The German Federal Network Agency for Energy, Telecommunications, Post and Railway, has issued a record fine of €300,000 against an electricity supplier for systematic cold call advertising.

Violations of the German Unfair Competition Act (UWG) generally involve the risk of competitors seeking cease and desist orders, or consumers claiming compensation. The violation of Sec. 7 UWG can – additionally – lead the Federal Network Agency to impose heavy fines on violating businesses.

Legislation:

According to Sec. 7 (2) UWG; telephone calls to consumers for sales purposes are illegal if the calling company is not in possession of an explicit and effective declaration of consent by the consumer. If the call is made to another business, it is sufficient to prove presumptive consent.

Sec. 20 (1) UWG then deems violations of Sec. 7 UWG to be an administrative offence, – but only if the call in question was made to a consumer.

According to settled case law, the protection of privacy is of higher value than the caller’s interest to promote or sell his goods or services (Federal Court of Justice, GRUR 1970, 523; 1989, 753; 1990, 280). However, even though there is established case law  relating to “cold calls”, quite a few questions have not yet been answered by the highest courts in Germany. For instance, the scope of preliminary injunctions or other court rulings banning a company from conducting cold calls is still subject to discussion. Does the scope extend to only the prohibited act in question, e.g. calling customers A and B, or also to any action that is still in the so-called “core area”, in which the characteristics of the prohibited action is expressed? In the past, courts have mostly shown a belief that the latter is true.

Federal Network Agency:

According to Sec. 20 (3) UWG and 36 (1) No. 1 of the German Administrative Offences Act (OwiG), the Federal Network Agency is the competent authority for administrative fine proceedings following violations of the cold call ban.

The Network Agency’s official purpose is to promote effective competition in regulated areas and to ensure non-discriminatory access to networks. In order to enforce its regulatory objectives, the Federal Network Agency has been equipped with the right to, inter alia, information and investigation as well as, in certain cases, impose sanctions.

The Network Agency has now imposed a fine of €300,000 for conducting unlawful advertising calls relating to energy supply contracts. In this case, about 2,500 consumers had complained to the Federal Network Agency about advertising calls from the electricity supplier. Considering the number of cold calls that were made, the Federal Network Agency has imposed the highest legally possible fine, Sec. 20 (2) UWG. The electricity supplier can still appeal to the District Court Bonn against the decision.

In 2017, the Federal Network Agency has imposed fines amounting to over €800,000 for illicit cold call advertising. Companies whose business activities focus on direct marketing should develop strategies that enable them to continue to operate in the market without exposing themselves to the risk of fines.