enforcement

How much are you willing to give up for Facebook?

Author-tabTechnolawgie-tab

NetworkThe Federal Cartel Office (‘FCO’) of Germany has preliminarily found that Facebook’s Terms of Service are violating competition law. The Office is concerned about the amount of personal data that internet users are expected to give up, just to be on the social media platform.

Let’s be honest. You probably didn’t read Facebook’s Terms of Service when you signed up for the platform. And why should you? As a consumer, you expect that if a company doesn’t behave according to what’s acceptable, a rival will eat them alive. That’s certainly true in most cases, but social media platforms are a bit special. The peculiarity of social media stems from the fact that users can become locked into using them because other people use them too. If you’re not happy with the Facebook Terms of Service, you can’t just simply jump ship. What about all your friends?! For this reason, the German Office examined whether Facebook abused its dominant position through that ‘I agree with the Terms of Service’ checkbox.

Ariel_signing_Ursula's_contract

Protecting competition on the internet is complex. That’s because online services like Facebook are rarely offered in return for cash. Data is the internet’s preferred payment method. To get Facebook, you have to give up information about you so that ads that appear on your screen can pay for your Facebook ‘subscription’. So the ads for postgraduate degrees on your feed shouldn’t really surprise you a week after you postedDATA-Money.png a picture of you throwing that hat up in the air. Why, then, is the FCO worried about the fact that Facebook is collecting your data? Well, they don’t really mind about all that data that you’re willingly giving on the Facebook website itself. They worry about all the data that is being collected when you visit other websites that have Facebook add-ons.

When you visit a website, any website, that uses Facebook add-ons like the ‘Facebook like’ button or the ‘Login with Facebook’ button, Facebook collects data about your actions on that website. They then take that data and merge it with your Facebook profile. That’s why Facebook knows much more about you than what you occasionally post on your wall. Ever wonder why Facebook knows you’ve been looking for a new backpack a minute ago? The website you’ve been scrolling through might be using Facebook Analytics. Facebook doesn’t have to ask for your consent to take that data from you. You gave them that consent when you ‘read’ those Terms of Service!

Add-on-pic

The German Cartel Office thinks that this data collection goes too far. The Office worries that, because accepting the Terms of Service of Facebook is a condition for creating an account and because Facebook has become such a dominant platform online, consumers have no real power to consent to the amount of data that they allow to be taken. As a result, Facebook offers a take-it-or-leave-it deal with no real option to leave. Put simply, in the eyes of the Federal Cartel Office, if data is the currency of the internet, Facebook is charging too much.

Facebook now has the opportunity to offer proposals that address the concerns of the FCO. For more information visit the website of the Bundeskartellamt.

What to do with a bad Apple

Author-tabTechnolawgie-tab

Apple admitted to slowing down older phones. Now it’s being sued in multiple courts and even investigated by governmental agencies. Find all you need to know and your options for compensation.

Apple_fullAfter a data analysis by benchmarking firm Primate Labs evidencing that the performance of iPhones was degraded through software updates, Apple finally admitted that this was the case. Apple stated that the manipulation of iPhones’ performance was in order to prevent unexpected shutdowns and to prolong the lifespan of the older phones that struggled with newer updates (iPhone models 6, 6S, SE and 7). The company suggests that performance issues can be addressed by replacing the battery. Apple has since slashed the pricing of its battery replacement service (from €89 to €29)  to enable consumers to restore the performance of their phones.

Lamp.pngThe scandal prompted debate over whether Apple was engaging in “planned obsolescence”. The practice is one where companies tweak their products to deliberately shorten their lifespan and to force users to purchase new ones. GE, Philips and a number of other lightbulb manufacturers conspired to do that in the 1920s to increase their sales. In France, Apple is already being taken to court under the “Hamon law” which explicitly targets planned obsolescence. Most interestingly, in Italy, the country’s antitrust agency (the AGCM) is investigating both Apple and Samsung on whether they have ‘reduce[d] the performance of their products over time… [to] induce consumers to purchase new versions of the same’.

