Addressing consumers' concerns

The Internal Market and Consumer Protection Committee of the European Parliament adopted a nonbinding resolution this Tuesday in which it points out to the failures of the internal, single market that prevent consumers from using their rights effectively. The Committee addressed 20 main consumers' concerns based on the independent survey that was conducted in 2011 (The Single Market through the lens of the people: A snapshot of citizens' and businesses' 20 main concerns). The European Parliament is scheduled to vote on this proposal in October. (Member States must stop dragging their feet...) Some of the main concerns that it argues should be handled and solved by the European Commission are:

• administrative problems consumers face while importing cars from one Member State to another (suggested solution: MS should recognise each other's technical controls and simplify car registration process)
•  complicated procedures of opening a bank account (solution: universal access to basic banking services for European citizens)
• difficulties with having one's professional qualifications recognised (solution: European professional card)
• lack of information about the single market (solution: regular European interactive, informative campaigns)

New European rules on medical devices

The commission has issued today two regulation proposals with the intention to replace existing- and apparently obsolete- directives :

• A proposal for a Regulation on medical devices (to replace: Directive 90/385/EEC regarding active implantable medical devices and Directive 93/42/EEC regarding medical devices);
• A proposal for a Regulation on in vitro diagnostic medical devices (to replace Directive 98/79/EC regarding in vitro diagnostic medical devices).

The objective is to enlarge and clarify the scope of EU legislation, improve the functioning of assessment bodies, achieve more transparency and match the regulation to the current state of science while revising manufacturers' rights and duties. The commission also seeks to foster international trade by "alignment to international guidelines". 

Health and Consumer Policy Commissioner John Dalli said "Just a few months ago, everybody was shocked by the scandal involving fraudulent breast implants which affected tens of thousands of women in Europe and around the world. As policy makers, we must do our best never to let this happen again. This damaged the confidence of patients, consumers and healthcare professionals in the safety of the devices on which they rely every day. The proposals adopted today significantly tighten the controls so as to ensure that only safe devices are placed on the European Union's market at the same time, they foster innovation and contribute to maintaining the competitiveness of the medical device sector."

If you are curious to know more about how the regulations should fulfill this daunting functions, please have a look here and here.

More justice (and money) for consumer protection?

This month BEUC published an interesting position paper on Re-directing Justice. This paper encourages the European Commission to redirect portions of fines that it collects when monitoring infringements in EU competition law. Some of this money should go to consumer organisations and consumer-related projects, it is being argued. It is an interesting concept that definitely deserves further consideration. There is a causal link between infringement of competition law rules and negative influence thereof on consumers. It makes sense to penalise parties infringing consumer protection by making them pay for further enhancement thereof. That could solve some of the problems of inadequate funding of consumer policy as well as, partially, fill in the gap that the lack of EU collective redress mechanisms left. Since there are no EU collective redress mechanisms, consumers cannot effectively claim compensation from the parties infringing their rights. At this moment, only the administrative fines may discourage the parties from infringing the competition law rules but all the collected fines are used within the Community budget. Redistribution of these funds to consumer organisations would still not compensate the victims of the infringements but could possibly contribute to strengthening of consumer protection and diminish the number of future infringements. Currently, certain Member States (e.g. Italy) allow in their national laws for such a redistribution of part of the administrative sanctions in competition proceedings to projects that would benefit consumers (e.g. Italian consumer information site was funded through money gained from such sanctions). Such national measures are still, however, exceptional and definitely do not fill the gap at a European level.

Consumers and food

The minutes from a May meeting of the group Diet, Physical Activity and Health - A European Platform for Action are now available online. During the meeting the preliminary results of the annual report 2012 Platform monitoring have been presented, which show that the members of the platform promoted physical activity, worked on food reformulation (e.g., in line with the EU salt reduction framework) as well as introduced stricter definition of advertising to children. 

A few new national initiatives have been presented. And so, in France in the period 2012-2013 'Increasing vending choice to promote healthy eating habits' initiative is to be implemented. The French Vending Association introduced a 'Feel Good' label in November 2011 that is being assigned to vending machines and not to the products. Vending operators may volunteer to participate in the program and they will get the label if they offer a specific minimum number of products from four categories: beverages, cereals, fruit and vegetables, and milk products. At this point ca 3.000 vending machines (out of ca 50.000) in France qualify for receiving the label and are able to offer more healthy choices to consumers. This development was possible due to new technological possibilities for vending machines sustaining different temperatures in various parts thereof. It will be interesting to see whether this initiative will be picked up by other Member States. 

In Denmark specific action was undertaken to encourage industry to participate in the strategy of reducing salt intake by consumers. The goal is to reduce the daily salt intake by 3g by 2014. Aside the European framework and European-wide actions, the Danish government is looking into strengthening criteria for obtaining a keyhole label, which can be placed on 'healthier' products in terms, e.g., of salt. Special information campaigns are being conducted by the government, as well. Restaurants and catering in Denmark are being monitored to reduce the salt usage. Finally, industry of processed foods reported salt levels in their products and intends to adopt the lowest 40% fractile as its benchmarking target.

