Consumers buying ‘discount cards’ for future transportation contracts have the right to withdraw - Case C‑583/18 (Verbraucherzentrale vs DB Vertrieb GmbH)

Case C‑583/18 (available in French here) deals with the Consumer Rights Directive, particularly with its scope of application and the exclusion of contracts for the transportation of passengers. The case originated in a dispute between the Verbraucherzentrale, the German consumer association, and DB Vertrieb GmbH, a company in the group of the railway company Deutsche Bahn. In this context, DB Vertrieb sells cards that allow passengers to have discounts on the price of their train tickets – either 25% (BahnCard25) or 50% (BahnCard50). These cards are sold online but no information about the right of withdrawal is given to consumers. DB Vertrieb GmbH argues that this omission is justified by the fact that there is no right of withdrawal in these ‘discount cards’ contracts, since they are excluded from the scope of application of the Consumer Rights Directive. Indeed, the Consumer Rights Directive excludes contracts for passenger transport services from its scope (Article 3(3)(k)). Consequently, the referring Court asked the CJEU whether the contract concluded between consumers and Deutsche Bahn can be considered a service contract under Article 2(6) of the Consumer Rights Directive and, if so, whether it can also be considered a contract for passenger transport service under Article 3(3)(k) in such a way that it would be excluded from the scope of the Directive.

The CJEU answered the first question in a straightforward and broad manner, in line with the broad definition of ‘service contract’ in the Consumer Rights Directive. The CJEU highlighted that Article 2(6) states that a service contract is ‘any contract other than a sales contract’ and, given that the contract in question does not involve the transfer of ownership of a good (Article 2(5)), it is not a sales contract. Not being a sales contract, it is a service contract. ‘Discount contracts’ are, therefore, considered service contracts under the Consumer Rights Directive.

Regarding the second question, the CJEU considered that a contract through which the consumer enjoys a price discount if and when concluding a future transportation contract is not a contract for passenger transport services as defined by Article 3(3)(k), since the contract in question does not have as a primary object the transportation of passengers.

Furthermore, the CJEU argued that the two contracts in question – the ‘discount card’ contract and the actual passenger transportation contract – are two different contracts, not legally connected to each other. In other words, the conclusion of the contract which gives the consumer a price discount in a future transportation contract does not mean that the consumer will necessarily conclude the transportation contract.

Finally, the CJEU considered that the existence of a right of withdrawal in the ‘discount card’ contract does not create any objective inconvenient for the transportation company. The CJEU based this argument on the rationale behind the exclusion of contracts for the transportation of passengers from the Consumer Rights Directive, explained in Recital 49. Recital 49 states that it would be inappropriate to give consumers the right to withdraw from service contracts where the conclusion of the contract leads the professional party to set aside the corresponding capacity which could not be filled or would be difficult to fill in case of withdrawal. In this case, the acquisition of ‘discount cards’ by consumers does not mean that Deutsche Bahn will alter its capacity (e.g. available seats on trains).

Therefore, Article 3(3)(k) must be interpreted as not including ‘discount cards’ contracts, which means that, in practice, the contract in question is covered by the Directive and by its provisions regarding the right of withdrawal.

Press digest

Air passengers

While the Regulation 261/2004 on air passenger rights is still under review, BBC reported recently on the investigation conducted in the UK by the consumer group Which?. Pursuant to their data between June 2014 and May 2015, ca 900.000 people could be eligible for a compensation for a delayed flight but only ca 38% of them claimed this compensation. Many passengers still don't know about their rights and are not informed about them by the airline. Even worse, airlines often discourage passengers from making this claim by arguing that the delay was beyond their control and therefore an extraordinary circumstance. The process of how to claim this compensation is also often complex. Our advice: see whether any of the online flight claim services operates in your country (such as euclaim, flightclaimservice, flightright). (Delayed airline passengers 'missing out on millions in compensation')

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Taping client financial consultations

UK financial advisers were worried that they would have to tape meetings with their clients in order to be able to prove that they were acting in clients' best interests. While MIFID II only demands recordings of phone and electronic communications to be made and store, it also recommends such measures for face-to-face meetings. The Financial Conduct Authority, however, does not expect such far-reaching measures to be taken by financial advisers. (FCA will not demand advisers tape client meetings)

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Mobile phone operators in Ireland breach CRD information duties on the right of withdrawal

