AG Mengozzi on price comparisons: buying cars is not like buying tomatoes ... So what? (C-476/14)

In his Opinion of 16 December 2015 in Citroën Commerce, C-476/14, EU:C:2015:814 (not available in English), Advocate General Mengozzi assessed whether EU consumer law allows for Member State rules that systematically ban car advertisements that mention separately the price of the car and additional mandatory transportation expenses that the consumers need to cover in order to buy the advertised car. Or, in other words, whether harmonised EU consumer law prevents Member States from retaining domestic rules that require car ads to indicate in a transparent and unmistakable manner the global, full and final price of the advertised vehicle. 

In his Opinion, AG Mengozzi concludes that EU law does not systematically prohibit this type of ads, but rather requires a case-by-case analysis of the content and circumstances of the advertisement. Thus, in his view, a domestic rule that imposes a blanket restriction on the way price and information on other (mandatory) expenses is provided--ie, which requires explicit disclosure of the global cost of acquisition of the car--runs contrary to EU law. This is a counter-intuitive Opinion on consumer protection and, in my view, deserves some closer analysis.

The dispute in Citroën Commerce concerns a German rule whereby the offeror of goods to final consumers must indicate prices including value added tax and any other integral parts of the final price to be paid. In the specific case of car ads, it is settled German law that 
in principle, what should be indicated in ads is the final price of the vehicle, ie the price including transportation expenses, because the public does not perceive these incidental expenses as additional, but rather as an integral part of the price. It is only possible to indicate separately the price if the consumer can choose between two options, namely, collecting the vehicle at the manufacturer's plant or ordering the vehicle to be transferred to the dealership where the sale took place; or when it is not possible to calculate in advance the amount of such expenses (Opinion in C-476/17, para 26, own translation from Spanish).
AG Mengozzi assesses the German rule and its interpretation by reference to EU rules on labelling of products (Directive 98/6) and on unfair business-to-consumer commercial practices (Directive 2005/29). 

Assessment under Directive 98/6
From the outset, AG Mengozzi doubts the applicability of Dir 98/6 to the case. In his view, '[p]erhaps the advertisement ... constitutes an offer of products in the broad and common sense. However ... the concept of "products offered by traders to consumers" in Article 1 of Directive 98/6 must be interpreted within the limits inherent to its scope' (Opinion in C-476/17, para 38, own translation from Spanish).

AG Mengozzi considers that Dir 98/6 on consumer protection in the indication of the prices of products offered to consumers, does not apply in the case of cars. In his view, '[a]lthough this obligation [to provide transparent prices for the purposes of comparison by consumers] is ... prima facie formulated regarding all "products offered", the analysis of the lexical scope of Directive 98/6 leads me to conclude that it was, however, essentially conceived for regular consumption products, it being understood that it may be both food and non-food products(Opinion in C-476/17, para 42, own translation from Spanish). 

The AG expands on the reasons for his assessment:
45 ... although Article 1 of the [then] proposed directive was drafted in the sense that the indication of the selling price and the price per unit of measure of "products offered by traders to final consumers" should be provided, the Commission added that this should be done where such dual pricing information was relevant. It thus acknowledged that "there [were] a number of situations where the comparison does not give the consumer determinant information, particularly when the products have very different characteristics or meet different needs of consumers. This is, for example, customized products, articles of clothing, automobiles, furniture and all products where indication of measurement [...] does not provide useful information to compare prices."
46. Thus, given their own varied individual characteristics, vehicles are not products for which a price comparison through the labelling regulated by Directive 98/6 proves immediately relevant to the consumer. To be clear, just as Directive 98/6 is destined to facilitate comparison, for the consumer, of the price of a kilogram of tomatoes--because tomatoes are an easily comparable product and, in any case, are completely equivalent to tomatoes sold in another store--for products such as automobiles, the labelling of prices in the conditions prescribed by Directive 98/6 cannot serve this objective, given the degree of specificity of each vehicle (Opinion in C-476/17, paras 45-46, own translation from Spanish, emphasis added).
AG Mengozzi also stresses that AG Cruz Villalón and the CJEU indicated that 'the purpose of Directive 98/6 is not to protect consumers in relation to the indication of prices, in general or with regard to the economic reality of announcements of price reductions, but specifically in relation to the indication of the prices of products by reference to different units of quantity' (Commission v Belgium, C-421/12, EU:C:2014:2064, para 59; as referred to in Opinion in C-476/17, para 47, emphasis added).

