In Cases
C-54/17 Autorità Garante della
Concorrenza e del Mercato (‘AGCM’) v Wind Tre SpA and C-55/17, AGCM v Vodafone Italia Spa, the
CJEU has ruled that, where a SIM card is sold with embedded services loaded and
activated which may require the user to pay fees and the consumer has not been
sufficiently informed about that potential liability, the seller may have
engaged in an unfair commercial practice. Such conduct constitutes, in
particular, ‘inertia selling’, which may be penalised by a national authority
other than the authority provided for by EU law on electronic communications.
The SIM card providers had alleged that the action could not be brought by the
competition authority but was a matter for the Italian communications
regulator.
Background
In 2012, Autorità Garante della Concorrenza e del Mercato
(the Italian competition authority) imposed penalties on the companies Wind
Telecomunicazioni (now Wind Tre) and Vodafone Omnitel (now Vodafone Italia) for
selling SIM (Subscriber Identity Module) 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 user did not
expressly ask for them to be deactivated. AGCM accused the two companies of not
having sufficiently informed the consumers of the fact that those services had
been pre-loaded and pre-activated and that they could incur charges. The
internet browsing service could even result in connections without the user’s
knowledge, inter alia by means of ‘always on’ applications.
The Tribunale amministrativo regionale per il Lazio
(Regional Administrative Court, Lazio, Italy), before which Wind Tre and
Vodafone Italia brought proceedings, annulled the AGCM’s decisions stating that
such sanctions fell within the competence of another authority, the Autorità
per le Garanzie nelle Comunicazioni (the Communications Regulator, Italy;
‘AGCom’).
Hearing the cases on appeal, the Consiglio di Stato (Council
of State, Italy) referred some preliminary questions to its Plenary. By
judgments delivered in 2016 the Plenary stated that, under Italian law, the
competence to sanction a mere infringement of information obligations in the
electronics communication sector lay with the AGCom, while penalising a
‘commercial practice that is in all circumstances considered aggressive’ (such
as, inter alia, ‘inertia selling’) fell within the AGCM’s competence, even in
the electronic communications sector.
The Consiglio di Stato questions, however, whether the
interpretation given by the Plenary is compatible with EU law. It therefore
decided to refer for a preliminary ruling questions on the interpretation,
first, of the Unfair Commercial Practices Directive (the objective of which is
to achieve a high level of consumer protection) and, second, of EU law on
electronic communications (more specifically the Framework Directive and the Universal Service Directive which aim to ensure the availability
throughout the EU of good-quality publicly available services through effective
competition and choice by giving the national regulatory authorities (‘NRAs’) —
in Italy the AGCom — the task of ensuring a high level of protection for
consumers in the specific sector of electronic communications). In particular,
the Consiglio di Stato asks the Court of Justice whether the conduct of the
telecommunications operators at issue can be characterised as ‘inertia selling’
or, more broadly, as ‘aggressive commercial practice’ within the meaning of the
Unfair Commercial Practices Directive, and whether EU law on electronic
communications precludes national legislation under which ‘inertia selling’ is
covered by the Unfair Commercial Practices Directive with the result that the
ARN is not competent to penalise such conduct.
Judgment
In its judgment of 13 September, the Court notes that for a
service to be solicited the consumer must have made a free choice. When 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 (which is for the national court to verify), it cannot be
considered that he freely chose the provision of those services. In that
regard, it is irrelevant that the use of the services in question required, in
certain cases, conscious action on the part of the consumer. Similarly, it is
irrelevant that the consumer could have had the services deactivated or
deactivated them himself, since he had not been informed of their existence.
The Court notes that, although it is for the national court
to establish the typical reaction of the average consumer, it is not clear that
the average buyer of a SIM card might be aware of the fact that it contains
pre-loaded and pre-activated services which can incur additional fees or of the
fact that applications or the device itself may connect to the internet without
his knowing, or that he is sufficiently technically capable of deactivating
those services or those automatic connections on his device.
The Court concludes from this that, subject to verifications
by the national court, conduct such as that of which the telecommunications
operators are accused constitutes ‘inertia selling’ and, therefore, according
to the Unfair Commercial Practices Directive, a practice — and more precisely
an aggressive practice — that is in all circumstances unfair.
In addition, the Court states that there is no conflict
between the Unfair Commercial Practices Directive and the Universal Service
Directive as regards the rights of end-users. The latter directive requires the
provider of services to include certain information in the contract while the
former directive contains rules regulating specific aspects of unfair
commercial practices, such as ‘inertia selling’. As a result, the Court
declares that EU law does not preclude national legislation under which
‘inertia selling’ must be assessed in the light of the provisions of the Unfair
Commercial Practices Directive with the result that, according to that
legislation, the ARN, within the meaning of the Framework Directive, is not
competent to penalise such conduct.
The full judgment is here.
