Friday, 24 October 2014

Information to a single consumer can not be regarded as a commercial practice - AG Wahl’s opinion in case C-388/13 UPC Magyarország

Yesterday, AG Wahl delivered an opinion in case C-388/13 UPC Magyarország concerning the Unfair Commercial Practices Directive. 

The Hungarian Court referred two questions to the CJEU on the basis of a claim filed by Mr S alleging that he had been provided with erroneous information by UPC Magyarország – a provider of cable television services.

The first question raised no new issues and the answer was easily to foreseen. The CJEU has already assessed in the judgment CHS Tour Services, that the UCPD must be interpreted as meaning that, if a commercial practice satisfies all the criteria specified in Article 6(1) of that directive for being categorised as a misleading practice in relation to the consumer, it is not necessary to determine whether such a practice is also contrary to the requirements of professional diligence as referred to in Article 5(2)(a) of the UCPD in order for it legitimately to be regarded as unfair and, therefore, prohibited in accordance with Article 5(1) of the UCPD (par. 16).

AG Wahl focused on the second question and denied that a communication of false information to a single consumer may be regarded as a commercial practice within the meaning of the UCPD. According to AG Wahl, an act may be regarded as a commercial practice within the meaning of the UCPD, when either or both of the two following conditions are fulfilled: 
- the conduct is directed towards an unspecified group of addressees; 
- the conduct is repeated in relation to more than one consumer (par. 23). 

The CJEU has not yet dealt with a question concerning the classification of an isolated act of a trader affecting a single consumer in light of the UCPD. AG Wahl is of the disputable opinion that the UCPD is aimed at the protection of the collective interests of consumers (par. 32). It is, of course, possible that the CJEU will not share the opinion delivered yesterday, but whatever the judgment may decide it will be certain to further clarify the scope of the UCPD.

Thursday, 23 October 2014

New Commissioner for "Justice, Consumers and Gender Equality"

Yesterday the European Parliament has enacted the Juncker Commission. It will thus start its term of office on 1 November 2014 after being formally appoined by the European Council. The Czech politician Vĕra Jourová will be the new Commissioner for Justice, Consumers and Gender Equality. 

The key files she mentions in her introductory statement are:
- reform of data protection rules;
- the European Public Prosecutors Office;
- the Women on Boards proposal;
- the Consumer Product Safety Regulation.

Wednesday, 22 October 2014

Press digest


The European Commission announces not to further regulate fixed telephone lines, since the market moved towards mobile and online telecommunication. (Europe says goodbye to fixed line regulation, hello to mobile era)

Tobacco Products Directive

UK e-cigarette manufacturer, Totally Wicked, challenges the validity of art. 20 of the Tobacco Products Directive at the CJEU, claiming that e-cigarettes should not be regulated as "tobacco related products" if they don't contain tobacco. (E-cig manufacturer wins right to challenge Brussels in EU courts; Totally Wicked vs. the EU's tobacco directive; First e-cig TV adverts from next month)

EU Data Protection and ePrivacy rules

Worries are being expressed about strengthening existing data protection rules even when businesses do not seem to be able to hold to currently existing ones (EU set to strengthen data protection laws). Data Protection Authorities across the EU are currently stepping up enforcement of the compliance with the existing EU data protection rules, by conducting a widespread cookie sweep (Are you ready? The EU "Cookie Sweep" is upon us). Other sources report widespread non-compliance of cloud-based storage service providers with the existing EU data protection rules (Most cloud apps flout EU data protection rules - study).

Tourism sector

TUI Travel argues in the UK for more support to be given to the reform of the Package Travel Directive and the Regulation No 261/2004 on air passenger rights. (TUI Travel calls on UK government to support the travel and tourism sector at home and abroad)


European booksellers plead with the European Commission and BEUC to set up investigation into the monopoly position of Amazon in the online book market, which harms European consumers by depriving them of a rich and diversified online book offering. (Booksellers raise Amazon monopoly concerns with European Commission)

Health claims

The new rules on food labelling (EU Regulation 1169/2011 on food information to consumers) are to enter into force as of December 2014 (nutrition information as of December 2016). Especially the sport nutrition sector may have to invest time and money to adjust the labels of their products to the new rules. While this regulation forces producers to be very specific in listing ingredients of their products, it may be even more difficult for the producers to justify placement of easy claims on how certain products may boost energy etc. (which are also regulated by Regulation 1924/2006). (Claim, set and match)

Consumer behaviour

Two new survey results have been published showing us growing trends of consumer online shopping habits. (UK leads European online shopping; Northern European web shoppers spent €1,780 each in 2013) In the meantime, Facebook sets up a new division - Facebook IQ - to try to understand consumer behaviour better... (Facebook forms new unit to study consumer behaviour).

