New EU fuel labelling - is this the best we can do?

Last week the European Commission announced adoption of a new harmonised set of fuel labels. The objective behind their introduction is, as usual, to provide consumers with better information. This time we are supposed to be better informed about the suitability of fuels for our vehicles. Whilst the harmonisation aspect of fuel labelling seems important considering the increase in cross-border travel and in consumers tanking their vehicles abroad, the standardised labels don't seem particularly informative to me (disclaimer though: I don't own the car, so maybe I'm not as informed in this area as I should be to begin with as I drive only occasionally).

My issue lies with the design of the labels that will be used. The Commission claims that they will be easily distinguished as: gasoline will be marked with an E inside a circle; diesel with a B inside a square; and gas with a rhombus shaped label... Why hasn't this been simplified further? For example, by labelling gasoline-type fuels with a G instead of an E; diesel with a D instead of a B; or using colours instead of/ or next to shapes on fuel labels? I would think that this would have made a selection of the appropriate fuel for the consumer's vehicle even easier at a glance. Further complication lies in the fact that, as is common practice in labelling policies, other information may be placed on the refuelling pumps aside the fuel identifiers, which may further hinder the transparency of this information.

This new fuel labelling system has been developed by European standardisation bodies (CEN), apparently with the input acquired from the industry, consumer and civic society representatives (New EU fuel marking Q&A). I wonder whether they conducted any consumer surveys as to the effectiveness of these labels in conveying information to consumers. Let's hope that there will at least be some education plan developed to draw consumers' attention to these new labels and differences between them.

Combating online disinformation (aka fake news)

This week representatives of online platforms (e.g. of Facebook, Google, Mozilla, Twitter), advertisers and advertising industry met with the EU Commissioner, Mariya Gabriel, to present her with their individual roadmaps describing how to limit online disinformation (Code of Practice to fight online disinformation). These roadmaps have been developed pursuant to the self-regulatory Code of Practice to fight online disinformation, agreed on last month. The commitments of the industry go beyond protection of consumers, e.g. against fake online accounts and their practices, towards combating broader understood fake news, e.g. by ensuring also transparency in online political advertising (see further here on the Code of Practices).

Amongst current best practices we may find on the list: 

• in advertising policies: "Facebook's ads policy", which contains examples of prohibited types of content that includes false and misleading content; 
• in service integrity policies: "YouTube spam policy" and "YouTube impersonation policy" - which respectively restrict spam and impersonation
• in policies and actions to empower consumers: "Reporting Twitter Ads" enabling users to report advertising on Twitter.

The list of best practices contains quite a few examples of such self-regulation, however, it does not refer to specific provisions in these policies. It would still require some legwork to then find out which policies have actually been adopted by these online platforms/advertisers. Not to mention that it is another matter altogether to establish to what extent these policies are being enforced.

Commission investigates collusion among car manufacturers

Guest post by dr Kati Cseres, Associate Professor at the Amsterdam Centre for European Law and Governance, University of Amsterdam

On 18 September the European Commission has announced that it has opened an investigation against BMW, Daimler and Volkswagen, Audi and Porsche from the VW group, based on information that they had colluded, in breach of EU competition rules, to avoid competition on the development and roll-out of technology to clean the emissions of petrol and diesel passenger cars.

EU Commissioner, Margrethe Vestager, in charge of the competition policy portfolio, said: "The Commission is investigating whether BMW, Daimler and VW agreed not to compete against each other on the development and roll-out of important systems to reduce harmful emissions from petrol and diesel passenger cars. These technologies aim at making passenger cars less damaging to the environment. If proven, this collusion may have denied consumers the opportunity to buy less polluting cars, despite the technology being available to the manufacturers."

