We need to move it, move it

Have you watched the animation movie "Wall-E"? If yes, you should remember the sad prediction of the human kind's future made by the movie makers: obese people being carried everywhere by automated chairs/vehicles, playing games from these chairs, consuming more and more while in these chairs, etc. This picture may not be as far from what lies in our future as we'd like. It doesn't surprise then that the European Commission announced yesterday a first ever proposal for a Council Recommendation on sport. The goal is to try to enhance sport participation and physical activity of European consumers, in order to improve their health prospects by avoiding obesity etc. Currently, 2/3 of Europeans never or seldom exercise or play sport. (!) Since the promotion of physical activity depends on the Member States, the European initiative may only invite them to develop certain strategies and action plans that would be harmonised across the EU. ("Getting people out of their chairs: new initiative to promote physical activity in Europe") Interestingly, the European Commissioner, Androulla Vassiliou even said specifically: "Much more can be done through our policies to encourage people to get out of their chairs.". I think she watched "Wall-E".

Misleading offers: too profitable to quit

A recent article in the Guardian nicely points out that even though certain unfair commercial practices may be prohibited in Europe, even if such a prohibition is then enforced by national consumer protection agencies and courts against a particular trader, this may not discourage other traders to continue using such practices. (OFT crackdown on dodgy deals won't stop retailers from cashing in) No. 7 on the blacklisted unfair commercial practices by the Directive 2005/29/EC is to falsely create an impression that a particular product will be sold only for a limited time or that it will be available at a specific price for a limited time. I'm sure many of our readers were confronted with signs in shops stating 'Final sale', '70% off everything', etc. Often the 'final sale' sign is displayed for weeks, and prices showed as discounted are rather original goods' prices (since they often apply to goods for longer than the 'original' price). Such practices are used to mislead consumers into thinking that they have to buy a product rather than miss on a really good deal and unfortunately consumers tend to be very easily led into such a reasoning. The Office of Fair Trading in the UK had a few successful cases against traders making such misleading claims, e.g., recently Tesco was fined for displaying strawberries' price as half-priced, while these strawberries were sold at original price for only two weeks, and at a discounted price for more than three months (Plucky pensioner costs Tesco £300,000 in victory from beyond the grave). Unfortunately, often the profit made from such controversial sale practices will be much higher than a potential fine placed on a trader by the authorities. In the Tesco case it is estimated that the profit the company made from the sale of 'not-really-discounted' strawberries was 8 times higher than the fine. It seems, therefore, that we may have reached a stalemate in consumer protection. Unless the enforcement agencies and courts would control more of the market for such practices and be willing/ have authority to take away all of their profit (if not more), it is hard to see why the traders would start complying more with unfair commercial practices rules.

Retail therapy in Europe

I've stumbled upon some articles regarding European consumers attitude to shopping online. A study by Bazaarvoice suggests that there is a significant difference between behaviour of English, French and German consumers. While browsing through the websites of potential retailers of a product they intend to buy, English consumers would focus on websites of recognised and trusted retailers, French shoppers on respected manufacturing brands and German consumers would just search for the cheapest deal. This means that for German consumers the most relevant websites would be the price comparison ones, and that only French consumers would pay special attention to branding of products. French consumers were also identified to read more product reviews and to be more likely to give feedback themselves. German consumers were in turn more likely to purchase products on their phones, if they found a good deal for it. (The continental divide: Deep divisions and distinctions among European shoppers) Another study by Pitney Bowes showed that French, German and English consumers would rather leave social media, like Facebook, than be confronted by too much marketing and advertising online. If the mass marketing would start to dominate personal walls of consumers, they'd be likely to feel overwhelmed by it, which communication specialists take as a sign to that personalized, targeted advertising should dominate online world. (Marketing via social media channels can have counterproductive effect on consumers)

EU consumer law in the age of the image

What views on consumers inform the development of the law in the EU? Professor Stephen Weatherill and Dr Dorota Leczykiewicz are starting a research project on this theme, the results of which are planned to be presented at a conference in Oxford next year. The project is summarised as follows:

'The purpose of the project is to invite experts in EU, consumer and competition law to explore the different "images" of the consumer in different contexts of EU law. The project’s theme is inspired by the persisting questions about how many visions of the consumer there are in EU law, and whether they are consistent and sincere, or merely instrumental to the achievement of other goals. Are the different types of "consumer" we find scattered across EU law apt reflection of rich diversity or do they create a troublingly chaotic landscape? Discussing these questions is particularly timely a few years after the Treaty of Lisbon, which reformed Union objectives to include a "social market economy" and vested the Charter of Fundamental Rights, elevating "consumer protection" to the status of a fundamental right, with a binding force. The project will culminate with a conference to be held at St Anne’s College, Oxford, on 27-28 March 2014.'