The BEUC announced during this meeting that it is looking into increasing consumer awareness about nutrition information in 'out of home' settings. Many consumers indicate that they would be interested in receiving this information, e.g., on calories, when they are eating out in a restaurant. The representatives of the European Modern Restaurant Association pointed out, however, that the European market for eating out is not uniform. In general, only 15% of European meals are consumed in restaurants. It differs by Member States whether consumers eat out in chain restaurants or SMEs. These differences may require different approach to providing consumers with proper information. Additionally, conducted empirical research shows that only 15% of consumers use calories information and there is no sufficient evidence that it changes consumer preferences. 

A research conduced by the European Food Information Council in 6 countries showed that almost all surveyed consumers checked the price and 'use by' date of the product, but only 30% looked at the portion information. Many consumers think that a portion is the amount a person should eat and what a person is likely to eat and often perceive it as either of a right or small size. Another research showed that 46% consumers know how many calories per day a person needs, with women being more knowledgeable than men. Many consumers wrongly believed that children's energy requirements were higher than adults'. Most consumers underestimate energy expenditure, as well. Consumers perceive high calorie-high fat products as the most unhealthy. (How do consumers respond to portion information on food and drink labels?)

Additionally, information was presented on whether more attractive labelling of food could contribute to better knowledge of nutrition information. The results of a survey show that while well-designed labels can attract attention, that is not enough to increase consumers' motivation to read labels. Consistency and familiarity are more important than adoption of a particular format. It was recommended to put the information on the front of product packaging. (Nutrition labelling can guide consumers but a lack of motivation and attention stand in the way of healthier food choices)

Making the Small Claims Procedure effective

Since 1 January 2009, the European Small Claims Procedure is in force. Its aim is to improve access to justice by simplifying cross-border small claims litigation in civil and commercial matters and reducing costs and especially to help consumers enforce their rights in cross-border cases.

It concerns claims amounting to maximum €2,000 excluding interest, expenses and disbursements . The consumer can choose whether to bring suit in his country of residence or in the country of the defending company. The decision is directly enforceable in the country of the losing party and in any other EU country. The procedure is conducted mostly in writing using pre-defined forms and it does not require the involvement of a lawyer.

Simple and useful, but... In 2010, a research led by ECC Italy, European Consumer Centres (ECCs) in the 27 EU Member States found that the procedure is relatively unknown – not only among consumers but among judges as well. Although the European Small Claims Procedure itself is in principle straightforward and free of charge, the enforcement of the judgement resulting from this procedure is often protracted by the losing party. As a consequence, only a minority of the positive rulings made by the courts in consumers' home countries, are actually enforced across borders.

Since, even in domestic markets, around 20% of European consumers report having encountered a problem in the past 12 months with a good, service, retailer or provider (with an average estimated loss of €375 per case), the Commission is working to improve the effectiveness of the Small Claim Procedure.

Here are the next steps to be taken:

• work with court authorities to promote awareness of the procedure;
• issue a guide providing practical advice to consumers and legal practitioners;
• raise awareness of the existing standard forms and make information available online in 22 official EU languages, through the European e-Justice Portal, to make it easier to register a claim and see how the procedure works;
• work with ECCs to actively promote the procedure among consumers and judges;
• encourage the ECCs to give concrete assistance to consumers to use the European Small Claims Procedure in individual cases;
• present an evaluation report on the operation of the procedure (including court fees, the speed and the ease of use of the procedure) and if necessary revise the European Small Claims Procedure to make it work more effectively for consumers by, for example, increasing the threshold of €2,000 to cover bigger claims or further simplifying the standard forms used to make a claim.

 Additionally, as of 2013, consumers in around 5-6 pilot countries will be able to complete the small claims forms and carry out the whole court procedure online, via the e-Justice portal.

It's a slippery slope from 'contain' to 'may contain'

Last week we mentioned on the blog that new rules on labelling food products have been accepted by the European Parliament (New regulations on food labelling coming up...). It seems that at least some Parliament's members are still not happy with the state of the European legislation concerning food labels. The main issue that was raised at this week's event that was hosted by the European federation of allergy and airways diseases patients' association (EFA) concerned the 'may contain' labelling and cross contamination information on food product packaging. The problem is the lack of a specific definition of 'may contain' label at a European level. (EU food labelling rules do 'not go far enough') There should be some yardstick according to which regulators and producers could measure the risk of a certain ingredient appearing in a product. Currently, consumers may either unnecessarily follow the 'may contain' labels (when producers cover their backs by including almost any known allergen on the list of what their product may contain) or ignore them, disregarding the potential risk that may be higher than just a mere possibility of the food being contaminated with a given allergen (the disbelief in such warning labels will likely follow excessive, untrue disclosures). There are also no clear rules about disclosing the risk of accidental contamination to consumers, which is often the case of allergens finding their way to some products.

