Unfair business practices (also Unfair Commercial Practices ) describes a set of practices by businesses which are considered unfair, and which may be unlawful. It includes practices which are covered by other areas of law, such as fraud , misrepresentation , and oppressive or unconscionable contract terms. Protections may be afforded to business-to-business dealings, or may be limited to those dealing as consumers . Regulation of such practices is a departure from traditional views of freedom to agree on contractual terms, summed up in the 1804 French Civil Code as qui dit contractuel dit juste (roughly, anything contractual is fair).
30-476: The Unfair Commercial Practices Directive 2005/29/EC regulates unfair business practices in EU law , as part of European consumer law . It requires corresponding laws to be passed that incorporate it into each member state's legal system. It is intended to provide a level playing field in the single market , reducing trade barriers. The Directive is concerned mainly with the "substantive" law (meaning in this context
60-575: A business-to-consumer transaction has taken place. In the United States, the Federal Trade Commission addresses unfair business practices. It has in the past included in its mission the goal of preventing "fraud, deception, and unfair business practices in the marketplace". It does so by "collecting reports from consumers and conducting investigations, suing companies and people that break the law, developing rules to maintain
90-468: A case in which an automobile dealer mis-sold cars, based on allegations of false claims, representing goods as new or unused when they weren't, and using exaggeration, innuendo, or ambiguity when representing material facts. Other Canadian provinces have laws headed Unfair Trade Practices Act (Alberta), "Trade Practices Act" (B.C.), "Business Practices Act" (Ontario), Consumer Protection Act (Quebec) , and Trade Practices Inquiry Act (Manitoba). Under
120-677: A fair marketplace, and educating consumers and businesses about their responsibilities". Individual states within the U.S. are also responsible for protecting consumers against unfair practices. In the United Kingdom unfair business practices are Unfair terms in English contract law by the Unfair Contract Terms Act 1977 , Consumer Rights Act 2015 and Consumer Protection from Unfair Trading Regulations . In Australia unfair business practices are regulated under
150-425: A major consumers' organisation could seek to argue during enforcement proceedings that compliance with the code of conduct is therefore evidence that they have not engaged in unfair commercial practices. Those charged with promoting and administering membership of codes of conduct will take note that Article 11(1) in effect contemplates the possibility of class-actions brought by consumer groups against code-owners where
180-506: A major review of the operation of the Directive by 12 June 2011 (Article 18). Unfair business practices Canadian provinces enact their own consumer protection laws which differ in scope and coverage. For example, Saskatchewan's Consumer Protection Act says: It is an unfair practice for a supplier, in a transaction or proposed transaction involving goods or services, to: (a) do or say anything, or fail to do or say anything, if as
210-480: A result a consumer might reasonably be deceived or misled; (b) make a false claim; (c) take advantage of a consumer if the person knows or should reasonably be expected to know that the consumer: (i) is not in a position to protect his or her own interests; or (ii) is not reasonably able to understand the nature of the transaction or proposed transaction. For example, the Saskatchewan Act has been applied to
240-539: A sufficient and standardised level of protection, regardless of where they choose to make purchases. The Directive is designed to achieve so-called maximum harmonisation of business-to-consumer fair trade. Maximum harmonisation requires member states of the European Union to apply the standards set out in European legislation, and prohibits those states from applying lower or higher standards. In other words,
270-486: A summary setting out the background to the consultation and inviting views on the draft guidance for the CMA. The first stage of the consultation ended on 6 September 2013. On 17 September, BIS announced the second consultation stage, which closed on 7 November 2013. During 2013 and 2014, the CMA announced several waves of appointments at the director level, reporting to members of the senior executive team. On 28 March 2014,
300-645: Is likely to mislead or deceive." This legal term article is a stub . You can help Misplaced Pages by expanding it . Competition and Markets Authority The Competition and Markets Authority ( CMA ) is the principal competition regulator in the United Kingdom . It is a non-ministerial government department in the United Kingdom, responsible for strengthening business competition and preventing and reducing anti-competitive activities. The CMA launched in shadow form on 1 October 2013 and began operating fully on 1 April 2014, when it assumed many of
330-609: The Australian Consumer Law which is enforced by the Australian Competition & Consumer Commission (ACCC). For example, in 2023 the ACCC took action against airline Qantas for, among other things, advertising and allowing customers to book unavailable flights. The law provides, among other things, that "A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or
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#1732765680738360-543: The Enterprise and Regulatory Reform Act 2013 , which received royal assent on 25 April 2013. In July 2012, Lord Currie was appointed chairman designate of the CMA, and in January 2013, Alex Chisholm was appointed Chief Executive designate. The term 'designate' was dropped when the CMA was launched on 1 October 2013. On 15 July 2013, BIS announced the first stage of an open public consultation period and published
390-706: The Federal Trade Commission , is a globally important antitrust agency. On 15 March 2012, the UK Government 's Department for Business, Innovation and Skills (BIS) announced proposals for strengthening competition in the UK by merging the Office of Fair Trading and the Competition Commission to create a new single Competition and Markets Authority (CMA). The formation of the CMA was enacted in Part 3 of
420-701: The Unfair Commercial Practices Directive 2005 (amended 2017) each member state is required to regulate unfair business practices. As the EU described its objectives: The objective of the EU Directive on unfair commercial practices from 2005 was to boost consumer confidence and make it easier for businesses, especially small and medium-sized enterprises, to trade across borders. It is the overarching EU legislation regulating unfair commercial practices that occur before, during and after
450-420: The 20th recital states: "It is appropriate to provide a role for codes of conduct ... In sectors where there are specific mandatory requirements ... these will also provide evidence as to the requirements of professional diligence in that sector. ... consumers' organisations could be informed and involved in the drafting of codes of conduct." Subscribers to a code of conduct drafted with the input of and endorsed by
