Protecting open internet

Yesterday the European Commission opened a public consultation on preservation of the open internet, which refers to the concept of net neutrality. The idea of open internet is that consumers should have a free choice among various internet offers, which means that these offers should be transparent and easily comparable, that consumers could switch between operators and that their online privacy would be protected. The consultation is opened until 15 October 2012 and consumers as well as public and private parties are invited to participate in it.

"Today there is a lack of effective consumer choice when it comes to internet offers. I will use this consultation to help prepare recommendations that will generate more real choices and end the net neutrality waiting game in Europe. Input from this consultation will help turn BEREC's findings into practical recommendations." said Neelie Kroes (Commission opens public consultation on preservation of the open internet (net neutrality)).

Safe food

Continuing with news on the food policy of the EU, last week the European Commission published a report about the efficiency of the Rapid Alert System for Food and Feed (FAQ on RASFF). This EU's tool helps to avert or mitigate many food safety risks by quickly spreading any information about risks found in food or feed (e.g. discovered during the safety checks at EU borders), contributing to the increase in EU citizens' health.

"European consumers enjoy the highest food safety standards in the world. The EU's Rapid Alert System for Food and Feed is a key tool as it allows risks to be identified and removed from the European market. RASFF reinforces the confidence of our consumers in our food and feed safety system. In 2011, we dealt with a number of important crises such as the effects of the Fukushima nuclear incident, the dioxin and the E. coli crisis. The EU managed to tackle them and the lessons we all learnt will no doubt guide us to do even better in the future." said John Dalli, Commissioner in charge of Health and Consumer Policy (Food: Latest Report shows EU Controls ensure our food is safe)

Annual report of 2010 may be read here , 2011 - here.

EU dietary guidelines

The European Food Safety Authority (EFSA) opened a public consultation last week on the draft Scientific Opinion on Dietary Reference Values (DRV) for energy. Basically, they are proposing new average energy requirements for adults, infants, children and pregnant and lactating women, taking into account the fact that a balanced diet should provide adequate amounts of energy and nutrients for health. The DRV set out the average intake of nutrients, adequate intake as well as lower threshold intake values. These values may then be used as reference in, e.g., food labelling. They also guide consumers in their choice what to eat. The last EU opinion comes from 1993 so it is indeed time to review it. (Dietary reference values and dietary guidelines)

If you are interested in finding out more about the proposal - see here. If you'd like to participate in the consultation, it is open until 28 September 2012, and you should visit its website.

Bon Voyage!

In this holiday period the European Commission has many travel-related issues on its agenda.

Yesterday, a public consultation was launched that aims at finding out what is the situation for victims of cross-border traffic accidents in the EU. It is estimated that at least 2% of all road accidents in the EU involve visitors from other EU countries. These can be tourists, cross-border workers or cross-border commuters. If a EU citizen is a victim of a car accident, he is likely to want to claim some compensation for his damages. Unfortunately, the EU law in this area is not harmonised, which means that there are different national rules for claiming such compensation. Especially problematic is the difference in time limits for making a claim which can range from 1 to 10 years (see Annex: Have a safe trip: Commission consults on how to help victims of road accidents abroad). These cut-off periods may contribute to making it difficult for the victims to claim compensation. The consultation will be open until 19 November and it is supposed to shed some light as to what future actions should the European Commission take. For example, it could harmonise limitation and prescription periods in the EU or it could just try to improve information given to victims of cross-border road accidents.

Additionally, the European Commission announced yesterday its approval for the Single European Sky Performance Scheme. The scheme contains national performance plans that are supposed to save billions of Euros for air passengers as well as airlines in years 2012-2014 by improving air navigation services. This would result in less delays, cheaper flights and reduction of environmental impact of air traffic. Currently, it is estimated that passengers ultimately pay between 6% and 10% of the airline's operating costs. The goal is to reduce user charges by ca. 2.4 billion Euros. (Commission approves national performance plans to reduce costs and...)

