High Court sides with the CMA on the meaning of consumer protection law

09 Nov 2018 | by Monckton Chambers

The High Court has held that, where a trader acts misleadingly during a test purchase by a local trading standards officer, it breaches consumer protection law, even if the officer is not acting as a consumer within the meaning of the relevant legislation: Warwickshire County Council v Halfords Autocentres Limited and Competition and Markets Authority [2018] EWHC 3007 (Admin).

In February 2017, a trading standards officer employed by Warwickshire County Council booked a vehicle in for a service at the Stratford-upon-Avon branch of Halfords. The vehicle deliberately had a number of faults and the booking was a “test purchase” designed to assess the quality of the service facility offered by Halfords. Without knowing that the customer was in fact a trading standards officer, Halfords purported to service the vehicle and charged the officer for a full service. However, when the vehicle was examined by the Council, it emerged that various faults had been neither rectified nor reported by Halfords.

The Council brought a prosecution against Halfords, alleging that it had committed an offence under the Consumer Protection from Unfair Trading Regulations 2008 by issuing an invoice which misleadingly claimed that a full service had been carried out when it had not. However, at the close of the prosecution case, the District Judge in the Magistrates Court accepted an application of no case to answer, holding that the officer was not a “consumer” for the purposes of the 2008 Regulations and that Halfords had not therefore engaged in a “commercial practice” within the meaning of those Regulations.

The Council appealed by way of case stated and, since the Judge’s interpretation threatened to undermine the operation of the 2008 Regulations to the detriment of consumers, the CMA intervened in the appeal.

In an important judgment issued on 9 November 2018, the Divisional Court (Lord Justice Hickinbottom and Mr Justice Jay) overturned the Judge’s ruling, accepting the CMA’s argument that, even if the officer was not a consumer (which the Court did not determine), the conduct engaged in by Halfords constituted a commercial practice on a proper construction of the 2008 Regulations. In reaching its conclusion, the Court drew upon the Unfair Commercial Practice Directive (2005/29/EC), from which the Regulations are derived, observing that the Directive sought to secure a “high level of consumer protection” and was therefore “broadly framed”. It accepted the CMA’s submission that the construction adopted by the Judge was liable to undermine the ability of the CMA and trading standards authorities to enforce consumer protection law through the use of test purchasing. The Court held in conclusion that a commercial practice for the purposes of the 2008 Regulations “may be constituted or derived from a test purchase made of a product (including a service) that is generally promoted and intended for purchase by consumers, even where the purchaser may not himself be a consumer”.

Ben Lask, who is Standing Counsel to the CMA, acted for the CMA. The full judgment can be read here.