Friedrich Mueller: misleading prize draw mailings

Office of Fair Trading (OFT) closed consumer enforcement case.

From:
Competition and Markets Authority
Published
1 April 2012
Case type:
Consumer enforcement
Case state:
Closed
Market sector:
Distribution and service industries
Outcome:
Consumer enforcement - court order
Opened:
1 February 2009
Closed:
1 April 2012

Case information

Case reference number:CRE-E/24531

Investigation into: WVD Direktverkauf GmbH, Volkertstraße 6-8, 1020 Vienna and R.T.C. Radio Television Communications Handels GmbH, Gölsdorfgasse 2/13, 1010 Vienna

Complainant: OFT own-initiative investigation

Issue

UK consumers were receiving unsolicited prize draw mailings under the names 'Friedrich Mueller'. The OFT were concerned that the mailings were potentially misleading in that they appeared to notify consumers of a major prize win and linked claiming the 'prize' to the making of a payment when in fact no purchase was necessary. In fact the small print appeared to reveal that recipients were merely being invited to participate in a prize draw with the majority of recipients likely to receive a prize which was not of the value stated and in some cases, recipients were unlikely to receive anything at all.

Relevant legislation

Directive 2005/29/EC on Unfair Commercial Practices and the Consumer Protection from Unfair Trading Regulations 2008

Summary of work

In July 2009 the OFT made a referral against WVD Direktverkauf GmbH (WVD) and R.T.C. Radio Television Communication Handels GmbH (RTC), the Austrian companies responsible for Friedrich Mueller mailings, to our Austrian counterparts, the Federal Competition Authority (FCA) under the EU Consumer Protection Co-operation Regulation (CPC Regulation).

The OFT considered Friedrich Mueller mailings to be misleading and in breach of the EU Unfair Commercial Practices Directive 2005/29/EC. In particular, we considered Friedrich Mueller mailings to be misleading as they appeared to notify UK consumers of a major prize win and linked claiming the prize, or receiving it more quickly, to the making of a payment when in fact no purchase was necessary.

The CPC Regulation, which came into force in January 2007, has established a network of public enforcement agencies in every EU member state to facilitate effective cross-border co-operation on infringements of consumer law. The aim of the CPC Regulation is to provide a formal mechanism which allows designated enforcement bodies to refer cases to their European counterparts for appropriate action. Under the CPC Regulation all member states have a duty to consider taking action to protect the collective interests of consumers when they are requested to do so.

An application for a cease and desist order was filed by the FCA in January 2010 along with an application for interim measures at the Vienna Commercial Court (Handelsgericht Wien).

A preliminary injunction was granted by the Commercial Court on 2 June 2010 whereby:

  • RTC and Alexander Ferrari (Managing Director) are not allowed to operate misleading lotteries of the kind of 'Award Confirmation', 'Final Prize Participation Information', '5-Prize-Lottery' or 'Express Prize Distribution' using the brand name 'Friedrich Mueller' or 'Legal Department Friedrich Mueller' to UK consumers, which give the false impression that the recipient has won or will win a specific prize or will gain - upon doing a particular act* - some prize or other benefit, when in fact recipients have been entered into a prize draw or the prize is shared among all respondents, or the prize is not of the value it is stated to be in the mailing or consumers get the misleading impression that to receive the prizes they have to make a payment.

    *for example, by responding to the mailings and sending off a processing fee or phoning a premium rate number

  • WVD and Gerhard Bruckberger (Managing Director) are not allowed to promote the organisation of lotteries in one of the four specific types described above by granting rights to use the brand names 'Friedrich Mueller' or 'Legal Department Friedrich Mueller'.

The companies and individuals appealed the decision but on 24 September 2010 the High Court in Vienna (Oberlandesgericht Wien) confirmed the preliminary injunction. Although the preliminary injunction is legally binding, it is only an interim measure and full proceedings still have to be decided. A court date for full proceedings has not yet been set.

Both WVD and RTC filed for bankruptcy in April 2011. Full proceedings for a cease and desist order have been stayed as a result. However, the preliminary injunction remains in force.

Published 1 April 2012