EU households still in the financial crisis

The European Commission published some new surveys results as to EU citizens dealing with the financial crisis and its effects on both the employment market and household expenses (Employment and Social Situation Quarterly Review). In general, it is estimated that since 2008 the level of financial distress in EU households remains more or less the same, despite a moderate improvement over recent months. The slight improvement manifests itself by a fewer number of households reporting that they are running into debt. Not surprisingly, the lingering effects of the financial crisis influence more the households with lower income. Additionally, there is a difference across Member States with consumers in Germany and Sweden reporting improvement of their situations and households in Greece, Spain and Romania - deterioration of their finances.

On the effects of the financial crisis on the labour market and child poverty see this quarterly review.

Towards no stress roaming

Following the European Commission's proposal of last year (on which we posted earlier), members of the European Parliament and representatives of the Council and the European Commission have now reached a preliminary deal on new EU Roaming rules. The agreement comprises three points of action:

Delivering cheaper roaming through competition

'From 1 July 2014, customers will have the option to shop around for the best deal and sign up for a separate mobile contract for roaming, which may be different from their domestic mobile provider, whilst keeping the same phone number. Each time the customer crosses a border, his or her phone will switch to the network of the roaming provider which they have chosen, without any further action on their part. Customers will also have the option to directly select a local mobile network for data roaming in the country they are visiting (more details below).

As from 1st July 2012, virtual mobile operators and resellers, who do not have their own networks will immediately have the right to access other operators' networks at regulated wholesale prices in order to provide roaming services (together with national services) to their customers. This will already create more competition between operators, and so increase the incentives for them to offer customers more attractive roaming prices and services.'

Facilitating data roaming

'From July 2014, mobile operators in visited countries will have the possibility to directly offer data roaming services on their own networks to travellers, which consumers can select either in advance or on the spot.'

Cheaper roaming through price caps until retail prices will have been driven down by competition (according to the agreement: till 30 June 2017).

The European Parliament is expected to approve the agreement in May and the Council in June. The new rules could then enter into force on 1st July 2012.

See also the Commission's roaming website for more information.

Towards no stress flying

Today the European Parliament adopted a resolution on the functioning and application of established rights of people travelling by air. The European Commission is called upon to strengthen the rules on help and compensation for flight cancellations and delays, including luggage delays over 6 hours (MEPs push for clear and enforceable air passenger rights). MEPs demand clarification of certain definitions, like 'extraordinary circumstances' and 'cancellation', so that the airlines may not escape their liability by using loopholes in these definitions. Moreover, there is a need for better information services and assistance at the airports in case alternative travel route needs to be found, so that immediate decisions may be made on assistance, rerouting and rebooking. The European Commission should also prepare a standard draft of a complaint form in all EU languages that would be given to passengers in case of any disruption of their flights, so that they would be confronted with the same procedure regardless of the airlines they had used. Again, it was repeated that if airlines go bankrupt, passengers should be repatriated free of charge. Other matters that are seen as requiring more harmonisation and stricter regulation are: rules on hand luggage, clear pricing, prohibition of non-optional-extra-fees when booking online, unilateral rescheduling of flights and price discrimination based on the country of residence of passengers. MEPs suggest also making it clear on an airline ticket what is the trip's environmental impact. Finally, passengers should have full access to information about PNR data and its use, as well as be able to withdraw or change their ticket reservation free of charge within two hours from making it.

Why not more serious?

Yesterday I have mentioned that the EESC is soon expected to give four opinions related to consumer protection measures (Expecting opinions of the EESC). Today a press released was issued in which the EESC calls on the European institutions to take consumer rights more seriously (The EU should take consumer rights more seriously, says the EESC). After having voted on the newly drafted provisions on alternative dispute resolution (ADR) and online dispute resolution (ODR), the EESC expressed its concern as to the setup and functionalities of the planned ODR platform. The criticism addressed the narrow scope of the platform, limits as to its practical usability, technical innovation and legal certainty. Moreover, the EESC believes that the European regulation should be more ambitious and broader in scope. They advocate for an ODR platform that would be available for all types of transactions, regardless of whether they are concluded online or offline, cross-border or inside one country only. Also the Consumer Programme 2014-2020 was criticised, since it does not provide for a sufficient budget to place consumers at the centre of EU policies.

