Extra fees: how 50 turns into 100

One of the ongoing battles in the field of consumer protection is against low budget airlines and their offers that might often mislead consumers. And so, it has been reported on this blog previously that e.g. Ryanair en easyJet might be forced to make their air tickets' prices more transparable by getting rid of hidden fees (European Commission to investigate airlines' add-on charges to tickets). The issue was commented on broadly since low budget airlines offer cheap priced tickets only to add extra charges later for e.g. consumers using debit or credit card forms of payment. Since these were the only type of payments accepted by the airline, that left consumers often having to pay ca 50 GBP more for family tickets (4 tickets). The new European legislation will prohibit such surcharges on these payment methods (Pay in order to pay - EU intends to ban fees for paying by credit/debit cards) but Ryanair announced recently that only consumers who pay with debit cards will be released from having to pay the fee, and consumer who make use of a credit card will still need to make it (Ryanair is 'dodgy' blasts minister as budget airline tries to get round ban on hidden fees). Apparently there might be a loophole in the upcoming English legislation that leaves consumers unprotected against extra fees when they choose to pay with a credit card for an airline ticket. Hopefully, with the introduction of the Consumer Rights Directive this loophole will be removed.

European Data Protection & Privacy Conference

The 2nd Annual European Data Protection & Privacy Conference will take place in Brussels on the 6th of December 2011. The programme includes keynote presentations by Viviane Reding (on the view from the European Commission) and Cameron Kerry (on breaching the trans-atlantic gap on data protection), as well as sessions on: ensuring co-ordinated and harmonised data protection laws across the EU; the effect of the new privacy rules on the online lives of EU citizens; fighting terrorism and cyber-crime, and the balance between security and privacy rights; rebuilding consumer confidence in data protection laws; shape for globalised data protection and privacy laws in the 21st century.

You may find registration details here.

Cartel theory

While as consumers we might feel the consequences of cartels in practice, theoretical studies in law & economics can teach us something about the dynamics behind these attempts of firms to restrict competition among them (e.g. through price fixing or market sharing). In about 1,5 hours from now Martijn Han (Amsterdam Center for Law & Economics, ACLE) will defend his PhD thesis on the topic of 'vertical relations in cartel theory'. How do managers and firm owners behave in cartels? In what way may the functioning of buyer groups (cooperations of retailers) be explained? And how are economic damages resulting from a cartel distributed? Martijn did the math and reached some interesting conclusions, which may be further explored on his website.

Digital Single Market

On a website of The Institute of International and European Affairs (IIEA) you may find a speech of Malcolm Harbour, Chairman of the Internal Market and Consumer Protection Commitee of the European Parliament, concerning the next steps in creating the Digital Single Market.

Love food. Hate waste.

"Best before", "use by", "sell by" and "display until"... these are the most common labels that a consumer might find on food products that he purchases in a supermarket. Sometimes a product will have more than one of these labels with two different dates on it. Since these terms refer to different things that might happen to your food when the deadline mentioned on the label passes, it seems important that consumers are aware of the differences between these terms. Research shows, however, that consumers are often confused by different or multiple label which leads to them believing often that if any deadline mentioned on the label lapses, then the food product is not longer safe for consumption. This leads to consumers throwing away ca £12 billion worth of good food each year (5,3 million tonnes of edible food) in the UK (see the report on Household Food and Drink Waste in the UK prepared by Wrap). Currently in the UK a new regulation forces food producers to remove some of the labels ("sell by" and "display until") from the packaging in order to reduce consumers' confusion. Consumer organizations argue, however, that it might be a better idea to further educate consumers on the meaning of the labels. Do you know what to expect from a product with these labels?

"Best before" - after such a deadline the product is still edible. This means that consumers should not immediately throw the product away. When the deadline is over, the food product is still safe to eat, it only will not be at its 'best'. These are products that most consumers usually end up throwing away when they are still edible, which contributes to the enormous amount of food wasted every year. Products with "best before" label include, e.g., jams, snacks, dry or tinned goods.

"Use by" - food is unsafe to eat after such a deadline. These food products should be thrown away when the deadline is over. These products include, e.g. eggs, fish, meat, soft cheese, ready meals.

