Austrian winners may still take it all - CJEU in Pfleger (C-390/12)

30 April 2014: CJEU judgment in Pfleger (C-390/12)

As we have previously mentioned on this blog (Taking a chance on a game of chance...), Austrian government limited a possibility of running gambling establishments by issuing only a limited number of licenses that would allow for it. This legislation was explained to be justified by the need to protect consumers from gambling addictions and to prevent crime related to gambling. However, these justifications clashed with the permitted, aggressive advertising of games of chance, encouraging active participation of consumers in them and presenting a positive image of gambling. This led some unlicensed operators of gambling establishments to question the compliance of the Austrian law with Art. 56 TFEU, which prohibits unjustified restrictions on the freedom to provide services. If Austrian law did not really try to protect consumers but, for example, the introduction of limited licensing would only serve specific tax purposes that could be seen as breaching the protection established by Art. 56  TFEU.

The opinion of AG Sharpston left it to the national courts to decide whether in the given case the restrictions on the freedom to provide services were justified. While on the one hand, limitation of gambling licences should lower the number of gambling opportunities and, therefore, automatically increase consumer protection and lower crime related to gambling, the national court would need to consider whether such measures were proportionate and whether other laws (e.g. allowing advertising of gambling) would not undermine this protection. The CJEU takes these factors into account and since the national court claimed that national authorities did not actually managed to prove that gambling was a significant problem in Austria (Par. 53) and that the increase of tax revenue was really at stake (Par. 54), it concluded that Austrian law is in breach of Art. 56 TFEU if it "does not actually pursue the objective of protecting gamblers or fighting crime and does not genuinely meet the concern to reduce opportunities for gambling or to fight gambling-related crime in a consistent and systematic manner". (Par. 56)

It remains to be seen what the referring court will decide in this matter, but once again it is made clear by the CJEU that in restrictions are placed on one of the freedoms, they need to be justified by real and attainable objectives, such as actual consumer protection that is not just a smoke screen.

Sweep on travel websites

Yesterday, the results of the latest sweep investigation have been published. A sweep investigation is a "coordinated enforcement action" whereby national authorities simultaneously check a certain sector's operator's compliance with EU law. This time, it concerned travelling websites. 

An earlier investigation in 2013 had found that 382 of the 552 websites checked did not fully comply with EU consumer law. The investigation was repeated in order to see whether the situation had improved after the first report. 

What the national authorities scrutinised was essentially whether the websites offered sufficient (and sufficiently early) transparency as to prices, and also how easy they made it for the consumer to know whom they were contracting with and how, if need be, they could file a complaint. 

Indeed, many websites did not clearly show the trader's identity/the procedure to be followed in case of complaints, and additional costs (such as luggage surcharges) also seem to represent a source of concern. All in all, 38% of the websites checked still seem to be "somewhat" in breach of EU law. 

The Commission's Q&A on the sweep contain a few useful tips for consumers who buy travelling services (not necessarily) online:

• Can you contact the trader? (and, if not the same as the trader, the airline/hotel)
• Do you have all the information you need about the air travel or hotel? 
• How much is it really going to cost? Look out for the final price; 
• Do you have a right to reimbursement? Check the cancellation policy;
• Can you find easily the contract terms? You should be able to print or save them *before* the purchase;
•  Do you have a problem? Report it immediately to the contacts indicated to you, and if need be to a consumer association/competent authority;
• Is your flight delayed? Remember that as a passenger you have specific rights! (http://ec.europa.eu/consumers/ecc/consumer_topics/air_travel_en.htm)

Good to keep in mind as the summer approaches...

