European Competition and Consumer Day

On 24-25 November in Poznan (Poland) there will be an event organized to celebrate the European Competition and Consumer Day. Every year the European Competition Day is organized by the country that holds the Presidency. This year Poland decided to devote this day to the interaction between competition and consumer protection (partially, due to both these areas being covered by the Polish Office of Competition and Consumer Protection). The title is: "Competition - what's in it for consumers?". If you are interested in taking part in it, you may find more information about participation and programme on the event's website.

AG Mengozzi: Scope of Product Liability Directive does not extend to service providers using defective products

The Opinion by Advocate General Mengozzi in Centre hospitalier universitaire de Besançon (case C-495/10) concerns the scope of the Product Liability Directive and the possibility for Member States to set rules on the liability of service providers for defective products used. It concerns a French case dealing with the damages of a thirteen year-old boy, who suffered burns during surgery in a French hospital as a result of a defective heated mattress.

According to the highest administrative court of France, the Conseil d’État, public health providers are strictly liable for damages caused to patients as a consequence of defective devices and products. According to the Conseil d’État, this liability rule follows from French administrative law rather than the legislation implementing the Product Liability Directive. In this case before the ECJ, this strict liability rule for public health providers is questioned, as it is argued that it is in breach of the Product Liability Directive.

Advocate General Mengozzi points out that in order for the rule to be in breach of the Directive, it must fall under its scope. He points out that this can only be the case if :

(a) the public health provider could be seen as supplier in the sense of Article 3(3) of the Directive, or

(b) if the liability rules for producers and other parties covered by the Directive preclude liability of others.

According to the Advocate General, neither is the case.

As to (a), the Mengozzi argues that a public health provider can not be seen as a supplier under the Directive. As a main rule, the Directive holds liable the producer of the product, i.e. the actual manufacturer. If the producer can not be identified, other parties may be liable instead. One of these parties is what the Directive refers to as the “supplier” of the product. But this term does not include the service provider, i.e. a party who uses a (defective) product while providing a service to a consumer. Rather, it refers to the other parties in the chain of distribution of the product, with the last seller being the last party in the chain. This is not surprising, as the Directive deals with manufacturer’s liability rather than user’s liability, even though the manufacturer’s liability is extended to other parties in the distribution chain if the actual manufacturer can not be identified.

The answer to (b) is somewhat more complex. As the Directive determines the liability of some parties but not of others, it could be argued that the Directive precludes liability of those other parties. So the reasoning would be that because the manufacturer and, under circumstances, later suppliers can be held liable, Member States can not make other parties liable. Mengozzi argues differently. The most important argument given on this point is that issues that are not explicitly dealt with under the Directive, do not fall under its scope. As a consequence, Member States have the freedom to design and apply their own rules, including e.g. the French rule holding public health care providers liable for damages as a result of the use of defective equipment. This makes sense: the Product Liability Directive does not govern all aspects of liability of defective products, leaving the topics left untouched open for regulation by Member States.

The Advocate General adds that if the Court decides differently on the question of scope, i.e. if it would decide that a service provider’s liability would fall under the scope of the Directive, this would breach Article 13 of the Directive. However, it seems likely that the Court follows the Advocate General on the question of scope, thus leaving the French liability rule untouched.

Click here for the opinion.

A moment for our readers

Originally, I created this blog in order to keep in touch with developments in European consumer law. It gave me a motivation to look up the news every day (and read it immediately, without sending it to my email for later reference). This blog was also planned to be an archive for all the news, easy to fall back on months later. It's not an anniversary of this blog today, but it has been some time since I checked Google Analytics (a brilliant statistics tool, btw!) to see how we were doing. And wow, was I surprised. I mean I hear from time to time that someone, aside my colleagues, is reading the blog. My students, other academics I run into mention this blog occasionally. But when I compared today the number of visits that this blog had in the past month to the visits within the same period of time but last year, I was astonished. The number increased over 200%. I guess we are doing something right. I'll try to keep it up this way. :)

Should medical tourism be reimbursed by national social security system? - CJEU case in Commission v. Portugal C-255/09

27 October 2010: CJEU case C-255/09 Commission v. Portugal

Unfortunately, the fall while often beautiful in its various colours also leaves us susceptible to various infections. Our bodies have to adjust to lower temperatures, lack of sun, etc. and often cannot fight against a flu, throat infection, UTI... It seems appropriate that the CJEU ruled today in a case concerning consumers health issues and protection of their right to have the medical costs reimbursed by social security and insurance.

