EU households still in the financial crisis

The European Commission published some new surveys results as to EU citizens dealing with the financial crisis and its effects on both the employment market and household expenses (Employment and Social Situation Quarterly Review). In general, it is estimated that since 2008 the level of financial distress in EU households remains more or less the same, despite a moderate improvement over recent months. The slight improvement manifests itself by a fewer number of households reporting that they are running into debt. Not surprisingly, the lingering effects of the financial crisis influence more the households with lower income. Additionally, there is a difference across Member States with consumers in Germany and Sweden reporting improvement of their situations and households in Greece, Spain and Romania - deterioration of their finances.

On the effects of the financial crisis on the labour market and child poverty see this quarterly review.

Towards no stress roaming

Following the European Commission's proposal of last year (on which we posted earlier), members of the European Parliament and representatives of the Council and the European Commission have now reached a preliminary deal on new EU Roaming rules. The agreement comprises three points of action:

Delivering cheaper roaming through competition

'From 1 July 2014, customers will have the option to shop around for the best deal and sign up for a separate mobile contract for roaming, which may be different from their domestic mobile provider, whilst keeping the same phone number. Each time the customer crosses a border, his or her phone will switch to the network of the roaming provider which they have chosen, without any further action on their part. Customers will also have the option to directly select a local mobile network for data roaming in the country they are visiting (more details below).

As from 1st July 2012, virtual mobile operators and resellers, who do not have their own networks will immediately have the right to access other operators' networks at regulated wholesale prices in order to provide roaming services (together with national services) to their customers. This will already create more competition between operators, and so increase the incentives for them to offer customers more attractive roaming prices and services.'

Facilitating data roaming

'From July 2014, mobile operators in visited countries will have the possibility to directly offer data roaming services on their own networks to travellers, which consumers can select either in advance or on the spot.'

Cheaper roaming through price caps until retail prices will have been driven down by competition (according to the agreement: till 30 June 2017).

The European Parliament is expected to approve the agreement in May and the Council in June. The new rules could then enter into force on 1st July 2012.

See also the Commission's roaming website for more information.

Towards no stress flying

Today the European Parliament adopted a resolution on the functioning and application of established rights of people travelling by air. The European Commission is called upon to strengthen the rules on help and compensation for flight cancellations and delays, including luggage delays over 6 hours (MEPs push for clear and enforceable air passenger rights). MEPs demand clarification of certain definitions, like 'extraordinary circumstances' and 'cancellation', so that the airlines may not escape their liability by using loopholes in these definitions. Moreover, there is a need for better information services and assistance at the airports in case alternative travel route needs to be found, so that immediate decisions may be made on assistance, rerouting and rebooking. The European Commission should also prepare a standard draft of a complaint form in all EU languages that would be given to passengers in case of any disruption of their flights, so that they would be confronted with the same procedure regardless of the airlines they had used. Again, it was repeated that if airlines go bankrupt, passengers should be repatriated free of charge. Other matters that are seen as requiring more harmonisation and stricter regulation are: rules on hand luggage, clear pricing, prohibition of non-optional-extra-fees when booking online, unilateral rescheduling of flights and price discrimination based on the country of residence of passengers. MEPs suggest also making it clear on an airline ticket what is the trip's environmental impact. Finally, passengers should have full access to information about PNR data and its use, as well as be able to withdraw or change their ticket reservation free of charge within two hours from making it.

Why not more serious?

Yesterday I have mentioned that the EESC is soon expected to give four opinions related to consumer protection measures (Expecting opinions of the EESC). Today a press released was issued in which the EESC calls on the European institutions to take consumer rights more seriously (The EU should take consumer rights more seriously, says the EESC). After having voted on the newly drafted provisions on alternative dispute resolution (ADR) and online dispute resolution (ODR), the EESC expressed its concern as to the setup and functionalities of the planned ODR platform. The criticism addressed the narrow scope of the platform, limits as to its practical usability, technical innovation and legal certainty. Moreover, the EESC believes that the European regulation should be more ambitious and broader in scope. They advocate for an ODR platform that would be available for all types of transactions, regardless of whether they are concluded online or offline, cross-border or inside one country only. Also the Consumer Programme 2014-2020 was criticised, since it does not provide for a sufficient budget to place consumers at the centre of EU policies.

Protection of medical records of patients in clinical trials

The subject of the protection of personal data of EU citizens was also under debate yesterday by the Heads of Medicines Agencies (HMA) and the European Medicines Agency (EMA). They have adopted a joint guidance document  and principles document to increase transparency as to when regulators may release certain medical data in response to access to documents requests (European medicines regulators agree a common, Europe-wide approach for the identification of commercially confidential information and personal data). This initiative is supposed to help the authorities to cope with requests for access to clinical and safety data contained in a marketing authorisation application. From the consumer perspective, it is important that these guidelines determine how to protect personal data (as defined by the EU Directive 95/46/EC) if it can lead to the identification of a person. It is especially applicable to personal data relating to experts, staff or patients that are taking part in, e.g., clinical trials whose data should be redacted before releasing.