Improving wellbeing through mobile devices

Last week the European Commission launched a consultation on mHealth (mobile health). The idea to use mobile devices to improve wellbeing of Europeans is not a new one, bus has not yet been given full regulatory support in the EU. In 2012 the European Commission published its eHealth Action Plan 2012-2020 which already focused on the benefits of mobile health apps, but also identified their potential risks. (Healthcare of the 21st century: digital) Upon announcement of the Green Paper on mHealth, the stakeholders may now respond by 3 July 2014 to the mHealth initiative (incl. Staff Working Document on the existing EU legal framework applicable to lifestyle and wellbeing apps). It is estimated that at the moment ca 100.000 mHealth apps are already available to EU citizens (through iTunes, Google Play, etc.) and if the full potential of this medium is used then in 2017 ca. €99 billion in healthcare costs in the EU could be saved. (What mHealth can do for you) The Commission needs to consider whether to further regulate on the EU level requirements with regards to the safety and performance of mHealth apps, how to ensure medical data safety and how best to promote this sector. (Healthcare in your pocket: unlocking potential of mHealth)

New rules on clinical trials - adopted

As it has been predicted on this blog last week the Council adopted yesterday the new rules on clinical trials (European Parliament's last stands). They will enter into force 20 days following publication in the Official Journal of the EU and apply not earlier than two years after publication (six months after a EU portal for the submission of data on clinical trials and a EU database becomes fully functional). (Council adopts new rules on clinical trials)

Reporting on fundamental rights and gender equality

Today, the European Commission published its 4th annual report on the application of the EU Charter of Fundamental Rights, together with a report on progress in equality between women and men. Summaries of the two reports can be found in the Commission's press releases on fundamental rights and equality in 2013 and a Q&A page. DG Justice's newsroom offers links to the reports as well as staff working documents accompanying them.

Consumer rights are mostly dealt with under the heading of 'solidarity'. The Commission highlights the process of implementation of the Consumer Rights Directive and its legislative initiatives on alternative and online dispute resolution (ADR and ODR) - see, in particular, the staff working document accompanying the report on the Charter, pages 15 and 27-29.

e-Commerce in a Digital Single Market

Anyone interested in online sales and online contracting, who would appreciate a crash course on the framework of online sales contracts, including special rules on consumer protection, may like to take note of the conference organized by the Academy of European Law (ERA) in Trier on 12-13 May 2014: "e-Commerce in a Digital Single Market". You may get a 25% discount on the standard registration fee if you get in touch with me. I intend to talk there about online consumer contacts as well as about issues with delivery of digital content. There will also be a chance to pose questions to the representatives of the European Data Protection Supervisor (EDPS) or of European Consumer's Organisation (BEUC).

You have been served! - AG Bot opinion in joined cases C-119/13 to C-121/13

9 April 2014: AG Bot opinion in eco cosmetics (C-119/13), Raiffeisenbank St Georgen (C-120/13) and Rechtsanwaltskanzlei CMS Hasche Sigle (C-121/13)

These three cases have been joined together since they all concern interpretation of the EU rules regarding the European order for payment procedure (Regulation No 1896/2006). More specifically, it concerns the rules on how the EU order for payment needs to be served on the defendant, pursuant to Articles 13 and 14 of the Regulation and the defendant's right to oppose the EU order for payment pursuant to Article 16. All three considered cases have been referred by the same German court (Amtsgericht Wedding) which has doubts as to what rights the defendants should have in case they question the validity of the EU payment order after the time the Regulation grants for submitting an opposition, but they add a claim that they have not been timely served the EU payment order.

In the eco cosmetics case, a German company Eco cosmetics Gmbh asked for the EU order for payment against Ms Dupuy, domiciled in France. The payment order have been served to the indicated domicile address on 31 March 2010. The consumer did not oppose it, which led the court to announce its enforceability on 20 May 2010, pursuant to Article 18 of the Regulation. The consumer claims that she has never been served the payment order, since she has moved her domicile in October 2009. She has only found out about the order through her bank's letter of 23 July 2010, upon which she questioned it with an opposition of 28 July 2010.

In Raiffeisenbank St. Georgen case an Austrian bank demanded the EU order for payment against Ms Bonchyk, domiciled in Germany. The order was issued on 2 September 2010. First two attempts to serve it have failed, finally, it was served at a new address of the defendant on 1 February 2011. The consumer did not oppose it, which led the court to announce its enforceability on 10 March 2011. The consumer claims that she has never been served the payment order, since she has moved her domicile in 2009. She has only found out about the order accidentally, upon which she questioned it with an opposition of 1 June 2011.

