European TV

In 2010 the Audiovisual Media Services Directive (2010/13/EU) was adopted and this week the European Commission presented the first report from its application by the Member States. The goal of the Directive was to enable free circulation of audiovisual content while promoting European content, and to restrict availability of harmful content (esp. for minors). We may not be receiving the same programmes all over Europe, but at least certain frameworks (like the amount of advertisements shown) is supposed to be harmonised. The report shows the effectiveness of the measures undertaken in the Directive, while at the same time pointing out its inefficiencies, especially with relation to the smart/hybrid TV (Connected TV).

The report shows that only Poland and Belgium still have to adapt their national laws to the Directive.

One of the main issues of the Directive is to limit advertising and teleshopping spots on TV - to the max of 12 minutes per hour. The report show that since this rule was implemented, in many Member States it has been breached. The European Commission will try to ensure the proper and strict application of this rule. Moreover, creative TV advertising which was claimed not to count as advertising spot, was recently determined by the CJEU to still fall under the 12-minute rule (see: Commission v. Spain, C-281/09)

What the Member States did not have any problems with was introducing stricter rules as to the advertisement of the alcohol on TV. It seems that both private and public persons are in agreement as to the potential harmful results of these advertisements and the need for its more careful control (see the earlier post today). The same careful implementation and application took place as far as protection of minors is concerned, which may be the result of detailed provisions of the Directive on these matters. Five Member States prohibit advertising in children's programmes, while four other Member States impose partial restrictions (as to timeframe or type of products), and seven more ban showing of sponsorship logos. The Directive prohibits: direct exploitation of minors inexperience or credulity in order to convince them to buy products or services; direct encouragement of minors to persuade their parents to purchase goods or services advertised; exploitation of special trust that minors have in parents, teachers, etc; unreasonably showing minors in dangerous situations.

The European Commission intends to pay closer attention to the regulation of Connected TV in the coming months, as well as take a closer look at the discrimination factors in advertisement (stereotyped representation of gender roles was found in 21-36% of the spots analysed). (Digital Agenda: Commission adopts first report on the application of the Audiovisual Media Services Directive)

Responsible (adversiting of) drinking

Continuing the theme of describing actions undertaken in the EU to make EU consumers healthier, it is worth it to mention that eight of biggest European alcohol firms (e.g., Carlsberg, Heineken) have united in order to introduce tighter self-regulation measures as far as alcohol advertising is concerned. The "Responsible Marketing Pact" was launched by these companies last month in all EU countries in cooperation with the World Federation of Advertisers (WFA) and the European Commission's European Alcohol and Health Forum (EHAF). The companies committed, among others, not to target children through the use of social media (by introducing effective age controls), by creating ads that are attractive to kids and to only purchase adverts in media that have an audience mostly consisting of adults (above 70% of expected audience). Consultants of Accentures as well as EHAF are supposed to carry out independent monitoring of performance of the commitments that have been made. (Drunk giants team up to head off ad regulation)

Reducing salt intake

Recently the European Commission published a report on the implementation of the EU Salt Reduction Framework by the Member States. The Member States were asked by the European Commission to take voluntary national initiatives in 2008 that would lead to reducing salt (specifically, sodium) intake among European citizens by a minimum of 16% over 4 years. The questionnaire was sent to Member States in February 2010 as to the results of the measures taken from mid 2008 until the end of 2009.

Medical evidence shows that current levels of sodium consumption in Europe lead to an increased blood pressure, as well as increase a risk of cardiovascular and renal disease. The World Health Organization (WHO) recommends not more than 2 grams of sodium (5 grams of salt) per day. On average the salt consumption in the EU is estimated to be in the range of 8-12 grams per day.

While the report indicates that there is no data available yet on whether the initiatives led to any changes in salt consumption, all Member States and Norway and Switzerland participate therein. 15 countries developed new public awareness campaigns on salt intake in the past three years. 13 countries managed to reach specific commitments from food companies to reduce salt in their products. For more data, see the report.

HEIDI

I used to associate Heidi with the little girl frolicking around Swiss mountains, but that is also the name that was chosen for the new system of storing and sharing health information in the EU. (HEIDI: A new way of sharing and storing health information in the EU!) HEIDI (Health in Europe: Information and Data Interface) has been launched by the DG for Health and Consumers and is a sort of wiki database on health in the EU. The content of HEIDI is written by European health experts, not by the employees of the European Commission. The information shared in HEIDI concerns health status, health determinants, systems and policies and is going to be updated on a regular basis directly by the health experts. The data can be sorted per year, by country of by region and will be showed by use of a variety of graphs which will allow for easy comparisons. 