"Sell by" or "Display until" - these labels are used by the supermarkets for stock control reasons only and do not indicate time when the food product becomes unsafe. When such a deadline is over, the food in most cases may still safely be consumed (unless the "use by" date is the same as "sell by" date). These labels will be removed in the UK now.

Inspired by the news article in The Telegraph: "New rules scrap sell-by date".

See also Love Food Hate Waste website hosted by Wrap, raising awareness of the need to reduce food waste.

European E-commerce Conference

The 3rd Annual European E-Commerce Conference 2011: Ensuring a functioning single market for goods and digital services in Europe will take place in Brussels on the 22nd November 2011.

This conference invites policymakers and stakeholders to discuss issues pertaining to purchasing goods and services online. The plenary debate will focus on ways in which EU could ensure the success of the single market for goods and digital services in Europe. Parallel workshops enable participants to focus on such issues as: IPR, liability and copyright; consumer confidence online; future solutions for e-commerce; internet safety.

You may register for this event via this website.

Who you gonna call?

While we are all awaiting a following episode on the harmonization of European Contract Law, the European Commission beings to anticipate what will happen when that series will be over. Imagine that we have harmonized European Contract Law in the form of the Optional Instrument that citizens of the Member States and businesses registered in the Member States may choose to apply to their contract instead of a national law system. This means that their contractual relations will be regulated by the provisions of the Optional Instrument, in as far as the Optional Instrument will have substantive rules on that matter. Would you choose, however, to have the Optional Instrument governing your contractual relations if you knew that in case there is a conflict between you and the other party and you end up needing legal counsel and maybe even judicial decision - it would be difficult to find lawyers and judges specializing in European Contract Law to an extent that would enable them giving you a helping hand???

That's one of the questions that I've been wondering about for a long time now, and it surprised me that this subject wasn't further elaborated on by the European Commission. Apparently, they waited until the end of the process of substantive harmonisation was in sight, before they set up plans regarding its enforcement. Maybe I'm too much used to multi-tasking myself... Commissioner Reding mentioned yesterday:

"An independent, well-trained and efficient judiciary is essential for a functioning judicial area and single market in Europe. It caters for good and prompt judicial decisions strengthening predictability and legal certainty. As European law is part of everyday life, citizens and businesses want to know that they can count on a knowledgeable and well-trained judiciary across the Union enabling them to exercise their rights and get justice. But judges and lawyers delivering such justice need to know the rules to be able to apply them effectively. That’s why I want to set a clear and ambitious target for expanding training in how the judiciaries in Europe apply European law. This will help cement our efforts to create an EU-wide area of justice, improving the way the internal market operates. Judicial training is central to a modern and well-functioning judiciary capable of reducing the higher risks and higher transactions costs that impede economic growth. European judicial training is therefore a much needed investment to develop justice for growth." 

The plan is to give some training on European law to half of the legal practitioners in the EU (which means to 700,000 people) by the end of 2020. 

More on that may be found in the press release: European Commission sets goal of training 700,000 legal professional in EU. There is also a website for the European judicial training initiatives and European e-Justice Portal.

Back to the sixties

On 12 September, a Directive was adopted that extends copyright of performing musicians from 50 years to 70 years after recording. The Directive somewhat narrows the gap between composers (who already enjoy copyright protection till 70 years after death) and performers, and is one of the outcomes of the European Commission's strategy on intellectual property rights. Good news for rock stars and for session musicians who were in danger of remaining without a pension? Critics point out that not all arguments in favour of copyright extension seem valid: a large share of the additional royalties are likely to go directly to record companies to which the rights on the recordings have been transferred, and there appears to be no conclusive evidence that an increased copyright term will encourage further investments in new music nor that it will make available more works. In this view, not creativity, but lobbying seems to be rewarded... (The European Commission's term extension proposal: Fair concern or fruit of industry lobbying?)

