This article was published as part of the Logan & Partners and qLegal series, which showcased practical and helpful insights on a variety of legal topics. qLegal is a pro bono law clinic at Queen Mary University of London that works with entrepreneurs and start-up businesses.
France’s Implementation of the Omnibus Directive – Three Key Things e-Commerce Businesses Should Know.
If you are involved in e-Commerce in the EU, you have probably heard of the Omnibus Directive, which came into force on 7 January 2020. A “New Deal for eConsumers” the Omnibus Directive focuses on protection for e-Commerce consumers that was not covered in the earlier EU package of legislation on consumer protection.
Known officially as the new Enforcement and Modernisation Directive 2019/2161, the Directive applies to all B2C e-Commerce companies in the EU as well as to companies that provide digital services, goods, or content to consumers in the EU.
How the EU Member States implement the directive in their national legislation will have significant impact on the way you do business online.
As France currently holds the EU presidency and is one of the largest e-Commerce markets in Europe, this article will focus specifically on France’s implementation of the Omnibus Directive into law. In France, implementation took place through a transposition law (DADDUE law) passed on 3 December 2020, and an ordonnance (2021/1734), passed on 22 December 2021. Failure to comply with the new obligations will lead to significant economic sanctions, starting from 28 May 2022.
So, to help you prepare for the new regulations, we have highlighted three key changes in the French law: a new legal definition of online markets, specific price reduction rules and upcoming changes to strengthening sanctions for violating consumer interests.
Legal definition of online marketplaces
First, one of the most important legislative changes brought by the Omnibus Directive concerns the legal definition of online marketplaces. Article 1 of the French Consumer Code now states that an online marketplace is a “service coming from a software including a website, part of a website or an online application, controlled by a professional, that allows consumers to conclude distance contracts with either professionals or other consumers.”
Previously, French law lacked a concrete definition of ‘online marketplaces.’ This amendment ends any confusion on who is covered by the legal definition, making it easier to identify which businesses are online marketplaces and must comply with the applicable legal provisions.
New rules on price reduction
Another relevant change concerns the mandatory information that businesses need to provide on price reductions.
The new provisions state that any online announcement of a price reduction must show the lowest price charged by the trader in the thirty days prior. This means that online traders will need to apply the “was/now pricing” rule in every price reduction. The “was price” is defined as the lowest price used thirty days before the price reduction or, exceptionally, when there are several successive reductions, the lowest price applied before the first reduction. The now price is the current price of the item.
Online traders must ensure that the ‘was/now pricing’ is clear, precise, and unambiguous. Traders that don’t comply could face up to two years of imprisonment, and a fine up to €300,000 or up to 10% of their annual turnover.
These rules will not affect price reductions on highly perishable products, such as products which rapidly spoil, or price comparisons between a professional and its competitors on a given market.
You can find more information in Articles 2 and 3 of the 2021/1734 ordonnance in Article L 112-1-1 of the French Consumer Code.
In order to guarantee legal certainty and to ease the application of the Omnibus Directive, the European Commission issued a document on price reduction rules to be applied by Member States (Commission Notice – C/2021/9328), which you can consult for more information.
Sanctions for violation of consumer interest
Finally, any clause in a commercial contract (i.e., a contract involving a professional and a non-professional, usually a consumer) which a Court of Justice decision rules unfair must be declared void. Furthermore, according to the recently updated Article L 241-1-1 of the French Consumer Code and Article 8 of the transposition ordonnance, the responsible party can face a fine up to €15,000 for an individual and up to €75,000 for a legal entity.
In Article 4, the ordonnance also restates sanctions faced by businesses that fail to provide mandatory pre-contractual information, particularly regarding product conformity to the European Union standards. Fines can range from €3,000 to €15,000 for an individual and €15,000 to €75,000 for a legal entity (see Article L 131-1-1 of the French Consumer Code).
With Article 5, the ordonnance also establishes fines against businesses that use unfair commercial practices. If a legal decision rules that a practice is a significant infraction at the EU level, fines may go up to €300,000 or up to 4% of the company’s annual turnover.
As expected, both the transposition law and ordonnance closely follow the Omnibus Directive’s aim to better enforce and modernize European consumer protection rights and the guidelines of the European Commission. This is very welcome news for both e-commerce businesses and consumers.
How can Logan & Partners help?
Compliance with the new legislation requires a detailed assessment of the scope of new legislation, and an analysis of the measures put in place by the business in France and others EU Member States, if applicable. If you have any questions, please contact us as our e-commerce team can assist you with this and other matters.