The Commission's investigation focusses on information indicating that BMW, Daimler, Volkswagen, Audi and Porsche participated in meetings where they discussed inter alia the development and deployment of technologies to limit harmful car exhaust emissions. In particular, the Commission is assessing whether the companies colluded to limit the development and roll-out of certain emissions control systems for cars sold in the European Economic Area (Article 101 of the Treaty on the Functioning of the European Union). While the EU competition rules certainly leave room for technical cooperation aimed at improving product quality, the current investigation concerns specific cooperation that is suspected to have aimed at limiting the technical development or preventing the roll-out of technical devices. The Commission has, however, stated that at this stage of the investigation it “has no indications that the parties coordinated with each other in relation to the use of illegal defeat devices to cheat regulatory testing”.

The Commission’s statement and act comes three years after  the Dieselgate scandal started with a violation notice issued by the US Environmental Protection Agency (EPA) to the VW group revealing that “defeat devices”, meant to game emissions testing, had been fitted to nearly half a million cars.

EU Commissioner Vera Jourová, responsible for Justice, Consumers and Gender Equality  has also been actively pursuing a solution for European consumers by way of legislation and proposing a New Deal for consumers as well as obtaining action plans from Volkswagen.

Should the current investigation of the Commission, Vestager’s DG Competition indeed find that Volkswagen group, Daimler and BMW has colluded on, consumers will have another strong case to bring before national courts and claim damages for the harm they suffered. At the same time, this is another strong signal for the other EU institutions that there should be further hesitation to support an EU wide collective action mechanism which effectively compensates harmed consumers.

Becoming a 'trader' in the platform economy: CJEU rules in Kamenova

It is trite but true that online platforms have blurred the lines between the positions of particular market actors. In doing so, they have put the traditional status-based European rules to a test. While the issue itself is not particularly new, the scope of the basic notions such as 'consumer' or 'trader' has attracted renewed attention in recent times. The Commission specifically addressed the interpretation problems related to these terms in its 2016 communication on collaborative economy. Around the same time two preliminary references, related to this very basic distinction as well, were directed at the Court of Justice. The Schrems case, on which the CJEU ruled several months ago (see our post here), provided the Court with an opportunity to clarify the notion of a 'consumer' in the context of social media. Yesterday's judgment in case C-105/17 Kamenova addressed a corresponding matter, namely at which point a person offering goods or services via an online platform can be qualified as a 'trader'.

Background of the case

We already reported on the opinion delivered by the Advocate-General Szpunar in June this year. To recall: the request for a preliminary ruling was submitted by a Bulgarian court adjudicating a dispute between Ms. Kamenova and the national consumer protection authority. Specifically, Kamenova, who had been engaged in the sale of goods via an online platform olx.bg, and had published eight different listings at the same time, did not provide information required by the Bulgarian act on consumer rights, which implemented Directive 2011/83/EU into national law. According to the consumer protection authority, in doing so Kamenova failed to fulfil her duties as a trader and engaged in an unfair business-to-consumer commercial practice. The defendant argued that she did act in a professional capacity and, therefore, her activities fell outside the scope of the invoked legal act. 

Judgment of the Court

The Court essentially followed the reasoning expressed by the AG in his opinion. This is true in the following three respects:

Firstly, the Court upheld the view that the concept of a 'trader' used in Directives 2005/29/EC on unfair commercial practices (UCPD) and 2011/83/EU on consumer rights (CRD) had to be interpreted uniformly (paras. 25-29). I will return to that point later on.

Secondly, it essentially repeated the criteria determining the threshold for becoming a trader elaborated by the AG and stressed the need for a case-by-case assessment. In light of the judgment the relevant factors are, among others, whether:

• the sale on the online platform was carried out in an organised manner, 
• that sale was intended to generate profit, 
• the seller had technical information and expertise relating to the products which the consumer did not necessarily have, resulting in a more advantageous position of the seller compared to that of the consumer, 
• the seller had a legal status which enabled her to engage in commercial activities and to what extent the online sale was connected to the seller’s commercial or professional activity, 
• the seller was subject to VAT, 
• the seller, acting on behalf of a particular trader or on her own behalf or through another person acting in her name and on her behalf, received remuneration or an incentive, 
• the seller purchased new or second-hand goods in order to resell them, thus making that a regular, frequent and/or simultaneous activity in comparison with her usual commercial or business activity, 
• the goods for sale were all of the same type or of the same value, and, in particular, whether the offer was concentrated on a small number of goods (para. 38).