Protecting consumers' choice in choosing air fares - CJEU case ebookers.com Deutschland (C-112/11)

19 July 2012: CJEU's judgement in the case ebookers.com Deutschland (C-112/11)

Regulation No 1008/2008 on common rules for the operation of air services protects passengers from unfair treatment by the airlines. For example, its recital 16 puts an obligation on the airlines to clearly indicate the final price (inclusive of all taxes, charges, fees etc.) to be paid by customers for air services, so that they are able to compare effectively the prices for air services of different airlines. The regulation defines what kind of charges should be included in the final price, as well as what to understand under air fares and air rates. It also requires all optional price supplements to be communicated in a clear, transparent and unambiguous way at the start of any booking process to the customer. The customer needs to clearly indicate his choice to pay any optional charges, which means that the 'opt-in' system has to be used to acquire customer's consent. The airlines are not allowed to check in boxes for optional price supplements as a default choice of passengers. (Art. 23 Regulation). This provision aims at protecting customers from overlooking a certain payment that has been chosen for them, which they may forget to reject. Moreover, it may prevent customers from seeing the default chosen options as the 'right ones', which they should go with.

In the case at hand the German consumer protection (BVV) organisation brought a case against ebookers.com, a company which organises air travel online. In the process of making a reservation on their website, the customer sees on the right hand side of the page his current travel costs. The 'total price of travel' that is indicated encompasses also 'travel cancellation insurance', which is calculated automatically and added to the travel price even though it is an optional payment. The passenger then pays the total price of travel in a single sum to ebookers.com, which company then transfers the costs of the cancellation insurance to an insurance company. If the customer does not want to take on the cancellation insurance, he needs to opt-out from this charge (and an information about how to do this may be found only at the bottom of the internet page). The BVV rightly noticed that this method could be seen as infringing provisions of the Regulation. The legal question that arose was whether the reference in Article 23 of the Regulation to 'optional price supplements' should be understood as covering costs, connected with the air travel, arising from services supplied by third parties (e.g. travel cancellation insurance) which are charged to the customer by the company selling the travel as part of the total price.

The CJEU decided that such an interpretation of this provision is necessary in order to assure transparency with regard to the prices for air services. (Par. 13)

"Those optional price supplements therefore relate to services which, supplementing the air service itself, are neither compulsory nor necessary for the carriage of passengers or cargo, with the result that the customer chooses either to accept or refuse them. It is precisely because a customer is in a position to make that choice that such price supplements must be communicated in a clear, transparent and unambiguous way at the start of any booking process, and that their acceptance by the customer must be on an opt-in basis, as laid down in the last sentence of Article 23(1) of Regulation No 1008/2008." (Par. 14)

In that respect, as also noticed by Advocate General Mazák, it should not make a difference for the scope of the passengers' protection whether the optional additional service is offered by an air carrier or by another, third party. (Par. 17) Therefore, as long as the optional additional service that is being offered during the booking process to customers is linked to the flight itself, it does not matter who is offering its performance. It falls under the definition of 'optional price supplements'. (Par. 18) The customers should, therefore, have a real choice as to whether they want to pay such a supplement and not find themselves bound by it as a default option.

Fate of the European ADR and ODR schemes to be decided after summer

Last winter the European Commission presented proposals of new laws that would improve consumers' rights in settling disputes out of courts. (A step away from out-of-court dispute resolution for European consumers) This post is just a quick update to let the readers know that these laws have still not been finalised but the works on them continue. A week ago the European Parliament's internal market committee adopted amendments to two draft laws on alternative and online dispute resolution schemes (ADR and ODR). MEPs proposed, e.g., an introduction of a quality label for ADR entities, with which they could show that they comply with the minimum quality standards set in the directive. MEPs introduced also certain provisions in order to strengthen impartiality of the ADR arbitrators or mediators. The next step is in the legislation procedure is to start negotiations with the Council on a possible first-reading of the two proposals. Whether the texts are ready for that will be decided after the summer break. (Easy, cheap and rapid redress for consumers)