The Competition and Consumer Protection Commission in Ireland is taking enforcement action against various mobile phone providers (Vodafone, Eircom, Meteor, Three and UPC) for not providing with sufficient and accurate information on how to withdraw from their contract, in accordance with the Consumer Rights Directive. The service providers are asked to update this information and to inform their most recent consumers of their right to withdraw from the contract. (Mobile operator avoids penalty; Consumer watchdog takes action against Vodafone; Action taken against Eircom, Meteor, Three and UPC)

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Price discrimination based on nationality in Disneyland Paris

The European Commission has received complaints about Disneyland Paris charging different prices for consumers depending on their nationality. According to the complaints British and German consumers would pay more than French consumers. Generally, it could be considered price discrimination if for the same service people pay more because of their nationality or country of residence, unless Disneyland Paris could justify the need for this price variation. (Disneyland Paris is being investigated for allegedly charging British and German visitors more than the French)

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European Commission vs Hollywood

The European Commission has started an antitrust procedure against Sky UK and six major US film studios: Disney, NBCUniversal, Paramount Pictures, Sony, Twentieth Century Fox and Warner Bros. These six studios have placed contractual restrictions on Sky UK pursuant to which Sky UK may only make their pay-TV services available in the UK and Ireland and not to EU consumers located elsewhere. Since due to these contractual provisions Sky UK cannot choose its clientele based on commercial reasons, incl. national copyright laws, these rules may amount to anti-competitive agreements, prohibited in the EU. US movie studios tend to, however, choose a broadcaster to license for their products in a single Member State and limit their options to share these services cross-border. Considering the increase in the demand for cross-border services in the EU, incl. (online) pay-TV services, these restrictions may be stifling competition. (Commission sends Statement of Objections on cross-border provision of pay-TV services available in UK and Ireland)

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Uber at the ECJ

On July 20 it was announced that a Spanish court referred to the ECJ for an estimation of the legal character of Uber, and more specifically UberPop services. Uber is one of the examples of the sharing economy companies that enables peer-to-peer transactions through an online P2P platform. There are a lot of uncertainties as to the legal position of the online P2P platform, its rights and obligations and its liability. Can it be seen as merely an (electronic) intermediary in a transaction between two peers or could it be seen as a service provider, etc.? In more and more European countries Uber's operations are questioned (and even banned) under national laws, since the courts do not see the activity of Uber as limited to only providing intermediation services. (EU court to classify Uber: taxi or information company?)

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Ban of a chemical in imported textiles

Over 10 years ago the use of nonylphenol ethoxylates (NPE) in textile manufacture in Europe was banned. This toxic substance is used as a cleaning, dyeing and rinsing agent in textile production, however, when it degrades in the environment it ends up in the bodies of fish, disrupting their hormones. Despite the ban, the negative effect of NPE's degradation did not disappear, since imported textiles contained it and when washed released it into the environment. The Council has now voted unanimously on extending this ban to imports of clothing and other products (to become effective 5 years after the adoption of the new rule). (EU countries agree textile chemical ban)

On the road

As of today, EU Regulation No 181/2011 applies to bus and coach travellers across the EU. The Regulation is meant to complete an integrated area of passengers rights, providing passengers in Europe a high level of consumer protection independent of the means of travel. In line with existing rights for travelling by air, rail or boat, bus and coach travellers may now rely on the following passenger rights (as enumerated in the European Commission's press release):

• 'Non-discrimination based on nationality regarding tariffs and other contract conditions;non-discriminatory treatment for disabled persons and persons with reduced mobility. Specifically, free-of-charge assistance both at designated bus terminals and on board buses and coaches, as well as financial compensation for loss of or damage to their mobility equipment;
• adequate and accessible information for all passengers before and during their journey, as well as general information in bus terminals and on the internet about their rights;
• reimbursement of the full ticket price or rerouting in case of overbooking, cancellation or delay of more than 2 hours from the estimated time of departure (only applicable for journeys of more than 250 km distance);
• compensation of 50% of the ticket price in addition to the reimbursement of the full price in case of overbooking, cancellation or a delay of more than 2 hours from the estimated time of departure, when the bus and coach company fails to offer the passenger the right to choose between reimbursement and rerouting (only applicable for journeys of more than 250 km distance);
• adequate assistance (snacks, meals, refreshments, as well as, if necessary, accommodation) in case of cancellation or delay of more than 90 minutes for journeys longer than 3 hours (only applicable for journeys of more than 250 km distance);
• compensation for death, injury, loss or damage to luggage caused by road accidents;
• a complaint handling mechanism established by the bus and coach companies and available to all passengers;
• setting-up of independent bodies in each EU Member State with the mandate to enforce the regulation and, where appropriate, to impose penalties.'