All those arguments lead AG Mengozzi to conclude that 'Directive 98/6 does not constitute the European Union law benchmark for the indication of prices in general for all product offerings. Nor is it intended to regulate in general terms the conditions under which prices must appear in ads' (Opinion in C-476/17, para 49, own translation from Spanish, emphasis added).

In my view, the reasoning of AG Mengozzi is problematic for two reasons. Firstly, because it conflates whether dual pricing (ie including both the selling and the unit price) is necessary for consumers to assess the cost of a car [which it is not, as cars are bought by units; see Art 5(1) Dir 98/6] and whether transparent price comparisons are useful for consumers looking to buy cars (which they definitely are). I am particularly troubled by his "tomato-analogy" because it does not reflect the basic economic insight that consumers can benefit from competition in two dimensions: inter-brand and intra-brand competition.

Of course, inter-brand competition only benefits consumers willing to compare the price and characteristics of different (makes and models of) cars and, in that regard, pure price comparisons may not be (solely/primarily?) relevant. However, intra-brand competition benefits consumers willing to buy one specific make and model of car and looking for the best price available. This second type of consumer benefit derived from competition necessarily relies on transparent price comparisons. Thus, the exclusion from cars altogether from the scope of application of Dir 98/6 'because buying  cars is not like buying tomatoes' is simply ridiculous [by the way, buying tomatoes can be a less than straightforward exercise as well ... but let's leave the paradox of choice aside].

A functional understanding of the goal of Dir 98/6 should make it obvious that it aims at enabling easy and reliable price comparisons by consumers, or 'to stipulate indication of the selling price and the price per unit ... in order to improve consumer information and to facilitate comparison of prices' (Art 1, emphasis added)--ultimately because 'transparent operation of the market and correct information is of benefit to consumer protection and healthy competition between enterprises and products' [rec (1) Dir 98/6].

Therefore, it seems quite straightforward that Dir 98/6 aims to facilitate price comparisons and, in that regard, the rest of its provisions are relevant also for the offer of cars. Art 2(a) Dir 98/6 clearly establishes that 'selling price shall mean the final price for a unit of the product ... including VAT and all other taxes'. Therefore, the analysis of the Citroën Commerce case should have rested on whether offering a price and separately indicating that there are additional mandatory transportation expenses for the acquisition of a car meets this requirement. In that regard, even if it was considered that the indication of these two elements of the final prices in the same ad was not prohibited by the EU rule, it should be taken into account that Art 10 Dir 98/6 allows for Member States to adopt or maintain provisions which are more favourable as regards consumer information and comparison of prices, without prejudice to their obligations under the Treaty. Therefore, unless there was an infringement of the other obligations under EU law, the German rule should stand (see analysis re Dir 2005/29 below).

AG Mengozzi disagrees with such an approach and considers that 'transportation expenses ... are entirely outside the scope of Directive 98/6 for various reasons(Opinion in C-476/17, para 55, own translation from Spanish). His main reasons relate to the travaux preparatoires of the Directive and his argument that it solely applies to regular consumption products offered immediately by retailers to consumers (ie where no transportation costs are usually applicable). In my view, such approach goes against the objective of the Directive and seeks to create a restriction that can well render the requirements of the Directive completely moot. It should be clear that the Directive aimed to provide consumers a global, final price for the products they are offered (thus, the obligation to include applicable taxes). Any interpretation that allows for the exclusion of price components from the 'legal' concept of final price makes no functional sense.

In any case, what is clear is that, either on the basis of Art 10 Dir 98/6 or not, the last hurdle for the German rule to overcome is the regulation of unfair commercial practices under Dir 2005/29, which establishes maximum harmonisation measures and, consequently, does not allow Member States to provide a level of protection beyond the EU law standard.