Better safe than sorry - on new road safety rules

Did you know that more than 5 people die on Europe's roads every day in accidents caused by a technical failure of a vehicle? Did you know that technical defects are responsible for 6% of all car accidents and 8% of all motorcycle accidents? In order to prevent such tragic outcomes, the EU decided to toughen its rules on vehicle checks. One could say, it's the highest time to introduce new rules, since the current minimum standards for vehicle checks date back to 1977 and don't foresee for inspections of such important mechanisms as, e.g., ABS. That's not what we want to hear when we are heading out for our holidays in our cars and would like to think that the chances of the car that comes towards us from another direction swerving suddenly into our lane are none to slim.

The new proposal of the European Commission introduces compulsory EU wide testing for scooters and motorbikes. It will also demand more frequent periodic checks of road-worthiness for old vehicles, as well as for cars and vans with exceptionally high mileage. The latter ones would have to fulfil the same requirements as taxis or ambulances. Not only the objects of the tests are to change, but also its substance. The EC intends to set minimum standards for deficiencies, equipment and inspectors, as well as make electronic safety components subject to mandatory testing. Finally, the proposal includes provisions that are to limit mileage fraud, with registered mileage readings.

"If you're driving a car which is not fit to be on the road, you're a danger to yourself and to everyone else in your car – your family, your friends, your business colleagues. What's more, you’re a danger to all the other road users around you. It's not complicated; we don't want these potentially lethal cars on our roads." said Vice President of Transport, Siim Kallas (Tougher vehicle testing rules to save lives)

The whole new legislative package is presented in the FAQ format.

If you'd like to read more about EU road safety plan 2011-2020 - see the guidelines and visit the road safety page.

Less than full harmonisation of consumer credits in the EU - CJEU case SC Volksbank România (C-602/10)

12 July 2012: CJEU's case SC Volksbank România (C-602/10)

The Directive on Consumer Credit (2008/48/EC) is still a 'baby' among European consumer protection measures. It had to be transposed by Member States only by 11 June 2010, so it does not surprise that the first cases regarding interpretation of its provisions are reaching the CJEU now. What could give rise to a certain amount of concern is the fact that the judgment seems to undermine the full harmonisation character of this Directive.

A Romanian bank, Volksbank România, demanded from its customers to pay the bank a 'risk charge' equal to 0.2% of the balance of the loan and payable monthly throughout its term. This charge was specified in the standard contract terms of the bank. Romanian consumer protection authorities (CJPC) questioned the validity of this charge and imposed fines on Volksbank for using them. Pursuant to Romanian law which transposed the Directive, the creditor is only allowed to levy certain, specified in the law charges on consumers and a 'risk charge' is not one of them. Volksbank claimed in front of national courts that the national transposition measures are contrary to the Directive.

A few important questions were considered by the CJEU in the light of the full harmonisation character that the Directive introduced (see its article 22(1)).

1. May a Member State broaden the material scope of application of the Directive to matters excluded from its scope, for example, in order to cover consumer credit agreements secured by immovable properties?
2. May a Member State broaden the temporal scope of application of the Directive to consumer credit agreements concluded before this law entered into force?
3. May a Member State prohibit creditors to impose certain charges on consumers even if the Directive does not specify them?
4. May a Member State allow consumers to have direct recourse to a consumer protection authority, which may then impose penalties on creditors for infringement of national measures without having to use beforehand the out-of-court resolution procedures?

