More light shed on clinical trials data

On 2nd of October 2014 the European Medicines Agency (EMA) Management Board unanimously adopted the new policy pursuant to which the clinical reports that underpin the decision-making on medicines will need to be published (Publication of clinical reports). This measure is to become effective as of 1 January 2015 and will apply to all applications for centralized marketing authorizations submitted after that date. EMA will thus increase transparency of clinical trials prior to May 2016 when the new rules on clinical trials may enter into force (see our previous post: New rules on clinical trials - adopted). The quest for granting access to this data has been long-lasting and had many obstacles on its path, but the pharma industry finally decided to co-operate with the academics and consumer advocates and allow them to re-evaluate the data of clinical trials. The individual patient data will not be revealed and any information that could be perceived as commercially confidential will be redacted. BEUC welcomed the news, however, it finds it 'deplorable' that pharma companies may still use the guise of commercially confidential information to avoid revealing all their data (Clinical trials transparency partially boosted by EMA).

Consumers' choice and innovation in retail food sector

The European Commission published last week the results of a retail food study. The study "The economic impact of modern retail on choice and innovation in the EU food sector" has been jointly prepared by Ernst & Young, Cambridge Econometrics Ltd. and Arcadia International and for anyone interested in this sector and its developments it has a fascinating amount of data spread out on ca 450 pages (more than 300 shops analysed in 9 Member States with 23 product categories and for a period of time 2004-2012). What we can gather from the European Commission's press release is that there was a worry expressed by the traders active in the food supply chain that large retailers imposed detrimental conditions on their suppliers (a reason to adopt CESL?) and the latter ones were not able to invest in new products, which could lead to the reduction of choice and innovation in food products for EU consumers (Commission publishes results of retail food study). The main results as we could hear are:

• consumer choice continuously increases (more shops, products, brands, package sizes);
• number of innovations reaching consumer each year decreased since 2008 by 6.5%;
• most innovations nowadays concern the packaging;
• range of choice/innovation is related to the size and types of shops and the economic environment (e.g. whether the local area is high or low on unemployment, GDP per capita etc.), as well as to the turnover in a product category;
• more competition among shops leads to the introduction of more choice/ innovation;
• in moderately concentrated retail markets, retailers' stronger bargaining power in comparison with the supplier did not point to the reduction of choice and innovation in food products.

The last presented finding suggests that the assumption that led to this study might have been incorrect, so that the need to grant suppliers more protection in EU law might not necessarily be related to consumer protection. We will need to see what are the responses to this study (allowed to be submitted before 30 January 2015).

A "nudge unit" for Germany

Over the past years various governments have introduced so-called “nudge units”, by which they pay tribute to the challenging task of translating behavioural insights into policy-making and law-making. Behavioural economics as a discipline is characterized by research identifying how people, for instance consumers, really act. It shows how they can systematically deviate from rational behavior. Such insights are generally established by interdisciplinary work involving psychologists, sociologists, lawyers and economists. 

Following the U.S. (“Social and Behavioral Sciences Team”) and Great Britain (“Behavioural Insights Team”) also the German Chancellery is currently in the process of setting up such an interdisciplinary team to apply empirical evidence from behavioural economics in public policy making.

Evidence of disclosure in consumer credit cases - AG Wahl's opinion in Case C-449/13 CA Consumer Finance v Bakkaus and Bonato

Contracts for consumer credit continue to raise questions under EU law, especially in regard to the mandatory disclosure duties that form the subject of the book that was mentioned in the previous post. On September 11th, Advocate General Wahl gave his opinion in a French case that is currently pending at the CJEU, CA Consumer Finance v Bakkaus and Bonato (opinion not yet available in English).

The case concerns the interpretation of the European Directive 2008/48/EC on credit agreements for consumers, in particular as regards pre-contractual information duties of professional credit providers towards consumers. Both Ms Bakkaus and Mr and Mrs Bonato had concluded contracts for car loans with CA Consumer Finance. In a dispute regarding the repayment of these loans, the tribunal d'instance in Orléans of its own motion (the consumers had not appeared in court) raised several preliminary questions concerning the rules of evidence applying under the European Directive. These questions concern the credit provider's duties under the Directive to (i) provide consumers with certain information and an explanation, in order for them to make a well-advised choice before entering into a credit agreement, and (ii) to assess the consumer's creditworthiness, with an eye on both parties' responsibilities when they decide to conclude the contract. According to French law, a credit provider faces severe consequences in case of non-compliance with these duties, including a loss of the possibility to recover interest on repayments of the loan. 