Article 22 of the Regulation 1408/71 on the application of social security schemes to employed persons and their families moving within the Community provides that within Europe consumers who travel to another country for non-hospital medical care are supposed to be reimbursed for the cost thereof in their own country. In a recent case of 5 October 2010 Commission v. France (C-512/08) the CJEU decided that a Member State could make reimbursement for non-hospital care planned in another Member State subject to prior authorisation if that care required the use of major and costly equipment.

In the current case, against Portugal, the CJEU considered whether Member States were allowed to introduce such a limitation of the need to obtain prior authorisation for medical treatment abroad in order to obtain reimbursement, when no costly or major equipment would be used. Portugal, namely, allows consumers to claim such reimbursement only after they fulfilled a threefold prior authorisation requirement. Additionally, consumers may claim such reimbursement only for 'highly specialised' foreign medical care, which cannot be provided in Portugal due to technical difficulties or a lack of qualified personnel.

The CJEU stated, first, that medical services are covered by the provisions on the freedom to provide services. (Par. 46) This means that Article 49 EC (of the Treaty) applies to cross-border healthcare. (Par. 52) On the basis of Article 49 EC Member States may not adopt national rules which make provision of services between Member States more difficult than provision of same services within a single Member State. In previous case law (e.g. Kohll; Smits and Peerbooms, Commission v. France) the CJEU confirmed that:

"the mere requirement, for treatment planned in another Member State, of prior authorisation to which responsibility for payment by the competent institution is made subject, in accordance with the rules governing cover in force in the Member State to which that institution belongs, constitutes, both for patients and service providers, an obstacle to the freedom to provide services, since such a system deters, or even prevents, those patients from approaching providers of medical services established in a Member State to obtain the treatment in question" (Par. 60)

In the current case it is foreseeable that Portuguese consumers would be deterred from seeking medical care abroad due to a prospect of financial loss in the event of refusal by the national health system to meet the medical costs. An additional deterrent factor is the complexity of the three-stage administrative authorisation procedure. (Par. 62) Moreover, the fact that reimbursement might be granted only when such a medical procedure is not available in Portugal further limits the possibility of consumers seeking medical care abroad. (Par. 63) This all indicates that prior authorisation is a restriction on the freedom to provide services. (Par. 71)

This restriction may not, in this case, be justified by an aim of maintaining the financial balance of the social security system (this argument for limitation was, e.g., accepted in Commission v. France). No evidence has been provided that in case the medical care is not 'major', the Portuguese social security system would be overburdened, taking into account that it's usually only consumers in border areas or where specific conditions are to be treated who travel for medical reasons. (Par. 77-79) As far as the claim was made by Portugal that such restrictions are necessary in order to protect the social security system, the CJEU observed that Member States are still free to set various conditions on which benefits (also, reimbursement) are granted:

"in so far as they are neither discriminatory nor an obstacle to freedom of movement of persons (...) That is particularly so in the case of the requirement that a general practitioner should be consulted prior to consulting a specialist" (Par. 86)

Additionally, Member States may fix the amounts of reimbursement which patients who have received care in another Member State can claim (objectively, without discrimination and using transparent criteria). (Par. 87)

Finally, the CJEU decided that the fact that Portugal does not provide for any possibility of reimbursement of non-hospital medical expenses incurred in another Member State in respect of a consultation with, e.g., a general practitioner or a dentist (not a highly specialised care) is contrary to the freedom of provision of services, as well. (Par. 95)

I agree with the CJEU that cross-border medical care is not likely to become a threat to social security systems, since consumers would most likely prefer to be treated close to their home, family and friends, as well as by doctors who speak their language. Therefore, it seems that when a consumer is looking for medical care abroad he has to have solid reasons to do so and should be enabled financial compensation just as he would have been compensated for undergoing the same treatment in his own Member State.