SuperEUThe investigation of Apple and Samsung in Italy is especially interesting, since it has the potential of opening a whole new can of worms for the two companies. The investigation is concerned with potential violations of the rules on Unfair Commercial Practices (UCP). These rules come from EU legislation which is meant to protect consumers from common misleading or aggressive practices. They aim to enable consumers to be fully informed before making a transactional decision. The AGCM believes that because Apple and Samsung did not warn phone users about how their software updates will affect the performance of their phones, their omission has been potentially misleading and therefore illegal. The European Commission itself warned against planned obsolescence in its guidance for the UCP rules.

The Unfair Commercial Practices legislation has been implemented by all EU Member States. This means that Apple’s practices can be investigated in all the member countries. The legislation additionally gives affected consumers rights to claim compensation. Affected consumers can contact their competent agency with the following message:

Following reports about an alleged deliberate slowing of mobile phones through software updates by Apple, the Italian Autoritá Garante della Concorrenza e del Mercato (‘AGCM’), in its capacity as the enforcing authority of the Unfair Commercial Practices Directive (Directive 2005/29/EC) in Italy, has initiated an investigation to determine whether the practice has been misleading and/or aggressive. Will the company be investigated in our country? Regardless, could you kindly advise me of my legal options as an affected consumer under the law as implemented in our country?

The following table contains a list of all the relevant agencies in each Member State as well as brief information on the available methods of redress for consumers. While the most absolute care was taken when compiling the list, we would suggest visiting the dedicated website of the European Union to complement the information provided. The first column of the table contains links to the information sheet for each Member State (details about Croatia were not included in the EU database). ]

Member State

Agency

Contact Redress
Austria 🇦🇹 Verein für Konsumenteninformation mail@vki.at Affected consumers may file a claim for damages subject to the rules of Austrian tort law.
Belgium 🇧🇪 Algemene Directie Controle en Bemiddeling / Direction Générale du Controle et de la Médiation info.eco@economie.fgov.be Affected consumers may claim for damages subject to the general rules of Belgian tort law (art. 1382 of the Belgian Civil Code).
Bulgaria 🇧🇬 Комисия за защита на потребителите Electronic form Affected consumers may claim for damages subject to the general rules of Bulgarian tort law (art. 54 of the Bulgarian Obligations and Contracts Act). Collective claim is available.
Cyprus 🇨🇾 Υπηρεσία Προστασίας Καταναλωτή perm.sec@mcit.gov.cy Affected consumers may claim for damages through a civil action. Collective claim is available.
Czech Republic 🇨🇿 Česká Obchodní Inspekce podatelna@coi.cz A cease-and-desist action or a general claim for civil damages can be filed before the competent district court.
Denmark 🇩🇰 Forbrugerombudsmanden forbrugerombudsmanden@kfst.dk Affected consumers can get compensation by filing a civil lawsuit. Collective claim is available.
Estonia 🇪🇪 Tarbijakaitseamet  info@tarbijakaitseamet.ee Affected consumers may file a claim for compensation to civil court.
Finland 🇫🇮 Regional Administrative Office See here A complaint shall be made in writing and submitted to the Regional Administrative Office.
France 🇫🇷 DDPP To be found on the website depending on area The Court may award the plaintiff damages to compensate his or her direct and foreseeable losses.
Germany 🇩🇪 BVL poststelle@bvl.bund.de Consumers have to file a claim for civil damages in accordance with general principles of German tort law.
Greece 🇬🇷 Γενική Γραμματεία Καταναλωτή 1520@efpolis.gr It is possible to ask for damages as well as for any non-pecuniary losses. Collective claim is available.
Hungary 🇭🇺 GVH ugyfelszolgalat@gvh.hu Compensation available if damage was caused and this can be evidenced in court. Collective claim is available.
Ireland 🇮🇪 CCPC Electronic form An affected consumer may apply to a Court for damages (including exemplary). Collective claim is available.
Italy 🇮🇹 AGCM Electronic form Redress is possible by bringing court action. Collective claim is available (Article 140-bis Consumer Protection Code).
Latvia 🇱🇻 Patērētāju tiesību aizsardzības centru ptac@ptac.gov.lv Through civil proceedings the claimant may seek damages. Collective claim is available.
Lithuania 🇱🇹 VVTAT service@vvtat.lt The provisions of the Civil Code and the Code of Civil Procedure are applicable. Collective claim is available.
Luxembourg 🇱🇺 Ministère de l’Économie consommateurs@eco.etat.lu Affected consumers may claim damages in civil Courts subject to the general rules of tort law (article 1382 of the Civil code).
Malta 🇲🇹 MCCAA Electronic form The consumer may elect to submit an unresolved case to the Consumer Claims Tribunal.
Poland 🇵🇱 UOKIK uokik@uokik.gov.pl Affected consumers may claim damages according to general rules of Polish civil law.
Portugal 🇵🇹 ASAE correio.asae@asae.pt Affected consumers may claim redress in a civil damages claim under Article 483 of the Civil Code. Collective claim is available.
Romania 🇷🇴 ANPC cabinet@anpc.ro Consumers may file a claim for civil damages subject to the general rules of tort law. Collective claim is available.
Slovakia 🇸🇰 See here See here Affected consumers may get redress or compensation by a civil action lodging to the respective court.
Slovenia 🇸🇮 Tržni inšpektorat gp.tirs@gov.si Affected consumers may file a claim for civil damages subject to the general rules of tort law.
Spain 🇪🇸 Spanish administrations (national, regional and/or local) See here The Court can order the cessation in the infringing practice or/ and can award compensation for damages or unfair enrichment.
Sweden 🇸🇪 Konsumentverket konsumentverket@konsumentverket.se A trader who intentionally or negligently violates…a provision specifically specified in the Marketing Practices Act… shall compensate any consumer… for any damage suffered…
The Netherlands 🇳🇱 ACM Electronic form A rectification can be claimed (section 6:167 Civil Code), as well as damages (art. 6:162 Civil Code).
United Kingdom 🇬🇧 CMA general.enquiries@cma.gsi.gov.uk