Label on this salmon salad informs us under 'allergy information' not only as to what it contains (fish, mustard, etc.) but also that it may negatively influence attention and concentration of children! Is that something we should be allergic to?

Signing your name under a contract does not automatically make you a consumer - opinion of AG Sharpston in Česká Spořitelna (C-419/11)

20 September 2012: Opinion of AG Sharpston in Česká Spořitelna (C-419/11)

This case concerned interpretation of provisions of the Regulation No. 44/2001 on jurisdiction and recognition and enforcement of judgements in civil and commercial matters. Articles 15 and 16 of this Regulation set specific rules as to jurisdiction over consumer contracts.   

In the given case, a company - Feichter-Cz - having its seat in the Czech Republic entered into an overdraft agreement with Česká Spořitelna, also domiciled in the Czech Republic. The loan was provided for business purposes. The promissory note was signed by Mr Feichter, both in his capacity as a managing director of the Feichter-Cz as well as an individual. Mr Feichter was shareholder of 60% of shares in this company. The promissory note was later not honoured by the borrower. Česká Spořitelna started proceedings seeking payment with interest before Prague City Court. Mr Feichter objected to the jurisdiction of this court, since he claimed he was a natural person who had his domicile in Austria and any proceedings seeking to enforce payment under the promissory note would be subject to Articles 15 and 16 of the Regulation and should take place in the Member State of his domicile.

AG Sharpston observes in this case that it is a common lending practice to demand a guarantee by one or more of the individuals who owns and/or manages the business that is looking to obtain extra funds, especially if it is a start-up business. (Par. 23) For Articles 15 and 16 of the Regulation to apply to the current case two conditions need to be fulfilled cumulatively: the contract needed to be concluded by a consumer and had to fall within one of the categories mentioned in Article 15(1). (Par. 27) The AG has no doubts under the circumstances of the case that the first requirement has not been fulfilled. (Par. 34) Mr Feichter entered into a contract to support the business with which he was closely connected. Therefore, the aval given by a natural person to a promissory note in such a situation has to be treated as having been given for the purposes of trade or professional activity. (Par. 41)

The more general provision of Article 5(1) of the Regulation that determines jurisdiction in contract matters is applicable in the given case, pursuant to AG Sharpston. (Par. 48) For the applicability of this provision, it is sufficient that there was a contract between a lender and a borrower and that Mr Feichter by giving the aval under the promissory note consented to take a legal obligation upon himself. It does not matter that the promissory note was in incomplete form. (Par. 45-46) The AG Sharpston considers that it is the place of payment that will be determinative for establishing of jurisdiction in this case (which was Prague). (Par. 49)

Are consumers entitled to check their electricity usage or does that depend on their neighbours' ethnicity? - opinion of the AG Kokott in Belov (C-394/11)

20 September 2012: Opinion of the AG Kokott in Belov (C-394/11)

Mr Belov lives in a Bulgarian city in one of its districts known as 'Roma districts'.  Throughout his city, Montana, the electricity meters are placed at a height of up to 1.70m, usually in the consumer's home or on the outside walls of the building, or on surrounding fences. However, in these two Roma districts the electricity meters were attached to electricity poles at a height of 7m. As a result, consumers living in these neighbourhoods cannot easily check the electricity meters and their usage data. The electricity company enables consumers to make an indirect visual check on condition of a written request submitted three days in advance by facilitating a use of a special vehicle with a lifting platform, free of charge. If a consumer in these districts wants to have a meter installed in his house, he can obtain it upon paying an installation fee. Mr Belov argued in his and other Roma name that they were being discriminated against on the basis of their ethnic origin.

1. Scope of the Directive - does it cover providing electricity meters to consumers free of charge?

The AG Kokott reminds in this case that Article 3(1)(h) of the Directive 2000/43 on equal treatment prohibits discrimination based on racial or ethnic origin with respect to the supply of electricity. The electricity meters are being provided by the electricity supplier according with its general contract conditions, which means they are part of the agreement on the supply of electricity. (Par. 59) The provision of the Directive should not be understood as only applying to the provision of the electricity per se, and not elements associated with it, like the meters. (Par. 60)

"Imagine if a public transport company earmarked different seats on buses according to the gender, colour or ethnic origin of passengers. Even though all passengers were transported and thus undoubtedly benefited from the transport service as such, it would be obvious that the specific conditions under which they are transported are not equal." (Par. 61)

While the Directive applies only to service provided for consideration and electricity meters are supplied free of charge, it is likely that the price thereof has been included in the price of the supply of electricity. (Par. 65)

2. Compatibility of national law - adding another requirement to recognise discrimination

The other set of questions asked by the Bulgarian court concerned the compatibility of the Bulgarian law with the Directive. Bulgarian law requires an infringement of rights of interests defined in law to take place in order to recognise the existence of discrimination. The Directive does not pose such a requirement - it is sufficient that a person is treated less favourably than another is, has been or would be treated. (Par. 72) The Bulgarian law by adding another, stricter requirement is incompatible with the Directive. (Par. 76) In the opinion of the AG Kokott, the Bulgarian court should try to apply and interpret Bulgarian provisions in accordance with the Directive. (Par. 78) If this is not possible, then Mr Belov may not invoke protection of the Directive directly, since directives do not have a horizontal effect. (Par. 79) The national court should, however, disregard the national legislation which is contrary to the prohibition of discrimination established as a fundamental right in Article 21 of the Charter. (Par. 80)

