The matter at hand

This matter concerns the conduct of the telecommunications operators Wind and Vodafone, consisting of the sale of SIM cards on which internet browsing services and voicemail services had been pre-loaded and pre-activated, the fees for using those services being charged to the user if the services were not deactivated at the user’s express request, without the user having been sufficiently informed, in advance, of the fact that those services had been pre-loaded and pre-activated, nor of their cost.

After receiving complaints from consumers who had been charged fees for unsolicited services and for connections made without their knowledge, the Italian competent authority, the AGCM, imposed fines on Wind and Vodafone, taking the view that their conduct fell within the category of aggressive commercial practices within the meaning of Articles 8 and 9 of the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market or the term ‘inertia selling’ within the meaning of Annex I, point 29 of that directive.

Wind and Vodafone appealed against the decisions of the AGCM before the Tribunale amministrativo regionale per il Lazio (Regional Administrative Court, Lazio, Italy), which upheld the appeals and annulled the contested decisions on the ground of the AGCM’s lack of competence. The court considered that, in the light of the principle of specification laid down in Article 3(4) of the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market, and considering that the practices at issue were covered by special legislation that gave another authority, the AGCom, exclusively, powers to inspect, prohibit and sanction with regard to electronic communication services, the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market was not applicable and, as a result, the AGCM was not competent to penalise the practices at issue.

The case was litigated all the way up to the Consiglio de Stato (Council of State), which decided to stay the proceedings and refer a number of questions to the ECJ, asking, in essence, whether the conduct of the telecommunications operators falls within the scope of the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market, in particular whether that conduct constitutes an aggressive commercial practice or ‘inertia selling’.

The judgment of the ECJ

The ECJ recalls that Article 5(5) of the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market provides that the practices listed in Annex I are in all circumstances considered unfair “without having to be subject to a case-by-case assessment against the provisions of Articles 5 to 9” thereof (paragraph 40).

As regards ‘inertia selling’, point 29 of that annex provides that demanding immediate or deferred payment for products supplied by the trader, but not solicited by the consumer, falls within the category of aggressive commercial practices which are in all circumstances considered unfair.

In that regard, the ECJ notes that “Article 8 of [the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market] defines the concept ‘aggressive commercial practice’ in particular by the fact that it impairs or is likely to significantly impair the average consumer’s freedom of choice or conduct with regard to the product. It follows that for a service to be solicited the consumer must have made a free choice. That supposes, in particular, that the information provided by the trader to the consumer is clear and adequate (paragraph 45).

Considering that information “on the terms of the contract and the consequences of concluding it is of fundamental importance for a consumer” (paragraph 46) and that “the price is, in principle, a determining factor in the consumer’s mind when it must make a transactional decision” (paragraph 47), the ECJ holds that “[w]hen the consumer has been neither informed of the cost of the services in question, nor even of the fact that they were pre-loaded and pre-activated on the SIM card that he bought, it cannot be considered that he freely chose the provision of those services” (paragraph 48).

The ECJ adds that it is irrelevant in this respect that the use of the services in question required, in certain cases, conscious action on the part of the consumer, considering that “without sufficient information on the costs of browsing the internet and using the voicemail, such action cannot be deemed to be establishing the existence of a free choice in the provision of these services” (paragraph 49). The same applies to the fact that the consumer could have opted for deactivation of the services in question or could have configured his device to deactivate those services, as in the absence of clear and sufficient information on the existence of those services and their costs “it is at the very least unlikely that the consumer would genuinely be able to make use of such an option, at least before being billed for those services” (paragraph 50).

Considering further that the objective of the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market is to achieve a high level of consumer protection, the ECJ concludes that “the term ‘inertia selling’ within the meaning of Annex I, point 29 of that directive must be interpreted as including, subject to verifications by the referring court, conduct such as that at issue in the main proceedings whereby a telecommunications operator sells SIM cards on which services such as internet browsing services and voicemail services are pre-loaded and pre-activated without first sufficiently informing the consumer of that pre-loading and pre-activation nor the cost of those services” (paragraph 56).

The ECJ then goes into the question whether the Universal Service Directive and the Framework Directive regulate specific aspects of unfair business practices, imposing obligations which are incompatible with those laid down in the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market, in which case the Universal Service Directive and the Framework Directive are to prevail. The ECJ answers this question in the negative, considering that there is no conflict between the Unfair Commercial Practices DirectiveDirective No 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and the provisions laid down in those directives.