Five-digit court fees and the threat of an administrative fine of 250,000 EUR due to the violation of distance contract law – judgement by the Higher Regional Court (OLG) of Düsseldorf of 13th April 2006, ref: VI-U (Kart) 23/05

RA Dr. Hendrik Schöttle, Hambach & Hambach Lawyers

Betting and gaming law is not the only legal area online providers in the gaming trade must deal with. The current legal disputes mainly concern the questions as to “whether“ and “how“ private providers are to be admitted – in particular in the area of sports betting. However, the present decision by the OLG of Düsseldorf shows that, beyond the scope of these questions, the implementation of IT law, in particular of distance contract law, plays an ever more important role (on obligations in the field of distance contract law for lottery syndicates, see also OLG of Karlsruhe of 27th March 2002, ref: 6 U 200/01, MMR 2002, 618 et seq.)

These court proceedings concerned the website of a provider procuring customers for a Dutch provider of system lotteries. This provider had initially unsuccessfully been sent a so-called warning notice (a special instrument of German competition law). In the court proceedings following this, which were conducted through two instances, the provider in the end was ordered to implement the obligations of distance contract law – and threatened with an administrative fine to the amount of 250,000 EUR.

Provider is responsible for the suppression of information due to a pop-up blocker

Whoever intended to conclude a gaming contract on the provider’s website was shown the contract information and participation conditions in a separate pop-up window during the registration process. In the meantime, many browsers have started using so-called pop-up blockers, which do not display such windows or which make the display subject to the user’s consent. In the case in hand, the pop-up window containing the legally required information was not displayed. According to the court’s opinion – which furthermore assumed that presently approx. 50% of all users have installed a pop-up blocker – this does not meet the legal requirements.

Providers displaying important, legally required information in a pop-up window, should change this kind of display in order to comply with the specifications of the OLG of Düsseldorf.

Distance contract law information obligations in the State Treaty on Lotteries do not violate Constitutional nor European Law

The provider had also neglected to comply with the information obligations stipulated in the State Treaty on Lotteries (LotterieStV). Pursuant to § 14 section 2 No. 3 sentence 2, the procurer,

before the conclusion of the contract, has to indicate clearly and comprehensibly in written form the amount to be forwarded to the gambling operator for the participation in the game, as well as, immediately after the procurement of the gaming assignment, to inform the customer of the identity of the operator.

The provider did not itemise the final price in such a way. However, he submitted that the quoted provision could not be applied, as it violated community law and constitutional law. The court did not follow this reasoning. It denied a violation of anti-trust law regulations from the EC Treaty, which had been argued by the provider. It held that the provision did not dictate cartel agreements by the gaming procurers, nor did it facilitate such agreements.

The decision might be different for § 14 section 2 No. 3 sentence 1 of the LotterieStV, which obliges commercial gambling procurers to forward to the operator at least two thirds of the sums taken in from the players for the participation in the game. In this, the court saw a possible restriction of competition for demand between the Federal States or the state lottery companies respectively in the area of the commercial procurement of gambling. However, as the question was not decisive in this case, the court left it unanswered. As the provision on the itemisation of prices could be separated from the remaining provisions, a violation of European law did not come into consideration.

The examination of a possible violation of the German Constitution was denied by the court with regard to the Federal Constitutional Court’s exclusive competence of rejection. However, the various specialised courts are not inhibited from providing interim protection before the decision by the Federal Constitutional Court, to be obtained in the course of the main proceedings. This does not foreclose the decision in the main proceedings.

General indication of expiry of the right of withdrawal inadmissible

Moreover, the court held that the provider’s information on the right of withdrawal was not sufficient. The provider had explained in the information on the right of withdrawal that the user in principle was entitled to a right of withdrawal. However, it said that this right would expire at the time of the acceptance of the order, as the provider in this case had already made “initial arrangements with regard to the execution of the service obligation assumed” – in other words: as the provider had already started his activities.

The judges held that this information does not comply with the requirements set by the German Civil Code (BGB) and the Decree on Information Obligations in the BGB (BGB-InfoV). They stated that this wording suggested that the customer, after the conclusion of the contract, has no further opportunity to withdraw his declaration, as the execution of the contract is commenced immediately. However, this does not comply with the current legal situation. This is because, pursuant to § 312d section 2 No. 2 BGB, the right of withdrawal only expires if the provider has started the execution of the service before the end of the withdrawal period with the customer’s expressed approval or if the customer himself has brought about this execution. However, such approval cannot be agreed upon in General Terms and Conditions; rather, it must be declared expressly.

Conclusion

In the field of entertainment media, legal disputes are no longer exclusively about questions on the admissibility of such services. The competition has found out that, beyond these questions, the specific design of the internet offers can now also be put to the test. The decision shows that the implementation of internet offers complying with legal requirements is not a static process which is carried out once and then completed for good. Even though the display of information in pop-up windows was unproblematic only a few years ago, this is not valid any more with the increasing spread of pop-up blockers. In particular, if such mechanisms are activated as a standard (instead of having to be activated by the user), the inexperienced user cannot be expected, according to the OLG of Düsseldorf’s decision, to recognise that a pop-up has been suppressed. The party responsible for the correct display of information is not the user, but the provider of this information.

This evaluation might, however, be revised again in the foreseeable future. Only a few years ago, many courts held that it was unreasonable to let a user of a website scroll in order to reach the link to the provider identification. In the meantime, there is a prevailing insight that a user with average experience is familiar with the basic functions of the browsers – which includes scrolling through several screen pages – and can also be expected to do so (on this topic, see our report on the OLG of Brandenburg’s judgement in Betting-Law News 01|2006, iv.). In a few years time, the situation might be similar with regard to the configuration of a pop-up blocker.