The Regulations do not enable consumers or businesses to take action directly against traders, either as individuals or collectively so are unable to claim for compensation.

 

 

Luxury brands are… special

Author-tabTechnolawgie-tab

EU’s highest court decided that prestigious brands like Calvin Klein can refuse to have their products sold on online platforms like Amazon in order to preserve their ‘aura of luxury’.

What happened:

COTY, the company behind reputable brands like Chloé, Calvin Klein and Marc Jacobs, distributes its beauty products in Europe through regional distributors. One of its distributors in Germany – Parfümerie Akzente (‘Akzente’) – decided to sell COTY’s products through the German Amazon site (amazon.de). This was not permitted under the contract that COTY signed with Akzente. Their contract allowed Akzente to sell only on websites that preserved the luxury character of COTY’s products. Essentially, what companies like COTY are trying to do with such contracts, is to make sure that online shoppers still get the ‘luxury aura’ that their brands are known for when customers shop through an online shop. The presentation of a brand’s logo, font and colours are some of the details that these brands look out for on websites that sell their products. The effect of this provision in the contract meant that Akzente couldn’t sell COTY’s products on Amazon. This was because the Amazon website could not – according to COTY – preserve the luxury image of their brands.No_Amazon.png

The legal issue:

The question for the Court was whether contracts like the one signed by COTY and Akzente violated competition law. Contracts that restrict the freedom of a party can be very problematic for competition. Imagine a situation where a very successful company agrees with shops to sell only their product. If most of your country’s shops sold exclusively Microsoft tablets because of such agreements, competitors like Apple would find it very hard to reach customers and persuade them to buy their iPads. The contract between COTY and Akzente can be bad for competition in a similar way. By requiring that their products are sold on specific websites, COTY can tightly control competition online by refusing to sell to giants like Amazon and Ebay. This can result to high prices and lack of choice for consumers.

