Skip to main content
SpringerLink
Log in

Behavioural Economics, Neuroscience, and the Unfair Commercial Practises Directive

  • Original Paper
  • Published:
Journal of Consumer Policy Aims and scope Submit manuscript

Abstract

This article suggests how and to what extent insights from behavioural economics and neuroscience may be used for the interpretation of the 2005 Unfair Commercial Practices Directive. These disciplines provide useful insight in how the average consumer’s decisions are influenced by commercial information and conducts. As the Directive focuses on whether a commercial practise distorts the economic behaviour of consumers, arguments for whether a particular commercial practise should be considered unfair may be found within these disciplines. It is important to bear in mind that the assessment that courts are to make is normative, and that behavioural economics and neuroscience is of a more descriptive nature. Thus these disciplines may not help draw the fine line between the legitimate influence of commercial activities and the illegal distortion of the average consumer’s behaviour. However, the average consumer test is at least in principle flexible enough to allow the inclusion of research within human decision-making in order to apply a more realistic average consumer than the “Homo Economicus” applied by the European Court of Justice.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. Consolidated Directive 2006/114, consolidating Directive 84/450 (misleading advertising) and amendments concerning Directive 97/55 (comparative advertising) and directive 2005/29 (unfair commercial practices).

  2. See Proposal for a European Parliament and Council Regulation, COM(2001) 546 final, 2001/0227 (COD).

  3. It should be mentioned that it would still be misleading to advertise a premium as a free gift, as premiums by definition come at a price. See also item 20 on Annex I to the 2005 Unfair Commercial Practices Directive.

  4. See article 2(1)(d), combined cases C-261/07 and C-299/07 (VTB-VAB NV v Total Belgium NV and Galatea BVBA v Sanoma Magazines Belgium NV, respectively), paragraph 49 and case C-304/08 (Zentrale zur Bekämpfung unlauteren Wettbewerbs eV v Plus Warenhandelsgesellschaft GmbH), paragraph 36.

  5. There are national and international traditions for taking social responsibility into account when evaluating marketing communication. In the International Chamber of Commerce’s advertising code, it is inter alia stated that marketing communication should not play on fear and superstition; see Article 4 of the 2006 ICC Consolidated Code on Advertising and Marketing Communication Practice.

  6. Article 6(1).

  7. Cases C-540/08 (Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co. KG v “Österreich”-Zeitungsverlag GmbH), C-304/08 (Zentrale zur Bekämpfung unlauteren Wettbewerbs eV v Plus Warenhandelsgesellschaft GmbH), C-261/07 (VTB-VAB NV v Total Belgium NV), and C-299/07 (Galatea BVBA v Sanoma Magazines Belgium NV).

  8. Guidance on the implementation/application of Directive 2005/29/EC on unfair commercial practices. Commission staff working document, SEC(2009) 1666 (3 December 2009).

  9. See also combined cases C-261/07 and C-299/07 (VTB-VAB NV v Total Belgium NV and Galatea BVBA v Sanoma Magazines Belgium NV, respectively), paragraph 56, and case C-304/08 (Zentrale zur Bekämpfung unlauteren Wettbewerbs e.V. v Plus Warenhandelsgesellschaft GmbH), paragraph 45.

  10. Article 5(2).

  11. Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM (2003) 356, 2003/0134/COD, see, e.g., paragraphs 52, 56, and 57.

  12. Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM (2003) 356, 2003/0134/COD, paragraph 53.

  13. Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM (2003) 356, 2003/0134/COD, paragraphs 72 and 74.

  14. Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM (2003) 356, 2003/0134/COD, paragraph 53.

  15. Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM (2003) 356, 2003/0134/COD, paragraph 55.

  16. Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM (2003) 356, 2003/0134/COD, paragraphs 37 and 54; “So incentives, such as the offer of free tea or coffee or free transport to their premises, would not qualify because the consumer has a free choice about whether to take advantage of the incentive or not.”

  17. Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM (2003) 356, 2003/0134/COD, p. 9.

  18. Item 6: “Making an invitation to purchase products at a specified price and then: (a) refusing to show the advertised item to consumers; or (b) refusing to take orders for it or deliver it within a reasonable time; or (c) demonstrating a defective sample of it, with the intention of promoting a different product (bait and switch).”

  19. Item 14: “Establishing, operating or promoting a pyramid promotional scheme where a consumer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products.”

  20. See, e.g., Case C-315/92 (Verband Sozialer Wettbewerb eV v. Clinique Labatories SNC and Estée Lauder Cosmetics GmbH) and Case C-210/96 (Gut Springheide GmbH v. Oberkreisdirektor des Kreises Steinfurt).