Answer 1

In general, the Directive excludes its application to credit agreements which are secured by a mortgage or by other security on immovable property (art. 2(2)(a) of the Directive). The CJEU explains the full harmonisation character of the Directive as precluding Member States to introduce less or more consumer protection measures than the ones that are provided for in the Directive. (Par. 38) However, recital 10 of the Directive allows Member States to apply provisions of the Directive to other areas which are not covered by its scope. (Par. 40) Since the consumer credit agreements which are secured on immovable property do not fall in the scope of the Directive, the Member States are free to broaden the scope of its application to these agreements. (Par. 42-43)

Answer 2

Article 30(1) of the Directive states that the Directive shall not apply to credit agreements existing on the date when the national implementing measures enter into force. The CJEU concludes, therefore, that consumer credit agreements that were concluded before this new law entered into force, fall outside the scope of application of the Directive. This means that Member States are free to broaden the scope of its application to these agreements. (Par. 53-54)

Answer 3

The CJEU finds that the Directive contains information duty for the creditors pursuant to which they are obliged to inform consumers about bank charges that will form part of the total cost of the credit. However, the Directive does not specify types of charges that the creditor may levy, which means that an exhaustive list of bank charges that can be levied by creditors upon consumers cannot be seen as contrary to the Directive. (Par. 64-65)

Answer 4

Article 24(1) of the Directive requires Member States to ensure that adequate and effective out-of-court dispute resolution procedures are put in place for the settlement of consumer disputes concerning credit agreements. The CJEU does not consider this provision as placing an obligation on Member States to establish these procedures as mandatory, as long as the consumer protection granted by this Directive remains effective. (Par. 94-95) Moreover, consumers should have the widest possible access to the bodies specially set up to defend their interests on account of the risk that consumes will be unaware of their rights or encounter difficulties in exercising them. (Par. 98) The fact that consumers may have direct recourse to consumer protection authorities does not automatically render out-of-court dispute resolution procedures ineffective and therefore a Member State is allowed to provide for such an option. (Par. 99-100)

HIT and HIT LARIX v Bundesminister für Finanzen: ECJ allows Austria's restrictions on foreign advertising for Casinos

12 July 2012: CJEU's case HIT and HIT LARIX (C-176/11)

In a judgment delivered by the ECJ today, the court made clear that the restrictive rules on foreign advertising for casinos in Austria do not breach the freedom to provide services. In Austria, foreign casinos can only advertise their services if the rules governing the casinos in that country offer at least similar protection (e.g. on legal gambling age, observing gamblers' conduct, etc.) as offered in Austria itself. In order for foreign casinos (in this case from neigbouring state Slovenia) to advertise in Austria, they must obtain prior authorisation by the Austrian state. According to the ECJ, the Austrian rules do limit the freedom of to provide services, but that this limitation is justified by the objective of protecting the population against the risks connected with games of chance. Lacking harmonised rules in the field, Member States are still able to set their own rules as long as they are proportionate. In the case of Austria, this does not pose problems. The ECJ does warn, however, that Member States cannot require foreign casinos to be subject to identical rules. Click here for the full judgment in the case (C-176/11).

CO2 emission targets and our (empty) pockets

Not many of those who own and/or drive a car are daily concerned with the CO2 they are releasing in the air when going to work, to the IKEA or on a weekend trip. Many more, on the other hand, are deeply affected by the fuel consumption that these activities are going to entail. 

A recent position paper issued by BEUC tries to link this two aspects in light of the EU plans to lower the emission targets for passenger vehicles in the coming years (the final deadline would be 2020). In short, the paper calculates that if producers are "forced" to comply to the new standards by means of technical improvements alone consumers are going to be better off in the short-middle run. How? BEUC researchers expect that the implementation of technical improvements may cause a raise in the vehicles' price of around 1000 euros; on the other hand, with the price for fuel likely increasing over the coming years, consumers will be able to recover the initial costs through reduced consumption in fairly short times- maximum three years according to BEUC, and less if the second-hand market is considered as a way to "split" the cost among subsequent owners.

Much emphasis is put on the fact that, as anticipated, the emission reduction should be only achieved through technical improvements: other implementation devices, such as efforts to teach drivers eco-driving would shift the burden on consumers and jeopardize the measure's effectiveness.

For more in-depth information, a longer version of the paper is also available (guest access available by simple click).