Passenger Name Record - your flying data forever in retention of the US government?

As we mentioned previously (Calling for better air passengers' rights) the Civil Liberties Committee of the European Parliament (LIBE) voted yesterday on the draft recommendation on the conclusion of the Agreement between the EU and the US for the use and transfer of Passenger Name Record (PNR) data. PNR data is information provided by passengers and collected by air carriers during reservation and check-in procedures (e.g. name, address, phone number, credit card details, travel agency data, baggage information, seat number, but also 'sensitive data' like religious meal choice or requests for assistance due to a medical condition). This agreement intends to help in prevention and combating of terrorism and other serious transnational crime (defined as crimes punishable by at least 3 years of imprisonment under US law). As previously mentioned the members of the LIBE were split as to whether to agree to this Agreement, but with a small majority (31-23) the draft recommendation to decline to give the consent was rejected. The Agreement will now be put to a plenary vote on the 19th of April. If approved it will bind for 7 years. If rejected, the Parliament may want to vote on extending the currently, provisionally binding Agreement of 2007.

The main problems that some of the members of the LIBE had with the Agreement are as follows (see also: Transfer of air passengers' data to the US - What's at stake?):

• PNR data could also serve "to identify persons who would be subject to closer questioning or examination"
• the duration for which PNR data will be stored (up to 5 years in an active database, after first 6 months it is to be depersonalised, up to 10 years in a dormant database, after 10 years data would be fully anonymized which means that the retention period is indefinite)

Expecting opinions of the EESC

The European Economic and Social Committee (EESC) meets today on a plenary session. One of the points on their agenda relates to strengthening the protection of consumers in cross-border trade. To this aim the EESC is to give four opinions within the consumer package on: "Consumer programme 2014-2020", "Common European sales law", "Alternative dispute resolution" and "Online dispute resolution for consumer disputes".

Seduced by plastic... or not?

On the 20th of April, the Amsterdam Center for Law and Economics (ACLE) organizes a conference on Behavioral Competition & Regulation. A brief introduction to the topic can be found on their website:

'Much of competition policy and regulation is based on insights from economic models with rational decision-makers. Yet a substantial body of research shows that many individuals are better characterized as being boundedly rational. In consumption choices as well as contexts that resemble executive decisions, people display such deviations from rationality as time inconsistency, overweighting of small probabilities, and failure to ignore sunk costs. Where one side of a market is not fully rational, the other side tailors its behavior accordingly. For instance, credit card companies may impose attractive baseline repayment terms combined with large penalties for late payments. This will attract borrowers that are time inconsistent and not sophisticated enough to foresee their temptations. That is, business strategies may display non-standard features, which regulators and competition authorities need to understand to be effective.

This year’s ACLE Competition & Regulation Meeting focuses on what we can learn from behavioral economics for the enforcement of competition law and regulation.'

This promises to be an interesting event for anyone with an interest in behavioral economics and law. In particular, issues of consumer credit deserve to be further explored. US literature is much further ahead in comparison to Europe: interesting work on this has been done by Oren Bar-Gill. For a selection of his articles, see ssrn. The ACLE conference could be a good starting point for research and discussion on the EU consumer credit market.

Whatever happens, air passengers need to be cared for - AG's opinion in McDonagh (C-12/11)

22 March 2012: AG's Bot opinion in case McDonagh (C-12/11)

Everyone in Europe still recalls the consequences of volcano's eruption in Iceland in March 2010: closing of airspace over most of northern Europe for over a week in April. Flights cancelled (over 100.000 flights), people stuck away from home (10 million passengers unable to travel), often without any or with little assistance from their air carriers or travel agencies. Ryanair had to cancel ca 9.500 flights, which effected 1.4 million of its passengers due to these extraordinary circumstances. The Regulation 261/2004 limits passengers rights in case the cancellation of the flight is a result of extraordinary circumstances. Passengers are not entitled to any compensation based on Article 7 of the Regulation under such circumstances. Ms McDonagh was one of the passengers that was supposed to travel from Faro to Dublin on the 17th of April 2010 and her flight got cancelled because of the volcano eruption. She was able to return to Ireland only on the 24th of April 2010. Ms McDonaugh claims she did not receive any care and assistance from Ryanair, to which she was entitled based on Article 5 and 9 of that Regulation. She claims compensation of the costs she incurred for meals, refreshments, accommodation and transport. 

The question referred to the CJEU is whether the prolong disruption to air travel, such as caused by the eruption of the volcano in Iceland, could be seen as going beyond 'extraordinary circumstances' within the meaning of the Regulation that would justify exclusion of the application of Articles 5 and 9 of the Regulation. If that is not the case, the referring court inquires whether the application of these articles could not be excluded based on the violation of the principles of proportionality and non-discrimination, and the principle of an 'equitable balance of interests' as expressed in the Montreal Convention. However, if the CJEU considers that these articles should still be applicable in such extreme circumstances, the referring court inquires whether the obligations places on air carriers in these articles could be subject to an implied limitation (temporal and/or a monetary limit)... Summing up, the referring court does not consider the obligation of air carriers to provide all passengers of cancelled flights with care and assistance for a prolonged period as a fair one and tries to find a way to justify an exclusion or limitation of such an obligation under the EU law.

