The Unfair Commercial Practices Directive: A Law and Economics Perspective

Directive 2005/29 on unfair commercial practices constitutes an ambitious attempt at building a general regulatory framework for firm actions towards consumer in the marketplace. The declared objectives of the Directive, namely consumer protection and eliminating barriers for the internal market, do not seem to provide enough support for such an overreaching legal intervention. The paper explores whether other rationales can justify the new rules and critically examines the scope and the tools to determine unfairness in commercial practices.

From an efficiency perspective, Directive 2005/29, although not devoid of merit and interesting solutions, is lacking both in terms of over-optimism in regulating practices that differ widely across markets for a whole range of goods and services, and disregarding several factors that greatly affect the necessary cost-benefit analysis for the major regulatory options.