For more information, please refer to the University of Oxford's website.

Math problem - calculating phone fees

A few weeks ago, we've mentioned that the EU Commission intends to further strengthen and harmonise the telecommunication market so that the mobile fees in various European countries are at a similar level. (Discon-nect/tent) Unfortunately, it seems that the national regulating agencies so far have made a mess from trying to lower fees that are charged by telecommunication operators, e.g., for carrying calls by other operators. The Irish ComReg required Vodafone to lower its fees to a certain amount, based on the calculation of average fees in seven European countries. The Irish court determined, however, that ComReg had no authority to use such a calculation method for application of the EU law. (Blow for consumers as Vodafone wins court case over mobile fees) It remains to be seen, however, what the next course of action in this particular issue would be. One way forward would be for the national regulating agencies to take into account current fees in all EU countries and to try to average costs based on more available data, to avoid further accusations of randomness and unreliability. The other solution could be for the European Commission to set a particular limit for these fees in a regulation. Even though the phone operators claim that such fees, as being charged between the operators, don't impact consumers, it's hard to imagine that they would not influence consumer prices.

Less TV ads in the consumers' interest - CJEU in Sky Italia (C-234/12)

18 July 2013: CJEU in case Sky Italia (C-234/12)

One of the goals of the Audiovisual Media Services Directive (2010/13/EU) is to protect consumers as television viewers from excessive television advertising. Therefore, the Member States are allowed to set their own rules and also differentiate in broadcasting rights granted to TV broadcasters under their jurisdiction. (Recital 83 Directive, Par. 17 judgment) In Italy, pay-TV broadcasters were given shorter hourly advertising limits than those of free-to-air broadcasters. (Par. 6) In the case in front of the CJEU the Italian court asked whether such a distinction was compatible with the principle of equality, rules of free movement of services and the principle of pluralism in media. (Par. 10)

The CJEU notices that the Directive is of a minimum harmonisation character and where it requires the Member States to set the limit of broadcasted advertisements to 20% of a given clock hour (Art. 23(1) Directive), this limit could be lowered on national levels in the interest of consumers as television viewers, as long as the EU principles are observed. (Par. 14) The interests of pay-TV broadcasters and free-to-air broadcasters are not seen as comparable by the CJEU which means that the infringement of the principle of equal treatment cannot be invoked: "Whilst the former generate revenue from subscriptions taken out by viewers, the latter do not benefit from such a direct source of financing, and must finance themselves either by generating income from television advertising, or by other sources of financing." (Par. 20) This difference could justify other rules for hourly broadcasting limits on television advertising. (Par. 23) While the provision of services by pay-TV broadcasters could be limited by such a special treatment, the need for the protection of consumers' interests could take precedence here, as long as the adopted rules were seen as proportional, which is for the national courts to determine. (Par. 25) There was not enough material submitted to the CJEU to determine whether such a national rule could distort competition on the media market. (Par. 32)

Using a specific domain name or metadata as misleading advertising - CJEU in BEST (C-657/11)

11 July 2013: CJEU judgment in case Belgian Electronic Sorting Technology (C-657/11)

In this judgment the CJEU determined what could be perceived as advertising for the purposes of determining its misleading or comparative character, taking into account modern forms of expression, that is: registration of a domain names, use of a domain name, use of metatags in a website's metadata. (Par. 32)

BEST and Visys are both producers and distributors of sorting machines and sorting systems using laser-technology, with the second company having been established by a former employee of BEST. In 2007 Visys registered a domain name 'www.bestlasersorter.com' and hosted a website under that domain name which was identical to the usual website of Visys - 'www.visys.be' and 'www.visysglobal.be'. Additionally, Visys used for its websites various metatags that referred to the products offered by BEST. As a result, upon entering in the search engine words 'best laser sorter', the website of Visys showed as a second result directly beneath the result for BEST's website. BEST considered the registration and the use of the domain 'bestlasersorter.com' as well as the use of these metadata as infringing rules of misleading and comparative advertising.