Where to sue for harmful online content? CJEU case in eDate Advertising and Martinez/Martinez (C-509/09, C-161/10)

25 October 2011: CJEU joined cases C-509/09 and C-161/10 eDate Advertising and Martinez/Martinez

Today CJEU gave judgment in eDate Advertising case setting rules as to which court should have jurisdiction in cases concerning infringement (alleged one) of personality rights that happened by means of content placed online on an internet website. It gave interpretation to Article 5(3) of Regulation 44/2001 on jurisdiction and recognition and enforcement of judgments in civil and commercial matters as well as Article 3 of Directive 2000/31/EC on electronic commerce, of which the first one is of particular interest for consumers and will be discussed here.

The problem that had been addressed was as follows. Imagine that on some website personal information of a consumer is published. If that consumer thinks that this information is either incorrect or improper and should be taken down from the internet, he might know what his first step should be, i.e. contacting the website, but what he should do after the website doesn't react to his notification is a bit more tricky to figure out. The consumer may go to his own national court to demand removal of such information, but if the website is set on a server of another Member State, operated and owned by parties from another Member State, then the chances are that it will be difficult to establish which court should have jurisdiction over such procedures.

This is what happened in the two cases presented to the CJEU. In eDate Advertising X, domiciled in Germany, demanded removal of an archived internet news report on a Rainbow website in which his full name was given as a person who murdered a well-known actor and was appealing from his conviction. After being released on parole X wanted the website to stop reporting that matter and refrain from future publication. eDate Advertising operated this website and was established in Austria. In Martinez/Martinez the French actor Olivier Martinez and his father, Robert, complained of interference with their private lives, etc. by an English website of Sunday Mirror which published a text entitled "Kylie Minogue is back with Olivier Martinez" detailing their meeting in 2008.

In both these cases national courts of the place of domicile of persons claiming alleged infringement of their personality rights were not sure as to whether they had jurisdiction. Article 5(3) of the above-mentioned Regulation determines that in matters relating to tort, delict or quasi-delict a person domiciled in a Member State may be sued in courts of another Member State, where the harmful event occurred or may occur. This 'place where the harmful event occurred or may occur' is difficult to establish when infringement may happen by means of content placed online. In an earlier case Shevill and Others the CJEU had held that:

"in the case of defamation by means of a newspaper article distributed in several Contracting States, the victim may bring an action for damages against the publisher either before the courts of the Contracting State of the place where the publisher of the defamatory publication is established, which have jurisdiction to award damages for all of the harm caused by the defamation, or before the courts of each Contracting State in which the publication was distributed and where the victim claims to have suffered injury to his reputation, which have jurisdiction to rule solely in respect of the harm caused in the State of the court seised"  (Par. 42)

The same considerations may be applied to other media and means of communication, e.g. online content. (Par. 44) However, the CJEU takes into account that distribution online happens instantly after publication of the content and is, in principle, unlimited. Moreover, it might be difficult to quantify that distribution with certainty and accuracy in a particular Member State due to technological difficulties. This leads to difficulties in determining damage that had been caused within a particular Member State. (Par. 45-46) At the same time, one cannot help but notice the serious nature of the harm which may be suffered by a person whose rights have been infringed on a world-wide basis. (Par. 47) Taking this into account, the CJEU decided that in cases of online infringement of personality rights the above-mentioned rule should be adjusted in favour of the victim:

"a person who has suffered an infringement of a personality right by means of the internet may bring an action in one forum in respect of all of the damage caused, depending on the place in which the damage caused in the European Union by that infringement occurred. Given that the impact which material placed online is liable to have on an individual’s personality rights might best be assessed by the court of the place where the alleged victim has his centre of interests, the attribution of jurisdiction to that court corresponds to the objective of the sound administration of justice" (Par. 48)

The centre of interest means usually habitual residence, but can be determined otherwise if e.g. professional activity is pursued in another Member State. (Par. 49)

This all means that if information is posted about consumer's private life online that he would like to object to, he might do so in his own national court, regardless where the website that posted that information is established. Moreover, he may claim damages in one court for infringement of his personal rights all over Europe and claim all of his damages in one procedure.