Thirdly, the Court underlined that the list is neither exhaustive, nor exclusive and, as a consequence, compliance with one or more of the listed criteria is not, in itself, decisive for establishing the seller's status (paras. 39-40).

With regard to the present dispute the Court shared the scepticism of the Advocate-General as to whether Kamenova should be qualified as a 'trader'. While the final assessment was left to the national court, the CJEU made it clear that "the mere fact that the sale is intended to generate profit or that a natural person publishes, simultaneously, on an online platform a number of advertisements offering new and second-hand goods for sale" is not, by itself, sufficient to make such a classification (paras. 40 and 44).

Comments

The judgment does not come as a huge surprise. What is perhaps more surprising is that it comes so late. National courts, including at the highest level (see e.g. the 2008 judgment of the German Federal Court of Justice), have already dealt with similar questions years before. Apparently, however, they did not consider the CJEU's involvement necessary.

The ruling itself does not affect the discretion of national courts in a far-reaching way. Establishing the facts and assessing their respective relevance remains in their hands and continues to be crucial for the final assessment. The comparably broad menu of criteria set out in para. 38 of the Court's judgment could facilitate this analysis to some degree, as can the Court's conclusion that the profit-driven motive and the number of offers are, in themselves, not sufficient to consider someone a 'trader'. It is also worth noting that the Court (once again following the AG) attempted to connect the discussion about determinants of one's status with the consumer law's traditional weaker party protection rationale (paras. 33-34).

A further element of the judgment, which could be of interest to the readers, concerns the uniform interpretation of the notions used in the CRD and UCPD. Following the Advocate-General, the CJEU found that the concept of a 'trader' laid down in both acts was to be interpreted uniformly. To make this observation the Court even reformulated the question asked by the referring court. From the point of view of legal clarity, such an effort should certainly be welcomed.

The reasons supporting the Court's finding are not discussed extensively. Essentially, they concern the correspondence between the wording of both definitions and between the objectives of both acts. We could probably debate to what extent the fact that both directives are based on Article 114 TFEU actually bears out the identity of their objectives, considering how broadly this legal basis came to be used in EU legislation. However, in the present context, the conclusion of the Court seems sound.

One could still wonder in which domains a requirement for a uniform interpretation would not necessarily be fulfilled. A possible candidate is the context considered in the Schrems case mentioned before. Indeed, it has been pointed out in the literature that in the conflict of laws sphere other objectives, such as ensuring procedural certainty, may be of greater relevance than contributing to the "proper functioning of the internal market" and ensuring "a high level of consumer protection". This could explain the apparent discrepancy between the Court's case law on dual purpose contracts (see the judgments from Gruber onwards) and the more recent legislative developments related to this issue (see e.g. recital 17 of the CRD). Notably, neither Rome I, nor Brussels I (bis) regulations are based on Article 114 TFEU.

All in all, the judgment does shed a bit more light on the notion of the trader in the platform economy, but it certainly does not bring an end to the legal uncertainty in this domain. Achieving the latter result, however, does not seem to be a task for the judiciary. Should one wish to address the issue of the problematic boundaries between 'consumers' and 'traders' in online markets more effectively, a legislative solution would be needed. The amendments proposed by the Commission as part of the so-called New Deal for Consumers package represent one of the possible approaches. 

"Eat ORIGINal! Unmask your food" initiative

With the introduction of the Lisbon Treaty EU citizens' empowerment increased due the setting up of the European Citizens' Initiatives. One such initiative has been registered this month - "Eat ORIGINal! Unmask your food". The goal thereof is to ensure that all food products have a mandatory declaration of origin. This could not only better inform consumers on their food products' choices but also aims to protect their health and prevent fraud. The registration of this Initiative is to take place on October 2nd. This will be followed by collection of signatures in support of this project - 1 million is necessary within a year, from at least seven different Member States. If this threshold is achieved then the Commission will need to react to the Initiative. 