CUI: consumers under influence

The annual reports of EMCDDA (European Monitoring Centre for Drugs and Drug Addiction) and Europol show that 2011 was a record year on a drug market in the EU. New drugs were detected in the EU at the rate of around one per week! Moreover, 49 new psychoactive substances were officially notified for the first time in 2011 through the EU early-warning system (EWS). However, it has to be taken into account that it may just be the improved reporting system that shows the increased number of new drugs and not the actual increase in production and consumption. 

 

‘New drugs have become a global phenomenon which is developing at an unprecedented pace’, say the agencies (New drugs detected in the EU at the rate of around one per week, say agencies) 

EMCDDA Director Wolfgang Götz says: ‘We now see new drugs marketed in attractive packages on the Internet or sold in nightclubs and on street corners. Whatever the source, the simple fact is that a dangerous game of roulette is being played by those who consume an ever-growing variety of powders, pills and mixtures, without accurate knowledge of what substances they contain and the potential health risks they may pose’.

It is expected that the European Commission will propose a stronger EU legislation on new psychoactive substances. A special attention is being placed on monitoring the online 'legal high' market, which does not surprise taking into account its growth (from 314 online shops offering at least one psychoactive substance in January 2011, to 690 in January 2012).

Virtual money

The European Commission called upon a few Member States last week to notify the measures they took in order to implement the latest Directive 2009/110 on e-money. Electronic money is a digital equivalent cash that can be stored on an electronic device, such as a mobile phone, or remotely at a server. Consumers may then make their payments using internet, e.g., through their mobile phones or computers. They may also open an 'electronic purse' - storing small amounts of money on internet user's payment card. The Directive enables businesses to offer e-money measures to consumers across the EU in the same manner. The implementation deadline was set on 30 April 2011. One year later several Member States still have not fully implemented its measures: Belgium, Spain, France, Cyprus, Poland, Portugal.

Children online

Within the Digital Agenda the European Commission set out a plan for introducing better online content for children as well as for protecting them from harmful sides of digital world. According to the gathered data today 75% of children use the internet, a third of them on mobile phones. Right now there are varying degrees of protection of children online applied across Member States, which makes it difficult for businesses to market child-friendly services and products in the EU, as well as to protect children using the same measures in the EU. The European Commission suggests certain measures that could be introduced, e.g., through self-regulation of the industry. It will be enforced partially by the Coalition to make a better internet for children which was set up in December 2011.

"4 in 10 children report having encountered risks online such as cyber-bullying, being exposed to user-generated content promoting anorexia or self-harm or misuse of their personal data. While by 2015 it is expected that 90% of jobs across all sectors will require technology skills, only 25% of young people across the EU say they have "high" levels of basic Internet skills (such as using the Internet to make phone calls, create a web page, or use peer-to-peer file sharing)." (Digital Agenda: New strategy for safer internet and better internet content for children and teenagers)

The initiative revolves around 4 goals:

1. Delivering high quality content online

- by stimulating production of creative and educational online content for children

- by promoting positive online experiences for young children

2. Increasing awareness and empowerment of children

- teaching online safety, digital and media literacy in schools

- scaling up awareness activities and youth participation

- designing simple and robust reporting tools for internet users

3. Creating a safe environment for children online

- age-appropriate privacy settings

- parental control tools

- age rating and content classification

- online advertising and overspending

4. Fighting against child sexual abuse and exploitation

- faster and systematic identification of material disseminated through various online channels, notification thereof and takedown of the websites

- cooperating with international partners to fight against child sexual abuse and exploitation

CESL in Chicago

Last Friday and Saturday, Joasia and I participated in a conference on 'European contract law: a law-and-economics perspective' in Chicago (that was announced in an earlier post on this blog). The conference considered a wide range of views on the development of European contract law, focusing on the European Commission's proposal for a Regulation on a Common European Sales Law (CESL).

While the proposed CESL met some heavy criticism from speakers from both sides of the Atlantic, suggestions for improvement and for the further development of European contract law took diverging directions. In general, and perhaps not surprising in light of the economic angle of the conference, it appeared that the US speakers were rather sceptical about further-going regulation of consumer transactions in the EU's internal market. The European speakers, on the other hand, mostly sought to combine their criticism with suggestions for the elaboration of measures of EU contract law within the existing acquis communautaire. The different approaches generated a lively debate on general issues (harmonisation, regulatory competition, mandatory rules, optional instruments) as well as specific topics (consumer protection techniques, the doctrine of mistake, remedies, custom, precontractual liability, Eurobarometer surveys).

