Protection site

No good prospects for (online) traders: toughening of competition law and consumer protection

The EU is committed to consumer protection. A fundamental change is also on the horizon in the German (online) retail sector. This is not good news for businesses. In order to implement the so-called “Omnibus” directive (EU / 2019/2161), the Bundestag adopted on August 10, 2021 two laws aimed at strengthening consumer protection (German Federal Journal [Bundesgesetzblatt – BGBl.] Part 1 no.53).

German law amending the German civil code [Gesetz zur Änderung des Bürgerlichen Gesetzbuches] and the Introductory Act to the German Civil Code [Einführungsgesetz zum Bürgerlichen Gesetzbuch – EGBGB] introduces, among other things, extended information obligations for operators of online marketplaces vis-à-vis consumers as well as a completely new prohibition criterion in Article 246e of the EGBGB which applies to all online traders. According to him, the “violation of consumer interests” now constitutes an administrative offense punishable by a fine. The catalog of actions of entrepreneurs vis-à-vis consumers liable to a fine contains, among other things and in addition to the violation of information obligations, in particular in art. 246th art. 1 (2) no. 2a) EGBGB, the use of a clause in the consumer T & Cs which is invalid according to Sec. 309 BGB.

German law to strengthen consumer protection in competition and trade law [Gesetz zur Stärkung des Verbraucherschutzes im Wettbewerbs- und Gewerberecht] provides for essential innovations in competition law: the introduction of administrative criteria for infringements and fines as well as the possibility for consumers to assert individual actions for damages in the event of certain legal infringements on the part of the entrepreneur. Both are an absolute novelty in German competition law!

Fines: new in German competition law and consumer law

Until now, the German legal system has relied on market self-regulation. Infringements of German Unfair Competition Law [Gesetz gegen den unlauteren Wettbewerb – UWG], including the use of invalid clauses of the T & Cs, have so far been sanctioned only by means of warnings issued by competitors and competition associations – unlike many other EU countries.

In the future, certain violations of the provisions of the UWG will constitute an administrative offense, which may be sanctioned by the competition authorities and which will in some cases lead to heavy fines. This is the case, for example, if the violation falls under the new catalog of unfair acts (Article 3 (3) UWG in conjunction with numbers 1-31 of the annex) or constitutes a specific aggressive or deceptive commercial act. The same will apply in the future if, for example, invalid clauses of the GTC are used in accordance with Sec. 309 BGB or in the event of violation of the obligations to inform consumers.

The precondition for this is that the violations are generalized or that they are generalized violations with a European dimension. In this case, the maximum fine is 50,000 euros. A higher fine may be imposed if an entrepreneur achieved an annual turnover of more than 1.25 million euros in the previous financial year. However, the fine cannot exceed 4% of the annual turnover. The amount of annual turnover can be estimated. In the absence of evidence to support an estimate, the maximum fine is € 2 million.

It should be emphasized that the new regulation does not replace the old one, but must exist alongside it. Competitors and competition associations can remain active. It is therefore possible that a company is warned and sanctioned at the same time for the same offense.

Claims for damages for consumers in competition law

German Competition Law Reform Act [Gesetz zur Reform des Wettbewerbsrechts] is considering another important innovation in the form of a possible claim for damages for consumers. This is the case if the consumer has suffered harm as a result of an unfair commercial act in accordance with Sec. 3 UWG. To date, there has been no such notion of individual appeal in competition law. The legislator sees it as an “additional economic incentive to comply with existing competition law regulations” and also meets the requirements of Directive EU / 2019/2161 that it is required to implement.

As a result of legal reform, actual consumers will be empowered to take action and will be able to take direct action against a business that acts anti-competitively. However, this only applies in the case of certain, generally aggressive, commercial acts and deceptive circumstances. Here it does not matter whether it is an active act or an omission on the part of the company. Thus, if in the future a trader commits, at least negligently, a commercial act which is illegal according to Sec. 3 UWG, and if this causes a consumer to take commercial action that he would not otherwise have taken, the consumer is entitled to compensation from the trader for the damage he has suffered. Consequently, the consumer must be placed in the same situation as if the unlawful commercial act had not taken place and therefore had not been led to carry out the commercial act – generally, the decision of purchase – which is detrimental to him.

Developments such as in data protection law?

Concerns are already expressed that there is a general threat of developments similar to those in data protection law also occurring in competition law and therefore also in the General Conditions Act (Section 309 BGB) as well as in consumer law: in the future, individuals could massively overwhelm various businesses and operators of information request sites. Since the entry into force of the GDPR, an increasing number of legal warnings can be observed. These are mainly potential violations of data protection law, for example forms without SSL encryption, e-mail addresses transmitted without consent or failure to comply with requests for information within the period of one month. . It is often felt that data subjects are less concerned with the data protection compliant behavior of companies than with the exploitation of what are only minor breaches.

In view of the innovations foreseen in competition law and in the EGBGB, these fears cannot in fact be entirely dismissed. This is contradicted by the fact that only particularly aggressive unfair commercial acts can trigger a claim for damages. The threshold for data protection breaches, on the other hand, is much more vague and arguably lower as well. Therefore, violations of, for example, the EGBGB’s information obligations and the use of terms and conditions that violate Sec. 309 BGB are likely to be riskier.

The GDPR also standardizes an explicit claim for information in Article 15, while neither the UWG nor the EGBGB do. To assert a request for information within the framework of the UWG or the EGBGB, it is necessary to resort to the general request for information according to the principles of good faith (Article 242 BGB), which is not immediately obvious and is also more difficult to justify.

Nevertheless, traders should not underestimate the changed legal situation from May 2022. In addition to complaints from competitors and associations that issue warnings, traders will be exposed to other complaints from new interest groups to the future. While online merchants in particular already perceive themselves today to be subject to strict legal requirements, this impression will increase when competition authorities and consumers also enter the scene. Particularly due to the inclusion of authorities in sanctioning competition infringements, the pressure to prosecute UWG and consumer law infringements is likely to increase significantly in the future.

This once again underlines how important it is to constantly take into account the current legal situation when designing your own internet presence and the terms and conditions to be used. Only in this way will online merchants be able to protect themselves against the risk of attacks from competitors, warning associations, competition authorities and consumers.