Commission guidance note on Unfair Terms Directive

The European Commission adopted today a guidance note on unfair contract terms. It is intended to ensure that consumer associations and legal practitioners, including judges, will be better equipped to protect EU consumers from unfair contract terms. The guidance note is based on the case law of the EU Court of Justice on Directive 93/13. As a complement to the guidance note, European businesses organisations have drawn up recommendations on how mandatory consumer information as well as terms and conditions can be presented to consumers in a more user-friendly and transparent way.
Both initiatives follow up on the REFIT Fitness Check of EU consumer and marketing law, as announced in the Commission’s Communication on a New Deal for Consumers.

Source: https://www.pubaffairsbruxelles.eu/fighting-unfair-contract-terms-commission-issues-guidance-to-better-protect-consumers-eu-commission-press/ 

Conference on the New Deal for Consumers

On Thursday 11 and Friday 12 April 2019 the conference 'A New Deal for Civil Justice? The New Deal for Consumers and the Justiciability of EU Consumer Rights' will take place in Amsterdam. Attendance is free of charge; you can register by sending an e-mail to: l.d.kaspar@uva.nl

The final programme is now available:

POLITICO publishes draft Commission proposal on collective redress for European consumers

POLITICO, a well-known news website on European affairs, reports that it has obtained a draft proposal of the European Commission for a new Directive on representative actions for the protection of the collective interests of consumers, and repealing the Injunctions Directive (2009/22/EC; referred to as "ID"). Last year, the Commission already announced a 'New Deal for Consumers', including an EU-wide class action and collective redress; see our blog post here.

One of the drivers of this development has been the "the inquiry into emission measurements in the automotive sector", i.e. 'Dieselgate'; see our previous blogs here, here and here. Not all Member States provide for collective redress mechanisms tailored for mass harm situations, so not all consumers have access to effective redress opportunities. According to the Commission, the significant disparities among Member States require EU intervention, particularly in light of the cross-border implications; although the proposal applies to domestic infringements of EU law as well.

The draft proposal is a follow-up to the REFIT Fitness Check of EU Consumer and Marketing Law, which also covered the ID, and to Commission Recommendation 2013/396/EU. The Commission states its intention to further strengthen the redress and enforcement aspects of consumer protection (Article 114 TFEU and Article 38 EUCFR), through the establishment of a complementary EU framework supported by procedural rules on the national level. This should also facilitate access to justice (cf. Article 47 EUCFR); possible benefits of collective judicial actions are lower costs and more legal certainty. The proposal is meant as an additional procedural tool: it does not replace existing mechanisms, nor does it affect substantive rights.

The proposed Directive establishes "certain key aspects", but its lack of further detail is also its weakness. For example, it does not specify which divergences between Member States or gaps in the protection of collective consumer interests are most problematic. It does not make a clear distinction either between injunction orders, redress orders and declaratory decisions, nor does it address corresponding procedural complications and modalities.

The Commission does not explain why the ID needs to be improved and which specific elements need an update. It only observes that the key shortcomings of the ID are its limited scope, the limited effects of injunctions on redress for consumers and the costs and length of the procedure. The Commission therefore proposes to enlarge the scope of the future Directive to other horizontal and sector-specific EU instruments, e.g. in the field of financial services, energy, telecommunication, health or the environment. Consumers who have been harmed must be able to rely on a final decision in a representative action (Article 8 draft proposal). The proposal aims to improve the effectiveness of injunctions in terms of deterrence of unlawful practices, as well as fair and adequate compensation for consumers, but how exactly those goals are to be achieved is not elaborated. Moreover, the proposal aims to strike a balance between facilitating access to justice and ensuring adequate safeguards from abusive litigation (frivolous claims), but again modalities are not defined. The proposal works with 'qualified entities' that must satisfy certain criteria (Article 6 draft proposal), and it emphasises the importance of 'due procedural expediency'. However, how this is to be realized is left to the Member States.

In the Netherlands, for instance, a legislative proposal is pending for the introduction of a collective damages action. The ongoing discussion shows how difficult it is to find a balance between access to justice and effective redress on the one hand, and the prevention of abuse on the other; see here and here for more background information. The most controversial issues, such as the designation of a lead plaintiff, opt-in/opt-out possibilities and the calculation of damage, are not addressed in the Commission's draft proposal. 

It is expected that the Commission will announce its proposal (this draft or an amended version) in the next few months. It is far from certain that it will eventually result in a Directive. Whether it will be adopted or not, the proposal is likely to have an impact on the debate on collective redress.

European Commission announces 'New Deal for Consumers'

Today, on 24 October 2017, the European Commission published its Work Programme 2018: an "agenda for a more united, stronger and more democratic Europe". The Commission announces that it will present a 'New Deal for Consumers' "to enhance judicial enforcement and out-of-court redress of consumer rights", as well as "to facilitate coordination and effective action by national consumer authorities". It aims at a "targeted revision" of the EU consumer directives following on the Fitness Check. No specific measures are proposed yet, but as we wrote last May: exciting times are ahead for EU consumer law. 

In the Results of the Fitness Check of consumer and marketing law, it has already been pointed out that there is no effective mechanism for collective action available at EU-level to compensate for a lack of incentive for individual enforcement (see e.g., Main report p. 246). BEUC and other consumer organisations have also asked for legislative measures in the aftermath of 'Dieselgate'. Last week, at a Politico Brussels Playbook Breakfast, Věra Jourová - European Commissioner for Justice, Consumers and Gender Equality - said that she would like to propose a EU-wide class action and collective redress. She also said a "package" of measures will be adopted in March 2018, presumably also in the field of consumer law (source: mLex market insight, 18 October 2017).

