Changes to EU Consumer Law - Implementation of the 'Omnibus' Directive into German Law

On 7 January 2020, Directive (EU) 2019/2161 on the better enforcement and modernisation of Union consumer protection rules, also known as the "Enforcement and Modernisation" or "Omnibus" Directive, entered into force and is due to be transposed into national law within 24 months. The Omnibus Directive adapts the Consumer Rights Directive (2011/83/EU), the Directive on Price Indication (98/6/EC), the Directive on Unfair Commercial Practices (2005/29/EC) and the Directive on Unfair Contract Terms (93/13/EEC). The German legislator has already passed two in June 2021, which will enter into force on 28 May 2022. Among other things, the laws establish new rules on fines for entrepreneurs in the event of violations of fair trading standards as well as claims for damages in favour of consumers. By modernising consumer protection and creating more transparency in favour of consumers, the position of consumers as a whole will be further strengthened.
 

I. Changes to the Right of Withdrawal for Contracts for Services and Digital Content

The amendment of the right of withdrawal concerns consumer contracts for the provision of services or the supply of digital content without an obligation to pay.
The right of withdrawal for contracts for the provision of services expires upon full performance of the service. The Directive also covers contracts for which the consumer only provides personal data as consideration.  The right of withdrawal for contracts for which consideration has been agreed, however, remains unaffected by the changes.
For contracts for digital content that is not delivered on a durable medium, the right of withdrawal expires at the beginning of the performance of the contract. If consideration has been agreed, the right of withdrawal only expires if the consumer has expressly consented to the performance during the withdrawal period and the trader has expressly confirmed this consent to the consumer - depending on the type of contract conclusion - in accordance with Sec. 312f BGB (German Civil Code).
 

II. Amendment of Model Withdrawal Instructions and Model Withdrawal Form

The model withdrawal forms and model withdrawal instructions contained in the Annexes to the EGBGB (Introductory Act to the German Civil Code) will also be adapted: In the model withdrawal instructions for contracts concluded away from business premises and distance contracts, the reference to contacting or withdrawing by fax is no longer included. Likewise, the fax number is no longer to be indicated in the model withdrawal form. On the other hand, it is now mandatory to indicate the telephone number in the withdrawal instructions, whereas previously this has only been required if a telephone number was in fact available.
The adjustments must be made by 28 May 2022. In the event of a breach of the requirements, the withdrawal period will be extended to a maximum of twelve months and fourteen days pursuant to Sec. 356 (3) sentence 2 BGB. In addition, the trader must expect consequences under competition law, such as warning notices.
 

III. Changes to the Unfair Competition Act

The Unfair Competition Act (UWG) is also affected by the amendments. Traders must create more transparency with regard to their customer ratings, the products offered as well as their role in the execution of the contract. In this way, consumers are to be enabled to make an independent business decision.  The law also supplements the so-called "black list" of the UWG, which can be found in the annex to Sec. 3 (3) UWG, with new facts that constitute an unlawful business act without exception. These are acts in connection with concealed advertising in search results, the resale of tickets and the presentation of consumer ratings.

1. Misleading by Concealing "Dual Quality"
The new unfairness provision of Sec. 5 (3) No. 2 UWG provides that the marketing of a product as identical to a product made available in other EU Member States is unlawful if the products differ substantially. Such a distinction must either be justified by legitimate and objective factors or be clearly recognisable to the consumer.

2. Misleading by Omission
According to Sec. 5a UWG, misleading by omission occurs if the trader withholds information from the consumer, which is essential for the consumer's business decision. What information is essential is specified in the newly introduced Sec. 5b UWG.

a. Customer Reviews
According to Sec. 5b (3) UWG, the trader must inform whether and how he ensures that customer reviews have been written by consumers who have actually used or purchased the product. This only applies to reviews provided by the trader himself and not to those collected by third parties.

b. Information on Provider of Online Marketplaces
Providers of online marketplaces are obliged to provide information as to whetherthe operator offering goods, services or digital content is a trader or non-trader (Sec. 5b (1) No. 6 UWG) so that the consumer may recognise the capacity of a possible contractual partner.

c. Ranking of Online Search Results
Traders who provide a search function for goods and services of different providers must inform about the selection and weighting of the main parameters of the ranking (Sec. 5b (2) sentence 1 UWG). Hidden advertising must also have no influence on the ranking (no. 11a of the Annex to Sec. 3 (3) UWG). This is intended to make the ranking of offers more transparent, which has a considerable impact on consumers' business decisions.   This covers, for example, comparison portals or online marketplaces, but not sole online search engines.

 

IV. Information Duties according to Article 246d EGBGB

The information obligations of operators of online marketplaces have also been extended, Sec. 312k (1) BGB (current version) in conjunction with Art. 246d EGBGB. Infringements are subject to fines if they are "widespread infringements" or infringements "with a Union dimension" (as explained below).
For example, the providers of an online marketplace must in future provide information on the main parameters for determining the ranking of suggested products as a result of a search as well as on the relative weighting of these parameters (Art. 246d Sec. 1 No. 1 EGBGB).
In order for consumers to be able to identify whether they are entitled to consumer rights, providers of an online marketplace must mark whether products offered by them originate from a private or a commercial supplier (Art. 246d Sec. 1 No. 4 EGBGB).