The CJEU reminds the definition of advertising from Art. 2(1) of Directive 84/450 and Art. 2(a) of Directive 2006/114 namely as 'a representation in any form made in connection with a trade, business, craft or profession in order to promote the supply of goods or services'. (Par. 34) It is a broad definition, not limited to traditional form of advertising. (Par. 35) In general, advertising is supposed to allow 'competitors to highlight objectively the merits of the various comparable products in order to stimulate competition to the consumer’s advantage while, at the same time, prohibiting practices which may distort competition, be detrimental to competitors and have an adverse effect on consumer choice'. (Par. 37) It is undisputed that the registration and the use of 'bestlasersorter.com' domain as well as the use of metatags was part of the commercial activity of Visys. (Par. 40) 

In its judgment the CJEU decides that while the registration of a domain name cannot be seen as advertising, the use thereof as well as the use of metatags could be perceived as advertising. The registration of a domain name is a purely formal act, which does not necessarily lead to any website's creation and may not influence internet users awareness of that domain name. (Par. 42) In that respect, consumers' choice may not be influenced by domain's registration and therefore, it does not need to promote the supply of goods or services of the domain name holder which does not make it an advertisement. (Par. 43) At best, it could limit competitor's communication opportunities, which, however, could be prohibited under different laws. (Par. 44) On the other hand, the use of a domain name to host a website, identical to a website of a company, is clearly a commercial activity focused on promoting companies' goods or services. (Par. 46) In that respect a use of a specific domain name could be perceived as advertising since 'it is not only by means of a website hosted under the domain name that that holder seeks to promote its products or its services, but also by using a carefully chosen domain name, intended to encourage the greatest possible number of internet users to visit that site and to take an interest in its offer. Furthermore, such use of a domain name, which makes reference to certain goods or services or to the trade name of a company, constitutes a form of representation that is made to potential consumers and suggests to them that they will find, under that name, a website relating to those goods or services, or relating to that company.'. (Par. 47-48) The court had also no doubts that the metatags' use influences promotion of companies' goods or services, since it influences the ranking of the sites by a search engine. (Par. 53-54) As a result consumers looking for a specific goods of a competitor entering a certain (trade) name into a search engine will get results of the search that have been changed to the advantage of the metatags' user, which falls under the definition of advertising. (Par. 57) It does not matter that these metatags are not visible to internet users. (Par. 58)

Regulating beauty industry

On July 11, 2013 the new EU Cosmetics Regulation (1223/2009 of 30 November 2009) came into force with an aim to strengthen existing safety standards and better inform consumers. As of last month cosmetics' manufacturers (i.e., not only producers of perfumes or make-up products, but also toothpaste, sunscreen, etc.) need to comply with strengthened requirements for product safety control before placing the product on the market. (From today new EU Rules are combating misleading information and putting safer cosmetics on EU shelves)

PRODUCT SAFETY

Cosmetics may only be introduced to the EU market by 'responsible persons' - clearly identifiable legal or natural persons, who are responsible for keeping an information file on the product, making it available for inspections, reporting any serious undesirable effects etc. A central database has been created - Cosmetic Products Notification Portal (CPNP) - to which cosmetics' manufacturers need to notify their products. Any use of colorants, preservatives and UV-filters, including nanomaterials, requires explicit authorisation. The list of cosmetics' ingredients need to clearly state which ones are nanomaterials (by adding word 'nano' in brackets after the substance). 

INFORMATION DUTIES

To avoid misleading consumers with cosmetics claims, common criteria for such claims have been adopted: legal compliance, truthfulness, evidential support, honesty, fairness and informed decision-making. Any claim placed on a cosmetic will need to withstand a test against these criteria.

Tourism business to the rescue

Summer holidays are almost behind us and accordingly tomorrow is the last day for completing a European Commission's survey regarding the needs of elderly, disabled and otherwise requiring special help while traveling (e.g., because they travel with small children) consumers. The survey is anonymous and its results are supposed to help the European Commission to draft new policy with respect to accessible tourism. The survey may be completed either by travelers who have special accessibility needs or by tourism businesses about their experience with accommodating such travelers.

