2017 CONSUMER LAW “ROUND-UP”

1. 2017 CONSUMER LAW “ROUND-UP” 22 NOVEMBER 2017, 2pm – 4:30pm

2. Today’s speaking agenda 2 – 2.05pm: Introductions (Fred Philpott) 2.05 – 2.30pm: Case law update (Simon Popplewell) 2.30 – 2.55pm: Are gamblers adequately protected? (Kevin de Haan QC) 2.55 – 3.20pm: A regulator’s view (Jason Freeman, CMA) 3.20 – 3.40pm: Coffee and networking 3.40 – 4.05pm: The Price is Right (Daniel Brayley) 4.05 – 4.30pm: Section 75: Litigation trends (Ruth Bala) 4.30pm: Thanks and closing (Fred Philpott)

3. “Hot off the Press!” Unfair Terms and CPUT case-law update Simon Popplewell | GOUGH SQUARE CHAMBERS

4. Casehub Ltd v Wolf Cola Ltd • 22nd May 2017 : [2017] 5 Costs LR 835; [2017] EWHC 1169 (Ch) • First reported case under the unfair contract terms provisions in the CRA • Case concerned a contract with minimum term, with a sum payable for termination during the minimum term • Court found that the price of the early termination charge could not be assessed for fairness – it was a “core term” within s.64(1)(b) of the CRA • The term could be assessed for fairness otherwise • The Judge felt that he was bound by the Supreme Court decision in OFT v Abbey (the bank charges litigation)

5. Casehub Ltd v Wolf Cola Ltd (cont) • CMA guidance para 5.14.6 • “A term which says, or is calculated to suggest, that inflated sums could be claimed (or retained from prepayments) if the consumer ends the contract is likely to be challenged as unfair”. • CMA guidance para 5.14.9 • “The Act is concerned with the intention and effects of terms, not just their mechanism. If a term has the effect of a penalty or sanction, it will be regarded as such, and not as [a] term which can benefit from the “the core exemption”

6. Casehub Ltd v Wolf Cola Ltd (cont) • CMA guidance probably correct • Lord Walker in OFT v Abbey • “Traders ought not be to be able to outflank consumers by “drafting themselves” into a position where they can take advantage of a default provision. But Bairstow Eves London Central v Smith [2004] 2 EGLR 25 shows that the court can and will be astute to prevent that.”

7. Andriciuc v Banca Romanesca SA • 20th September 2017 : C-186/16 • Is a clause that requires a foreign currency loan to be repaid in that currency a core term (i.e. main subject matter or price or remuneration)? • The concept of a core term is to be interpreted narrowly, and uniformly • The main subject matter of the contract is the essential obligations of the contract. Terms ancillary to those are not the main subject matter

8. Andriciuc v Banca Romanesca SA • The term in question was part of the main subject matter. The essential obligations of a loan contract relate to the repayment of money • This might not have been the case if the loan repayments were linked to a foreign currently, rather than required to be repaid in a foreign currency • Was it in plain and intelligible language? • This requires not just that the contract is grammatically intelligible but also that it can be understood in a broad sense • Question for the national court – but what was required was that the borrower was able to ascertain the cost of his loan • Borrower needs to be informed of the risk, and possible variations in the exchange rate. Needs to be aware of risk of change in rate and economic consequences to him.

9. Banco Primus SA v Garcia • 26th January 2017 : C-421/14 • Spanish Mortgage decision on an acceleration clause. The clause had already been assessed for fairness in an earlier decision. • Concept of res judicata is not incompatible with the obligation on courts to assess terms of their own motion. • However, if other terms have not been ruled upon, then the court must consider the fairness of those other terms.

10. Banco Primus SA v Garcia • In respect of the fairness test for the accelerated payment clause, was the ability of the lender to call in the loan conditional upon the non compliance by the consumer with an obligation of “essential importance” in the context of the contractual relationship? And if so does it derogate from applicable common law rules? • Cannot save a clause from being unfair merely because do not use it that way

11. Unfair Commercial Practice Directive cases

12. Canal Digital Danmark A/S • 26th October 2016 : C-611/14 • Satellite company had prices that consisted of a monthly charge (13.30 EUR) and a six monthly “card service” charge (52.30 EUR). • Advertised the monthly price more prominently that the total price for the minimum period, which included the card service charge.

