FIRST SECTION

DECISION

AS TO THE ADMISSIBILITY OF

Application no. 39069/97

KRONE VERLAG GmbH & CoKG

against Austria

The European Court of Human Rights, sitting on 20 March 2003 as a Chamber composed of

Mr C.L. Rozakis , President , Mrs F. Tulkens , Mr G. Bonello , Mr E. Levits , Mrs S. Botoucharova , Mr A. Kovler , Mrs E. Steiner , judges , and Mr S. Nielsen , Deputy Section Registrar ,

Having regard to the above application introduced with the European Commission of Human Rights on 18 September 1997 and registered on 19 December 1997,

Having regard to Article 5 § 2 of Protocol No. 11 to the Convention, by which the competence to examine the application was transferred to the Court,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

Having deliberated, decides as follows:

THE FACTS

The applicant, Krone Verlag GmbH & Co KG, a limited liability company with its head office in Vienna, is the owner and publisher of a daily newspaper, the “Neue Kronenzeitung”. It is represented before the Court by Mr R. Fiebinger , a lawyer practising in Vienna.

A. The circumstances of the case

The facts of the case, as submitted by the parties, may be summarised as follows.

On 9 and 11 December 1994 the local Salzburg edition of the Neue Kronenzeitung published an advertisement for subscriptions to the newspaper in which it compared its monthly subscription rates with those of another regional newspaper (“ Salzburger Nachrichten ”). According to the advertisement, the Neue Kronenzeitung was ‘the best’ local newspaper.

On 13 December 1994 the Salzburger Nachrichten applied to the Salzburg Regional Court ( Landesgericht ) for a preliminary injunction ( einstweilige Verfügung ) under sections 1 and 2 of the Unfair Competition Act ( Gesetz gegen den unlauteren Wettbewerb ) against the applicant company. It requested that the applicant company be ordered to refrain from publishing the advertisement.

On 29 December 1994 the Salzburg Regional Court issued a preliminary injunction against the applicant company to preserve the status quo during the proceedings. On the applicant company’s appeal, the Linz Court of Appeal ( Oberlandesgericht ) quashed the Regional Court’s decision. The court stated, inter alia , that the two newspapers were competitors in the same market and for the same readership. On 23 May 1995 the Supreme Court ( Oberster Gerichtshof ), upon the defendant’s appeal, issued a preliminary injunction. The court found that the advertisement was misleading. It considered that the Salzburger Nachrichten was a ‘quality newspaper’ and the Neue Kronenzeitung was not and that these differences were not necessarily known to consumers. Furthermore, in the particular circumstances of the case, calling the Neue Kronenzeitung ‘the best’ local newspaper amounted to disparagement of the Salzburger Nachrichten .

In the main proceedings which followed, the Salzburg Regional Court ordered the applicant company to refrain from publishing this advertisement as long as it did not provide at the same time information which made it possible to avoid any overall pejorative value statement or any other risk of misleading consumers. Secondly, the applicant company was ordered not to refer to the sales price of the Salzburger Nachrichten as “expensive”. Thirdly, the applicant company was ordered to refrain from comparing the sales prices of the two newspapers without disclosing at the same time the differences in their respective reporting styles, in particular as regards coverage of foreign or domestic politics, economy, culture, science, health, environmental issues and law, and without referring also to the Neue Kronenzeitung as an entertainment-orientated communications medium and the Salzburger Nachrichten as a medium mainly geared to information. It finally ordered the applicant company to publish the decision.

On 21 March 1997 the Linz Court of Appeal, allowing the applicant company’s appeal in part, confined the third branch of the order to the requirement that the applicant company had to refrain from comparing the sales prices of the two newspapers without disclosing the differences in their reporting styles as regards coverage of foreign or domestic politics, economy, culture, science, health, environmental issues and law. It confirmed the lower court’s decision as to the remaining branches of the  order. The court considered that it was a matter of common knowledge that both newspapers were competing in the same market. As to the differences in quality between the newspapers and the argument that readers were not familiar with these differences, the Linz Court of Appeal referred to the Supreme Court’s decision of 23 May 1995.

On 28 April 1997 the applicant company lodged an extraordinary appeal against this decision, relying on Article 10 of the Convention.

On 13 May 1997 the Supreme Court rejected as inadmissible the applicant company’s extraordinary appeal on points of law. The decision was served on 16 June 1997.

B. Relevant domestic law

The relevant sections of the Unfair Competition Act read as follows:

Section 1

"Any person who in the course of business commits, for purposes of competition, acts contrary to honest practices, may be enjoined from further engaging in those acts and held liable for damages.

Section 2

Any person who in the course of business, for purposes of competition, makes declarations that could be misleading on commercial conditions, especially on the quality, the origin, the method of production or the calculation of prices of single goods or services or the whole stock, on price-lists, on the manner and sources of supply, on the possession of awards, on the occasion or the purpose of the sale or on the quantity of the stock, may be enjoined from further making those declarations and, if he knew or had to know its suitability to mislead, held liable for damages. At any rate, comparing prices in advertisements is authorised, if it is not contrary to this section or section 1.”

COMPLAINT

The applicant company complains that the Austrian courts’ decisions under the Unfair Competition Act violated its right under Article 10 of the Convention.

THE LAW

The applicant company alleges that its right to freedom of expression under Article 10 of the Convention has been infringed by the Austrian court’s decisions. Article 10, as far as relevant, provides:

“1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. (...)

2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, (...), for the protection of the reputation or rights of others, (...).”

The Government accept that Article 10 applies to the proceedings at issue and that the domestic courts’ decisions constituted an interference with the applicant company’s right to freedom of expression. The injunction was prescribed by law, namely by sections 1 and 2 of the Unfair Competition Act and was in conformity with the well-established case-law of the Austrian Supreme Court. The interference served the legitimate aim of the protection of the reputation or rights of others, in particular to ensure that the applicant company’s competitor was not exposed to misleading avertisements and that consumers would not be victims of misleading comparative advertising. In view of the wide margin of appreciation accorded to Contracting States in purely commercial matters, the interference could not be considered disproportionate either. Moreover, the interference was of a minor character as no penalty was pronounced and no fine imposed.

The applicant company contests the Government’s view and doubts whether sections 1 and 2 of the Unfair Competition Act fulfill the “prescribed by law” requirement. In its submission, there is no established Austrian court practice in this area since the judgments are mainly based on German court practice. Furthermore, the injunction did not serve any legitimate aim, since the correct disclosure of sales prices could not harm the reputation of the competitor. As regards the necessity of the interference, the applicant company disputes the existence of a “pressing social need” to justify the interference. Since the domestic courts had based their reasoning on the assumption that the differences in quality were matters of common knowledge, the impugned injunction was unnecessary for protecting consumers. Moreover, the domestic courts failed to balance the interests of the parties. The applicant company further contends that the order restraining it from comparing the sales prices of the two competing newspapers without referring to their differences in reporting styles resulted in an absolute advertising ban. In order to avoid a breach of the injunction, the applicant company would have to obtain a detailed analysis of existing differences between the two newspapers, which would have to be published at the same time as the advertising slogan. Failing this, the applicant company would risk having to pay fines up to EUR 100,000 for each and every violation of the injunction, or even imprisonment of its managing directors.

The Court considers that the application raises complex issues of law and facts under Article 10 of the Convention, the determination of which should depend on an examination of the merits. The Court concludes therefore that the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. No other ground for declaring it inadmissible has been established.

Declares the application admissible, without prejudging the merits of the case.

    Søren NIELSEN Christos ROZAKIS Deputy Registrar President