Assessment under Directive 2005/29
Ultimately, then, the assessment of  compatibility of an interpretation of Dir 98/6 with Dir 2005/29 and the maximum harmonisation it imposes requires to determine whether a reading of Art 2(a) (and 10) Dir 98/6 as requiring the disclosure of a single final price that includes all mandatory costs and expenses payable for the acquisition of the car, is compatible with Art 7(1), 7(4)(c)  and 7(5) Dir 2005/29 as a standard of maximum harmonisation [Art 3(5)].

Art 7(1) Dir 2005/29 determines that a 'commercial practice shall be regarded as misleading if, in its factual context, taking account of all its features and circumstances and the limitations of the communication medium, it omits material information that the average consumer needs, according to the context, to take an informed transactional decision and thereby causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise'. Art 7(4)(c) Dir 2005/29 clarifies that '[i]n the case of an invitation to purchase, the following information shall be regarded as material, if not already apparent from the context: ... (c) the price inclusive of taxes ... as well as, where appropriate, all additional freight, delivery or postal charges ...'. Finally, Art 7(5) Dir 2005/29 determines that EU law requirements on pricing are to be considered material as well, which include Art 3(4) Dir 98/6 (not relevant for our purposes).

AG Mengozzi reasons as follows:
73 ... Article 7, paragraph 4, letter c) of Directive 2005/29 is not limited to mentioning the price, including taxes, but also refers to "... where appropriate, all additional freight, delivery or postal charges." From the structure of this provision, it is clear that it covers price with all of its components and that the text of Article 7, paragraph 4, letter c) of Directive 2005/29, read in its entirety, clearly seems to address differently the price or the manner in which it is determined, on the one hand, and the other price components such as transport costs, on the other. In any case, nothing indicates, in view of the interpretation of Article 7, paragraph 4, letter c), that the price must include transport costs and be subject to a global definitive indication
74 ... it must also be stated that the omission of material information, such as price as defined in Article 7, paragraph 4, letter c) of Directive 2005/29 is not, in any case and of itself, an unfair trade practice, since the impact of this omission on consumer behavior and the adoption of its decision on a transaction will always have to be analysed case-by-case. The terms of Directive 2005/29 show that this analysis should also take into account the context of the commercial practice in question, of all its features and circumstances and the limitations of the communication medium.
76 ... a national rule interpreted as systematically prohibiting invitations to buy that indicate separately the price of products and mandatory transportation costs would go beyond the level of protection afforded by Directive 2005/29 because that provision would have the effect of generally punishing the omission of material information--namely the price, including compulsory expenses--whereas the Directive requires a case-by-case analysis to appreciate the practical consequences of such a failure in the commercial behavior of such a consumer before it can qualify the commercial practice as "unfair" (Opinion in C-476/17, paras 73-74 and 76, own translation from Spanish, emphasis added).
In this instance, the reasoning of AG Mengozzi seems accurate. Indeed, it seems clear that Art 7(4)(c) Dir 2005/29 requires disclosure of all costs applicable to the purchase, but not necessarily the disclosure of a global, final price as a single figure. It also seems clear that Art 7 Dir 2005/29 excludes the use of presumptions of unfairness by Member States by requiring a case-by-case analysis [which may not be desirable from a broader perspective, particularly in terms of legal enforcement costs, but that is an issue intrinsic to Dir 2005/29 and its maximum harmonisation]. 

In the circumstances of the case Citroën Commerce, given that the mandatory transportation costs were disclosed (albeit in a different, smaller font...) it is hard to see a possibility to declare the practice "unfair" for the purposes of Dir 2005/29.

As a final point, it may be worth stressing that it also seems clear that Dir 2005/29 has (implicitly) severely limited, if not completely excluded, the possibility for Member States to adopt 'more stringent measures' under Art 10 Dir 98/6. If this implication is correct, it would be desirable for the CJEU to declare it as such in its final Judgment in Citroën Commerce.