What does the extension of copyright mean for consumers? It is submitted that the new rules will not affect retail prices, since 'empirical studies show that the price of sound recordings that are out of copyright is not lower than that of sound recordings in copyright' (see the FAQ on the new Directive). Furthermore, according to the Commission, the answer to questions of intellectual property 'is in the single market'. In that context, it will be interesting to see whether rules on IP-protected digital content (e.g. downloaded music) will be included in a proposal for an instrument of European contract law.

EESC calls for more action on passengers' rights

Last week, the European Economic and Social Committee (EESC) organized a public hearing on passengers' rights. Views were shared on the current problems and suggestions were made for the upcoming revision of the passengers rights. One of the problems is that passengers have little awareness of their rights and that if they do know about their rights and take action, their claims are often denied. There was also discussion on the problems disabled passengers currently face. Keith Taylor, Member of the European Parliament, promised to try to improve the position of people with disabilities and to fight for revised legal provisions that are clear, simple, transparent and fair. The EESC's opinion on the revision of the passengers' rights legislation is expected next month.

Photo: EESC website

Raise of the online cross-border transactions

The European Commission's works on the Optional Instrument that it supposed to further harmonize European Contract Law are progressing rapidly (see: Contract law - work in progress). We are awaiting the final draft of the Optional Instrument to be published this autumn. One of the main reasons that is being given as a justification for the need for the Optional Instrument is that it would lead to strengthening of the internal market. Consumers would gain more confidence as to their rights and the scope of the protection that they may expect when they conclude online transactions with businesses from other Member States than their own, which would increase the amount of these transactions. It is interesting to mention then that the number of such transactions being concluded is raising rapidly without the Optional Instrument being implemented, too. Research shows that e.g. the number of EU consumers buying goods and services online doubled to 40% compared to 20% in 2005. Many of these transactions are cross-border (see: Online shopping doubles in five years). That makes one wonder whether we should not leave the market to further develop on its own, without introducing further harmonization measures.

Lindner - or Océano meets conflict of laws

On 8 September the conclusion of Advocate-General Trstenjak in Case C-327/10 was published. The case poses some interesting questions on jurisdiction and on unfair terms. The facts are straightforward: Mr Lindner concluded a credit agreement with Hypotecni Banka a.s. to finance the purchase of a property. At the time of conclusion of the contract both parties were situated in the Czech Republic. The agreement contained a choice of forum clause which assigned jurisdiction to the courts in the region where the bank had its seat. Mr Lindner failed to pay the agreed credit installments and the bank instigated legal proceedings. It obtained a payment order but then was unable to locate Mr Lindner - a German national - in the Czech Republic. The payment order was retracted, and on 8 September 2009 the court appointed a guardian in order to represent the defendant and continue the case.

But does the Czech court have jurisdiction in this case? The questions that the referring judge put to the Court of Justice of the EU are the following:

- if one of the parties to court proceedings is a national of a State other than the one in which those proceedings are taking place, does that fact provide a basis for the cross-border element within the meaning of Article 81 of the Treaty on the Functioning of the European Union, which is one of the conditions for the applicability of Regulation 44/2001 (the Brussels I Regulation)?

- does the Brussels I Regulation preclude the use of provisions of national law which enable proceedings to be brought against persons of unknown address?

- if Question 2 is in the negative, can the making of submissions by a court-appointed guardian of the defendant in the case be regarded on its own as submission by the defendant to the jurisdiction of the local court for the purposes of Article 24 of the Brussels I Regulation, even where the subject-matter of the dispute is a claim arising out of a consumer contract and the courts of the Czeck Republic would not have jurisdiction under Article 16(2) of that Regulation to determine that dispute?

- can an agreement on the local jurisdiction of a particular court be regarded as establishing the international jurisdiction of the chosen court for the purposes of Article 17(3) of the Brussels I Regulation, and, if so, does that apply even if the agreement on local jurisdiction is invalid for conflict with Article 6(1) of Directive 93/13 on unfair terms in consumer contracts?

The issues arising from the case, as we can see, touch upon a number of issues. The first one is quickly answered by A-G Trstenjak, who rightly states that nationality is not of relevance in this situation: the cross-border element is present as soon as the case raises issues that make the court wonder whether he has international jurisdiction (Opinion at 59). The Brussels I Regulation, therefore, decides jurisdiction in this case.

