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~ Spotlight On ~

Unfair commercial practices similar to that of the GDPR.
The Omnibus Directive addresses the misleading practice of
selling identically branded products with a different composition The Directive provides fines of up to 4% of the entity’s yearly
or quality in different countries (s.c. “dual quality”), now turnover in the country (or countries) where the violation
expressly defined as an uncommercial practice, unless these has occurred or up to a minimum of EUR 2 million if there
differences are justified by objective factors – such as, for is the available information on the business’ yearly turnover.
instance, national rules on product composition. Countries are also able to set even more substantial fines when
implementing the Directive. Unsurprisingly, then, different
Moreover, the Omnibus Directive requires online marketplace penalties apply in different EU countries. For instance:
operators to disclose the criteria adopted to define search result
rankings. For instance, the case in which a trader provides • Germany: A letter is issued as a formal warning to
information to a consumer in the form of search results without cease the illegal conduct, and only afterwards is a fine
disclosing the existence of paid advertising is considered a potentially issued;
prohibited practice. • France: The fine is set at up to EUR 300,000 but
may be proportionally increased up to 10% of the
Moreover, the Directive introduces a clear ban on the publication average annual turnover of the last three years or 50%
of fake reviews. On this topic, the European Commission of the costs incurred for this marketing or the illegal
recently published interesting research. Consumer authorities practice. This is followed by a five-year professional
from 26 Member States checked 223 major websites for disqualification;
misleading consumer reviews. In 144 of the 223 websites • Poland: Fines can reach up to 10% of the previous
checked, the authorities could not confirm that these traders year’s turnover;
were ensuring that the reviews were genuine, meaning that they • Spain: Fines range between EUR 150 and EUR
could not guarantee with certainty that the reviews related to 10,000, increased by 2 to 4 times the volume of the
verified purchases. Moreover: profits linked to the infringement;
• Netherlands: Fines can reach as high as 10% of
• 104 of the 223 websites examined did not inform users the previous year’s turnover in case of recurring
of how reviews were collected and processed; infringements.
• 118 websites lacked information on how to prevent
fake reviews; Fines must be proportional to the gravity of the breach. The
• 176 websites did not state that “solicited reviews” were following criteria and factors should be considered to determine
forbidden. the appropriate sanctions:

Finally, the Directive regulates the application of consumer • The type, severity, extent, and duration of the breach;
remedies tailored to the individual case, which include access to • If any action has been undertaken by the seller to
damages, price reduction, or termination of the contract. alleviate the prejudice or damage caused; history of
non-compliance, including sanctions in other EU
Consumer rights countries;
The Omnibus Directive has also regulated product promotions. • The possible damage suffered by the seller because of its
According to the new rules, buyers must always be made aware violation of consumer law; and
of the following: • Prior criminal activities of the seller.

• If the price is determined via an automated decision- In conclusion, the Omnibus Directive tries to rationalise the
making procedure; wide and sometimes chaotic network of consumer protection
• The way offers are ranked in online search results; rules currently applied within the EU, scattered among various
• If the buyers are about to conclude a contract with a directives, including but not limited to:
private vs a professional;
• If the statutory rules on consumer protection apply or • The Unfair Commercial Practices Directive (2005/29/
not. EC)
• The Unfair Contract Terms Directive (93/13/EEC)
Penalties • The Consumer Rights Directive (2011/83/EU)
The Omnibus Directive amends Directive 93/13/EEC on unfair • The Price Indications Directive (98/6/EC) ••
terms in consumer contracts and institutes a penalty system

Alan Rhode is a co-founder at Taxmen, the one-stop-shop for legal and tax services to the e-commerce industry.
Enrico Caruso is the Business Development Manager at Taxmen.

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