Insights | October 10, 2018

CJEU: Services activated and charged without the consumer’s knowledge constitute an unfair commercial practice

The Court of Justice of the European Union has given a ruling in joint cases C‑54/17 and C‑55/17 concerning unfair commercial practices of telecommunications operators in Italy.

In 2012, the Italian Competition Authority (the Autorità Garante della Concorrenza e del Mercato, “AGCM”) imposed fines on Vodafone Italia SpA (“Vodafone”) and Wind Tre SpA (“Wind Tre”) for having used unfair commercial practices. The companies had marketed SIM (Subscriber Identity Module) cards with pre-loaded and pre-activated functionalities, such as internet browsing services and voicemail services, the use of which was charged to the user if they were not deactivated at his express request. This was done without properly informing the user of the existence of those services or of their cost in advance. According to the AGCM, this constituted a prohibited aggressive commercial practice and therefore a violation against the Italian Consumer Code.

The companies appealed the decisions before the Italian Regional Administrative Court which approved the appeals on jurisdictional grounds. The AGCM then appealed the matter to the Council of State which referred several questions to the Court of Justice of the European Union (“CJEU”).

The questions considered by the CJEU concerned, inter alia, whether the term ‘aggressive commercial practice’ under the Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council  (“Unfair Commercial Practices Directive”) or the term ‘inertia selling’ under Annex I of the Directive must be interpreted as including the above described practice of Vodafone and Wind Tre. Annex I of the Unfair Commercial Practices Directive concerns commercial practices which are considered unfair in all circumstances without having to be subject to the case-by-case assessment under Articles 5 to 8 of the Directive.

As a result, the CJEU found, subject to factual verifications by the referring court, that the concept of ‘inertia selling’ must be interpreted as including the practices in question, where a telecommunications operator sells SIM (Subscriber Identity Module) cards on which services such as internet browsing services and voicemail services are pre-loaded and pre-activated without first sufficiently informing the consumer of that pre-loading and pre-activation, nor the cost of those services. The CJEU found it irrelevant that the use of the services in question required, in certain cases, conscious action on the part of the consumer taking the view that without sufficient information on the costs of browsing the internet and using the voicemail, such action cannot be deemed to be establishing the existence of a free choice in the provision of these services. Similarly, it was irrelevant that the consumers could have deactivated the services because it is unlikely that a consumer could genuinely make use of this option without sufficient information. Consequently, the CJEU found that Vodafone’s and Wind Tre’s conduct constituted an unfair commercial practice provided that the referring court’s verification of the companies’ conduct, the information given to users and the users’ ability to opt for deactivation of the pre-activated services will support such a conclusion.