Week 1: What is a consumer? Who is a consumer?

CJEU case Gruber:

Facts:
A farmer uses the main building of his farm both as his residency (60%) and as a stable
for the pigs (40%). He sees an offer for tiles and he accepts, without letting the buyer
know he is also a farmer. Once the tiles arrive, he notices that they are not all of the
same color and he starts a process for non-satisfaction.

Issue:
The seller answers with an exception arguing that Gruber is not a consumer and that
therefore the judge has no competence, according to Brussels I. The question is how to
define consumer in the terms of Brussels I.

Answer:
Art. 13 of Brussels I states that a contract is said as celebrated by a consumer when it
cannot be considered to be linked to his professional activity. This is a regime to protect
the weak party. Therefore, to define consumer in the terms of Brussels I, the
predominant use is not prevalent. The interpretation of being or not a consumer
should be restrictive and only those contracts celebrated outside of the professional
exercise count as celebrated by the consumer. (The court leaves the space for a
marginal link, but it is for the consumer to prove that it is only marginal). This is an
objective consideration.


CJEU case Cape vs Ideal Services

Facts:
A company that provides bending machines celebrated two contracts with two different
companies. These were standard contracts and they have an unfair contractual term.

Issue:
Can a juridical person be considered a consumer? (So it can be under the protection of
Directive on unfair contractual terms?)

Answer:
No. Only natural persons (at least in the application of this particular directive)


CJEU case Manfredi

Facts:
In Italy, some insurance companies managed to charge car insurance policies 20%
higher because they started an exchange of information between them and they started
raising the prices together, with no market justification. Some consumers associations
start a process.

Issue:
Should art. 18 of the treaty be interpreted in a way that such a practice is invalid and
anyone can ask for its nullity?
If so, can this person also ask for prejudices and damages or only for the nullity?

Answer:
1. This is an invalid practice (this is competition law) and anyone who can prove a
connection between the practice and a prejudice can ask for its nullity.
2. No provision in the community law addresses damages and prejudices on this regard
and that this is left to national law. Interested parties should be able to ask for ceasing
gain and interests, and not only emerging damages.
To do so, the national courts should take into account the principles of equivalence and
effectiveness.
Principle of equivalence: in the writs that arise because of competence issues, it should
be possible to grant special compensations for damages as long as they dont give rise to
undue enrichment.
Principle of effectiveness: the compensation should take into account emerging damages,
ceasing gain and interests.

CJEU case Mars

Facts:
Mars changed the package of one of its chocolates to advertise that they would have
10% more. In Germany, they start a process because they should have kept the previous
price (but this is not the issue highlighted by the readings guidance) and because the
size of the 10% more sign on the package is bigger than the 10% of the package, which
may confuse consumers.

Issue and Answer:
The Court answers that a reasonable consumer should be able of recognizing that
there isnt necessarily a linkage between the size of the publicity and the actual
increment in the product. ( This is important because it introduces the notion of a
reasonable consumer, which makes the protection less strict)


CJEU case Gut Springenheide

Facts:
An egg seller announces them as coming from hens fed with 6 grains. However, these 6
grains only consist of actual 60% of their food. A process is started because this can
induce the consumer into an error.

Issue:
How can a national judge determine whether such a situation is enough or not to induce
an error?

Answer:

To determine whether something is enough to induce consumers into an error, it should
be considered what the expectation of a medium, normally informed and reasonably
attentive and sharp consumer. To find this out, it is permitted to a judge to run a survey.


CJEU Esthe Lauder cosmetics (this was done by Nadja)






CJEU case CFI

Facts:
This is a branch dispute. A company wants to register an olive oil package that is similar
to another one. The OAMI decided that there was no enough distinctive character but
that the figurative elements of the two packages where allusive to the nature and origin
of the product.

Issue: This is a recurs against the branch registration.

Answer:
The Court held that the appreciation of the risk of confusion should be done based on
the general impression that a product creates in a consumer, because consumers trust in
their memories of the branch. (This should also take into account particular
considerations. In Spain, consumers would be less likely to be confused by different
olive oils because they use a lot of olive oils)
Now, when this regards products that are bought in shops, the figurative element
prevails over the phonetic elements because consumers dont ask for the product but
pick it up from many. Therefore, in this case the court held that there was a risk of
confusion.


Case CJEU Buet and EBS: A company sold English-language teaching material in a
doorstep selling business model.

Issue: Is a prohibition of canvassing in connection with the sale of educational material
compatible with Art. 30 of the treaty?

Answer:

This is the only case where the court addressed the concept of a vulnerable consumer.
The Court held that people buying educational material should have a stronger degree of
protection because they really want to catch up. Therefore, even though such a measure
is a restriction to the market, it is justified by the higher degree of protection needed by
them.


Readings

SMEs in European Contract Law (abstract)

Community member state SMEs policy is based on the idea that SMEs need some more
protection or assistance. The text basically addresses the issue that this is a similar
rationale to why consumers have a stronger protection in contract law and that the
protection granted to consumers should be extended to them.


Green Paper (abstract)

This is a summary of consumer protection and the abstract addresses some of the main
issues in this section:
- Degree of Harmonization: most of the directives are based on a minimum
harmonization. This doesnt really fix the legal certainty of consumers, because
they dont really know if they will have less protection when purchasing abroad.
Even though full harmonization is wanted, it still seems difficult to achieve.

- Horizontal issues, definition of consumer and professional: the main problem is
that the directives dont offer a uniform definition of these two concepts.
Consumers are always natural persons, and professionals are frequently
addressed in other ways (seller, trader, etc.)

- Consumers acting through an intermediary are not protected. (because his/her
contractual counterpart is another private person)



Consumer contracts, behavioral economics vs neoclassical economics

The main idea is that consumers need special protection because they lack information,
have imperfect rationality and therefore fail to maximize their preferences. Individuals
make mistakes. However, some argue that this shouldnt be regulated because this
imperfections by repetition and by the market.
The author argues that this isnt true because (1) systematic misperception persist in
some consumers markets because many of the products are not standardized and are
not bought enough times as for really learning (how many times does someone buy a
house?) (2) Because sellers respond strategically to this misperception of the market
and (3) because this consumers misperception entails a welfare cost (for example when
things fail with credit card products). Therefore the author justifies the regulation of
consumer contracts.

European contract law, a matter of consumer protection, citizenship or justice

In the EU system, most of the contract regulations concern only consumers. These are
(a) protective rules, (b) categorical protection (whoever falls in the definition is entitled
to the protection, (c) conceptually uniform Consumers are usually defined in a
uniform throughout the EU and their protection is intended to be uniform, this hasnt
been possible yet, because they EU Comission has recently proposed to progressively
give all EU consumers the same level of protection.

Consumer protection is regarded by the European Community as a mean for the
creation of a properly functioning internal market. The idea is that a confident consumer
will be more inclined to indulge in cross-border shopping and that this will lead to more
economic growth.

The type of protection given to consumers reflects economic reasoning.

One question remaining to be answered is whether consumer contracts are only dealt
by consumer law only in the part regarding the consumer or in their entirety. Actually,
new documents by the EU Comission seem to envisage comprehensive legislation which
regulates the entire contractual relationship. This is, for the author, worrying because it
leaves other scopes, such as justice, fundamental rights, etc., out.