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Case detail

B a c k

Directive article Article 6 1.
Article 11 al2 (b)
Annex I al1 16.
National ID Administratīvās rajona tiesas spriedums lietā Nr. A420632710
Country Latvia Decision date 08/03/2012
Common name Decision type Administrative decision, first degree
Court Administratīvā rajona tiesa (Rīga) Plaintiff(s) “ALATRAVA A.S”
Court translation District Court of Administrative Cases (Rīga) Defendant(s) Consumer Rights Protection Centre
Subject misleading advertising
Keywords administrative authorityintermediaryjurisdictionnature of the tradertrader

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Headnote

(1) The activities carried out by an intermediary, constitute "commercial practices" and the intermediary qualifies as a "trader", in the sense of the UCP Directive.
(2) The fact that a consumer has the right to return the products or that no actual harm to a consumer was established, does not exclude the possibility of a practice being considered as an unfair commercial practice.
(3) A national administrative authority has the jurisdiction to penalize a foreign company acting through a branch as a trader in the sense of the UCP Directive.
 

Facts

The plaintiff, a foreign joint stock company, placed advertisements in certain media encouraging to obtain “Chinese coins”. The coins themselves were free of charge, but afterwards letters were sent encouraging the purchase of products such as “Smile of destiny”, “Ritual of fulfillment”,  “Talisman of wealth and happiness”, “Passport of wealth and happiness” and similar.
The promoted items induced to believe that would bring happiness, wealth, luck, etc. The Consumer Rights Protection Centre (CRPC) ruled that there was a violation of the Latvian Unfair Commercial Practice Prohibition Law (UCPPL) due to misleading advertising.
The plaintiff appealed against the aforementioned CRPC decision arguing that it only played an intermediary role of processing orders, hence it could not be qualified a "trader", and its activities could not be considered "commercial practice" in the sense pf the UCP Directive. Further, the plaintiff noted that the consumer was granted a right to return the products. In addition, there was not even one case of actual harm reported by a consumer. Finally, the plaintiff held that it was not clear from CRCP's decision which entity was found to be the infringing party and that the plaintiff, as a foreign company, could not be a party in these proceedings.
 

Legal issue

(1) Do the activities carried out by an intermediary, constitute "commercial practices" and does the intermediary qualify as a "trader", in the sense of the UCP Directive?
(2) Does the fact that a consumer has the right to return the products or that no actual harm to a consumer was established, exclude the possibility of a practice being considered as an unfair commercial practice?
(3) Does a national administrative authority have the jurisdiction to penalize a foreign company acting through a branch as a trader in the sense of the UCP Directive?
 

Decision

(1) The court first reminded that the plaintiff, through its registered branch in Latvia, had placed advertisements, collected orders, sent talismans and coins, letters, offers of other services and otherwise acted in the interests of the third party L.L. and E.E. The essence of these activities, the court held, was to encourage the sales of L.L. and E.E. products.
Therefore, the sending of letters and service offers to consumers must be regarded as a commercial practice as defined under the UCPLL. The fact that the plaintiff acted upon instructions and in the interests of L.L. and E.E. as the ultimate service providers makes the plaintiff a trader since its definition in UCPLL refers also to “anyone acting in the name of or on behalf of a trader”.
(2) The court first held that since the products are advertised as facilitating happiness, wealth and luck, this practice constitutes a per se misleading commercial practice under article 11, part 16 of the UCPLL. Further, the court held, the fact that a right of refusal is offered to the consumers and the fact that no harm was established, does not change anything to the prohibited character of the practice.
(3) The court finally set out that applicable jurisdictional rules were observed. Although plaintiff was a foreign company, it had opened a branch in Latvia through which its activities were performed. Therefore, all activities of the branch are attributable to the plaintiff, which may validly be held responsible.
 

  URL Decision Decision full text
EN N/A
LV http://www.tiesas.lv/files/AL/2012/03_2012/08_03_2012/AL_0803_raj_A-00300-12_16.pdf

Result

The appeal lodged by the plaintiff was dismissed.

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