AG Szpunar: No residency-based discrimination for direct debit payments

On the 2^nd of May, AG Szpunar published his Opinion on Case C-28/18 Verein für Konsumenteninformation v Deutsche Bahn AG. This is a case concerning payments within the SEPA area, so not on consumer protection legislation. Nevertheless, if the Court follows the AG opinion, this case can have a significant impact on the interests of consumers.

The opinion starts with setting the scene around residency requirements pointing out that while residency requirements are usually seen as discriminatory within the context of the internal market that view is limited to the relationship between public and private entities. In contrast to that, the position on residency requirements in the context of private relationships is a lot less clear. The nature of conditions placed in private relationships is at the centre of this case. 

The Verein für Konsumenteninformation is an Austrian Consumer organisation which brought an action against Deutsche Bahn, the German train company. Deutsche Bahn in its website offer customers 2 different modes of payment, namely credit card, instant bank transfer or under the single euro payments area (SEPA) direct debit scheme, the latter being limited to those customers with a residence in Germany.

The Verein für Konsumenteninformation argued in its action in front of Austrian courts that Deutsch Bahn breached article 9(2) of Regulation No 260/2012 on direct debit payments in euro by requiring that only German residents are able to participate in the scheme.

This case went up to the Oberster Gerichtohof, the Supreme Court of Austria, which referred the following question:

‘Must Article 9(2) of Regulation No 260/2012 be interpreted to mean that the payee is prohibited from making payment under the SEPA direct debit scheme dependent on the payer’s place of residence being in the Member State in which the payee also has his establishment (residence), if payment in a different way, for example with a credit card, is also allowed?'

Article 9(2) of Regulation No 260/2012 states that  ‘a payee accepting a credit transfer or using a direct debit to collect funds from a payer holding a payment account located within the Union is not to specify the Member State in which that payment account is to be located, provided that the payment account is reachable in accordance with Article 3 [of that regulation’.

The main objective of regulation No 260/2012 is to establish a Single European Payment Area (SEPA), yet in some parts of it, such as notably the article in question, it is concerned also with the relationship between payees and payers and offers protection to payers (para 29).

As the AG notes, the fact that most persons in the EU hold a bank account in the country where they reside is undisputed. Therefore, requiring a payer to be resident in a certain Member State is therefore tantamount to specifying in which Member State a payment account must be located (para 30). Pursuant to this, the AG found that Deutsche Bahn’s requirement breached art. 9(2) (para 31).

The AG continues to address whether the breach of art. 9(2), and the subsequent restriction to the freedom of payment can be justified. The AG rejects the argument put forward by Deutsch Bahn that there is a danger of abuse associated with direct debit payments, thus making credit checks and their practice necessary and justified. He states that while the reasoning of Deutsche Bahn may be sensible from a commercial point of view, there is no provision of justification in art. 9(2) or in any other part of the Regulation and the introduction of such a justification would be a matter for the legislator rather than the court (paras 45-46).

As the AG points out, the regulation does not require traders to offer direct debit payments. However, he argues, when they do, they should be non-discriminatory (para 49). However, attention should be paid to not make it more favourable for traders to offer fewer modes of payment in order to avoid adhering to additional requirements. 

Overall, this is a welcome and well-written opinion that, if followed in the judgement, can produce tangible benefits for consumers in the EU, facilitating cross-border payments in the internal market. Still the views expressed in the Opinion can have an impact going beyond payments and beyond consumers to further a broader debate on the role and indeed the obligations of private actors in respecting the fundamental freedoms of the EU.

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)

Belov (C-394/11) case remains unsolved - CJEU without jurisdiction

In September last year we commented on the AG Kokott's opinion in the Belov case (C-394/11). The case concerned the lack of access of consumers to electricity meters in two Roma districts of a Bulgarian city, Montana. Mr Belov, one of the Roma inhabitants of Montana, complained that he has been discriminated against on the basis of his ethnic origin, since the electricity provider made it more complicated for him than other consumers to check his electricity usage. AG Kokott recognized, indeed, that the case fell within the scope of the Directive 2000/43 on equal treatment and that on the grounds of its provisions there could be indirect discrimination found in this case.

The CJEU issued a judgment today in this case and disagreed with the AG's opinion. The CJEU does not consider itself as having jurisdiction to answer the questions referred to it in this case, due to the fact that the body referring the case could not be considered either as a court or a tribunal. Only national courts and tribunals are allowed to apply for the preliminary ruling from the CJEU, and the body in the mentioned case did not have compulsory jurisdiction nor "sufficient guarantees as to its independence", nor did the proceedings pending before it were "intended to lead to a decision of a judicial nature". (Par. 37)

This was an interesting, and very political question, that was referred to the CJEU and, unfortunately, we will not get an answer to it.