3. Burden of proof - 'presumption' or 'conclusion' of discrimination? Form of discrimination?

The AG Kokott decides based mostly on the linguistic interpretation of the Directive, that the burden of proof whether there was discrimination takes place after the party who considers themselves discriminated presents facts that allow for a 'presumption' of discrimination. (Par. 88) In the given case, the electricity company would likely have to present facts that would justify a commercial decision (made long time ago) to install electricity meters in the Roma districts differently than is normal in Bulgaria. This is justified by the fact that the relevant information should be in their sphere of control. (Par. 93)

The facts that have been presented to the CJEU point, pursuant to AG Kokott, at indirect discrimination, since:

"It is clear, however, that the two districts concerned are inhabited predominantly by people belonging to the Roma community. Consequently, the practice of attaching electricity meters at a height of 7 m is liable, in principle, to affect members of that ethnic group in a particular way and to put them at a disadvantage, since it makes it virtually impossible or at least excessively difficult for them to make visual checks of the relevant electricity meters." (Par. 99)

The submitted evidence suggests that the measure of installing electricity meters at a height of 7m was taken because of a large number of unpaid electricity bills and in response to many cases of illegal interference with electricity supply infrastructure, manipulation and illegal electricity extraction in these two districts. The national court has to determine whether the measure taken to prevent future fraud and abuse (legitimate aim) was proportional. (Par. 101-102)

EU needs to better "monitor this new reality"

Yesterday, the European Economic and Social Committee in its plenary session adopted two opinions that argue for introducing more measures that would protect children against harmful advertising and damaging online content.

"More and more often, children, including very young children, have access to a television and the internet alone and unsupervised. 38% of children between the ages of 9 and 12 already have an online profile, and this figure rises to 78% for 13-16 year olds. We need to monitor this new reality" said Jorge Pedago Liz, who was the rapporteur for the EESC on the opinion on advertising aimed at young people and children. (EESC slates harmful ads and pushes for balance of e-commerce and kids' safety)

The EESC believes that the EU should introduce a coherent framework that would protect young Europeans by introducing certain restrictions on advertising directed at them (not only in audio-visual media but also in online advertising), with special attention being placed on food advertising (due to concerns about children obesity and eating disorders). Advertising aimed at children is seen as having a potential of harming their physical, mental or moral health (e.g., by encouraging children to over-consumption, which could lead to debt and consumption of harmful products). One of the EESC' recommendations is to set at the European level a universal minimum age for advertising specifically aimed at children. The EESC advises also to enrich the current school curricula by teaching children how to interpret advertising messages and how to properly use information technologies.

The second opinion focuses exclusively on the protection of children online. The European Strategy for a Better Internet for Children calls for stricter rules, especially in case of infringements having been discovered. The sanctions should include closure of the infringing websites and withdrawal of licenses (e.g., if data protection rules were breached or the website promoted child pornography) and cannot be left to the market to self-regulate. The EESC is worried that the European Commission in pursuing its Digital Agenda will place more importance on the business growth instead of on making sure that the highest level of children protection online is assured. This could be seen in the previous Communication of the European Commission (COM(2012) 196 final) where only generic commitments have been made.

The full texts of the opinions may be found here.

Men drive car insurance prices up

Last month we mentioned that the new interpretation of the Gender Directive of 2004 forces the insurers to abandon their current rules on calculating insurance premiums on the basis of gender. (Is living longer still worth it?) While women could and should be worried that their life insurance premiums are likely to rise, the change is likely to reach further. At this point women car insurance policies are often set lower than men policies. Why? Statistics show that male drivers under the age of 22 are ten times more likely to have a serious crash than female drivers of the same age. (Google car insurance comparison service threatens moneysupermarket and confused.com) Since the car insurance companies will not be able to take gender into account anymore in calculating the premiums and will have to balance the amounts, it is likely that the car insurance premiums for women will rise, as well.

Interestingly, Google decided to launch a price comparison service for car insurance in the UK, which entices internet users with promises of transparency (e.g., it doesn't take into account extras such as courtesy car by default, which is said to reduce the risk of a consumer buying a policy that doesn't match his needs) and privacy (e.g., ca 120 insurers won't be selling the data acquired from visitors to Google's comparison website to third parties). Google promises to monitor the truthfulness of the data provided by the insurer on its website as well as to introduce a code of conduct that all the insurers would have to abide by. While Google is not an amateur in this area, this service follows already existing services for price comparison of credit cards and bank accounts, its neutrality as a price comparison website can be questioned. After all, it puts itself now at the top of the google search results when you enter 'car insurance' into Google UK. The not long ago reported need for a regulatory oversight of price comparison websites remains valid. (Spoiled for choice or well-informed?)