In Rechtsanwaltskanzlei CMS Hasche Sigle this Germany company asked for the EU payment order against a company Xceed Holding Ltd, which has its seat on Cyprus. The order was served on 30 June 2010. The court announced its enforceability on 10 August 2010. The defendant claims that she has never been served the payment order, since she has moved her company's seat to another city on Cyprus in May 2010. She has only found out about the order through the plaintiff's letter of 7 October 2010, upon which she questioned it with an opposition of 19 October 2010.

Article 16 of the Regulation allows the defendant to submit an opposition to the EU order for payment but only within 30 days of "service of the order on the defendant". In these three cases the national court considered that this time has already passed and, therefore, the defendants could only use the defence of Article 20 - namely to ask for a review in exceptional cases.

AG Bot acknowledges that the Regulation is silent as to what defence a defendant could use when the EU order for payment is not properly, nor timely served on him. (Par. 27) He does not share the national court's view that the only remedy available to the defendant is then to use the defence options of Article 20. (Par. 28) Taking into account that the EU order for payment procedures is designed to facilitate faster and easier reimbursement of recognized monetary claims, it is of crucial importance that the order is served properly on the defendant, since he is not otherwise informed of the procedure nor given any other options of defence than after the order was issued and was properly served on the defendant. (Par. 29-36) The assumption of the defendant having been served is of utter importance for the validity of the whole procedure, and if that assumption does not hold true, it is clear that the defendant's right of defence was infringed. (Par. 39-42) AG Bot remarks also that the sole fact that the defendant was not served the order, questions the whole concept of the applicability of the EU payment order since it is only to apply to non-contested monetary claims - but in this situation the defendant had no chance to contest the claim. (Par. 45) The defence of Article 20 is not sufficient to protect the right of defence of the defendant since it takes away one tier of defence (prior to the order having become enforceable). (Par. 44-45) Pursuant to AG Bot the defendants in these cases should, therefore, be given a possibility to prove that they have not been served the EU payment order (to question the assumption of valid delivery) and if they succeed the court should proclaim the invalidity of that order. (Par. 51-52)

No more illegal downloading - CJEU judgment in Case C-435/12 ACI Adam v Stichting de Thuiskopie

The CJEU's power to affect national laws should not be underestimated. The impact of the Court's judgment in the case of ACI Adam BV v Stichting de Thuiskopie illustrates this well: the CJEU's ruling of yesterday morning was followed by a prohibition on illegal downloading in the Netherlands taking immediate effect.

The case was brought by ACI Adam and others, who were importers and manufacturers of blank CDs and CD-Rs on which digital data could be copied. They argued that the amount of private copying levies charged on these blank data carriers in the Netherlands was too high, as it incorrectly took into account the harm suffered by copyright holders as a result of copies made from unlawful sources.

In its judgment, the Court holds that the Dutch law indeed was non-compliant with EU law insofar as it did not distinguish the situation in which the source from which a reproduction for private use is made is lawful from that in which the source is unlawful.

While the Dutch film industry has welcomed the prohibition on illegal downloading that followed the CJEU's ruling, consumer organisations are more sceptical. They emphasise the problems that enforcement of the prohibition may entail, such as infringement of consumers' privacy online. A well-balanced levy system would be the better option, in their opinion (for those of you who read Dutch, background information on the discussion may be found in newspaper articles here and here and here).

Please refer to the Court's press release for a more elaborate summary of the judgment.

(Re)imagining consumer law

What images of the consumer can be discerned in European Union law? And how do these affect the regulation of consumer interests in the EU? These questions formed the starting points for the conference on the 'Image(s) of the "Consumer" in EU law' that was organised in Oxford at the end of March. The papers presented at the conference mapped the various conceptions of the consumer in different fields of European law, including rules on competition, trade marks, consumer credit, financial contracts and free movement of goods and services. Furthermore, speakers addressed the normative questions raised by the images of the consumer that emerged in the descriptions of current law. What I took away from the conference were at least two matters for further thought. 

