Consumer action for damages against manufacturer under Unfair Competition Law possible

The, among lawyers long disputed question, whether consumers have a right to sue entrepreneurs for unfair trade practices, has now been decided by the Austrian Supreme court in favour of consumers.

Plaintiffs, two consumers, were stolen 60,000 EUR from a safe. This safe was advertised by the manufacturer with security level EN-1. This security level was a prerequisite for the coverage of the plaintiffs’ theft insurance. Once the insurance company refused payment, the plaintiffs learned that the safe did not in fact meet this security level reason.

Since the dealer from whom the plaintiffs had bought the safe no longer existed, they directly sued the manufacturer, which had advertised the safe incorrectly and thus misleadingly with security level EN-1.

The lower courts dismissed the action because the consumers were not entitled to sue under the UWG (the Unfair Competition Act).

The Supreme Court instead confirmed the consumer’s position to sue and set aside the judgements of the lower courts and ordered the court of first instance to make a new decision after supplementing the proceedings.

For entrepreneurs, it follows from this decision 4Ob49/21s of 16. 12. 2021 that they may be obliged to compensate consumers for their misleading statements directly. Conversely, it is easier for consumers to hold the manufacturer liable for false information.

Whether this will remain the case for long remains to be seen. If the current draft of the “Second Modernisation Directive Implementation Act – MoRUG II”, which is supposed to implement the Omnibus Directive, becomes law in its current form, liability could be limited to “obvious” violations of the UWG.

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