Some of the main points of discussion were the following:

1. The competitive strength of CESL in comparison to the national sales laws of the EU Member States. In this context, it was noted that according to the Commission's proposal CESL is 'more equal' than domestic laws, insofar as it 'neutralises' Article 6(2) of the Rome I Regulation and thus makes sure that in case parties opt into CESL it will be the only set of rules governing the topics within its scope (no additional consumer laws will apply). In terms of game theory, the European regulator thus acts both as a player within the game (offering CESL) and as arranger of the game (setting the rules). Not optimal from a regulatory perspective, it seems. On the other hand, it can be argued that this is the only way to make CESL work, since its uniformity is meant to make it an attractive option for cross-border transactions.

2. The relatively high number of mandatory consumer protection provisions in CESL. It was put forward that the costs of such a high level of consumer protection will likely be borne by consumers. This would be problematic insofar as there is no differentiation between types of consumers: Consumers who may prefer lower protection in combination with lower prices would be priced out of the high-protection market. Furthermore, weaker consumers who do not invoke mandatory protection rules might pay for the protection of stronger consumers that do (cross-subsidy). On the other hand, it was suggested that once a certain type of protection (eg right of withdrawal) has become part of consumer expectations at the conclusion of a contract, it could be made mandatory. Moreover, it was pointed out that many of CESL's mandatory rules originate from EU Directives that are already in place.

3. Efficiency and social justice in European contract law. The idea that European contract law, including CESL, could appeal or contribute to a shared European identity was considered to be unconvincing by some participants to the conference. The 'thickening' of the moral dimension of European identity through contract law would not be successful if CESL was not used or known by contracting parties. While there is some truth in the latter assertion, it may be submitted (and that is what part of my contribution to the conference consisted of) that the development of European contract law should take into account not only economic factors but also the idea of social justice underlying legislation and adjudication in this field.

The working papers can be found on the conference website and are planned to be published in a special issue of the Common Market Law Review.

Unfair contract term? Consequences for all consumers, not only those party to the proceedings. - CJEU case C-472/10 (Invitel)

26 April 2012: CJEU judgment in case C-472/10 (Invitel)

I'm participating right now in the conference on the law and economics perspective of the CESL in Chicago, which means that this blog post will be short by necessity. Still, it is worth mentioning that the CJEU issued a new judgment yesterday clarifying certain issues as to the applicability of the Unfair Contract Terms Directive.

The case concerned contracts concluded with consumers by Invitel, which is a fixed-line telephone network operator in Hungary. Invitel included in its standard contract terms a condition pursuant to which consumers had to pay additional fees, which had not initially been agreed between the parties, when they decided to pay invoiced by money orders. (Par. 17) The method of calculation of these additional fees was not explained. (Par. 18) Upon complaints of many consumers to the consumer protection authority, it decided to take an action against Invitel claiming they had been using an unfair contract term and demanding automatic and retroactive reimbursement to consumers who were charged by Invitel these fees. (Par. 19)

The Hungarian court asked the CJEU whether a standard contract term that gives a possibility to a service provider to unilaterally change contract terms without explaining the method of adjusting the price nor reasons behind it should be seen as always and automatically void (blacklisted). Moreover, the Hungarian court enquired as to the details of an action that a consumer protection organisation may make against companies using unfair contract terms: if the contract term is considered to be unfair, does it not bind any consumer, also if they are not party to the proceedings (also as regards the future)? 

The CJEU answered, as it was to be expected, that the national court has to assess the unfair character of a contract term on its own. The Unfair Contract Terms Directive does not provide for a black list of unfair contract terms. (Par. 25-26) Certain factors are being indicated to the national court as having to be taken into account in its assessment of unfairness: the fact whether the reasons for, or the method of, the amendment of the fees were set out in plain, intelligible language; the fact whether consumers have a right to terminate the contract.

" (...) the possibility for the consumer to foresee, on the basis of clear, intelligible criteria, the amendments, by a seller or supplier, of the GBC with regard to the fees connected to the service to be provided is of fundamental importance." (Par. 28)

The answer to the other question was that if a consumer organisation begins an injunction procedure against a company on behalf of hurt consumers, the recognition of unfairness' effects by the national court shall bring about effects not only for the consumers who were represented in the procedure by the consumer organisation but also to those who concluded a contract with the server provider under the same standard contract terms, and who were not party to the injunction proceedings. (Par. 38) Moreover, the court should apply, of its own motion, and also with regard to the future, all consequences of unfairness which are provided by national law. (Par. 43)

At your service

More news from the European Commission today: the Commission adopted a de minimis Regulation on services of general economic interest (SGEI). Consumers benefit from SGEI on a daily basis, e.g., by taking a bus to work, watching TV at home, sending a letter at a post office, going for blood tests at a hospital, etc. The Regulation exempts from EU state aid rules aid of up to € 500 000 per company over a three-year period that is granted as compensation for the provision of such services. It forms the final pillar of an 'SGEI package' defining the conditions under which State aid in the form of public service compensation can be considered compatible with the EU rules.

See the FAQ page for more information on the new Regulation.