Food scandals under control

On the 6th of May 2013 the European Commission announced its plan to change some of the existing measures with respect to health and safety standards in the agri-food chain. This review has been fuelled by the recent food scandals, e.g., the horse-meat scandal. As a result of revealed threats to consumer health and safety and obvious gaps in inspecting food products, it was obvious that the new system should be enforced. The new measures would give more power to the authorities allowing them to conduct more controls, inspections and tests by establishing new rules on carrying out official controls. 

 

BEUC published its assessment of the proposed rules on the 2nd of July. It demands from the European Commission to ascertain that the new rules would guarantee the independence of the control authorities (p. 3), as well as to make sure that the standard for inspection is unannounced inspections (p. 4) and that the inspection results are published (p. 5). The food business operators should, therefore, be ready for an inspection at any time. Among other requests, one stands out clearly: to secure the transparency of food business operators' brokers and suppliers. One of the problems of the horse meat scandal was that it was really difficult to establish a contractual chain in certain cases which would allow to find a culprit who changed the labels. If there is a clear registration system for brokers, it would help competent authorities to trace any potential food scare to its source. (p.5-6)

Everyone should read fine print

While consumers are often lectured about the importance of reading contract's standard terms and conditions, it seems that the same lesson should be given to some service providers. Various agencies reported this month about a curious case of a Russian citizen, Mr Argarkov, who upon receiving an unsolicited offer to open a credit line, not only took his time to read the contract's fine print, but went a step further. (Read the small print: Credit card user sets his own limit - then sues bank for closing account) He scanned the contract, changed its terms and sent a 'corrected' version to the loan provider - Tinkoff Credit Systems. Pursuant to the new terms he received an unlimited credit line, did not have to pay any fees and gave himself a 0 per cent interest rate etc. Obviously, he did not accept the provider's offer and countered with his own. Surprisingly, the credit card provider sent him a credit card and a signed copy of the approved application form. Of course, the provider's employees failed to read the offer and signed it blindly and now they are claiming that they have been a fraud's victim and that they cannot be held to contractual terms they did not know about. The argumentation line sounds very familiar and it's fascinating to, for once, not see a consumer as a victim of such practices.

The missing link - Opinion of AG Cruz Villalón in Case C-218/12 Emrek v Sabranovic

The interpretation of EU law intended to ease the troubles of cross-border shoppers continues to raise (preliminary) questions. The case of Emrek v. Sabranovic that is currently pending before the Court of Justice of the EU forms another instalment in the line of cases defining the conditions for a consumer to bring proceedings before the courts of his or her own Member State in relation to problems concerning a cross-border contract. It follows up on, among other judgments, Mühlleitner, on which we reported earlier ('Distance is not a factor'). On 18 July 2013, Advocate General Cruz Villalón delivered his opinion in the Emrek case (please note that the English translation is not yet available; the following summary is based on the original Spanish text and Dutch translation). 

Like Mühlleitner, the Emrek case concerns the cross-border sale of a second-hand car. Emrek, a resident in Saarbrücken (Germany), had concluded a contract for the purchase of a second-hand vehicle with Sabranovic, a car dealer in the adjacent municipality of Spicheren (France), at the premises of the latter. At this occasion, Emrek indicated to have learnt about the car seller's business through acquaintances, not through the seller's website. Some time later, Emrek brought proceedings before the court in Saarbrücken to enforce a contractual guarantee against Sabranovic. The court, however, considered that according to the Brussels I Regulation it had no jurisdiction to hear the case, since the seller's professional activities had not been directed at the Member State in which the buyer was domiciled, Germany. The court of appeal to which the case was then presented, referred the following questions to the CJEU:

'In cases in which a trader's internet presence satisfies the "directing" requirement, does Article 15(1)(c) of Regulation (EC) No 44/2001 require, as a further unwritten condition, that the consumer was induced to enter into the contract by the website operated by the trader and consequently that the internet presence must be a causal factor in regard to the conclusion of the contract?

In so far as a causal link between the "directing" requirement and the conclusion of the contract is necessary: does Article 15(1)(c) of Regulation No 44/2001 also require that the contract was concluded as a distance contract?'