Moving in the right direction

This week is a European Mobility Week 2012 with this year's focus on 'Moving in the right direction'. There are many actions and activities organised throughout the EU that promote alternative modes of transport to citizens and encourage consumers to reduce private car use. The event's aim is to raise awareness of sustainable urban transport, leading to the reduction of the use of fossil fuels.

"In responding to the challenge to make our cities cleaner and safer, we have to find the right balance for our daily travel needs. We are all frustrated by traffic congestion, noise and pollution, and we know the risk of road accidents, but quite often our good intentions do not translate into sustainable mobility. This is why European Mobility Week supports the development of pedestrian areas and cycle infrastructure, the improvement of public transport, and brings together local communities. We call on towns and cities to join us in making the right choices for public transport, shared road space and smooth mobility for all" said Vice-President Siim Kallas. (European Mobility Week 2012 "Moving in the right direction")

The European Commissions announced a new public consultation on the urban dimension of the EU transport policy which will be open until 17 December 2012. The aim of the consultation is to examine how best to contribute on a EU level to high-quality and sustainable urban transport and mobility, so that a concrete proposal could be introduced by the European Commission next year. (Urban transport: time to move sustainably)

Measuring noise pollution

One of the growing health and economic concerns is the EU is... the increased amount of noise pollution. Increased noise from rail, road and air traffic, inefficient urban planning as well as noise from the industry is often the bane of consumers' daily lives. Traffic-related noise could be responsible for over 1 million healthy life years lost in Europe. Last Friday a new set of common noise assessment methods was published. Only upon collecting comparable data in the EU on noise levels to which people are exposed, it would be possible to set up a EU policy that would reduce noise pollution. The data collection should last till the end of 2013. (Speaking the same language on noise exposure)

ELI on CESL - report available

The report of the European Law Institute's Working Party on the Common European Sales law is now available on the ELI's website. You can follow this link to download the report.

For an informative summary, please refer to Eric Clive's post on the European Private Law News blog.

EU-wide online access to orphan works soon possible

Certain photos, films, books and other artistic works are protected by copyright even though their right holders (authors) cannot be found. The gap in the current legislation is that no rules were made for when the right holder is nowhere to be found or not known (so-called: 'orphan works') and his permission for making use of the work cannot be obtained. As a result, many European libraries contain collections of such orphan works that they may not, e.g., display online without obtaining an author's permission. As a researcher it is especially frustrating to not have easy, online access to sources collected in another country of the EU where you are located. It's a square circle that stands in the way of sharing cultural heritage among Member States. The EU intends to enable digitisation of these works and also make it possible for EU citizens to access such orphan works from anywhere in Europe.

The new Directive on certain permitted uses of orphan works (see: text of the proposal) agreed on yesterday by the Members of the European Parliament will make it easier for public institutions to search for and use orphan works. If a 'diligent' and made in good faith search does not reveal a copyright holder, then the work may be deemed to be an 'orphan work'. Orphan works will be then made public in the EU, for non-profit purposes only, through digitisation. If at any time the right holder would be identified, he would be entitled to withdraw the 'orphan work' status and to claim appropriate compensation, taking into account actual damage done to author's interests, for the use made of it in the meantime.

New regulations on food labelling coming up: further protection for traditional and regional products

European Parliament has accepted new regulations for food labelling. The regulations aim to better protect and give clearer information, particularly on the issues of traditionally manufactured and regionally manufactured products.

The regulations will introduce the following definitions:

"Protected designation of origin" (PDO) - used for products produced, processed and also prepared in a given area e.g. Parmigiano Reggiano, Shetland Lamb, Feta, and Roquefort.

"Protected geographical indication" (PGI) - used for produce for which at least one production stage takes place in the specified region, e.g. Starobrněnské pivo, Schwarzwälder Schinken, or Castaña de Galicia.

"Traditional speciality guaranteed" (TSG) - producers using a recognised traditional method to make e.g. Vieille Kriek, Liptovská saláma, Kalakukko, or Prekmurska gibanica.

There will also be a new label for mountain products, and a label for local farming products and direct sale is on its way.

For more information, click here.

Unfair gas prices increase even if properly notified? - AG Trstenjak in RWE Vertrieb (C-92/11)

13 September 2012: Opinion AG Trstenjak in RWE Vertrieb (C-92/11)

Advocate General Trstenjak issued an opinion today on the interpretation of the provisions of the Unfair Contract Terms Directive 93/13. Unfortunately, it is not yet available in English, but here is a short summary of the case and the opinion (translated from German).

A German consumer rights organisation representing 25 consumers claimed reimbursement from the gas provider company - RWE Vertrieb. RWE Vertrieb raised the gas prices four times in the period 2003-2005, pursuant to their standard contract terms, which referred to standard, regulatory gas prices. However, these standard gas prices should not have been applied to consumers, claimed the German consumer rights organisation and claimed reimbursement of the paid amounts. It was undisputed, that whenever a consumer contested the application of standard gas prices prior to signing the contract, the gas company concluded a different contract with such a consumer, on more beneficial terms. For the 25 consumers who concluded a standard agreement there was no possibility to switch a gas provider after the prices were raised (due to the liberalisation of the energy market). The German consumer rights organisation considered the clause in standard contract terms as unfair.