Are consumers entitled to check their electricity usage or does that depend on their neighbours' ethnicity? - opinion of the AG Kokott in Belov (C-394/11)

20 September 2012: Opinion of the AG Kokott in Belov (C-394/11)

Mr Belov lives in a Bulgarian city in one of its districts known as 'Roma districts'.  Throughout his city, Montana, the electricity meters are placed at a height of up to 1.70m, usually in the consumer's home or on the outside walls of the building, or on surrounding fences. However, in these two Roma districts the electricity meters were attached to electricity poles at a height of 7m. As a result, consumers living in these neighbourhoods cannot easily check the electricity meters and their usage data. The electricity company enables consumers to make an indirect visual check on condition of a written request submitted three days in advance by facilitating a use of a special vehicle with a lifting platform, free of charge. If a consumer in these districts wants to have a meter installed in his house, he can obtain it upon paying an installation fee. Mr Belov argued in his and other Roma name that they were being discriminated against on the basis of their ethnic origin.

1. Scope of the Directive - does it cover providing electricity meters to consumers free of charge?

The AG Kokott reminds in this case that Article 3(1)(h) of the Directive 2000/43 on equal treatment prohibits discrimination based on racial or ethnic origin with respect to the supply of electricity. The electricity meters are being provided by the electricity supplier according with its general contract conditions, which means they are part of the agreement on the supply of electricity. (Par. 59) The provision of the Directive should not be understood as only applying to the provision of the electricity per se, and not elements associated with it, like the meters. (Par. 60)

"Imagine if a public transport company earmarked different seats on buses according to the gender, colour or ethnic origin of passengers. Even though all passengers were transported and thus undoubtedly benefited from the transport service as such, it would be obvious that the specific conditions under which they are transported are not equal." (Par. 61)

While the Directive applies only to service provided for consideration and electricity meters are supplied free of charge, it is likely that the price thereof has been included in the price of the supply of electricity. (Par. 65)

2. Compatibility of national law - adding another requirement to recognise discrimination

The other set of questions asked by the Bulgarian court concerned the compatibility of the Bulgarian law with the Directive. Bulgarian law requires an infringement of rights of interests defined in law to take place in order to recognise the existence of discrimination. The Directive does not pose such a requirement - it is sufficient that a person is treated less favourably than another is, has been or would be treated. (Par. 72) The Bulgarian law by adding another, stricter requirement is incompatible with the Directive. (Par. 76) In the opinion of the AG Kokott, the Bulgarian court should try to apply and interpret Bulgarian provisions in accordance with the Directive. (Par. 78) If this is not possible, then Mr Belov may not invoke protection of the Directive directly, since directives do not have a horizontal effect. (Par. 79) The national court should, however, disregard the national legislation which is contrary to the prohibition of discrimination established as a fundamental right in Article 21 of the Charter. (Par. 80)

3. Burden of proof - 'presumption' or 'conclusion' of discrimination? Form of discrimination?

The AG Kokott decides based mostly on the linguistic interpretation of the Directive, that the burden of proof whether there was discrimination takes place after the party who considers themselves discriminated presents facts that allow for a 'presumption' of discrimination. (Par. 88) In the given case, the electricity company would likely have to present facts that would justify a commercial decision (made long time ago) to install electricity meters in the Roma districts differently than is normal in Bulgaria. This is justified by the fact that the relevant information should be in their sphere of control. (Par. 93)

The facts that have been presented to the CJEU point, pursuant to AG Kokott, at indirect discrimination, since:

"It is clear, however, that the two districts concerned are inhabited predominantly by people belonging to the Roma community. Consequently, the practice of attaching electricity meters at a height of 7 m is liable, in principle, to affect members of that ethnic group in a particular way and to put them at a disadvantage, since it makes it virtually impossible or at least excessively difficult for them to make visual checks of the relevant electricity meters." (Par. 99)

The submitted evidence suggests that the measure of installing electricity meters at a height of 7m was taken because of a large number of unpaid electricity bills and in response to many cases of illegal interference with electricity supply infrastructure, manipulation and illegal electricity extraction in these two districts. The national court has to determine whether the measure taken to prevent future fraud and abuse (legitimate aim) was proportional. (Par. 101-102)