AG Cruz Villalón is of the opinion that a causal link between the information presented on the seller's website and the consumer's decision to enter into the contract is not a condition for allowing the consumer to bring a claim in his or her home country. However, the existence of such a causal link may be considered to be a qualified indication for answering the question whether a business's activity was directed at the consumer's country or not.

Furthermore, according to the AG, in case a qualified indication such as a causal link is absent, this should in principle be compensated by the presence of one or more indications of similar strength. Such an indication might be found in the fact that two municipalities form part of an urban agglomeration, which the national judge should establish.

Calls from the road

BBC published last Friday an article 'Mobile phone drivers 'not linked' to accident figures'. While there are no EU measures on what the consequences for EU citizens could be of using a phone while driving, in most countries such multitasking is prohibited and various fines are set if a driver is caught in the act of calling/ texting etc unless hands-free devices are used. Researchers examined the impact of increased phone calls in the evening hours in the US to the amount of car crashes in these hours and did not discover a pattern that would suggest a correlation between these sets of data. The research did not account for texting or surfing the net on smartphones. (Driving under the (Cellular) Influence)

Conference: applying behavioural insights to policy-making

On 30 September 2013 European Commission is organising a conference on behavioural economics and its application to consumer policies. The conference 'Applying behavioural insights to policy-making' has an interesting programme with many renowned academics taking part in it. Read more here.

On publication bias in medicine research

Great TED talk by Ben Goldacre on publication bias in medicine research which might influence which medicines are being prescribed to consumers, as well as could be another argument in favour of sharing clinical research data. (see further Who's keeping the score?)

Documentary: Terms and conditions may apply

This blog and its authors spend a considerable amount of time reasoning on terms and conditions, privacy online and possible combinations of the two. Of course, this is a matter that non-lawyers might also be interested in seen how it concerns the lives of more or less everybody- at least among those living in richer, hyperconnected countries. 

In this case, film director Cullen Hoback has worked three years to produce a documentary on internet services terms of use and the way companies make profits (which, is, by the way, their legitimate reason for existence) out of apparently "free" services.

The documentary both reflects on "hot" issues such as the instrumentalisation of information held by service providers to governmental ends (think of Prism!) and shows less scary-but nonetheless grotesque- aspects of the phenomenon.
Interviewed for an Italian magazine, mr. Hoback recalled for instance that in 2009 GameStation added mentions to the user's "immortal soul" being involved in the contract- a detail that went long unnoticed. Still today, again according to the director, Apple disclaims liability in case their products are used in the context of "nuclear war".

On the other hand, the film shows how serious threats to individual liberties can originate from intelligence and security service's ability to access personal (yet public) communications on social networks, stimulating awareness on the way we tend to thoughtlessly disclose information to an unidentified audience. 

Curious? You can find more info here.

Discon-nect/-tent

In the past few years the EU institutions managed to harmonize roaming within the EU and with every year European citizens paid less for using their mobile phones while they were in another European country than their home one. Recently gathered data shows, however, huge discrepancies for cost of using mobile phones for domestic calls among citizens of various European countries. The difference in price reaches 774% between the cheapest Lithuania and the most expensive Netherlands (yay me!). (774% difference in phone call prices across the EU)

Neelie Kroes, VP of the European Commission, announced that also in this aspect the telecommunication EU market needs strengthening and harmonization. New measures as to how to achieve this are to be presented in the fall.

Additional problem with mobile phone network is the failure of most European countries to successfully adopt 4G wireless broadband spectrum by the agreed deadline of 1 January 2013. While in the United States it is reported that over 90% of people have 4G access, in Europe only 25% citizens can access 4G in their hometowns (with almost no coverage in rural areas across the EU). Despite the fact that the EU made available broadband spectrum to the Member States, national level problems have caused many delays - both procedural and in licensing. (Connected continent? Three-quarters have no 4G access) (European suffering because most Member States are too slow delivering 4G mobile broadband spectrum)