Honk-honk

Another draft law that the European Parliament voted on last week concerned sound level of motor vehicles. The standard for cars would be lowered from 74db to 68db in the next 6-8 years (with some margin of error for more powerful vehicles, incl 81db for lorries). Additionally, the new cars should be labelled on their noise performance so that consumers were informed what type of vehicle they are purchasing (just like currently they can see the fuel efficiency or CO2 emissions' labels on cars). An idea was also brought up in the discussions on this new law that e-cars should have a sound added to it - so that pedestrians are in no danger of being silently run over. (Parliament backs law to tone down harmful traffic noise)

European Railways on the right track?

Last week the European Commission announced a new package of provisions that would regulate some of the consumers' traveling issues (Fourth Railway Package). The measures intend to improve the quality and give more choice in railway service in the EU. While the market for traveling by train shrinks yearly, the EU intends to try to stimulate it more, by promoting competition and inviting new entities to it. The railway transport is environmentally friendly and helps with traffic issues, which are one of the reasons why consumers are seen as needing to be encourage to participate in it. (European Railways at a junction; or Challenges Ahead) 

8th consumer scoreboard

What markets are working better for EU citizens? And where is there, to put it nicely, larger room for improvement?

Some answers can be found in the latest Consumers Market Scoreboard, which measures consumers overall appreciation of the markets along seven parameters (‘comparability’, ‘trust’, ‘satisfaction’, ‘choice’ and ‘ease of switching’, plus ‘problems’ and ‘complaints’).
In general, it seems that European consumers find themselves relatively at ease within markets for goods- with the notable but unsurprising exception of second-hand cars...

On the other hand, services markets in general seem to cause more troubles. In particular, at the bottom of the chart lay banking sand telecom services, which perform poorly on several parameters.

European consumers seem also to be at strains with energy markets when it comes to important aspects such as choice, comparability and switching suppliers and tariffs.

Finally, the most remarkable decreases in performance seem to have been taken place in the transport and post-delivery markets as an effect of the crisis. The latter has led governments to curb public subsidies to those sectors. 

Another interesting remark is to be found in the Commission's press release: apparently, "[m]arkets are assessed differently by different socio-demographic groups." Further research with the aim of clarifying the reasons for that is promised (and vividly looked forward to by this author).

Better information on delayed train connections - CJEU judgment in Case C-136/11 Westbahn Management v ÖBB Infrastruktur

This morning, the Court of Justice of the EU handed down its judgment in the Westbahn case. The Court reaches conclusions similar to those of the Advocate General (discussed earlier on this blog: 'Better information on delayed train connections - opinion of AG Jääskinen'). As summarised in the press release:

'Railway undertakings are therefore obliged to provide information relating to the main connecting services in real time.

The Court finds that that obligation relates to all main connecting services, both those of the railway undertaking concerned and those operated by other undertakings. A restrictive interpretation of the information to which passengers must have access would hinder transfers by them. It would compromise the objective of providing information pursued by EU law, by encouraging passengers to give preference to large railway undertakings which would be in a position to provide them in real time with information relating to all stages of their journey. 

As to the obligations of the railway infrastructure manager, the Court observes that, to ensure fair competition on the passenger rail transport market, it must be ensured that all railway undertakings are in a position to provide passengers with a comparable quality of service. Railway undertakings must therefore, for the purposes of the exercise of the right of access to railway infrastructure, be given information by the infrastructure manager in real time relating to the main connecting services operated by other railway undertakings. 

In this connection the Court notes that information which is available on screens at the various stations cannot be regarded as being of a confidential or sensitive nature which would prevent its disclosure to the various railway undertakings concerned. 

The Court therefore holds that the infrastructure manager is required to make available to undertakings, in a non-discriminatory manner, real time data relating to trains operated by other undertakings, in so far as those trains provide main connecting services.'

Green motorbikes

Is the EU planning to have all motorcycles painted green? No worries, it's not.