The Advocate General's answer in short is: no limitation nor release from an obligation of providing care for passengers whose flights have been cancelled owing to extraordinary circumstances, even if they have a prolonged character.

If the CJEU follows the reasoning of the AG that will be good news to passengers, and a rather devastating one to the airlines. Providing meals, alternative accommodation, transport etc. to thousands of stranded passengers in 2010, could well financially cripple most of the airlines operating in the EU. Of course, consumers may also end up not being so happy with this assessment, since in the end if the CJEU confirms it, the cost that the airlines have to incur will be passed on to consumers by airlines raising the price of tickets.

The AG in its opinion reminds that Art. 5 provides the passengers of cancelled flights with rights to receive assistance as well as to receive compensation. Only this second right is excluded in case of the cancellation due to extraordinary circumstances. (Par. 27) The notion of extraordinary circumstances is supposed to encompass all exceptional events that could not have been avoided even if all reasonable measures had been taken, which seems to encompass closing of airspace due to the eruption of a volcano, as well. (Par. 29, 32-34) The AG uses language interpretation of the term used in the Regulation, as well as refers back to the drafting process thereof, the aim of the provisions and their context to justify that there may not be a category of 'particularly extraordinary' events that would fully release the air carrier from its obligations. (Par. 32-26)

"In that regard, the obligation on the air carrier, which consists in providing care for passengers whose flights have been cancelled, by supplying them with refreshments, meals or accommodation or making available to them means of communication with third parties, is designed to cater for passengers’ immediate needs on the spot, whatever the cause of the flight’s cancellation, and to enhance the protection afforded to passengers’ interests." (Par. 38)

The aim of this provision is to enable passengers continuation of their travel under satisfactory conditions (Par. 41), when they find themselves in a vulnerable position, which is even more the case when the passengers are stranded at an airport on account of extraordinary circumstances. (Par. 42) Therefore, the AG considers prolonged closing of airspace as a 'regular' extraordinary circumstance, that still obliges the air carriers to provide care and assistance to their passengers, based on Art. 5 and 9 of the Regulation.

The AG does not find a justification to limit that obligation of air carriers to, e.g., a specific daily amount that would be provided to passengers to cover their accommodation or meals, or compensation of only public transport used by passengers and not taxis, or compensation for only a certain amount of time. (par. 50)

"It is precisely in situations where the waiting period occasioned by the cancellation of a flight is particularly lengthy that it is necessary to ensure that an air passenger whose flight has been cancelled can have access to essential goods and services throughout that period. It should be noted in that connection that Article 9 of Regulation No 261/2004, far from placing an implied limitation on the provision of care, states that passengers are to be offered free of charge ‘meals and refreshments in a reasonable relation to the waiting time’." (Par. 52)

The AG contradicts here the European Commission's guidelines that have been issued to airlines after the volcano eruption (see our earlier post). While the European Commission insisted on passengers needing to be provided with care and assistance, it also claimed that providing this care should not impose an unfair and disproportionate burden on the air carriers. Therefore, pursuant to the EC, the assistance should be provided within the limits of what is proportionate and reasonable in the light of specific circumstances. (Par. 56) The AG sees these guidelines as effectively placing an implied limitation on the provision of care. Such factors should only be taken into account by a national court assessing whether the sums claimed by passengers are reasonable. (Par. 57) Moreover, the AG considers the airlines to be free to pass on the costs incurred as a result of the obligation to provide care and assistance to passengers to airline ticket prices, which also Ryanair had done. (Par. 58-59) All in all, it does not consider that the application of Articles 5 and 9 would infringe the principle of proportionality, in this case (nor any other principle).

Human rights in business (II)

What are the responsibilities of businesses in regard to human rights protection? And what can the EU do to motivate businesses to respect and possibly promote human rights in non-EU countries? These questions are of particular significance in light of the growing use of new media as fora for expression of opinions and distribution of information, since internet providers play a key role in giving access to these platforms. 

In the human rights report 2010 that was approved by the European Parliament's Foreign Affairs Committee yesterday, MEPs call upon the European Commission to develop rules for increased monitoring of internet use and of the new technologies used by autocratic regimes to restrict internet access. The report states that '[i]nternet service providers must learn the lessons of past mistakes, such as Vodafone’s decision to give in to demands from the Egyptian authorities in the last weeks of the Mubarak regime to suspend services, and to disseminate pro-government propaganda'. According to the Parliament's press release, '[t]he report invites the European Commission to table, by 2013, regulatory proposals to improve monitoring of exports of goods and services that can be used to block access to websites. These proposals should include provisions to enhance transparency for EU and EU-based companies, it adds'.

For an overview of the EU's actions and ambitions in the field of human rights protection, see also the EU annual report on Human Rights and Democracy in the World in 2010.