Tuesday, 21 October 2014

Medicinal product recall allows to claim damages for surgical removal thereof? - AG Bot in case Boston Scientific Medizintechnik GmbH (C-503/13 & C-504/13)

21 October 2014: Opinion AG Bot in case Boston Scientific Medizintechnik GmbH (C-503/13 & C-504/13)

Imagine you had a pacemaker installed. It's already quite a stressful and invasive procedure, but then you find out from your doctor that the type of pacemaker that was used in your surgery has been found out to fail "from time to time". Since the producer of the pacemaker advises your doctor to think about exchanging your pacemaker due to a defect in their design for another one, with less chances of a failure, you agree to a new surgery. Who's going to pay for it though? The German courts were pretty certain that it should be the producer of the faulty product (a faulty pacemaker in case C-503/13 and a faulty defibrillator in case C-504/13) but some questions have been asked to the CJEU to ascertain the rules of the Product Liability Directive in such cases.

First, to claim damages under the Product Liability Directive the consumer needs to prove that the product he acquired was faulty. In the given case, there was a presumption that the medical products could fail working at one point (based on the extensive testing of copies of this product) and due to the increased risk of such a failure these products were deactivated. This means, however, that in these specific cases the defect did not manifest itself, since the removal of the medicinal products prevented this occurrence. The AG Bot nonetheless considers such medicinal product to fulfill the requirements posed in the Product Liability Directive to a faulty product. (Par. 26) Art. 6 of this Directive states that when the product does not offer consumers expected by them safety standards, it should be perceived as faulty. Recital 6 determines that "to protect the physical well-being and property of the consumer, the defectiveness of the product should be determined by reference not to its fitness for use but to the lack of the safety which the public at large is entitled to expect". The AG Both is, therefore, convinced that the test is an abstract one, not necessarily relying on the specific consumer's case, but rather during which it is justified to assume that if a consumer has a product identical to the one that already showed serious defects, he may reasonably question the safety of his product as well. (Par. 29, 33) Additionally, AG Bot claims that effective consumer protection requires that consumers could claim liability for defective products also prior to these products causing any damage. (Par. 38) While this statement is true, it needs to be said that this effective protection could be granted to consumers through measures other than Product Liability Directive, which is very much focused on compensating consumers for specific damage that was caused by a defective product. This opinion seems to be broadening the scope of application of the Directive, which until now was very narrowly interpreted.

Second, as mentioned above, the Product Liability Directive is meant to facilitate easy compensation of consumer's damage resulting from the defective product. The question was whether the costs of a surgery to remove a defective product (removal of a pacemaker or a defibrillator) could be seen as damage caused by personal injury. (Par. 56) While not all language versions of the Directive used a term with the same meaning of a 'personal injury', the theological interpretation points out that the Directive aims at protecting, in general, the 'health' of the consumer as well as his 'physical integrity'. (Par. 61) Therefore, excluding from the scope of the notion of 'damage' such damage that is caused due to a surgical intervention to remove a defective medical product would undermine this legislative purpose. (Par. 63) The causal link between the damage and the defect would then be for the national courts to prove (Par. 70) but the fact that the producer of the defective products recommended their removal to the doctors could be perceived as such evidence. (Par. 71)

It's a very interesting case that may influence the scope of application of the Product Liability Directive. Considering its limited application in practice and the fact that in such important cases as product recall due to increased risk to consumer health the compensation rules in the EU should be harmonized, it is clear why the AG Bot took the stand he did. It remains to be seen whether the CJEU shares this point of view.

Thursday, 16 October 2014

Spanish mortgages continued - AG Wahl's Opinion in cases Unicaja Banco and Caixabank

Today, Advocate-General Wahl delivered his Opinion in a number of joined cases regarding the assessment of standard terms in mortgage contracts under Spanish law. The cases of Unicaja Banco and Caixabank address the question whether the Spanish procedural rules governing the enforcement of a mortgage satisfy the requirement of Directive 93/13 (Unfair Terms in Consumer Contracts) according to which Member States must ensure that consumers are not bound by unfair clauses.

A brief recapitulation of earlier case law may be helpful to understand the currently pending disputes, which all relate to the consequences of the European economic crisis for the Spanish housing market: In the CJEU's judgment in Aziz (see a previous post), the court established that Spanish procedural law did not comply with the Unfair Terms Directive, insofar as it did not provide a court assessing the unfairness of standard terms in a mortgage contract to offer interim relief, in particular the possibility to stay mortgage execution proceedings, as a result of which a home owner could already have been evicted from the property before a judgment on the fairness of the bank's standard terms had been given. Spanish law was amended so as to repair these and other flaws in the legal framework for mortgage enforcement (in Law no 1/2013). In the case of Sánchez Morcillo, the CJEU recently established that Spanish procedural law was still not up to standard, as the assessment of the unfairness of the relevant terms was left to the discretion of the judge and, moreover, consumers were not given equal procedural defences as banks (see a summary in a previous post).

