The matter at hand

P&C Düsseldorf and P&C Hamburg are two independent companies and are both clothing retailers under the company trade name ‘Peek & Cloppenburg’. An agreement between those two companies provides for them to divide the German market into two economic areas and that each of them is to operate clothing outlets in one of those two areas. Each company promotes its clothing businesses separately and independently.

This case involves an advertisement that P&C Düsseldorf published in a German fashion magazine. It concerned a double-page article in Grazia, which invited readers to an evening of private sales under the title ‘Grazia StyleNight by Peek & Cloppenburg’. The event was organized by Grazia and P&C Düsseldorf together and both parties benefitted from the event. The article displayed several photographs of goods to be sold on the night of the event, which photographs were provided by P&C Düsseldorf free of charge. The content clarified that there existed two companies with the trade name Peek & Cloppenburg and that the advertisement was from P&C Düsseldorf.  

P&C Hamburg brought an action before the Landgericht Hamburg (Regional Court, Hamburg, Germany) seeking for an injunction to prohibit P&C Düsseldorf from publishing advertisements which are not clearly identifiable as such, and compensation for the damages that P&C Hamburg claimed to have suffered by the advertising campaign. In support of that action, P&C Hamburg argued that the advertisement was contrary to the prohibition of editorial content as provided in point 11 of annex I to 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.

Both the Landgericht Hamburg (Regional Court, Hamburg) and the Oberlandesgericht Hamburg (Higher Regional Court, Hamburg, Germany) upheld P&C Hamburg’s claim. The referring court, having doubts as to whether the agreement between Grazia and P&C Düsseldorf falls withing the scope of  ‘unauthorised editorial content’, asked the ECJ, in essence, “whether the first sentence of point 11 of Annex I to 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 must be interpreted as meaning that the condition of payment laid down in that provision encompasses any form of service and any economic advantage provided by the trader for the purposes of publication of an article and, if so, whether such a service must be provided as consideration for that publication” (paragraph 27).

The judgment of the ECJ

The ECJ confirms that the publication in question is indeed a commercial practice within the meaning 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, since it concerns the announcement of an advertising campaign which was part of P&C Düsseldorf’s commercial strategy for the sale of clothing and customer loyalty. The fact that there is a cooperation with a media company (Grazia) and that the advertising campaign also aims to sell its products does not affect this conclusion (paragraph 32).

Furthermore, the ECJ reiterates that the goal 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 protection for consumers, particularly in terms of addressing the frequent information asymmetries between consumers and traders (paragraph 39). Point 11 of Annex I 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 concretises this aim, because it is to ensure consumer protection and consumer confidence in the neutrality of the press. It requires companies to clearly inform consumers that they have exerted an influence on the publication, in their commercial interests.

Pursuant to this premise, the ECJ states that “It follows that the first sentence of point 11 of Annex I to Directive 2005/29 was designed, inter alia, to guarantee that any publication over which the trader concerned has exercised influence in its commercial interests is indicated clearly and is understood as such by the consumer. In that context, the specific form of financing” (paragraph 41). In this context, the ECJ joins the opinion of the Advocate General that the effectiveness of point 11 of Annex I 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 would be undermined if the term “payment” would refer exclusively to the transfer of a sum of money (paragraph 42).

In addition, the ECJ states that it is important to establish an unmistakable link between the material benefit (“payment”) provided and the editorial content of the publication (paragraph 45). The ECJ concludes that this is the case for the advertisement of P&C Düsseldorf, as “the provision, free of charge, by the trader in question to the company acting as media operator, of images protected by copyright may constitute direct payment for that publication, in so far as those images represented views of the premises and of the products offered for sale by that trader in the advertising campaign in question. That provision has an asset value and is intended to promote the trader’s product sales.” (paragraph 46).

The ECJ, therefore, answers the question as follows: “the first sentence of point 11 of Annex I to Directive 2005/29 must be interpreted as meaning that the promotion of a product by the publication of editorial content is ‘paid for’ by a trader, within the meaning of that provision, in the case where that trader provides consideration with an asset value for that publication, whether in the form of payment of a sum of money or in any other form, provided that there is a definite link between the payment thus made by that trader and that publication. That will, inter alia, be the case where that trader makes available, free of charge, images protected by copyright on which are visible the commercial premises and products which it offers for sale” (paragraph 49).