ON APPEAL FROM Chancery Division
Mr Justice Briggs
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE JACKSON
LORD JUSTICE MUNBY
| IN THE MATTER OF THE ENTERPRISE ACT 2002 AND
THE CONSUMER PROTECTION FROM UNFAIR
TRADING REGULATIONS 2008
PURELY CREATIVE LIMITED
STRIKE LUCKY GAMES LIMITED
THE WINNERS CLUB LIMITED
MCINTYRE & DODD MARKETING LIMITED
DODD MARKETING LIMITED
(9) PETER HENRY
Appellants / Defendants
|- and -
|THE OFFICE OF FAIR TRADING
||Respondent / Claimant
WordWave International Limited
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
MISS JESSICA SIMOR (instructed by THE GENERAL COUNSEL) for the Respondent
Hearing dates : 20 - 21 June 2011
Crown Copyright ©
The Chancellor :
"Annex I contains the list of those commercial practices which shall in all circumstances be regarded as unfair. The same single list shall apply in all Member States and may only be modified by revision of this Directive."
Paragraph 31 of that Annex is in the following terms:
"Creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either:
- there is no prize or other equivalent benefit
- taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost."
Paragraph 31 in Schedule 1 to the Regulations reproduces paragraph 31 of the Annex I to the Directive literally except that it introduces the indents with the references "(a)" and "(b)".
"create the false impression that the consumer has already won, will win, or will on a particular act win a prize or other equivalent benefit, when in fact taking any action recommended by the defendant in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost which is either
(a) a substantial proportion of the unit cost to the defendant of the provision to the consumer of the thing described as a prize or other equivalent benefit; or
(b) in the case of a charge stated to be for delivery and insurance, used by the defendant to finance in whole or in part its acquisition, handling or other cost of the making available of that thing other than the actual cost of its delivery to the consumer and insurance (if any) in transit."
The Promoters seek the deletion of subparagraph (a).
"If the consumer is given the impression that he has won a prize even if he adopts the recommended (but relatively more expensive) method or methods of claiming it, then if the cost of that method is sufficient to falsify the impression, that commercial practice should be, and is, prohibited by Paragraph 31. This is because the trader will be profiting by recommending a method of claiming which involves a cost which falsifies the assertion that the consumer has won something, rather than having bought it."
"In my judgment recourse to differences of implementation of a directive intended to have uniform effect throughout the EU is likely to prove a time-consuming and ultimately fruitless exercise, as will become apparent from [counsel]'s attempt to pray in aid the different language of the Irish regulations implementing paragraph 31 of Annex 1 to the UCPD."
"Create the impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact taking any action identified by the Defendants in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.
"Create the impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact taking any action identified by the Defendants in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring anything other than a de minimis cost."
"Making a representation or creating an impression that a consumer has won or will win a prize or other equivalent benefit, if –
(i) there is no prize or equivalent benefit, or
(ii) in claiming the prize, the consumer has to make a payment or incur a loss;"
Such an implementation of paragraph 31 omits the word 'false' which had been inserted into the draft Directive by an amendment approved by the European Parliament on 2nd February 2005. Perhaps of greater significance is the substitution of 'loss' for 'cost'.
1. Does the banned practice set out in paragraph 31 of Annex 1 to Directive 2005/29/EC prohibit traders from informing consumers that they have won a prize or equivalent benefit when in fact the consumer is invited to incur any cost, including a de minimis cost, in relation to claiming the prize or equivalent benefit?
2. If the trader offers the consumer a variety of possible methods of claiming the prize or equivalent benefit, is paragraph 31 of Annex 1 breached if taking any action in relation to any of the methods of claiming is subject to the consumer incurring a cost, including a de minimis cost?
3. If paragraph 31 of Annex 1 is not breached where the method of claiming involves the consumer in incurring de minimis costs only, how is the national court to judge whether such costs are de minimis? In particular, must such costs be wholly necessary:
a. in order for the promoter to identify the consumer as the winner of the prize, and/or
b. for the consumer to take possession of the prize, and/or
c. for the consumer to enjoy the experience described as the prize?
4. Does the use of the words 'false impression' in paragraph 31 impose some requirement additional to the requirement that the consumer pays money or incurs a cost in relation to claiming the prize, in order for the national court to find that the provisions of paragraph 31 have been contravened?
5. If so, how is the national court to determine whether such a 'false impression' has been created? In particular, is the national court required to consider the relative value of the prize as compared with the cost of claiming it in deciding whether a 'false impression' has been created? If so, should that 'relative value' be assessed by reference to:
a. the unit cost to the promoter in acquiring the prize; or
b. to the unit cost to the promoter in providing the prize to the consumer; or
c. to the value that the consumer may attribute to the prize by reference to an assessment of the 'market value' of an equivalent item for purchase?
Lord Justice Jackson
Lord Justice Munby