Unicaja Banco and Caixabank now focuses on another provision resulting from the law reform, which 'imposes a ceiling on the default interest recoverable through the enforcement of a mortgage: the rate of default interest must not be more than three times the statutory interest rate. If that ceiling is exceeded, the courts are to give creditors the possibility of adjusting the default interest rate so that it falls within the statutory limit.' (para. 3, 12-13 of the AG's Opinion) In the contracts at issue default interest rates range from 18% to 22.5%. The referring courts in essence asked whether they, in case they found these clauses to be unfair in light of Directive 93/13, should declare the clauses to be void and not binding or rather moderate the interest clauses. Furthermore, the national judges questioned the compatibility of the reform law with the EU Directive.

AG Wahl is, first of all, of the opinion that Article 6 of the Directive 'requires national courts to exclude the application of an unfair contractual term so that it does not produce binding effects with regard to the consumer, but does not authorise them to revise the content of that term. The consumer contract must continue to exist, in principle, without any amendment other than that resulting from the deletion of the unfair terms, in so far as such continuity of the contract is possible under national law.' This is in line with the CJEU's judgment in Case C-618/10 Camino, in which the Court held that national judges in principle should not replace unfair terms by ones that do comply with the Directive: 'The contract containing the term must continue in existence, in principle, without any amendment other than that resulting from the deletion of the unfair terms, in so far as, in accordance with the rules of domestic law, such continuity of the contract is legally possible.' The CJEU's more recent judgment in Case C-26/13 Kasler seems to be the odd one out, to the extent that in this case the contracts at issue could not remain in existence without the clause at issue and, given the negative consequences this would have on consumers, the national court was allowed to replace the unfair term by a supplementary provision of national law. 

AG Wahl distinguishes Unicaja Banco and Caixabank from Kasler, considering that '[i]t is unclear how invalidation of an unfair default-interest clause, such as the clause at issue, would be detrimental to a borrowing consumer' (para. 30). Whether that observation holds true does not seem self-evident, as the further existence of the mortgage contract might be at stake in case the bank will not receive any interest anymore, which may be considered to be a quite essential part of the mortgage agreement.

In the second place, the AG is of the opinion that: 'A provision of national law, such as the Second Transitional Provision of Law No 1/2013 of 14 May 2013 laying down measures for the strengthening of the protection of mortgagors, the restructuring of debt and social rent (Ley 1/2013 de medidas para reforzar la protección a los deudores hipotecarios, reestructuración de deuda y alquiler social), under which a creditor seeking enforcement, on the basis of a mortgage agreement containing a clause setting default interest at a rate higher than three times the statutory interest rate, may adjust the amount of default interest recoverable through the enforcement of a mortgage so that it does not exceed that threshold, is compatible with Directive 93/13 and, in particular, with Article 6(1) thereof, in so far as the application of such a provision is without prejudice to the obligation of national courts under that directive to exclude the application of an unfair contractual term in consumer contracts so that it does not produce binding effects with regard to the consumer, but without revising its content. It is for the referring court to determine whether that is the case, taking the whole body of national law into consideration and applying the interpretative methods recognised by that law.' In other words, the Spanish reform law is compatible with EU law, insofar as it does not interfere with the national courts' duty to hold unfair terms to be not binding on the consumer, without revising the terms' content (again cf. Camino).

The AG reaches this conclusion by observing that the Spanish provision on default interest applies to all standard terms alike, regardless of whether they fall within the material scope of the Directive (and can, thus, be assessed on their unfairness) and whether the mortgage contract is a consumer contract in the sense of the Directive or not (para. 36-37). As a consequence, in regard to standard terms that can be regarded as unfair under the Directive, consumers are protected by EU law, which entails non-bindingness of unfair terms. As concerns terms that either fall outside of the scope of the Directive or are not considered to be unfair, the national law protects debtors (incl. consumer-debtors) by providing a ceiling on default interests rates. While one may follow the AG's line of reasoning on this point, some more thought may be given to its implications: first of all, to what extent are parties able to assess beforehand under which of the two regimes their contract clause falls (which depends on the judge's assessment of its unfairness); in the second place, could this construction give an incentive to judges to rather assess a term to be fair in order to be able to amend it, instead of establishing its non-bindingness under the Directive?