When the going gets tough... get tough on insider dealing and market manipulation

A few days ago the European Commission released a new proposal for a Regulation on insider dealing and market manipulation (together these practices constitute market abuse) (Getting tough on insider dealing and market manipulation). It has been mentioned a few times on this blog that the European Commission tries to contribute to the process of sanation of financial markets by recognizing and dealing with some of its issues (e.g. Shortcoming of a financial market to be healed by shortselling regulation, Cross-border debt recovery to be made easier for consumers and SMEs). One of them is an increase in the possibilities of market manipulation due to globalization of financial markets, their complexity and new technologies. Insider dealing means that a person is trading in financial instruments after having obtained possession of price-sensitive inside information in relation to those instruments. Market manipulation is understood as artificial manipulation of prices of financial instruments through practices such as spreading of false information or rumours and conducting trades in related instruments. These practices concern consumers only indirectly by influencing the stability and transparency of the financial market. However, this indirect influence can have quite a strong effect on consumers, which means this new development in European law is worth mentioning here (see also previous post on Inside Job).

The new proposal intends to strengthen investor protection already offered by the Market Abuse Directive (2003/6/EC). It extends the scope of protection to financial instruments that are only traded on new platforms (e.g. multilateral trading facilities) and over the counter as well as adapts the existing rules to new technologies (e.g. high frequency trading within which certain practices, like "quote stuffing" - i.e. submitting orders without an intention to trade but to disrupt a trading system - will be recognized as prohibited market manipulation).

"The proposal clarifies that market abuse occurring across both commodity and related derivative markets is prohibited, and reinforces cooperation between financial and commodity regulators. The proposal includes a number of measures to ensure regulators have access to the information they need to detect and sanction market abuse. Since the sanctions currently available to regulators often lack a deterrent effect, the proposal introduces tougher and greater harmonisation of sanctions, including possible criminal sanctions which are the subject of a separate but complementary proposal."

This means that regulators will also gain the power to access phone and data traffic records from telecoms operators or to access private documents and premises (upon prior judicial warrant) where a reasonable suspicion exists of insider dealing or market manipulation. Whistleblowers will be granted protection and incentives for reporting market abuse. Also suspicious unexecuted orders and suspicious OTC transactions are to be reported. Additionally, an offence of 'attempted market manipulation' is introduced to protect the parties in the financial market from attempts to manipulated the market, where that manipulator does not succeed in actual trading practices. As far as sanctions are concerned: fines are not to be less than the profit made from market abuse, and not more than two times any such profit.

A proposal for a Directive on criminal sanctions was introduced as well, according to which, criminal sanctions will be applied for intentional offence of insider dealing and market manipulation (European Commission seeks criminal sanctions for insider dealing and market manipulation to improve deterrence and market integrity). Currently, the Member States differ in regulation of such offences which means that investors might avoid sanctions by 'forum shopping'.

For more information see FAQ about these two proposals. See also the website of The EU Single Market on Market Abuse.

Shortcomings of a financial market to be healed by a short selling regulation

In May this year we reported that a draft Regulation on short selling and credit default swaps (Short selling regulation?) is being prepared by the European institutions. Last week an agreement has been reached between the Council and the Parliament on this matter and only a formal endorsement lacks before this Regulation enters into force. The new rules are supposed to increase transparency, responsibility and stability in short selling transactions that are so often difficult to understand by consumers. After the regulation is enacted the short positions will need to be disclosed to regulators and they will have the power to limit short selling on a temporary basis in exceptional situations. This regulation is one of the measures that is seen as necessary to restore a healthy financial market and prevent future financial crisis (since short selling was seen as an aggravating factor in price declines in distressed markets).