 

V. New provisions on Fines in the Unfair Competition Act and the Introductory Act to the German Civil Code

1. Section 19 (1) UWG
The newly introduced Sec. 19 (1) UWG contains a fine for the violation of consumer interests.
Fines may be imposed under Sec. 19 (1) UWG if an unfair commercial act as defined in Sec. 5c (2) UWG has been committed which infringes consumer interests. This includes, in particular, violations of the blacklist (nos. 1 to 31 of the annex to Sec. 3 (3) UWG), aggressive commercial acts pursuant to Sec. 4a (1) sentence 1 UWG, misleading commercial acts pursuant to Sec. 5 (1) or Sec. 5a (1) UWG as well as continued unfair commercial acts which have already been prohibited by a court.
Covered are "widespread infringements" and "widespread infringements with a Union dimension". For this, a cross-border act must violate Union law protecting the collective interests of consumers in at least three Member States. The requirement is met, for example, if misleading advertising is intended to be available in several member states or if the provider of an online shop enables delivery to consumers in other member states.  An infringement has a "Union dimension" if at least two thirds of the member states and two thirds of the population of the EU are affected.
The amount of the fine is based on the company's annual turnover in the member state where the violation occurs. The fine is limited to 4% of the annual turnover from a turnover of EUR 1.25 million. A maximum of EUR 50,000.00 applies to acting persons, unless the person concerned is also the trader.
Infringements may only be punished in the context of a coordinated enforcement action, which limits the practical significance of the rules on fines.  For example, a member state may refuse to participate in such an action if legal proceedings have already been initiated against the trader for the same infringement (Art. 18(1)(a) of Regulation (EU) 2017/2394). The trader may also avoid the imposition of a fine by giving an undertaking to discontinue the proceedings (Art. 20(1) of Regulation (EU) 2017/2394).

2 Art. 246e EGBGB
In addition, Art. 246e Sec. 1 (2) EGBGB lists "widespread breaches" in connection with consumer contracts, such as the use of general terms and conditions that are invalid under Sec. 309 BGB or the insufficient labelling of an order button in e-commerce. For such infringements, Art. 246e Sec. 2 EGBGB stipulates a fine with a maximum limit of EUR 50,000.00, which can also only be imposed in the context of a coordinated enforcement action.

 

VI. Consumer Remedies

Pursuant to Sec. 9 (2) UWG, the consumer may claim damages for unlawful business acts committed by the trader intentionally or negligently. The prerequisite is a violation of Sec. 3 UWG as a result of which the consumer has made a business decision which he would not otherwise have made. Acts according to Sec. 3a, 4 and 6 UWG are excluded. The standard is intended to close loopholes in civil law and ensure that a comprehensive legal framework exists to remedy the individual consequences of unfair commercial acts. In the event of infringements, the trader is now threatened with actions for damages under the UWG in addition to actions for injunctive relief by consumers.
Of particular importance is the possibility to demand the cancellation of the contract (in rem restitution). In this way, the consumer can withdraw from the contract without setting a deadline or demanding supplementary performance, which represents a particular risk for the trader.

 

VII.       Amendment of the Price Indication Regulation

The "Omnibus" Directive also provides for an adaptation of the Price Indication Directive (98/6/EC). The corresponding amendments to the Price Indication Regulation (PAngV) will come into force on 28 May 2022. In addition to a fundamental restructuring, changes in content are intended to increase the transparency of price quotations vis-à-vis consumers.

In future, the basic price must be indicated in the quantity unit "1 kilogram or 1 litre" as well as "unambiguously, clearly recognisable and easily legible", Sec. 4, 5 (1) PAngV. In future, the regulations will also apply to goods whose nominal weight or nominal volume does not usually exceed 250 grams or 250 millilitres. Relief applies to the sale of perishable foods if the total price is reduced because of an "imminent risk of spoilage" or an "imminent expiry of shelf life", Sec. 9 (3) no. 3 PAngV. Also, the amount of the deposit must be stated next to the total price and not included in it, Sec. 7 PAngV.
In order to facilitate the classification of price reductions, the previous price is to be indicated in future whenever a price reduction is announced. This is the lowest price applied by the trader within the last 30 days before the price reduction, Sec.11 PAngV.
Operators of "publicly accessible charging points" for electric vehicles by consumers must indicate the "energy price per kilowatt hour" at the charging point, in Sec. 14 (2) PAngV. Alternatively, the "call-up option for a display of the price on the display of a mobile terminal" is sufficient.

Contact

If you have any questions on this topic or any need to adapt the website, general terms and conditions or revocation forms used in your business, please contact Sara Bandehzadeh, LL.M. (San Francisco) (sara.bandehzadeh@fieldfisher.com) or - especially if you have questions on the amendments to the UWG - Dr. Bahne Sievers (bahne.sievers@fieldfisher.com).