Protection of medical records of patients in clinical trials

The subject of the protection of personal data of EU citizens was also under debate yesterday by the Heads of Medicines Agencies (HMA) and the European Medicines Agency (EMA). They have adopted a joint guidance document  and principles document to increase transparency as to when regulators may release certain medical data in response to access to documents requests (European medicines regulators agree a common, Europe-wide approach for the identification of commercially confidential information and personal data). This initiative is supposed to help the authorities to cope with requests for access to clinical and safety data contained in a marketing authorisation application. From the consumer perspective, it is important that these guidelines determine how to protect personal data (as defined by the EU Directive 95/46/EC) if it can lead to the identification of a person. It is especially applicable to personal data relating to experts, staff or patients that are taking part in, e.g., clinical trials whose data should be redacted before releasing.

Passenger Name Record - your flying data forever in retention of the US government?

As we mentioned previously (Calling for better air passengers' rights) the Civil Liberties Committee of the European Parliament (LIBE) voted yesterday on the draft recommendation on the conclusion of the Agreement between the EU and the US for the use and transfer of Passenger Name Record (PNR) data. PNR data is information provided by passengers and collected by air carriers during reservation and check-in procedures (e.g. name, address, phone number, credit card details, travel agency data, baggage information, seat number, but also 'sensitive data' like religious meal choice or requests for assistance due to a medical condition). This agreement intends to help in prevention and combating of terrorism and other serious transnational crime (defined as crimes punishable by at least 3 years of imprisonment under US law). As previously mentioned the members of the LIBE were split as to whether to agree to this Agreement, but with a small majority (31-23) the draft recommendation to decline to give the consent was rejected. The Agreement will now be put to a plenary vote on the 19th of April. If approved it will bind for 7 years. If rejected, the Parliament may want to vote on extending the currently, provisionally binding Agreement of 2007.

The main problems that some of the members of the LIBE had with the Agreement are as follows (see also: Transfer of air passengers' data to the US - What's at stake?):

• PNR data could also serve "to identify persons who would be subject to closer questioning or examination"
• the duration for which PNR data will be stored (up to 5 years in an active database, after first 6 months it is to be depersonalised, up to 10 years in a dormant database, after 10 years data would be fully anonymized which means that the retention period is indefinite)

Expecting opinions of the EESC

The European Economic and Social Committee (EESC) meets today on a plenary session. One of the points on their agenda relates to strengthening the protection of consumers in cross-border trade. To this aim the EESC is to give four opinions within the consumer package on: "Consumer programme 2014-2020", "Common European sales law", "Alternative dispute resolution" and "Online dispute resolution for consumer disputes".

Seduced by plastic... or not?

On the 20th of April, the Amsterdam Center for Law and Economics (ACLE) organizes a conference on Behavioral Competition & Regulation. A brief introduction to the topic can be found on their website:

'Much of competition policy and regulation is based on insights from economic models with rational decision-makers. Yet a substantial body of research shows that many individuals are better characterized as being boundedly rational. In consumption choices as well as contexts that resemble executive decisions, people display such deviations from rationality as time inconsistency, overweighting of small probabilities, and failure to ignore sunk costs. Where one side of a market is not fully rational, the other side tailors its behavior accordingly. For instance, credit card companies may impose attractive baseline repayment terms combined with large penalties for late payments. This will attract borrowers that are time inconsistent and not sophisticated enough to foresee their temptations. That is, business strategies may display non-standard features, which regulators and competition authorities need to understand to be effective.

This year’s ACLE Competition & Regulation Meeting focuses on what we can learn from behavioral economics for the enforcement of competition law and regulation.'

This promises to be an interesting event for anyone with an interest in behavioral economics and law. In particular, issues of consumer credit deserve to be further explored. US literature is much further ahead in comparison to Europe: interesting work on this has been done by Oren Bar-Gill. For a selection of his articles, see ssrn. The ACLE conference could be a good starting point for research and discussion on the EU consumer credit market.