The AG Trstenjak examined firstly Article 1(2) of the Directive which states that:

"The contractual terms which reflect mandatory statutory or regulatory provisions and the provisions or principles of international conventions to which the Member States or the Community are party, particularly in the transport area, shall not be subject to the provisions of this Directive."

The first question asked by the German Supreme Court concerned the material scope of the Directive by asking for the interpretation of the term 'mandatory statutory or regulatory provisions'. AG Trstenjak stated that this term must be interpreted as referring only to such provisions that will automatically apply to the contracting parties and their intended type of contract, and it is immaterial whether these provisions are binding in nature, that is whether a contracting party may derogate from them. This opinion was made based on teleological arguments and legal history of the term. In the given case it could mean that since the standard gas prices were not supposed to apply to consumer contracts, they could not be seen as mandatory provisions.

Secondly, the principle of transparency was the subject of the referral, since the RWE Vertrieb claimed that it notified consumers properly about the increase of the gas prices and that they could have terminated their contracts upon such a notification. AG Trstenjak decided that the violation of the principle of transparency (Art. 3 and 5 of the Directive) may take place even if the gas company guarantees to notify its customers of any price increases within a reasonable time in advance, and even if consumers are given a right to terminate the contract, if they do not want to accept the changed conditions they have been informed about.

ELI on CESL

Last week, the Council of the European Law Institute (ELI) endorsed the ELI Working Party's Statement on the proposal for a Common European Sales Law:

'The Working Party critically examined the CESL, making a number of practical recommendations designed to facilitate the achievement of its underlying policy objectives, which include enhancing the viability of the EU’s internal market through facilitating cross-border trade, both in respect of business to consumer transactions and business to business transactions; securing a high and uniform level of consumer protection across the European Union; maximising the opportunities which can accrue to small and medium enterprises (SMEs) from an effective internal market; maintaining the EU’s policy of non-discrimination against consumers and businesses from third countries; and maintaining, except in defined circumstances, freedom of contract.'

The full text of the Statement will be made available on the ELI's website shortly. The site also offers more information on the upcoming ELI conference and general assembly that will take place in Brussels on 28 and 29 of September.

No such thing as 'easily digestible' wine - CJEU in Deutsches Weintor C-544/10

6 September 2012: CJEU judgement in Deutsches Weintor (C-544/10)

Last Thursday the CJEU decided that wine producers may not label or market their wine as 'easily digestible' even if that 'health claim' is correct.

In order to protect consumers and assure that they are properly informed and not misled by 'creative' advertising in making their choice of products, the Regulation No 1924/2006 on nutrition and health claims made on foods sets out strict requirements for safe and adequate labelling of food and beverages. Using the words 'easily digestible' on wine labels counts as a health claim, pursuant to the CJEU, especially when it is accompanied by a reference to the reduced content of substances frequently perceived by consumers as being harmful. (Par. 27) Art. 4(3) of the Regulation prohibited all 'health claims' relating to alcohol beverages, which means that wine producers cannot claim that since the specific wine has reduced acidity it is particularly easy or pleasant to digest (producing a beneficial nutritional or physiological effect in consumers, making them believe that their digestive system will not suffer or suffer just a little from, even repeated, wine consumption). (Par. 30-31) It does not also matter that the health claim in question may have been technically correct, since the specific wine was less acidic than other wines. The health claim still remains incomplete, since it: "...is silent as to the fact that, regardless of a sound digestion, the dangers inherent in the consumption of alcoholic beverages are not in any way removed, or even limited." (Par. 51) Therefore, even a correct claim can be misleading to consumers and is prohibited in order to ensure a high level of health protection for consumers. (Par. 52)

Public policy, good morals and social justice in European private law

On 26 and 27 October, the Groningen Centre for Law and Governance (GCL) organises a conference on the theme of 'Public policy, good morals and social justice in European private law':

'The focus of the session on Friday will be social-justice-inspired interpretations and applications of legal concepts of public policy and good morals as limitations to the validity of contracts and other acts of private autonomy (e.g. testaments). For what concerns contract law, the EU Commission, at least for the time being, does not seem to be willing to include a norm over immoral contracts or contracts contrary to public policy in its proposed Regulation on a Common European Sales Law (CESL). In the CESL preparatory works, a norm over illegality/immorality was proposed by scholars but this was not included in the Commission draft. Does this mean that there will be no European harmonisation of interpretations and applications of private law concepts of public policy and good morals altogether? Will this playing field for socio-economic justice in contract law remain the domain of national law? Or could perhaps some sort of European harmonisation take place through horizontal governance, especially horizontal judicial governance? A spontaneous, step-by-step convergence could be fostered by increasing judicial cooperation, especially if public policy and immorality norms are interpreted and applied in the light of the common European fundamental rights.