More information on this initiative will be available as of Ocobter 2nd! (through these links)

Airbnb to unroll the transparency carpet for its users

Whilst the Court of Justice was keeping us busy this month, it is worth it to mention that Airbnb finally committed to adjusting its T&Cs in accordance with EU law (Airbnb commits to complying with European Commission and EU consumer authorities' demands). This follows the earlier action of the CPC Network and of the Commission against Airbnb that we reported on previously (EU Commission cracks down on Airbnb to comply with EU consumer protection). Apparently, they will change its policies by the end of this year ensuring, among other things, price transparency. This should follow from Airbnb presenting consumers with the total price of bookings, including extra fees (cleaning charges e.g.) or warning them explicitly that extra fees may apply, when it is impossible to calculate these in advance. Other terms that shall be amended refer to clearly informing consumers about the remedies available to them both against hosts and Airbnb, and that they may sue Airbnb in courts of their country of residence. In case of a contract's termination or Airbnb removing content from its website, they will inform consumers about this and allow them to appeal this decision as well as claim appropriate compensation.

 

An interesting commitment is for Airbnb to clearly identify whether the accommodation is offered by a consumer or a professional party. Considering that different rules apply in B2C and B2B cases, it is important for consumers to know who their counterpart is. However, it may not always be easy to determine the professional character of the host, as this will depend on the applicable national laws, as well as transparency in dealings between the server and the hosts. It will be interesting to observe what solutions Airbnb adopts in this respect. Whether e.g. they will rely on the self-declared private/professional party character of the host. 

 

If any of our readers are hosts with Airbnb, we would appreciate being informed about any notifications you may receive in the coming months as to the changes in the new policies and new obligations placed on you.

National courts are not obliged to review unfair practices during mortgage enforcement proceedings - CJEU in Bankia

On 19th September 2018, the ECJ issued its ruling on the Bankia case (Case C‑109/17). The case concerned the application of the Unfair Commercial Practices Directive in mortgage enforcement proceedings and gave the Court the opportunity to comment on the different mechanisms used by the Unfair Commercial Practices Directive and the Unfair Contract Terms Directive (hereafter UCPD and UCTD respectively).

This blog has previously covered also the AG opinion on this case. You can find the previous post here.

Facts of the case

In 2006 Mr Marí Merino, Mr Gavilán and Ms Marí Merino took out a loan with Bankia secured by a mortgage in respect of a capital of EUR 166 000, repayable over a 25-year period. That agreement set the amount of the ‘starting price’ of the mortgaged property at EUR 195 900.

In 2013,  after a second novation, the amount of the starting price of the property was reduced to EUR 57 689 and the period for repayment of the outstanding loan capital of EUR 102 750 was extended to 40 years. In addition, the extrajudicial sale of the property was authorised and the agreement now states that that property is the habitual residence of Mr Marí Merino, Mr Gavilán and Ms Marí Merino.

Bankia used that novated loan agreement secured by a mortgage to initiate mortgage enforcement proceedings. Mr Marí Merino, Mr Gavilán and Ms Marí Merino lodged an objection to those proceedings claiming that the agreement contained unfair terms. First, the amount of the starting price was reduced to their detriment, with the extension of the period for repayment being merely a means of inducing the borrowers to accept the novation of the agreement. 

Furthermore, they argued that Bankia acted in a way that was contrary to the requirements of professional diligence inasmuch as it took advantage of restructuring the debt in order to alter the valuation of the property in question, meaning that Bankia employed an unfair practice.

Finally, Bankia was not adhering to the Code of Good Banking Practice, by which it is bound, by not allowing the borrowers to discharge the debt by giving the property in payment while remaining there as tenants, even though they satisfied the conditions set in the Code for doing so. 