Whatever happens, air passengers need to be cared for - AG's opinion in McDonagh (C-12/11)

22 March 2012: AG's Bot opinion in case McDonagh (C-12/11)

Everyone in Europe still recalls the consequences of volcano's eruption in Iceland in March 2010: closing of airspace over most of northern Europe for over a week in April. Flights cancelled (over 100.000 flights), people stuck away from home (10 million passengers unable to travel), often without any or with little assistance from their air carriers or travel agencies. Ryanair had to cancel ca 9.500 flights, which effected 1.4 million of its passengers due to these extraordinary circumstances. The Regulation 261/2004 limits passengers rights in case the cancellation of the flight is a result of extraordinary circumstances. Passengers are not entitled to any compensation based on Article 7 of the Regulation under such circumstances. Ms McDonagh was one of the passengers that was supposed to travel from Faro to Dublin on the 17th of April 2010 and her flight got cancelled because of the volcano eruption. She was able to return to Ireland only on the 24th of April 2010. Ms McDonaugh claims she did not receive any care and assistance from Ryanair, to which she was entitled based on Article 5 and 9 of that Regulation. She claims compensation of the costs she incurred for meals, refreshments, accommodation and transport. 

The question referred to the CJEU is whether the prolong disruption to air travel, such as caused by the eruption of the volcano in Iceland, could be seen as going beyond 'extraordinary circumstances' within the meaning of the Regulation that would justify exclusion of the application of Articles 5 and 9 of the Regulation. If that is not the case, the referring court inquires whether the application of these articles could not be excluded based on the violation of the principles of proportionality and non-discrimination, and the principle of an 'equitable balance of interests' as expressed in the Montreal Convention. However, if the CJEU considers that these articles should still be applicable in such extreme circumstances, the referring court inquires whether the obligations places on air carriers in these articles could be subject to an implied limitation (temporal and/or a monetary limit)... Summing up, the referring court does not consider the obligation of air carriers to provide all passengers of cancelled flights with care and assistance for a prolonged period as a fair one and tries to find a way to justify an exclusion or limitation of such an obligation under the EU law.

The Advocate General's answer in short is: no limitation nor release from an obligation of providing care for passengers whose flights have been cancelled owing to extraordinary circumstances, even if they have a prolonged character.

If the CJEU follows the reasoning of the AG that will be good news to passengers, and a rather devastating one to the airlines. Providing meals, alternative accommodation, transport etc. to thousands of stranded passengers in 2010, could well financially cripple most of the airlines operating in the EU. Of course, consumers may also end up not being so happy with this assessment, since in the end if the CJEU confirms it, the cost that the airlines have to incur will be passed on to consumers by airlines raising the price of tickets.

The AG in its opinion reminds that Art. 5 provides the passengers of cancelled flights with rights to receive assistance as well as to receive compensation. Only this second right is excluded in case of the cancellation due to extraordinary circumstances. (Par. 27) The notion of extraordinary circumstances is supposed to encompass all exceptional events that could not have been avoided even if all reasonable measures had been taken, which seems to encompass closing of airspace due to the eruption of a volcano, as well. (Par. 29, 32-34) The AG uses language interpretation of the term used in the Regulation, as well as refers back to the drafting process thereof, the aim of the provisions and their context to justify that there may not be a category of 'particularly extraordinary' events that would fully release the air carrier from its obligations. (Par. 32-26)

"In that regard, the obligation on the air carrier, which consists in providing care for passengers whose flights have been cancelled, by supplying them with refreshments, meals or accommodation or making available to them means of communication with third parties, is designed to cater for passengers’ immediate needs on the spot, whatever the cause of the flight’s cancellation, and to enhance the protection afforded to passengers’ interests." (Par. 38)

The aim of this provision is to enable passengers continuation of their travel under satisfactory conditions (Par. 41), when they find themselves in a vulnerable position, which is even more the case when the passengers are stranded at an airport on account of extraordinary circumstances. (Par. 42) Therefore, the AG considers prolonged closing of airspace as a 'regular' extraordinary circumstance, that still obliges the air carriers to provide care and assistance to their passengers, based on Art. 5 and 9 of the Regulation.

The AG does not find a justification to limit that obligation of air carriers to, e.g., a specific daily amount that would be provided to passengers to cover their accommodation or meals, or compensation of only public transport used by passengers and not taxis, or compensation for only a certain amount of time. (par. 50)

"It is precisely in situations where the waiting period occasioned by the cancellation of a flight is particularly lengthy that it is necessary to ensure that an air passenger whose flight has been cancelled can have access to essential goods and services throughout that period. It should be noted in that connection that Article 9 of Regulation No 261/2004, far from placing an implied limitation on the provision of care, states that passengers are to be offered free of charge ‘meals and refreshments in a reasonable relation to the waiting time’." (Par. 52)

