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Case Details

Case Details
National ID 2S-26
Member State Lithuania
Common Name link
Decision type Administrative decision, first degree
Decision date 04/11/2010
Court Competition Council of the Republic of Lithuania (Vilnius)
Subject
Plaintiff N/A
Defendant UAB “Tele2”
Keywords black list, economic behaviour, misleading advertising

Unfair Commercial Practices Directive, Chapter 1, Article 2, (d) Unfair Commercial Practices Directive, Annex I, 20.

Advertising products as “gratis”, whereas in reality the consumer has to conclude an agreement and, subsequently, pay monthly fees, constitutes a commercial practice which in all circumstances is considered unfair.
The defendant, a telecommunications operator, advertised its products through television, radio and internet. The advertisements included slogans stating “Many telephones for 0 Litas” and “Telephones cost 0 Litas”.

It was found out that this offer was valid only in cases where an additional subscription agreement was concluded for 24 months and, later on, a monthly telephone fee was paid.

 
The Competition Council first referred to misleading advertising regulation which provides that advertising shall be in all circumstances considered misleading if it falls within the blacklist of the unfair commercial practices. The Competition Council noted that it is not necessary to prove actual or likely impact on economic behaviour of consumers of unfair commercial practices falling within the blacklist.

Hence, in order to consider advertising misleading under the said provision, it is sufficient to prove that (i) information provided can be regarded as an advertisement, (ii) a company is a supplier of the advertisements, and (iii) such advertising falls within the blacklist of unfair commercial practices.

The Competition Council stated that the defendant’s advertising is also regarded as a commercial practice in terms of the unfair commercial practices regulation because it constitutes acts (advertising, marketing) directly connected with the promotion, sale or supply of a product to consumers.

It was noted that in cases where goods are advertised as “free” or “gratis”, a commercial practice will be considered unfair in all circumstances where the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item because otherwise the trader may create a false impression about itself, its good or services. It was noted that such assumption has been already confirmed in the case law of the Supreme Administrative Court of Lithuania and the European Commission’s Guidance on the implementation/application of the UCP Directive (3 December 2009 SEC(2009), 1666).

The Competition Council concluded that in this particular situation it is clear that a consumer willing to accept the advertised offer to buy the cell phone, will be made to conclude an agreement and have to pay monthly fees (i.e., a subscription fee and a telephone fee). These expenses cannot be regarded as unavoidable. Hence, the commercial practice of the defendant infringed the aforementioned principles.
Does advertising products as “gratis”, whereas in reality the consumer has to conclude an agreement and, subsequently, pay monthly fees, constitute a commercial practice which in all circumstances is considered unfair?
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A fine of LTL 7,000 (EUR 2,000) was imposed on the defendant.