New unfair competition legislation comes into force

Spain
On January 1 2010 Law 29/2009, which amends the legislation on unfair competition and misleading advertising, came into force. The new law transposes two EU directives into Spanish law: Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market, and Directive 2006/114/EC concerning misleading and comparative advertising.                                
 
The transposition of these directives into Spanish legislation has entailed the amendment of a number of acts - namely:

  • the Unfair Competition Act;
  • the General Advertising Act;
  • the General Consumer and User Defence Act; and
  • the Retail Trade Act.                                                        
The biggest change concerns the Unfair Competition Act, which came into force in 1991. It was the first single piece of legislation to regulate unfair competition in Spain. The act proved to be an effective measure against unfair commercial practices and gave rise to an abundant case law. 

Nevertheless, the act had to be amended in order to comply with Directive 2005/29/EC, which regulates the various practices falling within the scope of unfair competition. First, the general clause on the prohibition of unfair practices was redrafted. 'Unfair competition' is now defined as all conduct which clearly contravenes the requirements of good faith. The new provision clarifies that, in business-to-consumer relationships, a commercial practice shall be unfair if:

  • it is contrary to the requirements of professional diligence; and 
  • it is likely to distort materially, to a significant degree, the economic behaviour of the average consumer, or of the average member of the group that is being targeted by the commercial practice at issue.
Other important amendments include:

  • the redrafting of the definitions of several unfair commercial practices to reflect the contents of the directive; and
  • the introduction of new practices that are considered to be unfair. 
In that regard, the act introduces a new section on unfair commercial practices towards consumers or users. This section, which comprises 12 articles, sets out the practices that will be considered to be unfair under any circumstances due to their misleading or aggressive nature, pursuant to Annex 1 of Directive 2005/29/EC. These include:

  • misleading commercial practices giving rise to confusion among consumers;
  • bait advertising and other misleading advertising practices;
  • pyramid promotional schemes; and
  • aggressive practices such as coercion and harassment.
The act also includes a new section on codes of conduct. Such codes contribute to increasing consumer and user protection through the introduction of effective, extra-judicial dispute settlement systems, in compliance with the requirements established by EU legislation. The European Commission must be notified of the existence of such systems pursuant to the Council Resolution of 25 May 2000 on a Community-wide network of national bodies for the extra-judicial settlement of consumer disputes. Under the new section, consumers may bring actions against:

  • companies which have infringed the obligations imposed by a code of conduct to which they have adhered freely; and 
  • the parties responsible for the enforcement of the code.                                           
The General Advertising Act was also amended. The most important change involves the abrogation of the section on illegal and unfair advertising. This section proved to be redundant in practice in light of the Unfair Competition Act, as acts of unfair competition are often carried out through advertising. Moreover, there were discrepancies between the provisions of the Unfair Competition Act and those of the General Advertising Act, which resulted in legal uncertainty. Therefore, the legislature decided that the General Advertising Act should make express reference to the relevant rules of the Unfair Competition Act.                         
 
Finally, minor amendments were made to the General Consumer and User Defence Act, as well as the Retail Trade Act, to comply with the requirements set forth by the EU directives with respect to areas such as consumer information and sales promotions.     

Carlos Morán Medina, Elzaburu, Madrid

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