The AG contradicts here the European Commission's guidelines that have been issued to airlines after the volcano eruption (see our earlier post). While the European Commission insisted on passengers needing to be provided with care and assistance, it also claimed that providing this care should not impose an unfair and disproportionate burden on the air carriers. Therefore, pursuant to the EC, the assistance should be provided within the limits of what is proportionate and reasonable in the light of specific circumstances. (Par. 56) The AG sees these guidelines as effectively placing an implied limitation on the provision of care. Such factors should only be taken into account by a national court assessing whether the sums claimed by passengers are reasonable. (Par. 57) Moreover, the AG considers the airlines to be free to pass on the costs incurred as a result of the obligation to provide care and assistance to passengers to airline ticket prices, which also Ryanair had done. (Par. 58-59) All in all, it does not consider that the application of Articles 5 and 9 would infringe the principle of proportionality, in this case (nor any other principle).

Human rights in business (II)

What are the responsibilities of businesses in regard to human rights protection? And what can the EU do to motivate businesses to respect and possibly promote human rights in non-EU countries? These questions are of particular significance in light of the growing use of new media as fora for expression of opinions and distribution of information, since internet providers play a key role in giving access to these platforms. 

In the human rights report 2010 that was approved by the European Parliament's Foreign Affairs Committee yesterday, MEPs call upon the European Commission to develop rules for increased monitoring of internet use and of the new technologies used by autocratic regimes to restrict internet access. The report states that '[i]nternet service providers must learn the lessons of past mistakes, such as Vodafone’s decision to give in to demands from the Egyptian authorities in the last weeks of the Mubarak regime to suspend services, and to disseminate pro-government propaganda'. According to the Parliament's press release, '[t]he report invites the European Commission to table, by 2013, regulatory proposals to improve monitoring of exports of goods and services that can be used to block access to websites. These proposals should include provisions to enhance transparency for EU and EU-based companies, it adds'.

For an overview of the EU's actions and ambitions in the field of human rights protection, see also the EU annual report on Human Rights and Democracy in the World in 2010.

Standardisation for consumers' sake

The European Parliament is preparing a draft regulation that would modernise the European standardisation process (EU standardisation work: let small firms and consumers join in, says committee). Nowadays, companies who produce and sale EU goods and services may choose to work with various standards (local, national, or European). Upon the adoption of the new regulation the process of development of EU standards would be modernised. EU standards are voluntary, but a company who adopts them may rest assured that their goods and services are meeting legal requirements within the EU. Member States may not hold standards that would conflict with the EU standards (outside the social services and public health sector). That helps standardise procedures for companies distributing their goods among many Member States, and to lower transaction costs, though the last one would only fully take hold if Member States were forbidden to introduce additional standards beyond the European ones. The main benefit for consumers is that the goods bought within the EU market that conform to these standards are interoperable and compatible. The newly drafted rules aim to assure participation of consumer organisations (as well as that of SMEs), including people with special needs, when new EU standards are to be established. The amendments proposed by the IMCO may be found here.

"F" for Poland and Czech Republic

Many consumers may not be aware where the signs on the refrigerators, washing machines, dishwashers etc. that point out to their energy use and environmental friendliness (B, A, A+ etc.) come from but at least they started being aware of different levels of energy consumption of consumer goods. Part of this consumer awareness is due to the Energy Labelling Directive that obligates the Member States to enforce uniform labelling of consumer goods within the EU. This allows consumers to have more and easily-accessible information as to the energy efficiency of consumer goods that they are contemplating to purchase, which may lead them to make purchase decision based on energy-saving strategies, as well (and save a few polar bears in the process... yay!). Unfortunately, Poland and Czech Republic seem to be behind with the implementation measures what the European Commission has pointed out today (Energy Labelling...).

Everyone wants a bite of Apple

Yesterday the European Consumer Organisation BEUC published a press release concerning unfair commercial practices conducted by Apple as far as the product guarantees that they issue are concerned. BEUC calls for an immediate stop to these misleading practices (Consumer organisations across EU call on Apple to stop misleading practices on product guarantees).

In December 2011 Apple was fined 900.000 Euro by the Italian Competition Authority. It was proven that Apple prominently advertised that its products come with a one year manufacturer warranty, without clearly indicating consumers' automatic and free-of-cost entitlement to a minimum 2-year guarantee under EU law (unfair commercial practice no. 1). Moreover, objections were made as to the way its 'AppleCare Protection Plan' warranty extension was presented and sold to consumers. Apple appealed from this decision, so the final verdict has not been given yet. However, in the meantime, many consumer groups in other Member States (Belgium, Portugal, Luxembourg, Germany, the Netherlands, Denmark, Poland, Spain, Slovenia and Greece) received complaints from their consumers about similar practices of Apple. Therefore, Apple is being called upon to stop with these practices.

