Naughty Member States

Last week the European Commission again let us know which countries infringe existing European consumer protection rules and what it was going to do about this. The relevant infringements concerned:

• Poland: hindering EU consumers in participating in judicial proceedings taking place in Poland, infringing the Regulation on the service of documents (1393/2007) in cross-border cases. Namely, Polish law requires EU citizens to appoint a representative in Poland for the service of documents in civil and commercial proceedings in Poland. If a representative is not appointed, the documents are deposited at court and deemed as having been served. This means that EU citizens may even not known that documents have been deposited at court against them. EU sees it as an indirect discrimination on the grounds of nationality and gives Poland two months to adjust its law.
•  Denmark: endangering consumer health by allowing the sale of snus (oral tobacco, consumed without chewing or smoking by placing between the gum and the lip) in loose portions. The sale of snus is banned in Europe with exception of Sweden. Denmark has two months to ban this sort of sale.
• Poland (again): not adhering to the European common framework regulating the way airport charges are set. Poland failed to implement common rules on airport charges, which brings economic harm not only to airlines who may be asked to pay more for taking-off and landing in Poland but also passengers, who would ultimately be charged with these costs. EC referred Poland to the CJEU for missing the implementation deadline of 15 March 2011. Daily penalty may be imposed on Poland until the EU rules are adopted.
• Slovenia and Poland (again): not fully transposing the EU internal energy market rules (Electricity Directive and Gas Directive). A proper implementation of these EU rules was supposed to guarantee a secure energy supply at affordable prices to consumers. Both countries are referred to the CJEU at the moment and face daily penalties until they adjust their legislation.

Microsoft could lose up to 10% of annual turnover

Another update concerns the previously mentioned European procedure against Microsoft (Microsoft under investigation for limiting consumers' options). To briefly remind the readers: the European Commission is convinced that Microsoft failed to comply with the requirement to offer its users a choice screen enabling them to easily choose their preferred web browser (instead of just providing them with a pre-installed default of Internet Explorer). The European Commission sent a Statement of Objections to Microsoft on non-compliance with its preliminary view. This does not necessarily mean that the Microsoft will be found as having breached its obligations since it has a right to defend itself. Only then a final decision will be made by the European Commission. If, however, the European Commission will determine that Microsoft breached its legal commitments, it may fine the company up to 10% of its total annual turnover. (Commission sends Statement of Objections to Microsoft on non-compliance with browser choice commitments)

Towards removing hurdles to single market

The European Parliament adopted yesterday a non-binding resolution addressing consumers' concerns with regards to the single market. In the resolution the Members of the European Parliament point out specific cases in which the lack of sufficient, uniform protection given to consumers throughout Europe is especially visible (banking services, vehicle registration, recognition of qualifications etc.). See our earlier post on this subject: Addressing consumers' concerns.

European online marketplace

The European Consumer Centre Network (ECC-Net) published a new report on cross-border e-commerce and consumers' experiences with it. The report refers to years 2010-2011 and shows that consumers are still not fully comfortable with concluding transactions online even if the number of transactions gradually increases. This could be evidenced by the fact that more than half consumers' complaints that ECC-Net receives concerns online purchases, e.g., defective goods, non-conformity, non-delivery, no right of withdrawal. The most cases are reported in the Netherlands, Germany, France and Luxembourg. The report contains a checklist both for consumers and traders that they should follow in order to make sure that the transaction will be successful. (Consumers still face obstacles when shopping online)

Getting ahead of themselves?

Yesterday the European Parliament decided to make year 2013 the European Year of Citizens. The goal is to raise awareness of rights that are linked to the EU citizenship.The coming year should be, therefore, rich in events and activities that would focus on explaining and spreading knowledge of such rights like e.g., passenger and consumer rights. (European Year of Citizens: raising awareness of EU citizens' rights)

It is a bit ironic that on the same day, the European Parliament adopted also a non-legislative resolution in which it argues for better protection of passenger rights. It demands from the European Commission to improve complaint procedures and fight more actively unfair pricing conditions, as well as to define 'extraordinary circumstances' under which passengers may not claim compensation from their carriers. (Passenger rights: MEPs want loopholes closed) This is the second resolution this year on this subject. (Towards no stress flying) If you are interested in what such a resolution can achieve - see the reply giving to the March resolution by the European Commission here.

On the one hand the European Parliament wants to educate consumers about their rights, on the other hand it admits that these rights are often not clear or easily understandable. It would make more sense to first clarify the vague provisions on a European level before introducing them (and their current loopholes) to the EU citizens.

Easy money

In other news the European Commission communicated today its two-year plan to tackle online gambling (sports betting, poker, casino, lotteries, etc.). Apparently, online gambling is one of the fastest growing services in the EU (annual growth rate of almost 15%, estimated 6.8 million consumers participating). There is a definite lack of specific regulation that would protect consumers from unregulated gambling websites, carrying risks of fraud and money laundering. Since online gambling often takes place cross-border, the national legislators cannot effectively guarantee protection to their citizens and European rules are needed. The European Commission does not intend to introduce a regulation. Instead, specific actions and common principles on protection are to be set, e.g. three recommendations are to be adopted on: common protection of consumers; responsible gambling advertising; prevention and fight against betting-related match-fixing.(Commission sets out an action plan for online gambling)

See also FAQ.