In the first place,  different conceptions of the consumer (e.g. the average 'rational' consumer, the vulnerable consumer) were related to specific functions of EU law. The idea of a consumer acting in an economically rational manner, for instance, has inspired certain types of regulatory interventions, most famously the introduction of information duties ('a well-informed consumer will make a rational choice'). The image of a weaker consumer, on the other hand, justifies more extensive policing of contract terms ('the consumer needs protection, because there is a real risk that she may be unaware of her rights or encounter difficulty in enforcing them'). Such differentiated approaches have different effects on consumer contracts and, therefore, a further analysis of their impact is called for. Think, for example, of the Court of Justice of the EU's interpretation of the Air Passenger Rights Regulation, which effectively provides an incentive for airlines to pass on costs of higher consumer protection (compensation in case of cancelled or delayed flights) to consumers themselves.

In the second place, the topic of 'ethical consumerism' was taken up by several speakers. What approach does and should EU law adopt in regard to consumption choices having so-called 'negative externalities'? Examples include negative effects of consumption on the environment or on labour conditions for those producing consumer goods for European markets. The question was posed to what extent the market for consumer goods may be seen as a forum for the articulation of political and ethical values, in which consumers would vote through their purchases. From that point of view, could ethical consumerism be included in EU regulatory measures? Furthermore, could the European law on sales be understood to include consumer expectations regarding not only the features of a product but also the process through which the good has been made?

The contributions to the conference are planned to be collected in a joint publication. 

Labeling health claims - CJEU in Ehrmann (C-609/12)

10 April 2014: CJEU judgment in Ehrmann (C-609/12)

We previously wrote about an opinion in this case (see for the facts of the case: "As important as a daily glass of milk!"...) concerning a potential health claim used by Ehrmann to advertise its fruit quark as "as important as a daily glass of milk". The AG considered the comparison made between two products as suggesting that eating fruit quark is as beneficial to the consumers' health as drinking milk, while most consumers believe in nutritional value of drinking milk. This would allow for this advertising slogan to be considered a health claim. 

The CJEU's judgment decides since when the protection against misleading health claims was in force. The Regulation No 1924/2006 entered into force on 19 January 2007 and has been applicable since 1 July 2007 (Par. 33). The advertising slogan in question first appeared on the product in 2010 (Par. 35). At that time the list of allowed/prohibited health claims referred to in Art. 10(1) of that Regulation has not yet been published. This notwithstanding, the CJEU decides that prior to adoption of these lists the food business operators were already obliged to conform to the requirements of Art. 10(2) of the Regulation, on the basis of which they are supposed to provide consumers with detailed information accompanying health claims on the product's label and in advertising (Par. 42).

Member States can forbid "payees" to levy charges on payment instruments (CJEU in case C-616/11)

In a case decided today, the Court of Justice shed some light on Directive 2007/64 EC, which, despite being somewhat technical, has a non-negligible impact on consumer contracts. 

The Directive concerns payment services in the internal market, both as concerns the relationship between payment service providers and other professionals, and between the latter and end customers- so, in cases like the one at hand, consumers. 

In the case that the Court had to examine, T-Mobile Austria GmbH v Verein für Konsumenteninformation, a consumer association had obtained from a local court a decision pursuant to which certain terms adopted by the known telecom company had to be removed from future contracts and not enforced in the existing contracts. This has not happened, as one may expect, under unfair terms legislation, but in light of the Austrian law implementing Directive 2007/64. 

The relevant Austrian legislation - Zahlungsdienstegesetz, BGBl. I, 66/2009; ‘ZaDiG’- provides (art. 27) that:The payment service provider shall not prevent the payee from offering the payer a reduction for the use of a given payment instrument. The payee is not permitted to charge for the use of a given payment instrument.’

The term in T-mobiles general conditions charged customers who chose to pay their "Europe free" subscription by manual money transfer of via internet banking (rather then by direct debit or credit card) an additional fee of 3 euros. This charge was prima facie illegal under Austrian law, as ascertained by the local court, but T-mobile challenged the decision in point of law, claiming that the law did not correctly implement the Payment Services Directive. 

According to the Directive (art. 52 par 3) "The payment service provider shall not prevent the payee from requesting from the payer a charge or from offering him a reduction for the use of a given payment instrument. However, Member States may forbid or limit the right to request charges taking into account the need to encourage competition and promote the use of efficient payment instruments".

T-Mobile questioned both that money transfer through a paper form or internet banking could be considered as a payment instrument under the Directive and that the possibility of intervention granted to MS concerned them as telecom - and not payment - services providers. Finally, the company questioned Austria's decision to strictly prohibit all charges. 

