Unfair Commercial Practices Directive, Chapter 2, Section 1, Article 7, 1. Unfair Commercial Practices Directive, Chapter 2, Section 1, Article 7, 4., (a)

Omitting to provide consumers with information on the specifics of a project in which this consumer invests, constitutes a misleading omission.

The plaintiff, a finance company, issued bonds to provide financing for the construction and operation of an oil mill and a biodiesel refinery. The project was financed by the issuing bonds at 50,000 Euros a piece, a mortgage loan, low-interest-bearing government loans and subsidies. The prospectus stated that the total financing needed for the project amounted to €72 million, of which €6 million was generated through the issuance of the bonds.

Further, it was established that the prospectus did not contain much information on the project itself and the way in which the financing resources would be invested.

The defendant argued that plaintiff did not provide consumers with essential information regarding the project they invested in and on how the invested money would be spent. Therefore, after extensive investigation, the defendant had imposed a periodic penalty payment upon the plaintiff for each day it did not comply with the defendant's request to provide clear and comprehensive information on the project and the financing resources. The defendant did not agree with the sanction imposed and brought the case before court.

 

The court shared the opinion of the defendant and ruled that the plaintiff substantially fails in providing essential information to the bondholders, which, in the court's opinion, can be regarded as average consumers within the sense of the UCP Directive.

The court recalled that the information obligation incumbent on a trader relates to information before, during and after the term of the agreement.

As a result, the court found that the plaintiff has breached its information obligation by omitting essential information, hence has breached the rules on misleading omissions.

 

Does omitting to provide consumers with information on the specifics of a project in which this consumer invests, constitute a misleading omission?

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The court dismissed the objections of the plaintiff and decided that the latter had to warn the consumers and provide them with the missing information within three days after the decision, subject to a penalty of €4,000 to €80,000 for each day the breach is continued after the three-day period.