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Case detail



Directive article Article 6 1.
Article 11 al2 (b)
Annex I al1 16.
National ID Regional Court of Administrative Cases ruling in the case No A420632710
Country Latvia Decision date 21/01/2013
Common name Decision type Court decision in appeal
Court Regional Court of Administrative Cases Plaintiff(s) “ALATRAVA A.S”
Court translation Administratīvā apgabaltiesa Defendant(s) Consumer Rights Protection Centre
Subject misleading advertising
Keywords administrative authorityblack listgames of chanceintermediaryjurisdictionnature 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 they 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 of 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.

Arguments of the plaintiff were rejected by the District Court of Administrative cases and the plaintiff launched an appeal before the Regional Court of Administrative Cases. In the appeal the plaintiff repeated its arguments and pointed towards the applicability of Regulation 2006/2004/EC.
 

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

The court agreed with the reasoning provided by the District Court of Administrative cases, i.e., that sending letters and service offers to consumers must be regarded as a commercial practice defined under the UCPLL. The fact that the plaintiff acted upon instructions and in the interests of specific persons 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”.

The court also agreed to the finding of the District Court of Administrative cases that since the products were advertised as facilitating happiness, wealth and luck, such practice constituted a per se misleading commercial practice under article 11, part 16 of the UCPLL. A right of refusal and the fact that no harm was established does not change the prohibited nature of such commercial practice.

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. The court also opposed to the application of the Regulation 2006/2004/EC due to the violation not falling into the cross-border scope required by recital 2 of the Regulation 2006/2004/EC.
 

  URL Decision Decision full text
EN N/A
LV http://www.tiesas.lv/files/AL/2013/01_2013/21_01_2013/AL_2101_apg_AA43-1173-13_12.pdf

Result

The appeal lodged by the plaintiff was dismissed.

The court's decision is now final.
 

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