The European Parliament last week agreed with the European Council on new rules for safer and greener motorbikes. While the responsibility of safe driving is up to consumers using motorcycles, mopeds, scooters, etc., the European institutions make sure that at least technical issues are regulated at a safe, European level. After all, ca 16% of accident deaths on Europe's roads occurs with involvement of motorbikes. Some of the new rules toughen the market surveillance, while others are more specific: e.g., all bigger motorbikes (over 125cc) will need to have an anti-lock braking system (ABS). Additionally, the level of emissions has been adjusted to make motorcycles more green.The vote on the proposal is scheduled for November in the plenary. (MEPs close deal with Council on safer, greener motorbikes)

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)

Better safe than sorry - on new road safety rules

Did you know that more than 5 people die on Europe's roads every day in accidents caused by a technical failure of a vehicle? Did you know that technical defects are responsible for 6% of all car accidents and 8% of all motorcycle accidents? In order to prevent such tragic outcomes, the EU decided to toughen its rules on vehicle checks. One could say, it's the highest time to introduce new rules, since the current minimum standards for vehicle checks date back to 1977 and don't foresee for inspections of such important mechanisms as, e.g., ABS. That's not what we want to hear when we are heading out for our holidays in our cars and would like to think that the chances of the car that comes towards us from another direction swerving suddenly into our lane are none to slim.

The new proposal of the European Commission introduces compulsory EU wide testing for scooters and motorbikes. It will also demand more frequent periodic checks of road-worthiness for old vehicles, as well as for cars and vans with exceptionally high mileage. The latter ones would have to fulfil the same requirements as taxis or ambulances. Not only the objects of the tests are to change, but also its substance. The EC intends to set minimum standards for deficiencies, equipment and inspectors, as well as make electronic safety components subject to mandatory testing. Finally, the proposal includes provisions that are to limit mileage fraud, with registered mileage readings.

"If you're driving a car which is not fit to be on the road, you're a danger to yourself and to everyone else in your car – your family, your friends, your business colleagues. What's more, you’re a danger to all the other road users around you. It's not complicated; we don't want these potentially lethal cars on our roads." said Vice President of Transport, Siim Kallas (Tougher vehicle testing rules to save lives)

The whole new legislative package is presented in the FAQ format.

If you'd like to read more about EU road safety plan 2011-2020 - see the guidelines and visit the road safety page.

CO2 emission targets and our (empty) pockets

Not many of those who own and/or drive a car are daily concerned with the CO2 they are releasing in the air when going to work, to the IKEA or on a weekend trip. Many more, on the other hand, are deeply affected by the fuel consumption that these activities are going to entail. 

A recent position paper issued by BEUC tries to link this two aspects in light of the EU plans to lower the emission targets for passenger vehicles in the coming years (the final deadline would be 2020). In short, the paper calculates that if producers are "forced" to comply to the new standards by means of technical improvements alone consumers are going to be better off in the short-middle run. How? BEUC researchers expect that the implementation of technical improvements may cause a raise in the vehicles' price of around 1000 euros; on the other hand, with the price for fuel likely increasing over the coming years, consumers will be able to recover the initial costs through reduced consumption in fairly short times- maximum three years according to BEUC, and less if the second-hand market is considered as a way to "split" the cost among subsequent owners.

Much emphasis is put on the fact that, as anticipated, the emission reduction should be only achieved through technical improvements: other implementation devices, such as efforts to teach drivers eco-driving would shift the burden on consumers and jeopardize the measure's effectiveness.

For more in-depth information, a longer version of the paper is also available (guest access available by simple click).

Mandatory eCalls (EU life-saving system)?

Last year we mentioned that the European Commission issued a recommendation to mobile phone operators asking them to transmit eCalls properly (eCalls - towards a European life-saving system). Last week the European Parliament adopted a resolution pursuant to which all new cars should be fitted with eCall devices by 2015. 

An eCall device automatically alerts emergency services about road crashes through the public 112 emergency call system. This is seen as enabling the emergency services to arrive earlier at the scene of an accident, which may diminish the loss of lives and prevent more serious injuries. At the same time, these devices does not enable monitoring of car users' location unless an accident happens, which means that they do not infringe users' right to have their data protected.

Despite the strong support of eCalls in the EU institutions only a small number of cars is fitted with such devices up to now (ca 0,4%). Obviously, the industry does not put priority on deployment of such systems, which led the European Parliament to urge the European Commission to come with an appropriate legislative proposal to make this system mandatory by 2015.

