This is the first time that the OFT has taken action under the Injunctions Directive of 1998, and highlights the fact that similar actions may be taken by other European regulatory authorities against UK companies – which may be of concern to e-commerce businesses.
The OFT took the action against Belgian company D Duchesne SA, which trades as TV Direct Distribution and Just 4 You, to stop the mail order company sending what the OFT considers to be misleading mailings to UK consumers, contrary to the 1984 Misleading Advertising Directive.
This provides protection against misleading and unacceptable comparative advertisements. In particular it states that an advertisement is misleading if it "in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic
behaviour or which, for those reasons, injures or is likely to injure a competitor."
In this case the direct mailings offer household goods. The OFT believes that they are misleading since they appear to notify UK consumers of a large prize win, typically £10,000. To receive the prize the consumer is asked to make a purchase from an accompanying catalogue. Inevitably, they are only entered into a prize draw and may not have won anything.
Following complaints, the Advertising Standards Authority adjudicated against TV Direct Distribution in July 2001 and formally referred the case to the OFT in June 2003. Hampshire Trading Standards Department also referred the case to the OFT.
The Injunctions Directive does not deal with the enforcement of one country's law in another country where that law would be completely unknown – which would be a major concern for e-commerce businesses; rather, it is limited to European-based consumer protection legislation.
The OFT requested that D Duchesne SA sign undertakings to stop sending misleading mailings to UK consumers, and to comply with the Belgian implementation of the Misleading Advertising Directive. When the demands were ignored, it made its first use of provisions under the Injunctions Directive that allow it to take action directly in another Member State.
This was brought into force in the UK through the Enterprise Act 2002. It gives the OFT, other general enforcers and designated enforcers which are public bodies, the power to take action against businesses in certain other European countries that are infringing certain European-based consumer protection legislation.
This includes Directives relating to misleading advertising, consumer credit, unfair terms in consumer contracts and timeshares.
When a business based in another EU country harms the collective interests of UK consumers in relation to these specific directives, the OFT will normally ask the relevant community enforcer to take enforcement action. However, the OFT is able to take action in other EU member states if no community enforcer can act.
The same rights are granted to these community enforcers in relation to UK businesses.