"In a welcome improvement to our original proposal, so-called "naked" sovereign CDS positions will be prohibited where sovereign CDS are not acquired to hedge an exposure which is correlated to the value of the sovereign debt. The restriction will not apply to primary dealers and market makers. A competent authority will be able to temporarily suspend these restrictions where it believes, based on objective elements, that its sovereign debt market is not functioning properly and that such restrictions might have a negative impact on the sovereign credit default swap market. These balanced measures will ensure that sovereign CDS are used for the purpose for which they were designed, hedging against the risk of sovereign default, without putting at risk the proper functioning of sovereign debt markets." (Commissioner Michel Barnier welcomes trilogue agreement by Council and Parliament on new rules for short selling and Credit Default Swaps).

See FAQ for more details on this new regulation.

Any thoughts on the internal market?

If you are interested in sharing them, finding out what others think and getting some answers from the European Commission as to any doubts that you might have about the internal market... tune in to Facebook!

On Wednesday, the 26th of October, 15.00-16.00, on the European Commission's Facebook page a chat is organized on this subject. Main findings from a market research about opinions on the internal market may be found in the video below.

What's the score? - Consumer Markets Scoreboard Autumn 2011

The 6th Consumer Markets Scoreboard is now available on the website of the European Commission, DG Health and Consumers. The Scoreboard is meant to help the Commission 'identify potentially underperforming sectors in the single market from the consumers' perspective' and ranks '51 consumer markets, covering more than 60% of household budgets, in terms of consumer trust, satisfaction, the ease of switching and comparing offers, problems and complaints, choice and prices' (see the Q&A press release for more details on the Scoreboard's functions and this year's main results).

Market sectors that, according to the new Scoreboard, remain problematic from the consumers' point of view are (not surprisingly..) those concerning financial services: 'Consumers are most satisfied with "books, magazines and newspapers", "personal care services" and "glasses and lenses". The lowest satisfaction scores are assigned to "investments, pensions, securities", "mortgages" and "real estate services". "Train services" obtain the highest percentage of consumers giving a very poor score (16 %)' (p. 15 of the report).

Further action that will be taken on the basis of these results includes the launch of two in-depth market studies, one on consumer credit, the other on fuels. For those interested in the facts and figures presented on the Scoreboard, detailed breakdowns on different aspects of the data can be found on the related Consumer Market Monitoring Dashboard.

World Food Day

Today is a World Food Day which was proclaimed in 1979 by the Conference of the Food and Agriculture Organization (FAO). It basically reminds us the founding date of the FAO in 1945 (and is not associated with any particular world food crisis etc.). The idea behind establishing this Day was to remind consumers of the world food problem and to strengthen solidarity in struggle against hunger, malnutrition and poverty. The UN endorsed observance of the Day by resolution 35/70 of 5 December 1980 stating that: 

"food is a requisite for human survival and well-being and a fundamental human necessity".

World Food Day of 2011 has a following theme: "Food prices - from crisis to stability", and intends to highlight a major threat to food security in developing countries due to price swings. According to the World Bank in 2010-2011 rising food costs pushed nearly 70 million people into extreme poverty.

I would also like to point out that a month ago we celebrated the EU Food Safety Day during which lots of attention was given to food waste (see also earlier post on this blog about this: Love food. Hate waste.). In the framework of the EU 2020 Resource Efficiency Flagship programme the Commission is looking at how to minimise food waste and improve food packaging without compromising food safety (EU Food Safety Day: Commissioner Dalli on food waste). What scared me about this news was the statistics quoted.

Annual food waste in the EU is currently estimated at 89 million tonnes and is expected to rise to 126 million tonnes by 2020! Consumers waste on average 565 euros due to food waste per household per year, 60% of which could be avoided.

Scary, ain't it? Let's do something about it!