See also the editorial of Christian Twigg-Flesner in the latest issue of EuCML: 'From REFIT to a Rethink: Time for fundamental EU Consumer Law Reform?'

REFIT report of EU consumer law: exciting times ahead

Readers of this blog will know that 1,5 years ago the European Commission published a 'roadmap' for an evaluation and fitness check of EU consumer law (as a part of its 'Regulatory Fitness and Performance Programme'; REFIT). Today, the Commission presented an analysis which is intended to "serve as a basis for further improving the legal framework of consumer and business" (click here for the press release). According to the Commission, "[t]he results show that while European consumers already benefit from strong consumer rights, there is room for improvement for instance when it comes to enforcing these rights or making them fit for the digital age".

For this analysis, six consumer directives have been reviewed, including the Unfair Commercial Practices Directive, the Consumer Sales Directive and the Unfair Contract Terms Directive. Several issues are identified that should be addressed, such as limited redress possibilities and consumer rights not being fully adapted to the digital world. The Commission has announced that it will further examine rules concerning, inter alia, (civil law/contractual) remedies, online services and online platforms. It will also look into strengthening and harmonising the level of sanctions as well as injunctions and collective redress. This year (2017) a public consultation and an impact assessment will follow. 

We will keep you informed about any relevant (legislative) developments on this blog. For more information about the review of EU consumer law, see here.

A look into the future: What does 2016 hold for consumer law?

There is no doubt that 2015 was quite a busy year for the European institutions. In the light of considerable social, economical and political challenges faced by the EU these days, the European Commission under the presidency of Jean-Claude Juncker proclaimed that it would carefully choose its priorities and focus on feasible initiatives. While it is still too early to predict whether this approach will go beyond mere declarations, an overall policy stance can already be inferred from first two work programmes published under rather high-sounding titles: A New Start and No time for business as usual. Key objectives within ten priority areas have been defined and measures to be taken in order to reach them were announced. But what does this actually mean for consumers?

From the consumer law perspective three areas deserve particular attention:

• Measures designed to create a connected Digital Single Market
• Initiatives aimed to further deepen the internal market
• EU international trade policy, especially the Transatlantic Trade and Investment Partnership (TTIP), which is currently being negotiated by the EU and the USA

As we have already reported, first three legislative proposals implementing the Digital Single Market were presented on 9 December 2015. The first one deals with a fully novel issue of digital content (e.g. streaming music, purchasing e-books), while the second one builds upon the existing regulatory framework for online sales of goods. Both measures are seeking to fully harmonise several core aspects of online business-to-consumer sales of tangible goods and supply of digital content, including rules on pre-contractual information duties, consumer’s right to withdraw from the contract, conformity of goods and digital content as well as relevant remedies. Furthermore, a proposal for a regulation on ensuring the cross-border portability of online content services in the internal market was adopted.

In 2016 the Commission will surely try to further proceed with these measures. Its new approach to the European law-making shall ensure that the Digital Single Market strategy does not share the fate of the Common European Sales Law. Efforts are made to secure a common understanding with the European Parliament and the Council on key initiatives already at an early stage. Despite public concerns about the impact of such arrangements on the democratic process, an inter-institutional Agreement on Better Law-making has recently been finalised. Time will tell whether this approach will produce the desired results. In any case, it seems unlikely that the flagship measures implementing the Digital Single Market, which are by no means uncontroversial, will come into force in the nearest months. Also the Dutch Presidency in the Council seems to be taking a ‘wait and see’ attitude to this issue.

2016 will therefore rather be a time of intense discussions, public consultations and further legislative proposals. We may, among other things, expect a proposal aimed to bring an end to unjustified geo-blocking as well as other forms of discrimination on the basis of residence or nationality. Detailed information on the envisaged copyright reform should be presented shortly. Of particular interest are also measures, which have already been adopted in the previous years – such as Regulation 524/2013 on online dispute resolution for consumer disputes – or those at an advanced stage of adoption. It is worth noting that the European ODR platform has lately become operational and will be made available to consumers and traders on 15 February. While a faster and easier, Internet-based mechanism of resolving disputes between consumers and traders sounds like a good idea, much still needs to be done to ensure its reliability and promote its use among both parties to the contract. Furthermore, in the following months we will almost certainly witness a long-awaited reform of EU data protection law. Following the agreement reached in trilogue last month, it appears very likely that the final texts of General Data Protection Regulation and Data Protection Directive will be formally adopted in the first quarter of 2016.

From the consumer law perspective, particular attention should also be paid to the Commission’s Regulatory Fitness and Performance programme (REFIT), i.e. a systematic analysis whether the existing regulatory framework is fit for its purpose. According to the recently published roadmap, a substantial part of EU consumer law will be subject to evaluation within next 18 months, namely:

• Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market (Unfair Commercial Practices Directive);
• Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees (Sales and Guarantees Directive);
• Directive 93/13/EEC on unfair terms in consumer contracts (Unfair Contract Terms Directive).
• Directive 98/6/EC on consumer protection in the indication of the prices of products offered to consumers (Price Indication Directive);
• Directive 2006/114/EC concerning misleading and comparative advertising (Misleading and Comparative Advertising Directive);
• Directive 2009/22/EC on injunctions for the protection of consumers' interests (Injunctions Directive).

Additionally, Consumer Rights Directive 2011/83/EU and Regulation 2006/2004 on consumer protection cooperation are also expected to undergo separate evaluations in the coming months. During the first semester of 2016 public consultations on application of consumer legislation in Member States will be launched, which might well be a spark for another heated debate, reminiscent of the time when the Common European Sales Law was still on the agenda.

Without doubt 2016 will be a very exciting year in consumer law. Like every year, we will keep you posted about the most significant developments, so stay tuned!