Compensation for delayed flights - CJEU C-581/10 (Nelson and Others) and C-629/10 (TUI Travel and Others)

23 October 2012: CJEU judgment in joined cases C-581/10 (Nelson and Others) and C-629/10 (TUI Travel and Others) (see: press release)

The CJEU has confirmed with this ruling his previous decision (Sturgeon and Others) that passengers whose flights have been delayed for a long time may be compensated, on the basis of the provisions of the Regulation No 261/2004. (see our post on the AG's opinion: Airlines need to compensate passengers of delayed flights...)

The Regulation does not specifically give a right to a compensation for passengers whose flights have been delayed, just to these whose flights have been cancelled. In the Sturgeon judgment the CJEU compared the situation of passengers whose flights have been delayed (as long as they arrive more than 3 hours later at their destination) to those whose flights have been cancelled and gave them the same right to monetary compensation.

In today's decision the CJEU once again mentioned the principle of equal treatment, pursuant to which the same rights should be granted to passengers who are suffering the same inconvenience - the loss of time (more than 3 hours), regardless whether as a result of cancellation or a long delay. The airlines are protected from having to pay this compensation only in case when the delay was caused by extraordinary circumstances.

What is especially important in this ruling is that the CJEU states that there is no need to limit the temporal effects of the present judgment. The CJEU refused the airlines' request to confirm that the passengers whose flights were delayed could only apply for this compensation if their flight has been delayed after the date of the delivery of the judgment.

Life after the rehab

The European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) has published last week a new 'insights' study on the social reintegration of drug users. Since the 90s the new, better policies that promote treatment increased the chances of overcoming a drug addiction, but the study shows that more needs to be done with regards to social reintegration and, specifically, employment of ex-drug users. Without improved social reintegration policies the long-term success of treatments is endangered, e.g., over half of drug users entering treatment is unemployed. The report includes 'conclusions for practice and policy' which could be used by policymakers in developing new, European strategies to promote social reintegration of drug users.

Photo by Rotorhead

EMCDDA Director Wolfgang Götz says: ‘Drug use often exacerbates the already difficult life conditions of excluded individuals, making integration efforts a real challenge for the person concerned and for those providing support. This aspect is particularly relevant during the current period of economic difficulties in Europe, with high levels of unemployment among young European citizens’. (Neglecting the social needs of drug users can undermine chances of long-term recovery)

Global recall

A new OECD internet portal that was launched in Brussels today allows consumers to check information on products that have been taken off the market because of safety problems. The portal will be fed by the input of consumer authorities worldwide, who can insert details on consumer product recalls into the database.

For more information, please refer to the European Commission's press release and the OECD 'Global Recalls' portal.

CJEU in Purely Creative on Unfair Commercial Practices and the Directive's Black List

Today the CJEU published its judgment in the Purely Creative case, giving explanation as to the interpretation of the Unfair Commercial Practices Directive. In particular, the case pays attention to Paragraph 31 of the Directive’s “Black List”, on aggressive the trade practice of creating the false impression that the consumer has won a prize.

The facts of the case offer an interesting read, also for getting an insight into the traders’ ingenious way to make money. The case deals with a number of promotions throughout the year 2008 which in different ways promised the addressees of the promotions that they had won prizes. This was done by sending letters and distributing scratch cards. How did the Purely Creative make its money? In essence by charging costs exceeding the costs involved with the prize which was allocated to almost all addressees, such as, in one of the promotions, a Zurich watch (which was, despite its name, made in Japan).

In its judgment the CJEU deals with two issues related to paragraph 31 of the Directive’s Black List, which prohibits:

“Creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either,

– there is no prize or other equivalent benefit,

– taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.”

The first issue is whether the words “false impression” constitute a separate requirement within the provision. Purely Creative argued that, even if consumers had to pay money or incur a cost, this would not be prohibited as long as they were rightly informed about this, and thus that there would not be a “false impression”.

The CJEU does not agree on this. As soon as consumers are made to believe that they have won or will win a prize while there is no prize or while they have to pay money or incur costs to claim the prize, this is in itself an aggressive practice and thus prohibited. As the court states: “the term ‘false’ is not vital to an understanding of paragraph 31 of Annex I to the Unfair Commercial Practices Directive but merely reinforces the sentence in question.”

This makes sense if we look at the function of the Black List: the idea is to be able to easily identify factual circumstances as a specific aggressive (or misleading) black listed practice, without having to weigh in detail whether or not the information given is unfair.

The second issue concerns the second indent of paragraph 31, more specifically the question whether “paying money or incurring a cost” must be interpreted as meaning any payment or cost, or whether it only applies if it e.g. amounts to a certain proportion of the value of the prize.

Again, the CJEU is strict on this issue, arguing that any payment or cost leads to application of paragraph 31:

“[The] wording [of paragraph 31] does not allow for any exception, meaning that it is evident that the expression ‘incur a cost’ does not allow the consumer to bear the slightest cost, even if it is de minimis compared with the value of the prize or a cost which would not procure any advantage for the trader, such as the cost of a stamp.”

The CJEU therefore sticks to the literal interpretation of the Directive, again while this is necessary for courts and enforcement authorities to easily be able to identify the Black List practices and enforce prohibitions. That is exactly what the Black List is for, and that is also why the Black Listed practices are defined in such detail.