COTY+AkzenteThe decision:


Luxury2.pngThe Court of Justice decided that contracts like the one signed between COTY and Akzente can be allowed when they are intended to preserve the luxury image of a brand. According to the court, luxury brands are special because their quality is not only measured according to their material characteristics. Their ‘aura of luxury’ additionally ads to their quality. Consequently, agreements that are made to preserve this quality do not violate the rules of competition. So, in a situation where a luxury company makes agreements that dictate who qualifies to be their seller, if these agreements are designed to preserve its image and as long as these agreements are proportionate, uniformly laid down and non-discriminatorily applied; they are good to go.

 

How this impacts you:

The decision means that luxury brands can pull out their products from third-party online sellers like Amazon and Ebay. So, if you’re trying to treat yourself with a Marc Jacobs perfume for the holidays, you might need to rush for that ‘Proceed to Checkout’ button. Otherwise you might have to do your holiday shopping on the brand’s official website.
Note: The effect of the case might be obvious on brands that unmistakably have an ‘aura of luxury’. But it might be difficult to draw the boundaries of the luxury category in the future. Is NIKE a luxury brand? 

The first recorded antitrust trial?

Author-tabTechnolawgie-tab

LysiasIf greed is as old as human existence, then antitrust must be as well. There are no records of antitrust laws on Neanderthal cave paintings (or any that we’ve interpreted as such, at least), but the earliest documentation of an antitrust trial is much older than what one would maybe guess. The first written example of an antitrust case is described by an ancient Greek orator named Lysias. The facts of the illegal activity are quite remote and not really relatable to anyone now, but the description of the trial is interesting in observing how antitrust has always had a political side.

Lysias describes the trial of the grain dealers of Athens. Grain was a vital import for the Athenians. The soil in and surrounding Athens was very poor so it wasn’t possible for the Athenians to grow it themselves. Since grain was a necessary ingredient to produce bread, its trade was heavily regulated by the authorities of Athens. Fearing a long winter or possible attacks by Sparta, one of the grain commissioners suggested to the dealers not to compete when buying grain from the docks. Seeing a window of opportunity to make profits on the backs of the Athenians, the grain dealers bought large amounts of grain at the same price and stored it.

Wheat

Since none of the dealers were offering a different purchase price to the merchants at the docks, they created a monopsony. In this way, they fixed the price for wholesale wheat. Wholesale price-fixing is not unheard of in modern times. In fact, fixing of the wholesale prices of medicines for the benefit of citizens is a common practice by modern governments. The price-fixing was not problematic in and of itself. In fact, Lysias admits that the actions of the dealers might have been to the benefit of the Athenians up until that point. This is because storing grain would have secured that Athens would have enough of it in a time of crisis. This explains why the grain commissioner advised the dealers to collude in the first place. The action became problematic when the dealers hoarded the grain and sold it at inflated prices. Through these actions, Lysias explains, the dealers created a disincentive for ships to trade with Athens and they cheated the Athenian public.

Hoarding

The case is interesting just as historical trivia, but it’s also interesting as a chance to witness the political side of antitrust. Lysias doesn’t document the verdict of the trial. But in his speech he accuses the dealers of being ‘resident aliens’ of the city. He appeals to the emotion of the Athenians by saying:

‘…[the grain dealers] are so delighted to see your disasters that they get news of them in advance […] or [they] fabricate […] rumour themselves […] And thus at times, although there is peace, we are besieged by these men’

The story of Lysias is therefore a reminder to be cautious when enforcing antitrust. Because, in the hands of a populist, antitrust can escape the sphere of the legal and enter the realm of the political. 

Trump

Read more:

  1. Lambros E. Kotsiris, ‘An Antitrust Case in Ancient Greek Law’ (1988) 22 Int’l L. 451
  2. Wayne R. Dunham, ‘Cold Case Files: The Athenian Grain Merchants 386 B.C.’ (2007) Available at SSRN: https://ssrn.com/abstract=976028