Some companies in the past followed the practice to transfer costumer data as a part of an asset deal. From a data protection perspective it seems to be necessary to obtain the customer´s explicit consent before the purchaser can use the data, like the e-mail address, for advertising purposes.
However, this would have a great impact on a growing number of companies. Addressing customers by e-mail is one of the most important marketing activities for companies besides their average online business. Being subject to the requirement of obtaining costumer consent for every single activity would constitute an obstacle for the companies and would eventually lead to a significant loss of consent over the time. This in turn would lead to a significant loss of the company’s value, as e-mail marketing and it´s relevance is an essential part of the corporate value. Therefore, from a competition law point of view it would be preferable if there would be no need for seeking consent.
Neither jurisprudence nor the legal literature has yet stated clearly their opinion about how to handle such a situation. Consequently a solution has to be found in the given rules.
The difference between data protection and competition law
First of all, data protection law and competition law protect different interests and therefore it could be required to treat them differently. Data protection law serves the protection of the individual´s right to privacy. The data subject has the right to decide who and to what extend a third party has access to his data. Thus, the data subject generally has to give his consent. As already outlined in another article in our blog from 08/19/2015 the data subject´s consent in this context can be obtained by informing the subject of the transfer before selling the data and giving them a certain objection timeframe. After this period, the data may be transferred.
In contrast competition law seeks to protect a fair and free competition. In this context the use of data for purposes of e-mail advertising is regulated in Germany by § 7 Abs. 2 Nr. 3 UWG. For the admissibility of advertising the law also requires a prior expressed consent. However, the rule does not make clear whether in case of an asset deal a new consent is also needed or not.
The requirement of a re-consent?
The named UWG rule was established in 2004 and was supposed to protect consumers from receiving an unsolicited masse of advertising emails (spam). Spam-emails cause high economic losses as they increase the amount of data significant and cause additional costs, as these spam-mails have to be sorted out and eliminated. Address brokers use once obtained customer data in order to make them accessible for a large number of purchasers. Through this they contribute to the dissemination of spam. Giving prior explicit consent was supposed to stop or at least limit these interferences.
The requirements for such consent were also set quite high. The consent must be given for a specific company and a specific product. Therefore, new products can only be advertised based on a previous consent if they have sufficient similarities to the previously advertised products. Similarly high are the requirements for the consent in relation to the specific advertising companies.
In case of an asset deal, transferring a part of the company to the purchaser will only change the ownership. The corporate part as such fully remains. This constellation will therefore not affect § 7 Abs. 2 Nr. 3 UWG and its purposes. The asset deal is thus no address trading in the classical above named sense. The customer continues to receive advertising for a product he has already given his consent to. There will be no rise in advertising compared to before. The customer data will be transferred along with the part of the company. The vendor no longer possesses the customer data. Therefore he cannot sell them more than once. Requiring the costumer to consent separately each time the owner of the data changes would rather be an additional burden for the costumer. Would he fail to give his consent in some cases it would mean to loose the information, even though he has a high personal interest in keeping them. Consequently the need to consent must be negated.
In accordance with the data protection procedure the predominant practice of most of the companies is to inform the data subject´s about the change of ownership and to give them the right to object concerning the use of his data for advertisement purposes.
This solution is so far the best, at least as long as the legislation and jurisprudence have not established clear guidelines. From a legal perspective it would also acceptable to not always seek for renewed costumer consent in context of an asset deal.