Men drive car insurance prices up

Last month we mentioned that the new interpretation of the Gender Directive of 2004 forces the insurers to abandon their current rules on calculating insurance premiums on the basis of gender. (Is living longer still worth it?) While women could and should be worried that their life insurance premiums are likely to rise, the change is likely to reach further. At this point women car insurance policies are often set lower than men policies. Why? Statistics show that male drivers under the age of 22 are ten times more likely to have a serious crash than female drivers of the same age. (Google car insurance comparison service threatens moneysupermarket and confused.com) Since the car insurance companies will not be able to take gender into account anymore in calculating the premiums and will have to balance the amounts, it is likely that the car insurance premiums for women will rise, as well.

Interestingly, Google decided to launch a price comparison service for car insurance in the UK, which entices internet users with promises of transparency (e.g., it doesn't take into account extras such as courtesy car by default, which is said to reduce the risk of a consumer buying a policy that doesn't match his needs) and privacy (e.g., ca 120 insurers won't be selling the data acquired from visitors to Google's comparison website to third parties). Google promises to monitor the truthfulness of the data provided by the insurer on its website as well as to introduce a code of conduct that all the insurers would have to abide by. While Google is not an amateur in this area, this service follows already existing services for price comparison of credit cards and bank accounts, its neutrality as a price comparison website can be questioned. After all, it puts itself now at the top of the google search results when you enter 'car insurance' into Google UK. The not long ago reported need for a regulatory oversight of price comparison websites remains valid. (Spoiled for choice or well-informed?)

Is living longer still worth it?

European consumers shop not only for various goods, but also for services and soon an increase of interest in purchasing new insurance policies among European women is to be expected. Why? As of 21 December 2012, on the basis of the CJEU's judgement in the case Test Achats (the Belgian Consumer Association), the insurers will no longer be able to calculate costs and benefits of insurance based on a person's gender. This gender-neutral pricing is based on the principle of equality expressed in the Gender Directive of 2004 that requires unisex pricing for European consumers. This ruling is, however, to the detriment of European women, who 'traditionally enjoyed cheaper life insurance because of their longer life expectancy'. (EU Directive Could Send Women Running to Buy Life Insurance) Some consumer organisations expect that the insurance premiums for women could rise by a third (Life insurance premiums set to soar). At the same time, certain insurance companies assure that their premiums should not be overly influenced by this ruling (e.g., http://www.aviva.co.uk/gender-neutral-pricing/). It remains to be seen whether these premiums will indeed rise and whether shopping for a cheaper insurance companies will be on many women agendas as of 2013.

Challenges of air travel

Most of us take it for granted that we can reach any destination within a frame of few hours, making use of advanced air travel options. However, for many disabled consumers air travel still is associated with lots of problems and unfair treatment. In order to fight this the European Commission has published guidelines on air travellers' rights. (What passengers with reduced mobility need to know when travelling by air) (based on the Regulation EC 1107/2006)

In general, persons with reduced mobility have a right to travel by air, but there are certain obligations placed on them, as well. Most importantly, a disabled person needs to notify airports and airlines about the need for special assistance at least 48 hours before the published time of departure. This allows the service providers to prepare special means that may be required (currently, only ca 40% of passengers pre-notify their assistance needs). A person with reduced mobility should not be refused travel on the ground that they don't present a medical certificate (if the medical condition is stable - e.g., a blind person) or that they don't have an accompanying person (if they are self-reliant). Moreover, such persons are allowed to travel with two pieces of mobility equipment (transported for free), a guide or assistance dog. Still, despite the Regulation binding the airlines already they continue to hinder air travel for disabled passengers and discriminate against them, for example:

"A senior UN official was denied boarding on a flight from Heathrow to Geneva because he was unaccompanied. The official was a paraplegic frequent traveller who had travelled unaccompanied for fifteen years."

"3 passengers on internal French flights were denied boarding because they were unaccompanied. They later successfully challenged the decision in court. The airline and ground-handling company faced substantial fines for non-compliance."

It gets a bit complicated when a passenger requires oxygen on board. The airlines may determine themselves whether to allow access to passengers with their own oxygen and they are not required to provide oxygen themselves either. This may mean that such passengers won't be in practice allowed to travel by air. The guidelines aim at least to provide passengers with certain clarity, advising airlines to make their rules on travelling with oxygen clear.

