On november 25, 2008, the German Bundestag passed the Act on the Amendment of the Unfair Competition Act (UWG) (Bundestag Printed Paper 16/11107016). The Federal Council approved the Act on December 19, 2008. It was published in the Federal Law Gazette on December 29, 2008, and entered into force on January 1, 2009, without any transitional provisions. This new Act implements the Directive on Unfair Commercial Practices (UCPD) in Germany.
This results in a series of significant innovations across all areas of competition law.
Firstly, the term “act of competition” will henceforth be replaced by that of a “commercial practice.” The definition of “commercial practice” encompasses “any conduct by a person for the benefit of their own or another's undertaking before, during, or after a transaction, which is objectively connected with the promotion of the sale or procurement of goods or services, or with the conclusion or performance of a contract for goods or services.” Goods also include real estate, and services also include rights and obligations.
In contrast to the previous legal situation, this means that the provisions of the UWG now cover not only activities preceding a contract conclusion but also the contract conclusion itself, contract execution, and the rights of affected parties in enforcing post-contractual rights.
In the new version of § 3 UWG 2009, all unfair commercial practices are classified as unlawful if they are likely to appreciably affect the interests of competitors, consumers, or other market participants.
According to § 3 (3) UWG 2009, all commercial practices listed in the Annex to the UWG 2009 are always unlawful towards consumers.
The Annex to the Act lists 30 specific practices that are generally prohibited, even without an “appreciable effect.”
This so-called 'blacklist' imposes an almost absolute prohibition on a significant number of previously permissible or 'insignificant' minor cases. Of particular relevance for daily practice are items 5, 6, 7, 8, 11, 13, 18, 21, 27, and 28 of the 'blacklist', which is the annex to Section 3 of the UWG 2009.
Particular diligence is required in the planning, development, dissemination, and placement of all types of advertising, especially advertising directly targeting children.
Another significant innovation of the UWG is regulated in Section 5a of the UWG 2009 as 'misleading by omission'.
In the future, the violation of essential information duties under this new provision can constitute a misleading omission. Previously, businesses were already required to fulfill a range of information duties concerning their goods and service offerings.
The new labeling requirements include:
- the essential characteristics of the product,
- the identity and address of the business,
- the final price (or a simple calculation method) and all additional costs,
- payment, delivery, and performance terms
Originally, the provisions of the UCP Directive only applied to the relationship between businesses and consumers. Under the European Directive, no explicit provision was made for the relationship between businesses. As in other instances, the German legislator has gone beyond the scope of the Directive.
In the new UWG 2009, the concept of 'commercial practice' – the starting point for the application of the UWG – is not limited to the relationship between businesses and consumers.
The definition of terms in Section 2 No. 1 UWG 2009 and the description of the scope of application in Section 3 UWG 2009 contain no restrictions. Consequently, it follows that, according to the intent of the German legislator, these provisions are also intended to apply between businesses themselves. As no differentiation has been made in Section 4 No. 11 UWG 2009, the following significant innovation arises for practical application:
Section 4 Number 11 of the UWG 2009 states: 'unfairly acts, in particular, whoever …
violates a statutory provision which is also intended to regulate market conduct in the interest of market participants.'
With these statutory norms, provisions in general terms and conditions are for the first time directly covered by the UWG. Previously, jurisprudence was inconsistent and only referred to GTC clauses between businesses and consumers, but not to GTC clauses between businesses themselves. This implies that, through the new UWG, Sections 307-309 of the German Civil Code (BGB) are likely to be considered market conduct rules within the meaning of the UWG. The provisions of Sections 307 et seq. BGB thus generally serve to protect other market participants. The GTC provisions of the BGB are intended to protect the contracting parties of the user. It follows that the use of invalid General Terms and Conditions will, in the future, be readily classified as an unfair commercial practice.
Whether the use of invalid GTC clauses impacts demand decisions is irrelevant. It is highly questionable whether, with this relatively clear regulation, the previous jurisprudence, which differentiated between consumer and business GTCs, will be continued.
In any case, Section 4 Number 11 of the UWG 2009 means that businesses applying invalid GTCs to consumers can generally no longer argue that the so-called de minimis clause applies in their favor.
Even though some aspects regarding the application of UWG 2009 to GTCs between businesses will still need clarification through jurisprudence, it remains clear that the use of invalid GTCs in the commercial sector (B2B) can also constitute an unfair commercial practice under Section 4 Number 11 UWG 2009 in conjunction with Section 3 UWG 2009.
As a result of the UWG's new regulations, every business is strongly advised to review all general terms and conditions (sales terms, delivery terms, purchasing terms, warranty and guarantee terms, etc.) in every area of their company and adapt them to the changed legal situation.
A random check of general terms and conditions currently available online across various industries revealed a violation rate of almost 100% against the new UWG 2009 regulations within minutes.
Since the new law, according to the legislative proposal, came into force 'on the day after its promulgation' – i.e., without a transitional period – prompt action by businesses is required.
A significant number of novel cease and desist letters, accompanied by substantial costs for businesses, are to be expected.
At the end of this text, you will find for download the unofficial, yet complete text version of the UWG 2009, including the annex to Section 3 ('blacklist'), based on the previous wording and incorporating the version adopted by the Bundestag after deliberation by the Legal Affairs Committee, which formed the basis for the Bundesrat's decision on December 19, 2008. No further amendments were made by the legislator.
The version we provided in advance in December 2008 contains the complete legal text. The version published in the Federal Law Gazette, Year 2008, Part I, No. 64, page 2949, contains only the amendments to the law and is less suitable for daily practice.
We will report here regularly on the jurisprudence developing based on the UWG 2009.
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Copyright 2008 Goldberg Attorneys
Attorney-at-law Alexander Goldberg
Certified Specialist Lawyer for Intellectual Property Law
Specialist Lawyer for Information Technology Law (IT Law)