The A-G continues to discuss the application of the Regulation, in particular in light of the fact that this is a consumer case. This normally means that the consumer can object to proceedings in a country other than his own on the basis of Article 16(2), which gives him the right to litigate in the court of his place of residence. But is that also the case here, where the consumer did not show up in court himself - although the court appointed a guardian to represent him - and where the choice of forum clause is possibly unfair?

A-G Trstenjak considers that the appointment of a guardian without the consumer's knowledge and consent is not enough to assume submission to the jurisdiction of the court under Article 24 of the Regulation. That would be at odds with Article 16(2) (Opinion at 82).

The choice of forum clause, according to the A-G, can validly assign international jurisdiction as long as it is not unfair within the meaning of Directive 93/13. According to the CJEU's earlier case law, the national judge will have to determine this on the basis of national law (Opinion at 97, 99, 103-104, 107, 111-112).

Should the judge be unable to assume jurisdiction on the basis of the choice of forum clause, he may still do so if Article 16(2) allows it. Article 16(2) assigns jurisdiction to the courts of the consumer's country of residence. That means, in this case, that the judge needs to determine whether the defendant is resident within the jurisdiction (Opinion at 114). If not, the judge must determine whether the defendant is resident in another Member State (Opinion at 116). This test, according to Article 26(1) of the Regulation, is a test that the judge must exercise ex officio (Opinion at 118). The question becomes one of burden of proof, in which the interests of the consumer - who is not present and who, as we have seen, the guardian may not without the consumer's knowledge represent - are decisive. The claimant may offer evidence but the judge is not bound to this information without further investigation (Opinion at 120).

The case shows how complicated questions of jurisdiction can get in international consumer cases. The A-G's application of the Brussels I Regulation, however, also shows that the Regulation is sensitive to consumer interests. The mechanisms of the Regulation in combination with the unfair terms cases - remember Océano! - make for a pretty tight safety net. Let's see what the Court of Justice says. We'll keep you posted...

Single Market Forum

Another upcoming conference will take place in Krakow, Poland from October 2-4 and there is still a possibility to register for it via this website.

The Single Market Forum forms part of the Single Market Act and will periodically gather market participants, e.g. businesses, social partners, non-governmental organisations and those representing citizens, public authorities at various levels of government and parliaments. It will examine the state of the Single Market, the transposition and application of directives, and exchange best practice. The Forum will contribute to policy evaluation s and will play its part in monitoring the implementation of the Single Market Act and its impact at grassroots level.

The workshops will be focused on the follow areas: professional qualifications; ADRs and ODRs; points of single contact (development of services directive); e-commerce; posting of workers and fundamental social rights; EU public procurement legislation; citizens and the Single Market; citizen's rights. 

Back to Class (Actions)

The autumn conference season has opened... Here's an interesting conference on class actions and mass litigation. The topic is a hot item in European consumer law, seeing for example the recent consultation on collective redress on which we posted earlier on this blog.

The 5th Annual Conference on the Globalization of Class Actions and Mass Litigation

Despite continuing controversy and strong opposition from some sectors, class action procedures and mass litigation continue to proliferate around the world. What challenges do class and mass actions present to judges, litigators, business enterprises, and civil society?

On December 8-9 2011 judges, practitioners and scholars will gather together at Raad van State in The Hague, the Netherlands, to share information, experiences and recommendations on these issues. The conference is co-organized by Deborah Hensler (Stanford Law School), Christopher Hodges (Oxford Centre for Socio-Legal Studies and Erasmus University) and Ianika Tzankova (Tilburg University). Key speakers and panelists are, among others, Mr. Kenneth Feinberg (Administrator, Gulf Coast Claims Facility and Former Special Master 9/11 Victims’ Compensation Fund), Prof. Camille Cameron (University of Melbourne), The Honorable Vaughn Walker (Chief Judge (ret.), US), The Honorable Lee Rosenthal (U.S. District Court, S.D. Texas), Prof. Axel Halfmeier (Frankfurt School of Finance and Management), The Honorable Mr. Justice David Steel (High Court of Justice, England & Wales), The Honorable Ivan Verougstraete (former President of the Belgian Court of Cassation and Visiting Professor of Law Georgetown University), The Honorable Frank Iacobucci (Chief Justice (ret.), Canada), and Prof. Francis McGovern (Duke University Law School).