13. Canal Digital Danmark A/S • Challenged initially as a misleading actions • Whilst limitations of the medium used (time and space) is relevant to misleading omissions, this is not relevant to misleading actions. • Must be assessed by reference to the average consumer who is reasonably well informed and reasonably observant and circumspect, taking into account the social, cultural and linguistic factors. • It is for a National Court to assess whether the commercial practice suggests to the average consumer an attractive price which is misleading

14. Canal Digital Danmark A/S (cont) • “Article 6(1) of [the UCPD – misleading actions] must be interpreted as meaning that a commercial practice which consists of dividing the price of a product into several components and highlighting one of them, must be regarded as misleading, since that practice would be likely, first, to give the average consumer the false impression that he has been offered a favourable price and, secondly, cause him to make a transactional decision that he would have made otherwise, which it is for the referring court to ascertain, taking into account all the relevant circumstances of the main proceedings.”

15. Canal Digital Danmark A/S (cont) • Goes on to consider misleading omissions • “…where a trader has opted to state the price for a subscription so that the consumer must pay both a monthly charge and a six-monthly charge, that practice must be regarded as a misleading omission if the price of the monthly charge is particularly highlighted in the marketing, whilst the six-monthly charge is omitted entirely or presented only in a less conspicuous manner, if such failure causes the consumer to take a transaction decision that he would not have taken otherwise…”

16. Canal Digital Danmark A/S (cont) • The list of items that are “material” for the purpose of considering misleading omissions in an invitation to treat is exhaustive. • However, including those items does not preclude the commercial practice from being misleading.

17. Europamur Alimentacion SA • 19th October 2017 : C-295/16 • Can the ECJ use the UCDP to rule on national legislation which concerns business to business practices? • Spanish wholesale collective fined for selling goods at a loss to Supermarkets. Argued: • No consumer detriment. • Government had failed to adequately implement the UCPD.

18. Europamur Alimentacion SA (cont) • ECJ decided that it did have jurisdiction. • The provision in question applied to retailers as well as wholesalers, and therefore its interpretation was equally applicable to consumers. • ECJ found that the practice of banning selling at a loss was contrary to the maximum harmonisation provisions of the UCPD.

19. UAB ‘Gelvora’ v Valstybine Vartotoju Teisu Apsaugos Tarnyba • Gelvora took an assignment of debts from a creditor and, unfairly, collected those debts. Did this constitute an unfair commercial practice under the UCPD? • ECJ found that debt collection can be a product for the purpose of the ECJ, and that debt collection practices fell within the scope of the UCPD.

20. Are gamblers adequately protected in an increasingly globalised market? Kevin de Haan QC | GOUGH SQUARE CHAMBERS

21. Consumer Law –the Regulator’s Perspective Jason Freeman Legal Director, Competition & Markets Authority

22. The CMA approach

23. European perspective • EU law still supreme • Current CJEU rulings will have Supreme Court authority? • Commission Guidance • CPC joint enforcement

24. Examples of how we work • Market Study > Enforcement • Online Reviews & Endorsements • Digital Comparison Tools • Care Homes • Working with partners • Car Rental (EU) • Gambling (sector regulator) • Secondary Tickets (TSS)

25. A few repeat themes

26. Online Comparisons • Competition on headline price • Advertising of Prices Market Study (OFT) • Airline payment surcharges • Digital Comparison Tools (CMA) • Car Rental Intermediaries • YDS, OWF, Fuel policies, CDW & Excess • Compliance Summary Oct 2017 • Which is the best deal? • Hotel Booking Sites • Hidden charges • Ranking (role of commission) • Discount claims • Pressure selling • CJEU • Vincent v Sony • Canal Digital

27. Information consumers need to compare • Secondary ticket sites • Important information about the ticket • Restrictions on use of the ticket • Identity of the seller • Connections between seller and other key players • CJEU • DHL Paket • Wathelet

28. Intermediary responsibility • Lots of markets • Car rental, secondary tickets, hotel booking, social media sites • Role of the platform • To permit 3P users to disclose information • To collect information accurately • To check information provided • To take down unlawful content quickly • CJEU • DHL Paket • Sony v McFadden

29. Fair terms & Fair practices • Gambling • Eye catching promotions –restrictive ts and cs? • Care homes • Big unexpected charges • Further work next year… • CJEU • All the cases on unfair terms vs Wolf Cola v Case Hub

30. ‘The Price is Right’ Daniel Brayley GOUGH SQUARE CHAMBERS

31. What is the Pricing Practices Guide? • Guidance to traders by the CTSI on behalf of BEIS • “Designed to provide helpful common sense advice to traders about pricing practices • Principles - Factors – Examples • A living document • Aim: enhanced consumer protection • Best practice or minimum standard?