What's the problem? Consumers are given certain guarantees by EU law as to what they may expect of their product, e.g., how long it should work, not need a repair, etc. Some sellers and producers choose not to mention these free, obligatory guarantees and instead present an option to 'consumers' to buy a guarantee from them (at a special price, of course). Consumers may be confused, not known that they are entitled to such guarantees to begin with and decide to purchase a commercial guarantee of the seller/producer, e.g., Apple. This is a clear example of a misleading commercial practice.

Removing icebergs in transatlantic data protection?

Yesterday a High Level Conference on Privacy and Protection of Personal Data took place under auspicies of the European Commission and the US Secretary of Commerce.

"This is a defining moment for global personal data protection and privacy policy and for achieving further interoperability of our systems on a high level of protection. On January 25, 2012, the European Commission adopted legislative proposals to reform and strengthen the fundamental right to data protection and unify the EU’s data protection laws and enforcement rules. On February 23, 2012, the United States released its privacy blueprint, including the Consumer Privacy Bill of Rights." from the joint statement (to be found here)

The cooperation between EU and US as far as data protection is concerned is necessary, taking into account the global character of the internet and the difficulties with enforcement of national rules if there is no international framework to protect privacy. With that in mind both parties reaffirmed their commitments to the US-EU Safe Harbor Framework yesterday. Unfortunately, specifics of the conference were not revealed (yet?). One cannot help but wonder whether and if yes, what kind of further harmonisation measures were discussed and whether the whole project will sink under the weight of differences in existing and planned regualtions.

Taking account of banking services

Today, the European Commission launched a public consultation on bank accounts aimed at gathering 'stakeholders’ views on the need for action and on the possible measures to be taken in relation to the issues of transparency and comparability of bank account fees, bank account switching and access to a basic payment account' (see also an earlier post on the difficulties faced by consumers when switching bank accounts). The Commission intends to use the results of the consultation when identifying and designing the measures to be included in its Bank Accounts initiative later this year.

The consultation is open to all stakeholders (including citizens and organisations, as well as market participants, national governments and national competent authorities) and will run till 12 June 2012.

Unfair terms and unfair commercial practices' relation - CJEU in case C-453/10 Pereničová and Perenič

15 March 2012: CJEU judgment in case C-453/10 Pereničová and Perenič.

Previously, we have discussed the opinion of the AG in this case (see: Unfair commercial practice...). Since the CJEU followed the opinion of the AG we refer you to our discussion thereof in order to find out how this ruling influences consumer protection against unfair contract terms and unfair commercial practices.

An elderly uncle living in another Member State? - on cross-border inheritance

Two days ago, on the 13th of March 2012, the European Parliament adopted the proposed Regulation on jurisdiction, applicable law, recognition and enforcement of decisions and authentic instruments in matters of succession and the creation of a European Certificate of Succession (PE 441.200v03-00). The text of this Regulation still needs to be adopted by the Council before it comes into force (EU-wide rules in matters of succession - Background).

The new regulation will directily apply in all Member States, except Denmark, United Kingdom and Ireland. These new rules would simplify succession in cross-border situations, when laws of more than one Member State may be applicable, making inheritance within Europe easier, cheaper and faster. The regulation intends to treat succesion to the estate of a deceased person as a whole irrespective of the nature or the location of the assets. It will give authority to decide over succession to one body and only one law would be applicable. In general, the law applicable to the succession will be the law of the State of the deceased's habitual residence at the time of his death. However, he will have a possibility to choose the law of a State of which he is a national, as well. This is believed, to enable anyone living abroad within the EU to retain a close link with his home country. Succession decision issued by any court within the EU, as well as notary issued documents, will be recognised and enforceable throughout the EU. The creation of a European Certificate of Succession will enable the person who draws up the will to safeguard the rights of his heirs, as well as of his creditors, and to make the legal position of successors clearer. (Making cross-border inheritances easier)