480-564: The CMA published the Rules of Procedure for CMA merger, market, and special reference groups following a consultation from 21 February to 18 March. On 12 August 2019, the CMA's London office moved to The Cabot, 25 Cabot Square, in London's Canary Wharf area. In 2021, the CMA announced that it would establish branch offices in Manchester and Darlington . The Manchester office would house
510-704: The Digital Markets Unit, charged with "oversee[ing] a new regulatory regime for the most powerful digital firms", forming a 'Digital Hub' with the Digital Regulation Co-operation Forum. The Darlington office, part of the UK Government's Darlington Economic Campus, would be home to the Microeconomics Unit, in charge of the economic research and evaluation functions of the CMA, including production of
540-594: The Directive is expressly "without prejudice to contract law and, in particular, to the rules on the validity, formation or effect of a contract" (see also the 9th recital to the Directive). It does not seek to harmonise unfair competition law regulating "...commercial practices which, although not harming consumers, may hurt competitors and business customers" (8th recital to the Directive). Article 5(1) says that "unfair commercial practices" are prohibited, and under article 5(2)(a) these are practices that are "contrary to
570-431: The Directive sets out a list of "commercial practices that are, in all circumstances, considered unfair" (a black-list of bad behaviour). These are divided into "misleading commercial practices" (23 examples) and "aggressive commercial practices" (8 examples). On a literal reading of the Directive, misleading or aggressive commercial practices that would not affect the average consumer's economic behaviour, but would distort
600-402: The Directive tells European countries to give consumers no more and no less than the level of protection set out in the Directive. That maximum harmonisation is not yet in force. The Directive starts with a general prohibition on unfair business-to-consumer commercial practices (Articles 3(1) and 5(1)) and then goes into progressively greater detail defining what that means. Article 3(2) states
630-554: The UK Government supports its interpretation with reference to the European Commission's Explanatory Memorandum. This could be important because depending on the answer to this question it may be easier or harder to pin down a breach of the Directive. The rules referred to in the actual text of the Directive in relation to codes of conduct are quite limited (e.g. Article 6(2)(b), prohibiting non-compliance with codes of conduct in some circumstances, and Article 10). However,
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#1732765680738660-645: The code promotes non-compliance with legal requirements. Taken together, these provisions may be an incentive for those who administer and promote codes of conduct to consult with consumers' groups and take careful legal advice in relation to the drafting of such codes. Chapter 3 envisages a role for businesses in the industry to draft codes of conduct about practices among their competitors. Chapter 4 requires that member states have, under article 11, "adequate and effective means exist to combat unfair commercial practices". This includes ensuring that consumer groups have standing to take representative legal action on behalf of
690-427: The consumer protection laws are different among the various member states (see Article 1 of the Directive and the recitals to it). The Directive is supposed to reduce these differences while establishing a required level of consumer protection across all member states. This is expected to benefit both business and consumers, as businesses receive a more standardised legal system under which to operate and consumers receive
720-479: The economic behaviour of particular kinds of consumer, may be prohibited only by the general clause in Articles 5(1) to 5(3), and not by the specific clauses in Articles 6 to 9. This is because the latter provisions refer exclusively to the "average consumer" (although Article 9(c) also refers to the "exploitation of any specific misfortune or circumstance of such gravity as to impair the consumer's judgement, of which
750-613: The functions of the previously existing Competition Commission and Office of Fair Trading , which were abolished. The CMA also has consumer protection responsibilities and take on new digital markets regulation responsibilities in late 2024 under the Digital Markets, Competition and Consumers Act 2024 . The CMA alongside the European Commission , the United States Department of Justice and
780-446: The member states to pass laws by no later than 12 June 2007 incorporating it into their own internal national law by 12 December 2007. However, until at least 12 June 2013, Member States will continue to be able to apply more protective national rules diverging from European directives insofar as it is necessary and proportionate to do so (Article 3(5)), meaning that maximum harmonisation may not be complete before that date. There will be
810-545: The people whose interests they represent, or make complaints to the consumer authorities. Article 11(2) requires that public authorities exist (for instance, the Competition and Markets Authority or the Bundesamt für Verbraucherschutz und Lebensmittelsicherheit ). Article 11(3) requires that they should be impartial in fulfilling their role of protecting consumers against unfair business practices. The Directive required
840-655: The requirements of professional diligence" (see further Article 2(h)) and that are likely to materially distort the economic behaviour of the average consumer (Article 5(2)(b)). The effect of commercial practices on particular kinds of consumers, especially those who are unusually vulnerable, can replace the "average consumer" test if the practices are directed at those kinds of consumers or will foreseeably affect them (Articles 5(2)(b) and 5(3)). The Directive describes two major categories of unfair commercial practices:- those that are misleading (Articles 5(4)(a), 6 and 7) and those that are aggressive (Articles 5(4)(b), 8 and 9). Annex 1 to
870-402: The standards of behaviour required of traders). To some extent, it leaves to member states the choice of appropriate domestic enforcement procedures and penalties for non-compliance (Articles 11 to 13 of the Directive). The recitals state the objective of the Directive to reduce barriers to free trade in the EU while simultaneously ensuring a high level of consumer protection . At issue was that
900-469: The trader is aware..."). However, it might be fairer to read Articles 5(2)(b) and 5(3) as supplanting the references to the "average consumer" in Articles 6 to 9 in appropriate cases. The UK Government's Department of Trade and Industry published a consultation paper in December 2005, which suggested that that was indeed the intention. There is no clear basis in the text for the favoured interpretation, but
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