abroad.

Cozen O’ConnorOne Liberty Place1650 Market Street, Suite 2800Philadelphia, PA 19103USA

Tel: +1 215 665 2093Email: [email protected]: www.cozen.com

Meredith C. Slawe is co-chair of Cozen O’Connor’s Class Actions Practice Group and co-chair of the firm’s Retail Industry Group. Meredith is a recognised authority in the national class actions defence Bar. She represents businesses in a range of industries in class actions across the country. Her cases often implicate cutting-edge privacy and consumer protection issues under federal and state statutes. She has been the architect of strategies to prompt plaintiffs to voluntarily dismiss their claims, to compel arbitration, to obtain dismissals on the pleadings and at summary judgment, to strike class allegations, to defeat class certification, and to prevail on the merits in arbitration proceedings. Meredith is also a thought leader on the issue of consumer arbitration, and drafts, revises, interposes, and enforces arbitration agreements and class action waivers in consumer contracts. Meredith’s proven record of success, combined with her practical, accessible, and business-oriented approach, have made her the go-to class actions lawyer for several of the country’s leading businesses.

Cozen O’ConnorOne Liberty Place1650 Market Street, Suite 2800Philadelphia, PA 19103USA

Tel: +1 215 665 4175Email: [email protected]: www.cozen.com

Our Class Actions Practice Group has extensive experience repre-senting clients in class actions and other aggregate litigation. We have an outstanding record of success defending some of the most signifi-cant class actions in courts across the country by employing strategies grounded in deep knowledge of consumer protection statutes and Rule 23. We work together with our clients to devise effective exit strategies early on in litigation. We repeatedly obtain early dismissals with no payments to plaintiffs and, where appropriate, successfully move to compel indi-vidual arbitration, transfer venue, dismiss actions on the pleadings and at summary judgment, strike class allegations, and defeat certification. We pursue thoughtful and creative approaches aimed at prevailing on the merits, eliminating class exposure, and avoiding protracted and costly liti-gation. Our skill, experience, and professionalism have been cited by our

peers, adversaries, and judges. We successfully defend cases prosecuted by the most formidable opponents in the most plaintiff-friendly jurisdic-tions in cases that challenge key business practices.

www.cozen.com

Marie Bussey-Garza is an associate in Cozen O’Connor’s Class Actions Practice Group. Marie represents clients in complex litigation matters, with a particular focus on defending class actions. She represents leading businesses across industries, including retail, finan-cial services, hospitality, communications, and manufacturing, in cases in courts across the country. Many of these cases raise claims challenging business practices, including advertising, marketing, pricing, the collection/retention/dissemination of consumer data, credit reporting, pricing, and marketing and informational telephone calls and text messages. Marie also assists companies with privacy compli-ance, including efforts related to the California Consumer Privacy Act, and counsels clients on best practices with respect to state-of-the-art terms and conditions, arbitration provisions, privacy policies, and other consumer contracts. In addition, Marie maintains an active pro bono practice, with an emphasis on assisting survivors of commercial sexual exploitation with their complex and varied legal needs.

Cozen O’Connor1717 Main Street, Suite 3100Dallas, TX 75201USA

Tel: +1 214 462 3085Email: [email protected] URL: www.cozen.com


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