32. Legal status • “This guidance is not statutory guidance and a court is not bound to accept it. The decision whether any particular pricing practice is unlawful remains to be judged by all of the relevant circumstances.” • Maximum harmonisation under EU Law, CPUTR 2008, banned practices etc.

33. Price establishment • Abolition of 28-day rule for price establishment • PPG 2010 ‘A price used as a basis for comparison should have been your most recent price available for 28 consecutive days or more’ [1.2.3(a)] • Replaced by non exhaustive list of factors

34. Price establishment: important factors

35. Other factors • Time between price establishment and promotion • Out-of-season reference pricing • Promotions during the price establishment • Intervening prices • Series of price claims

36. Key change: Abolition of the ten percent rule • The ten percent rule • 2010 PPG “General notices saying, for example “half price sale” or "up to 50% off" should not be used unless the maximum reduction quoted applies to at least 10% of the range of products on offer at the commencement of the sale.” [1.9.3] • Replaced by “You should only make such a claim if the maximum reduction quoted applies to a significant proportion of the range of products that are included in the promotion.” • ‘Significant’ comes from OFT v Officer’s Club [2005] EWHC 1080

37. Recommended Retail Prices • Be clear higher selling price is RRP • Genuine selling price • Should not recommend own RRP/ influence how price set • Substantiation

38. Small Print • Small print should not contradict the main claim • Material information must be clear and prominent • Using technology fairly

39. Fair comparisons • Objectivity of comparisons • Local price variations • General price savings claims / basket of goods • Intended for the same purpose • Businesses must: • Verifying and evidence the comparison • Monitor change

40. Volume offers • Consumers must genuinely be getting better value because of the offer. • Don’t take advantage of how bad we all are at arithmetic “You should not take advantage of the fact that many consumers will not calculate for themselves whether the price promotion actually offers better value’ • Pre-printed value claims, such as ‘Bigger Pack – Better value must be objectively justifiable. • Which? Super-complaint to the CMA. Response in July 2015, breaches not incurring in large numbers, supermarkets generally taking compliance seriously Types of volume offer: Multi-buy; Combination offers; Linked offers; Extra for the same price

41. Charges

42. Subscriptions • Extent of customer’s commitment clearly and prominently set out at the outset • Express consent to additional payments before being charged

43. General reductions • "Up to 50% off" • Must reflect reality of the offer • Should apply to significant proportion of products in the promotion

44. “Free” • Only where nothing paid other than unavoidable costs of responding or delivery payment • Item genuinely free • Free item must be genuinely additional/ separate

45. Enforcement • Trading standards, CMA, ASA • Enforcers were waiting for the new PPG • Due diligence guidance in the PPG focused on record keeping • Have not seen a significant increase in prosecutions in the past year

46. Section 75: Litigation Trends Ruth Bala GOUGH SQUARE CHAMBERS

47. Application • DCS Agreements, CCA s12(b) or (c): • Credit cards • Restricted-use loans • Underlying claim v supplier: breach of contract or misrep • Includes breach of implied terms • Typical examples: • Timeshares: foreign properties • Home improvements (solar panels, double glazing, conservatories) • Applies where credit card only used to pay deposit! • Creditor’s indemnity does not cover foreign suppliers

48. Restrictions • Exempt credit agreements not covered • Business purposes loans > £25k • Loans secured on buy-to-lets or borrower’s home • Price of goods/services must NOT exceed £30k • “cash” (s189) – membership points? • Creditor can rely on valid exclusion/limitation clause in supply contract

49. s75A • Credit agreements made on/after 11th June 2010 • only applies where cash value of the goods/services = £30k- £60,260 • Credit agreement must usually expressly identify the relevant goods/services • before the creditor becomes liable, the debtor must be unable to obtain satisfaction from the supplier

50. Limitation • Limitation Act s9: 6 years • Also underlying breach of contract/misrep claim: 6 years • BUT ‘unfair relationships’ can be used to circumvent this • 6 years from date credit agreement redeemed (Patel v Patel) • Credit cards: indefinite term agreements • Scotland & Reast v British Credit Trust Limited [2014] EWCA Civ 790 • s75 time barred • UR could be used as vehicle to pursue same claim