In short, the CJEU declared that the means of payment concerned are to be considered payment instruments in the sense of the Directive (para 44) and that the Directive's provision also addresses non-payment service providers as "payees" (people to whom the money is transferred) (para 28). 

As concerns Austria's outright prohibition of payment charges, according to the CJEU (para 48) it is for the national court to assess, considering the broad discretion that MS enjoy under the Directive, whether the national legislation, as a whole, takes into account the need to encourage competition and the use of efficient payment instruments, which it is for the referring court to ascertain".

  

European Parliament's last stands

Last week, the European Parliament voted in its plenary session on a few proposals that are important for consumers and their fate needs to be set prior to the end of term of the current Parliament. Let us take a short look at the results of last week's session:

Roaming fees and open access internet

In the first reading on the new Telecoms package, the European Parliament consolidated work conducted so far and is ready to give a further go at it to the new Parliament after the elections (see previously: MEPs say NO to roaming and YES to open internet). The package not only aims at abolishing roaming charges in Europe as of December 2015, but also at prohibiting internet access providers from blocking or slowing down selected services ensuring more net neutrality. (Ensure open access for internet service suppliers and ban roaming fees, say MEPs)

Clinical trials

We have previously mentioned on this blog the need for ascertaining more transparency of clinical trials' data, so that it could be more thoroughly tested and so that its' results could be subjected to more academic, objective scrutiny (see e.g. Who's keeping the score?...). This would increase patients' safety. On 2nd of April the European Parliament voted for a new proposal amending the existing Clinical Trials Directive. Pharma companies and academic researchers will now have to post the results of all their European clinical trials in a publicly-accessible database. The new law is also supposed to facilitate easier cross-border cooperation, which is expected to enable bigger, more reliable trials. The European Commission will be authorized to do the checks of reporting procedures, which themselves are simplified. (Clinical trials: clearer rules, better protection for patients) The proposal has already informally been agreed with by the Council so it should not take long to adopt it as law. This new proposal is welcomed by the European Ombudsman who often had to deal with complaints that citizens were refused access to clinical trials data (Clinical trials vote is a triumph for transparency in EU healthcare).

Medical devices

The MEPs voted in the first reading on the proposal for a new Regulation on medical devices in order to consolidate the existing various projects of that law and pass it on to the new Parliament. (see our previous post: New European rules on medical devices) We discussed the need for this law previously, mentioning the scandals with faulty breast implants, for example. New provisions are to enforce stricter monitoring and certification procedures of medical devices, therefore, increasing consumer safety. (Medical devices: better controls and traceability to ensure patients' safety)

Consumer payments

The European Parliament adopted also last week the proposal to cap bank fees for processing consumers' payments in the EU (at 0.3% of the transaction value for credit card transactions and at a maximum of seven euro for debit cards). (MEPs push for card payment fee caps and online payment safeguards) The caps will apply to both domestic and cross-border transactions and in time should lead to lower prices for card users. They will enter into force one year upon this law's adoption. Moreover, the MEPs decided to strengthen online payment safeguards by, among others, introducing a uniform set of information that would clearly state all charges, execution times, contact information and exchange rates. Unauthorized payment will need to be refunded within 24 hours of their being noticed. Consumers should not bear losses of illegal use of their stolen or lost cards above €50. (see our previous post: Money, money, money...)

CJEU declares Data Retention Directive invalid (Joined Cases C-293/12 and C-594/12)

With today's decision, the Court of Justice has declared the Data Retention Directive invalid. (see our previous post on the opinion in this case: Challenging the Data Retention Directive...)

The Directive concerned the harmonisation of Member States' legislations as to the storage of data which are generated or processed by providers of publicly available electronic communications services or of public communications networks, to the end of fighting terrorism and other forms of organised crime. In this context, providers must retain traffic and location data as well as related data necessary to identify the subscriber or user.

The Court observed that such large-scale collection and retention of data represents a serious interference with fundamental rights such as the right to private life and respect of personal data. It then sought  to ascertain whether such interference was justified in light of the objectives pursued by the Directive.