Questions referred

The following questions were referred to the ECJ:

1)    Must Directive 2005/29 be interpreted as meaning that national legislation such as that currently regulating Spanish mortgage enforcement — Article 695 et seq. in conjunction with Article 552(1) of the [Law of Civil Procedure] — which does not provide for the review by the courts, of their own motion or at the request of one of the parties, of unfair commercial practices, is contrary to Article 11 of that directive because that national legislation hinders or prevents review by the courts of contracts or acts which may contain unfair commercial practices?

(     2)    Must Directive 2005/29 be interpreted as meaning that national legislation such as the Spanish law which does not ensure actual compliance with the code of conduct if the party seeking enforcement of a debt decides not to apply that code (Articles 5 and 6 of Royal Decree-Law No 6 of 9 March 2012, read in conjunction with Article 15 thereof) is contrary to Article 11 of that directive?

(     3)    Must Article 11 of Directive 2005/29 be interpreted as precluding Spanish national legislation which does not allow a consumer, during mortgage enforcement proceedings, to request compliance with a code of conduct, in particular as regards the giving of a property in payment and extinguishment of the debt — Point 3 of the Annex to Royal Decree-Law No 6 of 9 March 2012, Code of Good [Banking] Practice?’

Review of unfair practices in mortgage enforcement proceedings

The first question is asking whether national law which prohibits the review of unfair commercial practices is contrary to art. 11 UCPD. The Court pointed out that the UCPD prohibits unfair practices, but leaves it to the discretion of the Member States to decide what measures to use to combat unfair practices. Such national measures need to be adequate and effective and that the penalties thus laid down are effective, proportionate and dissuasive (para 31). Furthermore, the Court underlines that the UCPD is without prejudice to national contract law and individual legal action, as set out in art. 3(2) UCPD.

Therefore, the ECJ found that it is not necessary for national courts during mortgage enforcement proceedings to be able to review whether the enforceable instrument breaches the UCPD, as the UCPD does not place such an obligation on the Member States (para 34).

The Court elaborates on the differences between the well-known Aziz case, also concerning mortgage enforcement proceedings in Spain and the present one, as well as the differences between UCTD and UCPD. It states that both the UCTD and the UCPD aim to ensure a high level of protection; however, each one pursues that objective using different means (para 36).

The reasoning put forward by the Court is that the UCTD clearly sets out in art.6 UCTD that unfair terms are not to be binding on the consumer, while the UCPD merely prohibits unfair practices (paras 37, 41). The UCTD seeks to address the inequality of power between the parties which is created by the unfair term, while the UCPD only seeks to put an end to unfair practices, without an impact on the validity of the contract. 

Contrary to Aziz, where compensatory protection was found to not meet the requirements of art. 7(1) UCTD, in the case of unfair practices, compensatory protection can be sufficient (paras 45-46). Still, the Court clarifies that it is possible for the unfairness of practices to be considered during mortgage enforcement proceedings in the context of review of unfair terms. As established in Pereničová and Perenic the finding of an unfair practice doesn't have a direct effect on the validity of the contract (paras 49-50).

For the first question, the court agrees with the AG opinion that the answer to the first question should be negative.

Codes of Conduct

The second and third questions referred to codes of conduct, and whether national law which does not confer a legally binding nature to a code of conduct is contrary to art. 10 UCPD. The Court notes that it is not up to them to establish whether the Code in question falls under the definition of code in art. 2(f) UCPD.

The court stated that even though non compliance with a code may constitute an unfair practice, the UCPD does not require for the Member States to provide for direct consequences when the traders do not adhere to the code they subscribed to (para 58). This decision undermines the effect of codes of conduct, if traders face no consequences when they do not adhere to them. More precisely, it transfers that responsibility to the Member States, even though the UCPD is a maximum harmonisation directive and intended to strengthen the relevance of codes of conduct.

This judgement appears to weaken the importance of the UCPD, making it clear that it is less able to protect individual consumers than the Unfair Contract Terms Directive. While the judgement is firmly based in the letter of the law, it shows the resulting gaps in protection and the need for individual remedies for the UCPD, in order to achieve the proposed aim of a high level of consumer protection.