Fake it and you won't make it

While many EU consumers travel more during the summer months they tend to bring souvenirs back home. Maybe that is the reason why EU Customs publishes its yearly reports on counterfeit products during the summer holidays. (see last year's EU helps to keep it real) Last year almost 40 million products were detained on EU borders under suspicion of violating IP rights (last year it was 115 million products, but while less products were stopped from entering the EU this year their value didn't change much from 1,3 billion to 1 billion euro). This time it was mostly cigarettes that were intercepted (medicines two years ago), followed by miscellaneous goods (e.g., batteries, washing powder), and packaging material. Most of the detained goods arrived in the EU through postal and courier packages. China still remains the main source of fake goods. (Custom detain 1 billion euro worth of fake goods at EU borders in 2012) (FAQ)

Who's keeping the score? Consumer health & drugs safety vs. money, money, money for pharma industry

In May this year we mentioned that there is a battle raging in Europe over the access to clinical trials' information. While the worldwide trend seems to be increased disclosure in order to improve transparency of clinical trials and to contribute to consumer health, an opposite tendency is shown in Europe. Major pharma companies try to keep the data of their clinical trials as secret as possible, for as long as possible, claiming protection under 'commercially confidential information' laws, privacy of patients data laws, etc. (Interim injunctions to stop EMA from releasing non-clinical and clinical data) (Trying for better clinical trials)

The Guardian reported last week that pharma companies are now trying to involve their patients to support their claims on keeping clinical trials data confidential, in a battle against EMA's work to make more of these data public. (Big pharma mobilising patients in battle over drugs trials data) As we mentioned before, the whole idea about making clinical trials data public (or more public) is to allow independent scientists to replicate the results of the trials and to test health claims that are being made during them. This should increase the medicines' safety. However, as Guardian reports, currently only about half of all clinical trials are published in full, and positive results of such trials are twice as likely to be published than negative ones.

A memo that was leaked to the press by a drugs company employee shows how two large pharma trade groups (PhRMA - Pharmaceutical Research and Manufacturers of America and EFPIA - European Federation of Pharmaceutical Industries and Associations) strategized in order to influence public opinion on this subject. Under the pressure from the industry, various patients groups (who are often sponsored by the industry) were to start expressing their fears that in case clinical trials data is released it may be misinterpreted and endanger public health by scaring people to use certain drugs. Apparently, European Parliament has already witnessed such a lobbying from patients groups against the proposal on the clinical trials directive.

This leak was just what was needed, it seems, to further mobilise opposition against pharma industry. Despite attempts to rectify the situation after the leak was publicised - EU and US pharma companies pledging to share clinical trial data responsibly - the damage to their credibility has been done. As a result BEUC announced on 24 July this year that it will support EMA in its pending cases in front of the CJEU against pharma companies (read earlier posts on this).

Monique Goyens, Direction General of BEUC, said: 

"The pharma industry raised concerns about the risk of trial information being misinterpreted and causing health scares. But currently, the only existing evidence points to the health risks of secrecy and non-disclosure. Several drug-related scandals could have been prevented and many lives saved

had trial data been examined by independent researchers."

Reach for the stars - BEUC ideas on the review of the Unfair Commercial Practices Directive

As we reported in March this year the European Commission after a thorough examination of the current application of the Unfair Commercial Practices Directive decided to review this Directive in order to, among others, strengthen its enforcement. On 24 June this year the BEUC published its position paper (X/2013/049) with respect to the review of the Directive (and as to the Guidance on how to use/ interpret its provisions). 

The BEUC argues the European Commission to rethink certain crucial characteristics of the Directive, such as:

- its full harmonisation character which precludes national bans of unfair practices that are not blacklisted in the Annex to the Directive;

- definitions of 'average consumer' and 'vulnerable consumer' that are being used in the Directive, which may not take into account 'the social and economic reality of consumers and the way they make consumption choices';

- the requirement of professional dilligence used in the unfairness test, since it requires more guidance that has been given as to its concept;

- the scope of the definition of 'consumer' with regards to certain blacklisted practices - such as pyramid schemes whose victims are often natural person acting with a commercial interest; 

- the lack of any contract law remedies for consumers;

- the lack of efficient enforcement.

Additionally, the Commission should consider:

- reversing the burden of proof for consumers, e.g., as to proving subjective elements of a certain commercial practice (such as trader's intentions);

- introduction of special rules on protection of children against unfair (online) advertising;

- what is the interplay between this Directive and Audiovisual Media Services Directive