The Saturday session will be a round table on the comparison of the interpretation and application of public policy rules in private law, private international law and primary EU law in the light of EU fundamental rights and principles of social justice.'

More information regarding the programme will follow shortly on the conference website.

Conference visitors interested in questions of European private law might want to combine this event with (a part of) the Maastricht conference on 'EU law and the private sphere' that was announced on this blog earlier.

We Do Need More Education

In the past two weeks the European news were filled with information on the need for better European education systems. Educating youth leads to better informed, empowered adult consumers so this is a topic close to my heart.

Last week the lack of sufficient European literacy was all over the news. Apparently, as much as one in five 15 year olds, as well as nearly 75 million adults, lack basic reading and writing skills. This comes from the new report published in September 2012. Illiteracy is one of the obstacles in finding a job and increases risks of poverty and social exclusion in Europe. Therefore, the European Union Education Ministers set a joint target to reduce the ratio of 15 year olds with reading problems to 15% in 2020 (from the current 20%). The report submitted by the High Level Group of experts in the field of literacy suggests as solution to this problem:

"...advice for parents on creating a culture of reading for pleasure with their children, to siting libraries in unconventional settings like shopping centres and the need to attract more male teachers to act as role models for boys, who read much less than girls. It also makes age-specific recommendations, calling for free, high-quality early childhood education and care for all, more specialist reading teachers in primary schools, a change of mind-set on dyslexia, arguing that almost every child can learn to read with the right support, and for more varied learning opportunities for adults, especially in the workplace." (High level group issues 'wake-up call' for Member States to address literacy crisis)

Check out the EU website on literacy. I'm curious as to what further measures would be undertaken by the EU, since this data could even be considered in deciding whether certain information given to consumers should be seen as clear and comprehensive (which is a requirement in many European consumer legislative measures).

This week another, related news was published - namely, on the wide fluctuations in cost of higher education and support for students in Europe. Apparently, while some Member States manage to upheld cost free higher education for students (and even grant some additional support, e.g., Austria or Scotland), other Member States ask students to pay more than 11000 euro per academic year (e.g. England/Wales/Northern Ireland). You may read the full report, prepared by the Eurydice network, here. European students are expected to compare the available data and shop around Europe (and not only in their home country) for the best, most suiting them (also taking into account costs and fees) higher education, just like they would do with any other consumer product or service.

Talking about money

Last week the Internal Market Committee of the European Parliament announced its doubts as to the sufficiency of the budget proposed for the 2014-2020 Consumer Programme. So far, 197 million euro was budgeted for proposed developments, mainly as far as safety, consumer information and education, redress and enforcement of consumer rights are concerned. While the Internal Market approves the main lines of the Consumer Programme and agrees to further, informal negotiations thereof with the Council, it would reshuffle certain priorities. For example, MEPs considered as very important the role of European consumer organisations in assisting and informing consumers, and therefore would grant them more funds than planned. Additionally, they proposed to finance an online portal for consumer organisations, which would lead to better cooperation and information flow among them. Another project that could be funded would be price comparison websites and certification labels for them. (Funding for the next EU Consumer Programme is inadequate, say MEPs)

'Everything must go' - on pre-requirements to announce sale - AG Trstenjak in C-206/11 Köck

6 September 2012: Opinion of the Advocate General Trstenjak: C-206/11 (Köck)

Yesterday, there was also an opinion issued in consumer law related case C-206/11 (Köck). The case concerned interpretation of the scope of the Unfair Commercial Practices Directive 2005/29. In Austria if a company wants to announce a sale of its goods it has to first obtain a permit for it from a regional authority. Köck is a retail company in Innsbruck and announced such 'full sale', 'everything has to go' without the permit. In related proceedings against it, it claimed that the requirement to obtain such an administrative permit is contrary to the provisions of the Directive, since it does not follow a test of the unfairness of the commercial practice but prohibits such practices regardless of its potentially fair character. 

Since I'm on holiday at the moment, the post is only a short summary of the case. The full description is likely to come with the judgment. In the meantime: Advocate Trstenjak concluded that the national provisions were not contrary to the provisions of the Directive, as long as the company had a possibility to claim in the proceedings against it that

Everything you always wanted to know about the EU...

...you may be able to ask the President of the European Commission, José Manuel Barroso, in an interview on the state of the European Union that will take place on 19 September.

See the Commission's press release for more information on how to submit a question.

EU law in the private sphere

On 26 October 2012, Gary Low and Elise Muir (Maastricht University) organise a conference on the theme 'EU law in the private sphere - helping hand or officious intermeddler?' As they write in the conference announcement:

'The aim of this one-day international conference is to evaluate EU Law’s evolution from one initially limited to the sphere of public law to its increasing stake in regulating private relationships. Such an evaluation has fundamental and applied consequences for how a multi-levelled European legal order ought to be regulated: What is the extent to which EU Law’s regulation of private relationships is justifiable? How is the State’s traditional role affected? What is its impact on the current system of rights and remedies?'