European Equal Pay Day

You may have missed it but yesterday was the second European Equal Pay Day. Last year in March we were reporting that women in the EU earn on average 17.5% less than men (International Women's Day...). This year the statistics are not much better since the percentage lowered by one (Equal Pay Day: Women in Europe still earn 16.4% less on average than men). The EU-wide event marks the extra number of days that women must work to match the amount of money earned by men (last year it was the 5th of March). The goal thereof is to raise awareness of the inequalities that still exist in the EU between the sexes.Interestingly, Poland has the lowest discrepancy - ca 2%, while the biggest one may be noted in Estonia - ca 27%. Despite the recent years showed a downward trend, in some countries the gap is widening, e.g. in France, Bulgaria, Latvia, Hungary, Portugal and Romania.


"European Equal Pay Day reminds us of the days and hours that women have been working 'for free' since 1 January. The principle of equal pay for equal work is written in the EU Treaties since 1957. It is high time that it is put in practice everywhere," said EU Justice Commissioner Viviane Reding, the Commission’s Vice-President.

To see more statistics go to the Gender pay gap website.
 

Goal! ... Goals were set for future European regulations of sport sector.

Everyone has some hobby or passion that he just cannot help but be a bit emotional about, maybe even a bit out of control about. Many of these are sport-related. Unfortunately, some of these sport passions tend to take over rational sense which sometimes escalates in violence during sport events, match-fixing, players' doping etc. Sport has been recognized as one of the areas that European institutions have power to harmonize on a European level, on the basis of article 165 of the Lisbon Treaty. A few days ago, the European Parliament adopted a resolution in which it calls for more legislative initiatives aiming at regulating sport on a European level (Sport: EU tackles hooligans, corrupt agents and illegal betting).

One goal that was set for European institutions is to make sport more approachable and attractive for girls and women. On one hand, it may be achieved by increasing the amount of women in sport governing bodies, who could possibly better protect female interests in sports. On the other hand, it is interesting to see that the European Parliament members perceive cultural or religious grounds that could restrain girls (or more specifically 'immigrant girls') from participating in gym or swimming classes at schools as intolerable and inexcusable. Personally, this view seems to be a bit narrow-minded and may lead to some unrest it would lead to the adoption of a binding provision in this scope.

Less controversial idea is to create European blacklists of hooligans, that is, sport fans who are known to be violent or engage in discriminatory behaviour. They should be banned from all European stadiums during international matches. This goal could be achieved upon creation of a European database. I'm fully in support of this idea, especially since I'm supposed to attend a game during EURO 2012 and I worry a bit about safety measures that are going to be enforced.

The MEPs think not only about protection of potential female athletes as well as safety of citizens attending games, but also professional athletes. They suggest adoption of a new European law on the basis of which trafficking in performance-enhancing substances would be treated alike trafficking in illegal drugs. Moreover, any match-fixing, illegal betting etc. should be treated as a criminal offence in Europe. Licensing system should be adopted for betting operators. Other initiatives concerns sports agents as well as education system set up for young athletes aside their sports training.

International Women's Day - is there anything to celebrate? Musings on (lack of) equal pay.

Happy International Women's Day to all Women!

Unfortunately, for many of us this day cannot be greated with enthusiasm since while it is supposed to let us celebrate the power of women, we are all too aware that the position of women is still not as strong as men on the labor market. While consumers in the European Community are seen as weaker parties, in general, the position of female consumers is the weakest. Recent research had shown that women in the EU still earn significantly less (17.5% on average) than men. Vivianne Reding noticed that this means that women would have to work two months more in a year to earn as much as men do. Who needs holidays, right?

The scary fact is that in the past 15 years this gap had not been closing at all. This means that while we all realize that women are being discriminated against in the labor market, there is not much being done to prevent it - aside it being a subject of many politician's speeches and debates. And again, the European Commission wants to initiate a series of public-awareness campaigns to address this problem. Why not actually take some legislative/administrative measures to prevent this discrimination, though? Haven't we talked about it enough already? I think on this day, more than ever, certain specific steps should be taken and not just more empty promises be given. Let's talk about revision of the EU Directive on equal pay, for example, since obviously it has failed to achieve its aim. Let's talk about introducing quotas for women on higher administrative/business positions both in public and private sector. It's a bit ironic if the European Commission starts demanding this measures, though, taking into account that only 9 out of 27 European Commissioners are women...

Discussion of the report may be found here. To find more on the 5th of March as the first European Equal Pay Day - go here. Press release of the EC - go here. Gender pay gap campaign - more information may be found here.