Are words all we have? - on EP's resolution on child labour in cocoa sector

Today the European Parliament passed a resolution aimed at increasing awareness of the problem of child labour in cocoa fields (Chocolate without the guild of child labour). The EU is the world's leading consumer of chocolate (40% of world's cocoa) and home to many major chocolate manufacturers. While they enjoy consumption of delicious chocolate products, not many Europeans stop to wonder about the process of its production. We may know that chocolate is made of cocoa, but would anyone gather a guess that it is over 215 million children worldwide that are used as child labourers (according to the ILO's estimations) and many of these children work in cocoa fields? The resolution of the European Parliament calls on everyone in the cocoa value chain (not only cocoa growers, but also governments, traders and consumers) to be aware of forced child labour and child trafficking and to fight it. Of course, not all children work can be classified as child labour and many children work to help their families survive in Africa. However, certain studies conducted in Ghana and Cote d'Ivoire suggest that children working on cocoa farms may suffer from exposition to pesticides and may have been trafficked. 

Unfortunately, the new International Cocoa Agreement that was approved today by the European Parliament does not address a problem of child labour. Since it is the main commodity agreement between cocoa exporters and importers, one could expect that a provision on detecting whether goods are produced by forced child labour and prohibiting trade of such goods could be the most effective if it were included in this agreement. The resolution expresses nice ideas, but they remain just ideas as long as they are included in non-binding documents. After all, in the past the European Parliament had even called for a ban on child labour in trade, not to mention for an introduction of "child labour free" product labelling. It's only words...

If we took a holiday...

A week ago a new Eurobarometer survey on tourism was published (Tourism to become economic driver in 2012). It shows quite interesting statistics as to the EU consumers' tourist habits:

- 72% of EU citizens travelled in 2011: Spain was the most visited country

- over 80% of EU citizens expected to travel in 2012

- majority of EU citizens prefers to arrange their holidays by themselves: 53% of Europeans booked their holidays via internet

- 49% of EU travellers in 2011 organised the various elements of their trip separately, instead of booking one package

- word of mouth recommendations of friends and family were relied on by 52% of EU travellers

- 40% relied on internet websites recommendations

- 78% of EU travellers chose car and motorbike as means of transportation (in 2010 - only 44%)

- 46% travelled by plane (in 2010 - 39%)

- 54% of EU travellers going on short trips and 60% spending at least 4 nights away - used hotels or rented accommodations

- 48% of EU travellers looked for 'rest and recreation' (next objectives:  sun and beach; visiting family and friends)

- over 50% of EU citizens would go back to the same place for its natural beauty

- over 90% of EU citizens were satisfied with their travelling choices

Critical look at the new data protection rules

Last Wednesday the European Data Protection Supervisor (EDPS) issued an opinion (EPDS applauds strengthening of the right to data protection in Europe, but still regrets the lack of comprehensiveness) regarding, among others, the proposed changes to the Data Protection Directive (we mentioned earlier that the European Commission plans to adopt a new directive and regulation in this area - see: EU data protection reform announced). 

The EDPS positively assessed certain aspects of the to-be-adopted regulation. For example, due to its direct applicability it should harmonise the national laws in Europe to a higher extent than they are now. Moreover, its rules aim at strengthening the rights of individuals and making data controllers more accountable for how they handle personal data. Additionally, it should enhance the role and powers of national supervisory authorities. However, the current draft raises also certain concerns, as to the following issues: possibilities for restricting basic principles and rights; possible derogation for transferring data to third countries; excessive powers granted to the Commission; new ground for exceptions to the purpose limitation principle. 

The EDPS also considers the drafted directive to be below the requirements of a consistent and high level data protection, with main concerns being directed as to the rules set for data protection in the law enforcement.

"The proposed rules for data protection in the law enforcement area are unacceptably weak. In many instances there is no justification whatsoever for departing from the rules provided in the proposed Regulation. The law enforcement area requires some specific rules, but not a general lowering of the level of data protection." said Peter Hustinx, the EDPS.

In his opinion he referred to the lack of legal certainty about the further use of personal data by law enforcement authorities; the lack of a general duty for law enforcement authorities to demonstrate compliance with data protection requirements; the weak conditions for transfers to third countries; as well as the unduly limited powers of supervisory authorities.

Websites may be a click away from a durable medium - AG's opinion in case C-49/11 (Content Services)

6 March 2012 - AG Mengozzi's opinion in the case C-49/11 (Content Services)

The issue raised in this case concerned interpretation of Article 5 of the Distance Selling Directive (Directive 97/7/EC). Article 5 states that upon conclusion of a distance selling contract consumers must receive confirmation of certain information in a 'durable medium'. The question asked by the German court to the CJEU was whether information available on the vendor's website, that consumers can access by clicking on a link displayed at the time when the contract is concluded, may be regarded as having been given to the consumer in a durable medium. Short answer: no, it may not.

