Case law

  • Case Details
    • National ID: PS681
    • Member State: Italy
    • Common Name:"HERA - ADDEBITO PER ASSICURAZIONE"
    • Decision type: Administrative decision, first degree
    • Decision date: 01/12/2010
    • Court: Italian Competition Authority
    • Subject:
    • Plaintiff: Hera COMM S.r.l.
    • Defendant: Hera S.p.A.
    • Keywords: contract law, misleading omissions, price information
  • Directive Articles
    Unfair Commercial Practices Directive, Chapter 2, Section 1, Article 6, 1., (d) Unfair Commercial Practices Directive, Chapter 2, Section 1, Article 7, 4., (a)
  • Headnote
    (1) The omission by the trader to inform consumers on the retroactive application of a contractually agreed price increase, constitutes a misleading commercial practice.

    (2) The omission by the trader to inform the consumers that the conclusion of a separate agreement, subsidiary to the principal agreement, is optional, while binding the consumers to the optional agreement through the consent with the principal contract, constitutes a misleading practice.

     
  • Facts
    This case concerns misleading omissions by the defendant, a water supplier concluding contracts with consumers in tha Ravenna and Bologna area. The Italian Competition Authority decided to start the proceeding on 7 July 2010 further to two different claims.

    First, it was established that the defendant occasionally applied price increases. Although this was stipulated in the contract, the consumers were not clearly informed on the fact that these price increases were applied retroactively.

    Next, the defendant did not inform the consumers that by signing the agreement for water supply, the consumer equally consented (with their signature) to conclude an insurance policy, whereas the conclusion of such an insurance contract was in fact optional only.

     
  • Legal issue
    (1) The Authority stated that the omission to inform consumers of the fact that contractually agreed price increases are applied retroactively, constitutes a misleading commercial practice, as this omission causes or is likely to cause the consumer to take a transactional decision that he would not have taken otherwise.

    (2) The Italian Competition Authority first emphasizes that the defendant required the consumers only to place one signature. However, the consent of the consumer relates to separate services, i.e. the water supply service and an insurance service. By not clearly informing the consumers that they had the option whether or not to conclude the insurance service, the defendant has omitted to provide material information to the consumer. Consequently, the defendant induced the consumers to take a transactional decision that the consumer would not have taken otherwise.

     
  • Decision

    (1) Does the omission to inform consumers that agreed price increases will be applied retroactively, constitute a misleading commercial practice?

    (2) Does the omission to inform the consumers that the conclusion of a separate agreement, subsidiary to the principal agreement, is optional, while binding the consumers to the optional agreement through the consent with the principal contract, constitute a misleading practice?

     

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  • Result
     

    Based of the gravity and duration of the misleading practices, the Italian Competition Authority decided to fine the defendant and imposed the obligation to cease its unfair behaviors. The financial sanction amounted to 190.000 Euro.