  21. See article 5(2)(b) and Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM (2003) 356, 2003/0134/COD, paragraph 51.

  22. “The average consumer test reflects the economists’ idealistic paradigm of a rational consumer in an efficient marketplace. This notion may be useful for economists’ calculations and projections, but departs from the unpredictable realities of individual human behaviour and is hardly an appropriate standard for legislative or judicial sanctions” (Incardona and Poncibò 2007, p. 39).

  23. Case C-239/02 (Douwe Egberts NV v Westrom Pharma NV, Christophe Souranis, and FICS-World BVBA), paragraph 54.

  24. Case C-465/98 (Verein gegen Unwesen in Handel und Gewerbe Köln eV v Adolf Darbo AG).

  25. Case C-470/93 (Verein gegen Unwesen in Handel und Gewerbe Köln e.V. v Mars GmbH), paragraph 24.

  26. Article 2(1)(b).

  27. Proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM (2003) 356, 2003/0134/COD, p. 21 (item 13).

  28. Cases C-470/93 (Verein gegen Unwesen in Handel und Gewerbe Köln e.V. v Mars GmbH), C-456/93 (Zentrale zur Bekämpfung unlauteren Wettbewerbs e.V. v Privatkellerei Franz Wilhelm Langguth Erben GmbH & Co. KG), C-315/92 (Verband Sozialer Wettbewerb e. V. v Clinique Laboratoires SNC et Estée Lauder Cosmetics GmbH), C-126/91 (Schutzverband gegen Unwesen in der Wirtschaft e.V. v Yves Rocher GmbH), C-238/89 (Pall Corp. v P. J. Dahlhausen & Co), and C-362/88 (GB-INNO-BM v Confédération du commerce luxembourgeois).

  29. E.g., Cases C-210/96 (Gut Springenheide GmbH and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt - Amt für Lebensmittelüberwachung), C-313/94 (F.lli Graffione SNC v Ditta Fransa.), C-373/90 (Criminal proceedings against X), C-203/90 (Erzeugergemeinschaft Gutshof-Ei GmbH v Stadt Bühl), and 94/82 (Criminal proceedings against De Kikvorsch Groothandel-Import-Export BV).

  30. Case C-210/96 (Gut Springheide GmbH v. Oberkreisdirektor des Kreises Steinfurt).

  31. Case C-210/96 (Gut Springheide GmbH v. Oberkreisdirektor des Kreises Steinfurt), paragraphs 32, 35 and 36. See also Case C-220/98 (Estée Lauder Cosmetics GmbH & Co. OHG v. Lancaster Group GmbH).

  32. Joint Practical Guide of the European Parliament, the Council, and the Commission for persons involved in the drafting of legislation within the Community institutions, paragraphs 1.1 and 10, respectively. See also Trzaskowski 2011.

  33. Case C-540/08 (Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co. KG v “Österreich”-Zeitungsverlag GmbH).

  34. Commission staff working document guidance on the implementation/application of Directive 2005/29/ec on unfair commercial practices, SEC(2009) 1666, 3 December 2009. See p. 32.

  35. See, e.g., Case C-356/04 (Lidl Belgium GmbH & Co. KG v Etablissementen Franz Colruyt NV), paragraph 78 with references.

  36. Article 5(3). See in general Howells et al. 2006, p. 111 ff.

  37. See recital 18 and proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive), COM (2003) 356, 2003/0134/COD, p. 8.

  38. Case C-220/98 (Estée Lauder Cosmetics GmbH & Co. ORG v Lancaster Group GmbH), paragraph 25.

  39. In a number of states, more general societal interests, such as discrimination, have also been included in marketing law. According to recital 7 of the Unfair Commercial Practices Directive, “it does not address legal requirements related to taste and decency which vary widely among the Member States.” See in general about this concept Howells et al. 2006, p 59. ff.

  40. Studies show that human brains by nature are wired to compare. See in general Ariely 2008, p. 16 ff.

  41. Gambling games exploit humane valuation and decision-making machinery, as humans are terrible at playing gambling games (see in general: Montague 2007a, b, p. 159).

  42. Article 7(2). See also item 11 on annex I which bans per se “using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer (advertorial).”

  43. Gambling games should not interest the Homo Economicus as used by the European Court of Justice as the average consumer.

  44. Cases C-540/08 (Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co. KG v “Österreich”-Zeitungsverlag GmbH), paragraph 47.

References

  • Ariely, D. (2008). Predictably irrational. New York: HarperCollins.