To be continued.

Monday, 13 October 2014

International Association of Consumer Law 2015 conference


This post is just to remind our readers that there is only one month left to submit an abstract if you would like to present your work during our conference 29 June - 1 July 2015 in Amsterdam. We will make sure that the 15th International Association of Consumer Law conference will be informative and fun. While it's theme is "Virtues and Consumer Law" we understand it broadly and submissions in any areas related to consumer protection (e.g. consumer health, enforcement of consumer protection, consumer finances) are encouraged. We are planning three days packed with simultaneous sessions on various consumer protection issues so there will be a chance to discuss anything you may be interested in. The deadline for submissions is November 15th, 2014.


For anyone who is not interested in presenting their research but would like to participate in the conference, the registration is already open. You may register through this website.


Additionally, we will have a few scholarships available for participants from Asia, Africa and Latin America under the age of 35. We will award the scholarships at our discretion, based on the quality of the abstracts sent before the call for papers' deadline. Selected scholarship students will receive a fee waiver. Please add information that you are applying for this scholarship when you submit your abstract. 

Friday, 10 October 2014

Behavioural Exchange 2015 (BX2015)

Anyone interested in looking into behavioural insights when researching, evaluating or drafting law should book 2nd and 3rd of September 2015 for the Behavioural Exchange 2015. I'm looking foreward to find out more about this in the coming months.

Thursday, 9 October 2014

More light shed on clinical trials data

On 2nd of October 2014 the European Medicines Agency (EMA) Management Board unanimously adopted the new policy pursuant to which the clinical reports that underpin the decision-making on medicines will need to be published (Publication of clinical reports). This measure is to become effective as of 1 January 2015 and will apply to all applications for centralized marketing authorizations submitted after that date. EMA will thus increase transparency of clinical trials prior to May 2016 when the new rules on clinical trials may enter into force (see our previous post: New rules on clinical trials - adopted). The quest for granting access to this data has been long-lasting and had many obstacles on its path, but the pharma industry finally decided to co-operate with the academics and consumer advocates and allow them to re-evaluate the data of clinical trials. The individual patient data will not be revealed and any information that could be perceived as commercially confidential will be redacted. BEUC welcomed the news, however, it finds it 'deplorable' that pharma companies may still use the guise of commercially confidential information to avoid revealing all their data (Clinical trials transparency partially boosted by EMA).

Wednesday, 8 October 2014

Consumers' choice and innovation in retail food sector

The European Commission published last week the results of a retail food study. The study "The economic impact of modern retail on choice and innovation in the EU food sector" has been jointly prepared by Ernst & Young, Cambridge Econometrics Ltd. and Arcadia International and for anyone interested in this sector and its developments it has a fascinating amount of data spread out on ca 450 pages (more than 300 shops analysed in 9 Member States with 23 product categories and for a period of time 2004-2012). What we can gather from the European Commission's press release is that there was a worry expressed by the traders active in the food supply chain that large retailers imposed detrimental conditions on their suppliers (a reason to adopt CESL?) and the latter ones were not able to invest in new products, which could lead to the reduction of choice and innovation in food products for EU consumers (Commission publishes results of retail food study). The main results as we could hear are:

  • consumer choice continuously increases (more shops, products, brands, package sizes);
  • number of innovations reaching consumer each year decreased since 2008 by 6.5%;
  • most innovations nowadays concern the packaging;
  • range of choice/innovation is related to the size and types of shops and the economic environment (e.g. whether the local area is high or low on unemployment, GDP per capita etc.), as well as to the turnover in a product category;
  • more competition among shops leads to the introduction of more choice/ innovation;
  • in moderately concentrated retail markets, retailers' stronger bargaining power in comparison with the supplier did not point to the reduction of choice and innovation in food products.
The last presented finding suggests that the assumption that led to this study might have been incorrect, so that the need to grant suppliers more protection in EU law might not necessarily be related to consumer protection. We will need to see what are the responses to this study (allowed to be submitted before 30 January 2015).

Wednesday, 1 October 2014

A "nudge unit" for Germany

Over the past years various governments have introduced so-called “nudge units”, by which they pay tribute to the challenging task of translating behavioural insights into policy-making and law-making. Behavioural economics as a discipline is characterized by research identifying how people, for instance consumers, really act. It shows how they can systematically deviate from rational behavior. Such insights are generally established by interdisciplinary work involving psychologists, sociologists, lawyers and economists. 
Following the U.S. (“Social and Behavioral Sciences Team”) and Great Britain (“Behavioural Insights Team”) also the German Chancellery is currently in the process of setting up such an interdisciplinary team to apply empirical evidence from behavioural economics in public policy making.