France: Transposition of the Omnibus Directive – Strengthening consumer protection

published on 9 June 2022 | reading time approx. 4 minutes

Authors: Fabien Stade and Eva Meron

Faced with the development of digital platforms and new online commerce practices, and following on from the Platform to Business Regulation (Regulation (EU) 2019/1150 of 20 June 2019), which provides a framework for commercial relations between online intermediation platforms and user businesses that offer their goods on these platforms, the legal rules on consumer protection have just been strengthened by the order transposing the European Omnibus Directive (Directive (EU) 2019/2161 of 27 November 2019) into national law.

New definitions »
A strengthening of the regulation of misleading commercial practices »
Increased supervision of distance and off-premises contracts »
Penalties of up to 4 percent of turnover »

From 28 May 2022, businesses will have to comply with the new measures introduced by the Omnibus Directive on misleading commercial practices, unfair terms and distance contracts, particularly in the digital field, and face the risk of increased sanctions.

The new provisions aim to regulate certain practices in online commerce, taking into account the twofold need to adapt existing rules to the digital transformation and to reinforce their effectiveness in the face of the growing risk of infringements at European level.

Below is a presentation of these new rules.

New definitions

The Order introduces new definitions in the introductory article of the Consumer Code relating to online marketplaces, online marketplace operators and commercial practices.

A strengthening of the regulation of misleading commercial practices

New misleading commercial practices have been added to the provisions of the Consumer Code, some of which aim to adapt the regulation of misleading commercial practices to the digital economy.

Among the misleading commercial practices whose misleading character is assessed on a case-by-case basis, i.e. those which substantially alter or are likely to alter the economic behaviour of the average consumer, the following misleading commercial practices are added to the Consumer Code

The presentation of a good as being identical to a good marketed in one or more Member States, even though it has a different composition or characteristics (Article L. 121-2, 4° of the Consumer Code);
The absence of certain material information in any commercial communication constituting an invitation to purchase: The order adds three new items of information to the list in Article L. 121-3 of the Consumer Code which must now be included in such commercial communications:
- Whether or not the seller on an online marketplace is a professional
- If applicable, the main parameters determining the ranking of products presented to the consumer on an online interface and their order of importance.

The absence of an indication of the price previously charged by the professional in any advertisement for a price reduction:

In order to combat price reduction advertisements calculated on the basis of inflated reference prices, which affect consumers’ ability to be properly informed about the reality of the promotion, the Order reintroduces a more restrictive regime for price reduction advertisements by requiring the professional to indicate in any price reduction advertisement the previous price charged by the professional before the price reduction.

The Order also expands the list of practices deemed to be misleading in all circumstances. Henceforth, practices will be deemed to be misleading if their purpose is to (Art. L. 121-4, 25° to 28° of the Consumer Code):

providing search results in response to a consumer’s online query without clearly informing the consumer of any payment made specifically by a third party to obtain a higher product ranking;
Reselling tickets for events to consumers by using an automated means to circumvent the restriction or prohibition on the resale of such tickets;
Disseminating or causing to be disseminated false consumer opinions or recommendations.

Increased supervision of distance and off-premises contracts

The Order amends several articles of the Consumer Code relating to distance and off-premises contracts in order to :

Extend the regulation of distance and off-premises contracts to contracts for the supply of digital content without a material support (e.g. applications, audiovisual files, e-books, etc.) or the supply of a digital service in return for the provision of personal data by the user (e.g. access to a social network, streaming access to videos, etc.);
To group together in a single article (Article L. 221-5 of the Consumer Code) the list of all the pre-contractual information that must be communicated to the consumer and to add an obligation to inform the consumer about the application of a personalised price on the basis of an automated decision;
Strengthen consumer protection against unsolicited home visits by prohibiting any unsolicited visit by a professional to a consumer’s home with a view to selling a product or providing a service where the consumer has clearly and unambiguously indicated that he does not wish to be the subject of such a visit (new Article L. 221-10-1 of the Consumer Code);
Specify the conditions under which the performance of a contract may begin before the end of the consumer's withdrawal period. For this to happen, the professional must have obtained the consumer's prior and express consent and an acknowledgement by the consumer that he has lost his right of withdrawal.
To adapt the conditions of withdrawal in the context of contracts for digital content and services.

Penalties of up to 4 percent of turnover

The order introduces a “system of effective, dissuasive and proportionate penalties for large-scale cross-border infringements”^[1], i.e. infringements which concern at least three Member States, such as certain unfair commercial practices or the existence of unfair terms in contractual documentation. For the repression of these infringements, new civil fines have been introduced with the possibility of increasing their amount to 4 percent of the average turnover over the last three financial years known at the date of the decision or 2 million euros in the absence of sufficiently available information on turnover (Articles L. 241-1-1 and L. 132-1 A of the new Consumer Code).

Finally, the text reinforces the penalties incurred in the event of failure to comply with the pre-contractual information obligations relating to the existence and implementation of legal guarantees and any commercial guarantees as well as aftersales service. The maximum amount of the administrative fine in the event of a breach of these obligations is raised to EUR 15,000 for natural persons and EUR 75,000 for legal persons (Article L. 131-1-1 new of the Consumer Code).

The same penalty will be incurred in the event of a breach of pre-contractual information obligations in distance contracts (amended Article L.242-10 of the Consumer Code). The amount of the fine may be increased to 4 percent of the average annual turnover in the event of a large-scale infringement sanctioned in the context of a request for mutual assistance (new Article L. 242-14-1 of the Consumer Code).

The risk of being imposed high penalties is all the more important as the Constitutional Council has just recalled in a decision of 13 March 2022, in response to a priority question of constitutionality, the possibility of cumulating administrative penalties pronounced for distinct breaches.

[1] Source: Press release of the Council of Ministers of 22 December 2021 (www.legifrance.gouv.fr)