More information and a tentative programme is available on the website of the Maastricht European Private Law Institute.

Distance is not a factor - CJEU judgment in Case C-190/11 Mühlleitner

The Court of Justice of the EU is back from holidays. Today, it handed down its judgment in Case C-190/11 Mühlleitner. The case concerned the acquisition of a car by Ms Mühlleitner, who resided in Austria, from Autohaus Yusufi in Hamburg, Germany. Ms Mühlleitner had found Authohaus Yusufi's offer through the internet and had then travelled to Germany to sign the contract and take delivery of the car. When a dispute arose concering a defect of the vehicle, the question arose whether the Austrian courts were competent to hear the case. Did the courts' international jurisdiction require for the sales contract to have been concluded at a distance?

The CJEU is of the opinion that the fact that the contract was concluded in the Member State where the seller is based does not mean that the consumer-buyer cannot bring a case in her own Member State. The decisive factor is that the seller's commercial or professional activities were directed at the State of the consumer's domicile:

'If, therefore, (i) the trader domiciled in another Member State pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State and (ii) the contract at issue falls within the scope of such activities, the consumer may bring proceedings before the courts of his own Member State against the trader, even if the contract was not concluded at a distance because it was signed in the Member State of the trader.'

See the press release on this judgment for further information.

Ensuring integrity of financial benchmarks

The European Commission opened today a new public consultation related to the production and the use of indices serving as benchmarks in financial and other contracts. (Consultation on benchmarks and market indices launched following LIBOR manipulation) Certain of such indices refer to consumer data  (e.g., consumer price index - CPI, interest rate benchmarks) and may be used as benchmarks in consumer financial products (e.g., to determine the reference interest rate in a retail mortgage or consumer credit contract). As you can imagine, using a wrong benchmark to determine what the interest rate payable on variable rate mortgages, for example, should be, could lead to serious detriments for both consumers and investors. (see: Consultation document) Recently, a vulnerability of certain various, important indices, such as LIBOR, EURIBOR and TIBOR was revealed (see, e.g.: FSA final notice). Therefore, the European Commission decided to start looking for a solution that would allow it to ensure the integrity of financial benchmarks. The consultation is open to 15 November.

CE Marking and toy safety – not always together

As a mother of two energetic babies I try to check the safety of toys they receive. And being a lawyer not always help in this department. That is why I desperately seek help in this matter – preferably not only from other moms but also from regulatory bodies.

What recently caught my eye is the Commission campaign on toy safety. However, the BEUC report on this matter is even more interesting. Although BEUC welcomes efforts taken by the Commission to raise awareness among manufacturers, importers and retailers of their legal obligations, there is always a "but"... 

BEUC is also concerned that a campaign addressed to consumers promotes CE Marking as a safety mark. However, CE Marking is no more than a message from economic operators to market surveillance authorities and it must not be interpreted or implied as a mark for consumers, particularly as it can even mislead them in what it conveys. Given the lack of an obligation on manufacturers to ensure an independent check on the conformity of the toy to the essential requirements of the Toy Safety Directive, CE Marking cannot be a guarantee, or even indication, that a toy is safe.

This “wrong” message is even send by the promotional song of the campaign (“I put my CE tags on toys, But only if I truly know, That a toy is good, good to go”). A review of the RAPEX database reveals that there have been almost 250 notifications of unsafe toys so far in 2012, most bearing CE Marking. In the end, the problem of falsely-affixed CE Marking continues to exist.

Duty to warn clients in construction sector

Imagine you are building a house for your family. You've hired a builder and an architect. After months of work, you are about to move in when after a storm you discover your roof is leaking. Let's say the architect made a mistake and forgot to add an isolation layer in his plans for the roof. Should the builder have noticed it and warned you about it? Should he have warned the architect? Can you claim damages from the builder, the architect or both of them? If you want to know the answer to these and other questions, check out my PhD book - The service provider's duty to warn about defects caused by third parties - that has just been published.

Sharing radio spectrum would benefit consumers

While internet is growing, the regulations that allow to maximise its use have sometimes some catching up to do. For example, in order to introduce and use wireless broadband services a certain radio spectrum needs to be used. The problem is that the radio spectrum is a scarce resource, and most European regulators already allocated all their radio spectrum, as well as strictly controlled its use. This means that providers of new wireless services would need to first re-allocate some old radio spectrum - which is an expensive process - in order for consumers to benefit from these new wireless services. What was needed was a more efficient plan of using the radio spectrum, and promotion of the idea of sharing it - across Europe. Therefore, the European Commission informed today that they are working on enabling wireless technologies to share the use of the radio spectrum. (Commission moves to foster wireless innovation through sharing of radio spectrum) What is important about this news is that the change on a European level would eventually grant many European consumers a better (and more affordable) access to wireless broadband services, greater use of wireless devices and new wireless services. (Maximising radio spectrum efficiency by sharing it)