On 19th October, the CJEU (Court of Justice of the European Union), issued a ruling in which, in general terms, the prohibition of selling at a loss that exists in the Spanish legal system is contrary to the regulations of the European Union.
The case was introduced when the Contentious-Administrative Court No. 4 of Murcia filed a request for a preliminary ruling in respect of Directive 2005/29/EC (hereinafter, the “Directive”) concerning the unfair business-to-consumer commercial practices in the internal market before the CJEU.
The request came from an administrative fine imposed against Europamur Alimentación, SA (hereinafter referred to as “EUROPAMUR”), a company that sold food and domestic products to supermarkets and small neighborhood stores that directly suffer from competition from large chain supermarkets. The fine was imposed by the General Department for Trade and Consumer Protection of the Region of Murcia, which deemed that EUROPAMUR had breached the prohibition of selling at a loss, that is to say, sales made at a price lower than their cost. This prohibition is contemplated in article 14 of the Law on Retail Commerce (hereinafter, the “LOCM”), which in turn establishes two exceptions: that those selling at a loss do so in order to meet competitors’ prices and thus affect their sales, or that the articles are perishable items if not used in the upcoming dates.
EUROPAMUR appealed the administrative fine alleging, among other reasons, that it was necessary for small businesses to be able to align their prices with competitors and that the sanctioned behavior did not cause any harm to consumers. In addition, the company argued that the sanction filed was contrary to EU legislation because the Directive on unfair commercial practices had been insufficiently transposed into the domestic legal order.
The Contentious-Administrative Court No. 4 of Murcia decided to suspend the procedure in order to request the CJEU to clarify whether the Directive concerning the unfair business-to-consumer commercial practices in the internal market should be interpreted as opposing national legislation, as in the case at issue in the main proceedings, which contains a general prohibition on offering goods or making sales at a loss and establishes exceptions to said prohibition based on criteria not contained in the Directive.
With regards to the purpose of the LOCM, it is worth noting that in the explanatory memorandum it is inferred that the purpose of the Law is to protect consumers. Furthermore, this purpose is imposed even in a situation such as that at issue in the main proceedings, which concerns sales concluded between wholesalers and small traders, because said sales have an impact on consumers.
Regarding as to whether the prohibition on selling at a loss is of a general nature within the meaning of the established case-law or the exceptions to said prohibition allow the national courts to determine if, taking into account the factual context of each case, the case in question of selling at a loss is “unfair” or not, in light of the European criteria on unfair commercial practices, it must be taken into account that the Directive announces criteria that allow circumstances to be determined in which a commercial practice must be considered unfair and, therefore, prohibited.
In this respect, the CJEU emphasizes that the Directive already carries out a complete harmonization of the rules related to unfair commercial practices of companies in their relationships with consumers and, thus, Member States cannot adopt more restrictive measures than those defined in said Directive, not even to guarantee a higher degree of consumer protection.