Practise:

The company Content Services operates an internet site (opendownload.de), which is configured in German and enables internet users to download free software by providing a collection of links to programs that are freely available on the internet. This website may also be accessed by internet users in Austria. (Par. 9) The subscription to use this website was EUR 96 for one year. Internet users enter into a contract by filling in an interactive web page form on which, in particular, they need to tick in a box accepting the general terms and conditions and waiving their right of withdrawal. The information on the right of withdrawal (that needs to be given pursuant to Article 4 and 5 of the Directive) is not shown directly to the consumer. The consumer may access this and other information by clicking on a hyperlink on the contract sign-up page. (Par. 10) After concluding a contract, the customer receives an email with his user name and a password. The email does not mention the right of withdrawal. Following communication is an invoice for EUR 96 which reminds the customer that he had waives his right of withdrawal. (Par. 11)

Legal analysis:

The problem of this case is that a customer who may want to download free software online, only upon signing up at a website may realise that he had just concluded a subscription contract. Normally, upon realising that fact consumers would have withdrawn from a contract, but in this case they had waived their right of withdrawal. The company claimed that this waiver was valid, taking into account the fact that they made the information on the waiver of the right of withdrawal available on their website, which is in accordance with Article 4 of the Directive. (Par. 18) Content Services argued that confirmation of that information is not necessary since Article 5 stipulates that such a confirmation should be given:

"(...) unless the information has already been given to the consumer prior to conclusion of the contract in writing or on another durable medium available and accessible to him."

The AG considers that Article 5 places two fundamental requirements on the vendor: firstly, the consumer must receive the information; secondly, the consumer must be able to take control of the information. (Par. 23-26). The first element means that the information must be conveyed without the customer having to make any active effort to obtain it (which is confirmed by the language chosen in the Directive). (Par. 24) This is justified by the protective purpose of the Directive, which should bind towards all customers, even the less careful ones, who may not be able to recover the relevant information. (Par. 25) The second element aims at making consumer protection more effective, by making sure that the information is not conveyed to customers fleetingly and that they may consult it at a later time in order to be able to enforce their rights. (Par. 26) The fact that the information shall be conveyed on a 'durable medium' means that the consumer should have an opportunity to store, recover and reproduce the information over an adequate period of time. (Par. 27)

Taking into account these fundamental requirements the AG states the following about the case at hand. Firstly, requiring the customer to click on a hyperlink on the contract sign-up page in order to view the necessary information means that the customer needs to undertake a deliberate act, putting him in the 'active' role. Even if the action involved in clicking on a hyperlink is not difficult, it still means that the information is not 'received' by the customer but needs to be obtained by him.  (Par. 31) The AG emphasises that there does not seem to be any technological difficulty that would prevent the Content Services to provide the customer with the necessary information, taking into account that they electronically correspond with their customers. (Par. 32) Secondly, the AG considers whether a website could be seen as a durable medium. He recalls a recent EFTA judgment of January 2010:

"In that judgment, the EFTA Court found that, in principle, a website too can constitute a durable medium, provided that three cumulative conditions are met. Firstly, the site must allow the consumer to store the information received. Secondly, that storage must be guaranteed for a sufficiently long period: the period of time for which it must be able to be stored cannot be specified generally, but must be determined case by case. Finally, for the user’s protection, it must not be possible for the person who provided the information to change it." (Par. 39)

What is important in that evaluation is the question whether the information has been placed under the customer's control and is no longer under the control of the person giving it. (Par. 42) Pursuant to the AG a general web page, such as the page of Content Services, does not satisfy these conditions, since it is not placed under the control of the person who consults it, but remains under the control of the person who publishes it. This means that, e.g., Content Services could alter or delete this information at will. The claim that the user could act to print or store the page before it is changed should be rejected since then the user would be generating the durable medium and not the vendor. (Par. 43) As a final remark, the AG mentions that even if a website could be seen as a 'durable medium', the consumer is still supposed to 'receive' the information which means that placing a link to such a website (either on home page or in an email) still does not satisfy the first element of this test. The AG suggests that placing that information directly in the text of the email seems to be much simpler and more in the spirit of the Directive.