"According to estimates, the eCall system would save up to 2500 lives a year and reduce the severity of injuries by 10 % to 15 %, the resolution states." (MEPs say mandatory emergency eCall system in cars will save lives)

Better information on delayed train connections - AG in the CJEU case C-136/11 (Westbahn Management)

7  June 2012: opinion of the AG Jääskinen in the CJEU case C-136/11 (Westbahn Management)

This new case of the CJEU concerns transport services offered to consumers. We talk a lot on this blog about protection offered to passengers of air planes, but not so often do we get a chance to discuss European measures in other areas of transport, such as railway.

In the given case Westbahn Management wanted to provide passenger services on the railway line between Vienna West Station and Salzburg Central Station. They were granted an operational authorisation to provide these services by decision of the Federal Ministry of Transport, Innovation and Technology of 29 May 2009. In the case referred to the CJEU they sued ÖBB Holding AG which is a sole shareholder in the largest rail infrastructure management company in Austria. The reason for that was a lack of access to the information that the ÖBB had and was not fully willing to share. Namely, the ÖBB disposes of real-time data on all trains operating on the Austrian rail network, including the current positions of trains, arrival/transit/departure times for the remainder of the journey, data on delays and cancellations. They share this data only in so far as it concerns the trains of the railway undertaking they are sharing it with, and not of other railway undertakings. However, all the data is displayed by ÖBB on electronic notice boards at major stations. Westbahn Management required access to all real-time data from the ÖBB in order to be able to inform its passengers about current departure times of their connecting trains, which was especially relevant in case of delays and cancellations. ÖBB refused such a disclosure and claimed that it could only be possible if Westbahn Management concluded agreements with all other railway undertakings operating in Austria, who would then disclose their own data to it. Interestingly enough, a company owned by ÖBB (ÖBB-Personenverkehr AG) refused to sign such an agreement. And so, the legal proceedings began.

The Austrian Commission (monitoring competition proceedings) stayed proceedings and asked the CJEU, whether Article 8(2) of the Regulation No. 1371/2007 of 23 October 2007 on rail passengers' rights and obligations should be interpreted as meaning that information on main connecting services must include, in addition to scheduled departure times, notification of delays to or cancellations of those connecting services. If the answer to this question was in the affirmative, then the second question arises as to the interpretation of Article 5 of the Directive 2001/14/EC of 26 February 2001 on the allocation of railway infrastructure capacity etc. Namely, does it oblige the railway infrastructure manager to make real-time data on other railway undertakings' trains available to railway undertakings in a non-discriminatory manner, as long as those trains constitute main connecting services?

The AG Jääskinen believes that the answer to both these questions should be in the affirmative.

First, the AG considered a claim that information concerning delays and cancellations of train services could amount to a business secret (and therefore, not easily be shared). (Par. 31) The AG does not give credence to this claim, since according to him information will only amount to a business secret under EU law if it was confidential information, disclosure of which could harm the undertaking, and information about train delays and cancellations is not confidential in nature. To the contrary, disclosure of such information is necessary in order to guarantee a well functioning rail transportation system. ÖBB realises that and the importance thereof to passengers since it displays is on electronic boards. (Par. 33-34) Moreover, this information should not be perceived as personal data, that needs additional protection under EU law, since this information does not give away any details on passengers, or even on other service providers as such, but only on the issue of whether the scheduled connecting services are in fact available. (Par. 36)

As far as the objectives of the Regulation are concerned, it aims at safeguarding users' rights for rail passengers and to improve the quality and effectiveness of rail passenger services, as well as to attain high level of consumer protection. (Par. 38)

"This includes the right to obtain information concerning rail journeys both before they commence and while they are being taken, and, wherever possible, as soon as possible (recital 4)." (Par. 38)

A narrow interpretation of the provisions in the Regulation would limit the information to which passengers are entitled to the departure times described in the timetable. It would be contrary to the aims of the Regulation, among which the passengers' right to be informed of late arrivals and departures by the railway undertaking or the station manager as soon as such information is available. (Par. 40) The information on scheduled times of departure and arrival becomes useless in case of delays and cancellations, and if during the journey the passenger might obtain only such information it would be a mere repetition of the information he had already received. (Par. 41) The systematic interpretation of the Regulation confirms the difference between the static information before the journey begins, and the dynamic information during the journey. The information at these different points of time that consumers need is not generally the same. (Par. 42)

Finally, the Directive 2001/14 needs to be interpreted in a way to facilitate reaching of the objectives envisaged under Regulation No. 1371/2007. (Par. 49) This suggests that rail undertakings should be entitled to real time data from the infrastructure manager. (Par. 52)