Term and legal context of steering
Definition of steering
The term “steering” (English for “guidance” or “control”) refers in legal contexts to the targeted guidance or influencing of decisions by a third party. Steering is applied in various economic sectors and legal fields, particularly in cases where a market participant influences the selection of a contracting partner or the conclusion of a specific transaction. The core of the term always lies in the intentional influence of decision-making processes for a specific purpose or a third party.
Areas of application for steering
Insurance law
In insurance law, steering occurs, among other things, during claims settlement. For example, insurers may recommend or exclude certain workshops or service providers to their customers after a loss event. This is especially relevant in motor vehicle insurance when insurers attempt to direct policyholders to selected contracting partners, such as partner workshops. Steering can occur both through contractual provisions (e.g., workshop binding in the insurance contract) and through informal influence.
Antitrust and competition law
In antitrust and competition law, steering is of central importance insofar as targeted guidance may trigger market distortion or restriction. Steering is viewed as particularly critical when dominant companies steer customer flows to the detriment of smaller market participants. The European Commission and national antitrust authorities regularly examine steering strategies for abuse of a dominant market position (Art. 102 TFEU, Sec. 19 GWB).
Payment services and online commerce
In payment transactions and e-commerce, the term steering is also encountered in relation to means of payment. Online merchants, service providers, and payment service providers often exert influence over which payment methods consumers should choose—sometimes through different fees, sometimes by highlighting certain payment options during checkout.
Legal classification
Steering as permissible influence
Influencing a decision by a third party is not inherently unlawful. Rather, it must be examined on a case-by-case basis whether steering violates legally protected interests. In principle, a recommendation or influence is permissible, provided there are no statutory prohibitions or contractual obligations to the contrary.
Steering and non-discrimination rules
Steering may violate the prohibition on discrimination (Sec. 19 AGG, Sec. 20 AGG) when individual participants or groups are systematically disadvantaged. In the insurance industry, for example, steering may not result in workshops or customer groups being discriminated against.
Steering in light of terms and conditions control
If policyholders are required by general terms and conditions (AGB) to use certain service providers or workshops (e.g., workshop binding), this clause is subject to substantive review under Secs. 305 ff. BGB. It must not be unreasonably disadvantageous and must comply with the transparency requirement.
Steering conduct as a competition violation
According to Secs. 1, 3, 5 UWG (German Act Against Unfair Competition), steering may be classified as anti-competitive if, for example, it is done in a misleading manner or involves unfair business practices (e.g., aggressive influence or pressure on consumers).
Steering and the transparency requirement
In civil law, the transparency requirement (§ 307 para. 1 sentence 2 BGB) applies to steering. In particular, contracting parties whose freedom of choice is restricted by steering must be adequately informed about the consequences and scope.
European legal dimension
Steering regulations in payment transactions
With the Payment Services Directive PSD2, the European legislator has established requirements for steering in the provision of payment services. Consumers are to be given free choice between different payment options. In particular, Art. 62(4) PSD2 prohibits banks and payment service providers from charging fees for certain payment instruments, in order to limit steering in the payment process.
Competition law guidelines at EU level
The European Commission, in its guidelines on the application of Arts. 101 and 102 TFEU, has outlined the effects of steering on competition and imposes strict requirements on dominant companies to prevent a disadvantage to competition.
Steering in comparative law
International developments
In the USA, steering is known, among other things, from the healthcare sector (healthcare steering), where providers direct patients to visit certain organizations or doctors. Comparable mechanisms are also common in Anglo-American law in the area of payment solutions and credit business, and are regularly reviewed in competition policy.
Case law on steering
Key judgments
- Federal Court of Justice, judgment of October 26, 2005, Ref. IV ZR 120/04
The Federal Court of Justice held that workshop binding is permissible under certain conditions, provided it is transparently regulated in the insurance contract and reasonable for the customer.
- ECJ, judgment of July 5, 2018, C-307/16 (Verein für Konsumenteninformation/WKO)
The European Court of Justice provided clarifications on the permissibility of surcharges when selecting payment methods and on steering measures.
- Higher Regional Court Frankfurt am Main, decision of October 20, 2020, Ref. 11 W 48/20
The Higher Regional Court emphasizes that steering measures in payment transactions must be designed transparently and without discrimination.
Legal consequences of unlawful steering
In the event of violations of competition law, antitrust law, or consumer protection provisions, steering can have civil and administrative consequences, including injunctive relief, damage claims, or fines. In addition, regulatory action by competent authorities may be threatened.
Summary
Steering encompasses all forms of targeted guidance of decision-making processes by third parties and is of considerable legal relevance in various areas of law. Its permissibility largely depends on compliance with statutory requirements, prohibitions on discrimination, and transparency and information obligations. Unlawful steering measures can result in significant legal consequences and are subject to strict scrutiny by the courts and regulatory authorities. The topic is particularly important in insurance, competition, antitrust and payment services law as well as the digital economy.
