EU: Jump on board the Omnibus (Directive)

E-commerce is indispensable. Two years of pandemic have shown us the advantages and disadvantages of distance selling. Our EU legislator might have seen this boom coming: already in 2019, the "New Deal for Consumers" was sealed. Among other things, this initiative consists of the so-called Omnibus Directive¹ 2019/2161, which EU Member States should have adopted by 28 May 2022. The Omnibus Directive aims at better enforcement rules and a modernisation of EU consumer protection laws as well as increased transparency. Consumers should be better informed about dynamic pricing, the parameters used by providers of online marketplaces to rank products and sellers on their platform as well as whether and how businesses ensure that product reviews originate from customers who have actually used or purchased the respective product.

The Omnibus Directive amends four (existing) EU Directives:

• Consumer Rights Directive (2011/83/EU)
• Directive on unfair terms in consumer contracts (93/13/EEC)
• Directive on consumer protection in the indication of the prices of products offered to consumers (98/6/EC)
• Unfair Commercial Practices Directive (2005/29/59 EC)

1. Still envisaged implementation in Austria

1.1 Key amendments to the FAGG and KSchG

Austria is a little behind schedule with the implementation of these new rules, but just published the government bill (Regierungsvorlage) on 15 June. The "Modernisation Directive Implementation Act", aka MoRuG I, amends the Austrian Distance Selling Act (FAGG) and the Consumer Protection Act (KSchG) and specifically demands more transparency. Naturally, all information needs to be provided to the consumer upfront (i.e. asap, in any case before the contract is concluded) and in a clear, comprehensible and transparent manner.

The key amendments include:

• The extension of the scope of application to contracts where the business supplies digital content, and the consumer provides personal data as consideration instead of money (unless the digital content is provided on a tangible medium or the data is only needed for the provision of the digital service).
• The harmonisation of consumer rights in respect of physical and digital goods and services and with this, new definitions (such as "digital services", "digital content", "personal data", "online marketplace", "online marketplace provider", "compatibility", "functionality" or "interoperability").
• Further obligations to provide information, e.g. the obligation to provide a telephone number and an e-mail address at which the consumer can quickly contact the business without any particular effort.
• Businesses will be obliged to indicate where the price of a particular good or service has been altered for a consumer based on automated decision-making ("dynamic pricing").
• With respect to providing digital content, the business has specific rights and obligations in case the consumer withdraws from such contracts.
• Online marketplaces must comply with additional information obligations, such as the obligation to provide background information on the seller of the good/service by indicating whether a specific seller is a "professional trader" (and is therefore within the ambit of the consumer protection legislation) or a private individual.
• The introduction of GDPR-style penalties for infringements of consumer rights under specific circumstances.

1.2. Key amendments to the UWG and PrAG

The second "Modernisation Directive Implementation Act", aka MoRuG II, amends the Austrian Unfair Competition Act (UWG) and the Price Labelling Act (PrAG).

• In particular, those amendments contain provisions that oblige providers of online marketplaces to disclose the parameters determining the order of rankings (e.g. search results) and customer reviews on their platforms.
• Additionally, the new provisions of the UWG clarify that marketing a product as identical in several Member States despite significant differences in its composition or characteristics (dual quality) under certain circumstances may be considered misleading commercial practice.
• The resale of event tickets (for concerts, sports events, etc.) to consumers is prohibited if the business has purchased those tickets using "bots" (i.e. automated procedures designed to circumvent dispensing restrictions on the number of tickets per person or other rules such as waiting lists). The provision, which extends the UWG catalogue of per-se prohibited commercial practices, is intended to prevent tickets sold online from being withdrawn from the market at large scale shortly after the start of sales and resold at inflated prices.
• The amendment to the PrAG demands a higher level of price transparency for discounts advertised. When a discount on a product is communicated to the consumer, the business will be required to also indicate the lowest price charged for the respective product within 30 days prior to advertising the discount.
• For obvious and widespread violations, companies may even face fines (up to 4 % of annual turnover).
• Finally, a gamechanger introduced by the Omnibus Directive: consumers will be empowered to pursue compensation for damages if they are harmed by certain unfair commercial practices.

As a novel regulation, the Omnibus Directive will create a new level of organisational obligations. Platform operators, but also companies operating on such platforms, will be held more accountable, especially with respect to transparency on rankings and pricing. Thus, the jungle of regulations just became a little denser.

¹ DIRECTIVE (EU) 2019/2161 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council on better enforcement and modernisation of Union consumer protection laws

authors: Veronika Wolfbauer and Michael Woller