Besides the discussion sessions, the preliminary results of the international research project - led by Hensler, Hodges, and Tzankova - in which cases litigated in class action and group proceedings are compared will be available at the 2011 conference. The conference is also interesting for members of the judiciary. More information on the conference and the registration can be found at: http://www.tilburguniversity.edu/research/institutes-and-research-groups/tisco/events/classactions/

eCalls - towards a European life-saving system

Last week the European Commission adopted a recommendation targeting mobile phone operators obliging them to make sure that their networks trasmit eCalls correctly (eCall: using ICT to save lives). What is an eCall, you ask?

eCall is an ICT system that can be implanted in a consumer's car (watch the video). Whenever it detects that the car was in an accident, it activates and automatically alerts the emergency services, by dialling emergency number and giving your GPS location. What is this means in practice is that the emergency services are notified sooner about the accident and have the exact location of the car, which leads to more speedy reaction in situations when time is often an issue. Moreover, the procedure has been unified throughout Europe which means that even when you travel abroad in your car you may expect the same service.

European Commission sees the importance of providing emergency services within minutes since the accident had happened and that is why the recommendation had been issued. Further plans include a new legislation that would obligate car manufacturers to instsall eCall devices in all new models of passenger cars and light vehicles on one hand, and on the other hand that would make sure that such eCalls are properly received and handled by emergency services all over Europe. The prediction is that this legislation will be fully implemented by 2015.

See also: Neelie Kroes Vice-President of the European Commission responsible for the Digital Agenda Deploying the eCall life-saving emergency call system European Parliament's Committee on Transport and Tourism

Musings on effectiveness of warning labels

How effective do you think warning labels on products are? The discussion about the purpose of placing such warning labels on consumer products has been going on for some time now. Sociologists mention e.g. that we might become desensitized to warning labels, if we find them on most products we buy. Still, politicians often argue that more laws should be introduced that would force businesses to place such warning labels on many more consumer products than the ones that already have such labels.

E.g. in Denmark there have been voices raised recently about a necessity for warning labels on soft drinks (Health minister calls for warning labels on soft drinks). What's the danger that these labels should warn consumers about? High sugar content. Of course, there are already laws in place that force producers of soft drinks to publish specific content of their drinks, including revealing information on how much sugar they contain (read e.g. earlier post on new Regulation on Food Information). It is believed, however, that most consumers either ignore the list of ingredients on consumer products or will not realize how high the content of sugar in these drinks is (not to mention that some people are actually attracted by warnings, read e.g. earlier post on Morbid warnings on cigarette packs). Therefore, the Danish health minister calls for specific warning labels on soft drinks that could contribute to scaring consumers off purchasing such drinks and to fighting the modern plague of obesity. So far he calls for business to introduce such warning labels voluntarily, but it can be expected that a legislation initiative would follow. 

Do you think it could work? Personally, I doubt it, since if higher prices cannot discourage consumers from buying certain products (a tax for soft drinks was raised in the past few years in Denmark), a warning label on a bottle seems to be deemed to be ignored, as well. Most consumers, in my opinion, would read it with the first bottle of soft drink they'd be purchasing, maybe think about the high sugar content for a second, and maybe even decide that they'd limit their purchases of soft drinks... I have little faith, though, that consumers' resolution would hold for long in this case. To the contrary, just like with warnings on cigarette packs, I'm certain that consumers would quickly stop seeing them. I cannot help but think about the gyms that are full in January, with many consumers acting up on their New Year's resolution to become more fit, and how they empty again mid February... I believe that's what would happen if these warning labels were placed on soft drinks bottles.

Contract law - work in progress

Earlier, we posted on the publication of the Expert Group on European Contract Law's 'feasibility study' for a future instrument in this field. The European Commission's work (in progress) on the further development of the proposed rules can now be followed on the website of DG Justice.

To be continued.