    Google Scholar 

  • Chorvat, T., & McCabe, K. (2005). Neuroeconomics and rationality. Chicago-Kent Law Review, 80, 101–121.

    Google Scholar 

  • Hoffman, D. A. (2006). The best puffery article ever. Iowa Law Review, 91, 1395–1448.

    Google Scholar 

  • Howells, G., Micklitz, H.-W., & Wilhelmsson, T. (2006). European fair trading law—The Unfair Commercial Practices Directive. Surrey: Ashgate.

    Google Scholar 

  • Incardona, R., & Poncibò, C. (2007). The average consumer, the Unfair Commercial Practices Directive, and the cognitive revolution. Journal of Consumer Policy, 30, 21–38.

    Article  Google Scholar 

  • Jacoby, J. (1984). Perspectives on information overload. Journal of Consumer Research, 10, 432–435.

    Article  Google Scholar 

  • Jolls, C., Sunstein, C. R., & Thaler, R. (1998). A behavioral approach to law and economics. Stanford Law Review, 50, 1471–1550.

    Article  Google Scholar 

  • Jones, B. D. (1999). Bounded rationality. Annual Review of Political Science, 1999(2), 297–321.

    Article  Google Scholar 

  • Kahneman, D. (2003). Maps of bounded rationality: Psychology for behavioral economics. The American Economic Review, 93, 1449–1475.

    Article  Google Scholar 

  • Malhotra, N. K. (1982). Information load and consumer decision making. Journal of Consumer Research, 8, 419–430.

    Article  Google Scholar 

  • Micklitz, H.-W. (2009a). Jack is out of the box—The efficient consumer-shopper. Tidskrift Utgiven av Juridiska Föreningen i Finland, 145(3), 417–436.

    Google Scholar 

  • Micklitz, H.-W. (2009b). The targeted full harmonisation approach: Looking behind the curtain. In G. Howells & R. Schulze (Eds.), Modernising and Harmonising Consumer Contract Law (pp. 47–86). Berlin, New York: Sellier de Gruyter.

    Chapter  Google Scholar 

  • Montague, R. (2007a). Your brain is (almost) perfect: How we make decisions. New York: Plume

  • Montague, R. (2007b). Neuroeconomics: A view from neuroscience. Functional Neurology, 22(4), 219–234.

    Google Scholar 

  • Posner, R. A. (1998). Rational choice, behavioral economics, and the law. Stanford Law Review, 50, 1551–1575.

    Article  Google Scholar 

  • Potts, G. F., Martin, L. E., Burton, P., & Montague, R. (2006). When things are better or worse than expected: The medial frontal cortex and the allocation of processing resources. Journal of Cognitive Neuroscience, 18, 1112–1119.

    Article  Google Scholar 

  • Ropeik, D. (2010). How risky is it really? Why our fears don’t always match the facts. Columbus: McGraw-Hill.

    Google Scholar 

  • Shiv, B., Carmon, Z., & Ariely, D. (2005). Placebo effects of marketing actions: Consumers may get what they pay for. Journal of Marketing Research, 42, 383–393.

    Article  Google Scholar 

  • Simon, H. A. (1955). A behavioral model of rational choice. The Quarterly Journal of Economics, 69, 99–118.

    Article  Google Scholar 

  • Thaler, R. H., & Sunstein, C. R (2008). Nudge. Improving decisions about health, wealth, and happiness. Ann Arbor: Caravan Books.

  • Trzaskowski, J. (2011). Towards a common European marketing law. EUI Working Paper, LAW 2010/21 (forthcoming).

  • Woolfolk, M. E., Castellan, W., & Brooks, C. I. (1983). Pepsi versus Coke: Labels, not tastes, prevail. Psychological Reports, 52, 185–186.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Law Department, Copenhagen Business School, Solbjerg Plads 3, 5C, 2000, Frederiksberg, Denmark

    Jan Trzaskowski

Authors
  1. Jan Trzaskowski
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Jan Trzaskowski.

Additional information

This article is based on a presentation by the author at the symposium on behavioural economics, consumer policy, and consumer law, held at the European University Institute, Florence, 25–26 June 2010.

Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practises in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC, and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (“Unfair Commercial Practices Directive”; text with EEA relevance).

Rights and permissions

Reprints and permissions

About this article

Cite this article

Trzaskowski, J. Behavioural Economics, Neuroscience, and the Unfair Commercial Practises Directive. J Consum Policy 34, 377–392 (2011). https://doi.org/10.1007/s10603-011-9169-2

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10603-011-9169-2

Keywords

Search

Navigation