I disagree with that last remark of the AG. Imagine that the consumer is aware of the fact that the information is stored on a website since, e.g., the online vendor could make visiting such a website a mandatory step of the sing-up process. The consumer could not move further with his online registration if he had not visited that website. Or, upon conclusion of the contract, the browser could automatically open the website with the information - without the need for the consumer to click on a hyperlink. Well, in such a situation, having a hyperlink to that website stored in an email should not be seen any differently then the consumer looking up a letter in his archive. In both cases in order to re-access and consult the information the consumer needs to take certain physical action. It doesn't seem to make much difference whether the action would consist of finding the right letter among others and opening an envelope, or finding an email in an inbox and clicking on a hyperlink in it.

Who is the 'average consumer'?

An interesting comparison for EU lawyers looking at the 'average consumer' standard:

http://www.slaw.ca/2012/02/28/scc-strikes-blow-at-mail-sweepstakes/

Canada seems a more consumer-friendly place in this respect than the EU... perhaps it is time for a re-think on what counts as 'average' and whether consumers are in fact, as the Unfair Commercial Practices Directive presupposes, rational actors who are capable of looking after their own interests.

European Equal Pay Day

You may have missed it but yesterday was the second European Equal Pay Day. Last year in March we were reporting that women in the EU earn on average 17.5% less than men (International Women's Day...). This year the statistics are not much better since the percentage lowered by one (Equal Pay Day: Women in Europe still earn 16.4% less on average than men). The EU-wide event marks the extra number of days that women must work to match the amount of money earned by men (last year it was the 5th of March). The goal thereof is to raise awareness of the inequalities that still exist in the EU between the sexes.Interestingly, Poland has the lowest discrepancy - ca 2%, while the biggest one may be noted in Estonia - ca 27%. Despite the recent years showed a downward trend, in some countries the gap is widening, e.g. in France, Bulgaria, Latvia, Hungary, Portugal and Romania.


"European Equal Pay Day reminds us of the days and hours that women have been working 'for free' since 1 January. The principle of equal pay for equal work is written in the EU Treaties since 1957. It is high time that it is put in practice everywhere," said EU Justice Commissioner Viviane Reding, the Commission’s Vice-President.

To see more statistics go to the Gender pay gap website.
 

CESL going Dutch

Last Wednesday, a conference took place on the implications of the European Commission's proposal for a Common European Sales Law (CESL) for Dutch law. General questions related to the enactment of the instrument included:

- the CESL's legal basis (introduced by Jacobien Rutgers)

- opting into CESL, national mandatory law and the CESL's self-standing nature (Martijn Hesselink)

- the optional instrument and the Dutch procedural order (Mark Wissink)

- do we need the CESL? (Alex Geert Castermans)

Substantive matters that were discussed were:

- mitigation rules regarding damages (Anne Keirse)

- digital content (me)

- standard terms (Marco Loos)

- restitution (Albert Verheij)

- related services (Chris Jansen)

For an excellent summary of the main points of the conference, I happily refer to Gary Low's post on the Maastricht European Private Law blog (thanks, Gary!)

Insurance contract linked to investment funds is just an insurance contract - CJEU in González Alonso case C-166/11

1 March 2012: CJEU judgment in the case C-166/11 (González Alonso)

The dispute in this case concerned a consumer concluding a life insurance contract outside the premises of the insurance company. The contract concluded provided consumer with life assurance offered in return for payment of a monthly premium. That monthly premium was to be invested, in varying proportions, in fixed-rate investments, variable-rate investments and financial investment products. The question asked to the CJEU was whether such a contract falls under the scope of the Doorstep Selling Directive. If it did, then the consumer could withdraw from a contract. If it didn't, then the consumer was bound by the contract he had concluded.

Insurance contracts are excluded from the scope of the application of the Doorstep Selling Directive (art. 3(2)(d)). However, the consumer claimed that in this case he had concluded a "unit-linked" contract (of contract linked to investment funds) that is not excluded from the scope of the application of the Directive. The CJEU decided, however, that:

"(...) contracts which are ‘unit-linked’ or ‘linked to investment funds’, such as that concluded by Mr González Alonso, are common in insurance law. Thus, the European Union legislature took the view that that type of contract falls within a class of life assurance, as is clear from Annex I, point III to the Life Assurance Directive, read in conjunction with Article 2(1)(a) of that directive." (Par. 29)

As a result, insurance contracts linked to investment funds should be seen as insurance contracts that are excluded from the scope of the application of the Doorstep Selling Directive. (Par. 31-32)