German Court Prohibits Co-Shopping

On October 12, 2000 the Cologne District Court (case number 33 O 180/00) affirmed a temporary restraining order (TRO) against the German firm "Primus Online" and its website "RTL-Primuspower", in a "co-shopping" case. The "German Center Against Unlawful Competition" had sued the defendant who offers co-shopping services on the internet.

In a co-shopping system, potential buyers of a product form groups in order to reduce the purchase price of the product through bulk purchases. As the number of buyers increases, the purchase price drops following a system announced in advance. In the defendant's system the purchase price falls in several steps until it reaches a minimum level. The best price is reached only if the required number of buyers subscribe to a product.

The petitioner argued that this system violates competition law. The court considered this price model excessively attractive because the court believes that it takes advantage of gambling passions of the buyers in an immoral way and constitutes an offense against the rules of fair trade. In the court's view, the judgment of the consumer may be clouded by this improper practice.

Pursuant to section 1 UWG (Unfair Competition Statute), cease and desist orders and TRO's are remedies for a competitor who, in the course of busines, offends common decency.

In a similar case the Hamburg District Court decided on October 13, 2000 (case number 416 O 209/00) that another co-shopping provider ("LetsBuyIt.com") violated the German anti-discounts statute and the fair trade statute. Petitioner was the internet-service provider "cnited". The judgment also involved the price model by which (1) the price of goods varies with the number of customers who form buyers' groups, and (2) the price drops in several steps.

LetsBuyIt.com will also appeal the decision and continue its service. Earlier in the same case, the Hamburg court of appeals had reversed a judgment of the District Court that enacted a TRO prohibiting the same service.

On June 1, 2001, the Cologne Appeals Court (6 U 204/00) affirmed the judgment of the Cologne District Court in the Primus case. The Court characterized the co-shopping system as immoral. Consumers would be disadvantaged because the system stimulates gambling. Also, users risk not receiving the goods or having to pay a higher price than they expect to pay.

Primus Online announced that it would appeal the decision to the highest German civil court (Bundesgerichtshof) and move the company to a foreign country if it should lose again.

* The author studied law in Konstanz, Dublin (IRE) and Freiburg, where he received his law degree in 1997. He is currently an intern with the Berliner, Corcoran & Rowe LLP law firm in Washington D.C. His main interest is Intellectual Property Law.

Edited by Thorsten Dardat. Updated by Olaf Herrmann on June 6, 2001

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