Frequently asked questions
What legal framework applies to so-called steering in the EU?
Steering—that is, the targeted guidance or influencing of consumers with regard to payment methods on websites or in stores—is regulated in the European Union, in particular by the Payment Services Directive 2 (PSD2, Directive (EU) 2015/2366). According to Article 62, paragraph 4 PSD2, providers are generally free to charge different surcharges for various payment instruments (so-called “surcharging” or “steering”). However, Regulation (EU) No 2015/751 on interchange fees for card-based payment transactions (Interchange Fee Regulation, IF-Regulation) prohibits surcharging for certain cards (such as Visa and Mastercard regulated consumer cards), thereby restricting a direct financial incentive to steering. In Germany, “steering” is additionally regulated by § 270a BGB, which prohibits fee agreements for payments made with certain cashless payment methods. Violations not only lead to civil law reversals, but, where applicable, also to regulatory measures by BaFin or relevant EU supervisory authorities. It must also be considered how steering relates to consumer protection and competition law (for example, regarding misleading practices or discrimination).
Are there any special transparency obligations regarding steering towards end customers?
Yes, under PSD2, payment service providers and merchants are legally required to provide end customers with clear and transparent information about all applicable additional charges and fees (where permitted) as well as the various payment options. This information obligation arises from Article 52 of PSD2, as well as the Consumer Rights Directive (Directive 2011/83/EU) and the German EGBGB (Sec. 312j). It must be made clear and understandable whether, and to what extent, a fee is payable for a particular payment method before completion of the payment process. In the event of violations, warning letters (e.g. from consumer associations), injunctions, and fines may result.
How does steering relate to non-discriminatory access to payment methods?
Steering may not, from a legal perspective, constitute discrimination; that is, merchants or payment service providers may not unlawfully disadvantage consumers or exclude them from purchasing goods or services merely because they prefer or reject a specific payment method. The prohibition on discrimination is found in particular in the General Equal Treatment Act (AGG) and in the German Civil Code (Sec. 312a para. 4 BGB), which sets out the principles for distance contracts and clarifies that, when offering payment methods, neither an unreasonable exclusion nor a disproportionate disadvantage of specific payment methods may occur. Merchants may offer and promote alternative payment methods but must maintain an economically reasonable standard (such as bank transfer or credit card).
What sanctions can be imposed for unlawful steering?
Violations of the legal framework for steering can result in various sanctions. Civil law allows affected consumers to reclaim fees that were wrongly levied and demand cessation of the practice. Under competition law, warning letters and injunctions may be issued by competitors or consumer associations. Depending on the infringement, regulatory sanctions may also be imposed by national financial supervisory authorities such as BaFin or by data protection authorities (if data protection issues are involved). In addition, the local regulatory authority may impose fines. Within the EU, the competent authorities of other member states may also act if the merchant serves customers there.
Are national special provisions on steering possible or do only EU-wide rules apply?
While the key provisions on steering are predominantly harmonized at the EU level, there are, in some member states, supplementary or stricter national regulations. In Germany, for example, § 270a BGB stipulates that no additional fees may be charged for SEPA transfers, SEPA direct debits, and certain credit card payments, even if this is not explicitly forbidden at EU level. Consumer and competition law can also contain more detailed rules in member states. However, national provisions may not fall short of the level of protection provided by EU requirements, and European law takes precedence.
Are there exceptions in which steering is legally permissible?
Steering is generally permissible in cases where there are no explicit prohibitions under EU law or national law. This applies in particular to payment instruments not covered by PSD2 or the Interchange Fee Regulation—for example, corporate credit cards, unregulated prepaid cards, voucher systems, or innovative payment methods such as cryptocurrencies. However, even in these cases, the general transparency and information obligations as well as competition, consumer, and data protection requirements must be observed. Certain industry-specific exceptions, for example in public transport or tax-privileged sectors, may also arise from special laws. Merchants should seek legal advice if in doubt before engaging in targeted steering.
How is steering assessed from a data protection law perspective?
The topic of steering is also relevant from a data protection perspective, especially when the selection or steering of a payment method is based on personal data. According to the General Data Protection Regulation (GDPR), merchants must clearly disclose whether and to what extent customer data are processed for the purpose of steering payment methods. Lawful processing requires, under Art. 6 GDPR, a clear legal basis (e.g., contract performance or legitimate interest). If payment habits data are used for targeted influence, a data protection impact assessment is also required. Unlawful use of data may result in substantial fines; in addition, data subjects must be informed of their rights, particularly the right to access and object.