While acknowledging that the infringement of fundamental rights brought about by the Directive is limited and linked to genuine public interest, "the Court is of the opinion that, by adopting the Data Retention Directive, the EU legislature has exceeded the limits imposed by compliance with the principle of proportionality".

First, "the directive covers, in a generalised manner, all individuals, all means of electronic communication and all traffic data without any differentiation, limitation or exception";

Second, it "fails to lay down any objective criterion which would ensure that the competent national authorities have access to the data and can use them" only in relation to the crimes that the directive was meant to prevent/fight;

Third, the data retention period seems to be established without giving any meaningful indication as to how differences could be made among different subjects and different categories of data.

Finally, the Directive doesn't seem to provide sufficient guarantees against abuse and does not "ensure the irreversible destruction of the data at the end of their retention period", and furthermore does not require the data to be kept within Europe, which leaves unclear what authorities will, in fact, have access to the data.

The decision, which is making privacy advocates rather happy, will of course have consequences. Stay tuned for updates!

Informed consent online

Jennifer Golbeck, director of the Human-Computer Interaction Lab at the University of Maryland, talked at TED about the need to protect our data better online and how this could be achieved. For anyone interested in improved disclosures and privacy issues this is an interesting talk: The curly fry conundrum: Why social media "likes" say more than you might think.

15th International Association of Consumer Law conference in Amsterdam

We now have a conference website, where gradually you will be able to find out more details about its organization. We are expecting to announce a call for papers in the summer 2014. 

This may also be a good place to announce we are looking for sponsors (check out the 'sponsorship opportunities' tab on the website). We can offer marketing opportunities, but also, depending on the level of your company's (law firm's, bank's, organization's etc.) involvement, a possibility to present your company's policies with regards to consumer protection in one of the conference sessions or during keynote speech panels. Send me an email if you want to find out more about these opportunities or discuss their terms.

Financing through pyramids - CJEU judgment in 4finance (C-515/12)

3 Apil 2014: CJEU judgment in 4finance (C-515/12)

This case as we described earlier (Pyramid schemes...) concerned conditions that needed to be fulfilled in order to recognize a commercial practice as a pyramid scheme, which would then be blacklisted as an unfair commercial practice under Annex 1, point 14, Directive 2005/29/EC. The Court is in agreement with the AG Sharpston that it does not matter what is the amount of the consideration that consumers give for participating in a pyramid promotional scheme (how insubstantial it is). What is decisive is whether consumers need to give financial consideration for "the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products". (Par. 34) In the given case, the CJEU has doubts whether the condition of consumers' compensation coming 'primarily' from the introduction of new members to the scheme was met since the bonuses paid to existing members were funded only to a very small extent by the financial consideration required from new members. If the national court determines that this condition was not met, then the company would not be seen as having conducted an unfair commercial practice. (Par. 33)

Exclusive jurisdiction? Court second seised may not stay proceedings - CJEU in Weber (C-438/12)

3 April 2014: judgment CJEU in case Weber (C-438/12)

Today the Court of Justice followed the AG Jääskinen's opinion in determining that in matters of exclusive jurisdiction (in a given case the dispute related to immovable property) if two courts are seized, the second court may not stay its proceedings on the basis of Art. 22 (1) of the Regulation No 44/2001 without examining who has exclusive jurisdiction and if it belongs to the second court, it should proceed with the case. If the first court would recognize its jurisdiction this would be done contrary to exclusive jurisdiction rules and its judgment would not be able to be recognized on the basis of Art. 35. See for more details on this case our previous blog post (The Italian Torpedo...).

What will the future bring? The new consumer programme 2014 - 2020

With some delay, the EU announced its priorities in consumer law for the period from 1st January 2014 to 31st December 2020.  The consumer programme takes the form of a Regulation based on Art 169 TFEU and explains how the Union will complement, support and monitor the Member States' policies. This is mainly achieved through financing actions taken either by national authorities or thirds, such as consumer organisations, e.g..

The consumer programme details four main objectives (Art 3): product safety (I), consumer information and education, and support of consumer organisations (II), rights and redress (III) and enforcement (IV). The short Regulation (only 19 articles) as well as its Annexes elaborate these objectives and the types of actions to be taken. Although not directly granting rights to consumers, the Regulation is an important indicator of the EU's current view on and future priorities in consumer law.