The referring judge in Orléans wishes to obtain more clarity as to (a) who bears the burden of proof of (non-)fulfillment of the credit provider's information duties and (b) in which form evidence has to be produced. AG Wahl submits that the answer to the first question implicitly follows from the Directive, whereas the answer to the second question depends on national laws, in accordance with the principle of procedural autonomy of Member States.

According to AG Wahl, the effective exercise of the rights deriving from the Directive does not preclude a national provision, such as the French rule applicable in this case, that requires the credit provider to prove that he has correctly fulfilled his information duties. On the contrary, in line with the Directive's objectives of consumer protection, it may be assumed that the burden of proof rests on the professional credit provider. In case a national judge lacks sufficient information to assess whether the relevant information duties have been fulfilled, the judge should ask the credit company to provide additional data.

The AG is of the opinion that the credit provider may not shift the burden of proof to the consumer by simply including a standard term in the contract according to which the consumer declares to have received the relevant information. The Directive does not preclude credit providers from using such standard terms, as they may support the proof of fulfillment of information duties, but additional evidence may be required in the specific case.

As regards the consumer's creditworthiness, the AG considers that Article 8 of the Directive obliges the credit provider to assess this on the basis of sufficient information. In this context, the credit provider may not limit the assessment to simple declarations by the consumer that have not been checked. Article 8 does, however, in the AG's opinion not require the credit provider to systematically check information  given by the consumer in order to establish its truthfulness.

Finally, AG Wahl submits that Article 5(6) of the Directive should be interpreted in the sense that, on the one hand, the credit provider should not assess the consumer's financial situation and needs before having given an explanation of the pre-contractual information, whereas, on the other hand, an appropriate explanation cannot be considered to follow from contractual information included in the credit agreement. The credit provider can, however, not be required to provide an explanation in a written document.

Even more than you wanted to know

New additions have been added to the virtual symposium on Ben-Shahar's and Schneider's book on mandatory disclosure. They include contributions by:

VII. Nancy Kim

VIII. Florencia Marotta-Wurgler

IX. Daniel Schwarcz

X. Jeff Sovern

XI.A David Vladeck

Online 'free' newspapers also subject to national libel and defamation rules - CJEU in Papasavvas and Others (C-291/13)

11 September 2014: CJEU judgment in case Papasavvas and Others (C-291/13)

Over a week ago the CJEU issued an important judgment in this case concerning interpretation of the e-Commerce Directive (2000/31/EC). While e-Commerce Directive is not per se a consumer protection measure, its provisions regulating the legal aspects of electronic commerce have a significant impact on European consumers, as well.

In this case from Cyprus Mr Papasavvas claimed damages against a newspaper company for what he considered to be defamation through articles published in the daily newspaper, which were published online on two websites. One of the questions raised was whether the e-Commerce Directive should apply at all in this case, since the websites of the newspaper were free for Mr Papasavvas to access and peruse and they only generated income from the advertisements placed on them. The question was whether the Directive should only apply to such 'information society services' that have been provided against a remuneration from the recipient? The positive answer to this question would significantly lower the level of protection granted online to internet users since many websites nowadays earn their money through advertisements rather than through financial contributors of their readers. The CJEU confirms that the 'service' does not need to be paid by the person for whom it is performed (Par. 28-30) to fall under the scope of the e-Commerce Directive, even if the definition refers to a service 'normally provided for remuneration' (Par. 27). It is sufficient that this remuneration is being paid by someone else than the recipient.

This broader scope of application could allow the online newspaper to rely on Articles 12 and 14 of the Directive in order to escape liability for the posted content (incl. defamation) if it could prove that it was 'merely' a 'conduit'. In this case the online newspaper could not be qualified as such. For these articles to apply the service provider would have to have no knowledge or control over the information that was transmitted or stored, which was not the case here. (Par. 40) (this and following articles refer also to the Google France case)

The e-Commerce Directive allows for the Member States to keep on applying their rules on civil liability (incl. for defamation) to information society service providers, as long as this does not restrict the freedom to provide them from another MS. (Par. 33-34) Since in the given case the services originated in Cyprus, the rules on civil liability for defamation could be applicable.

However, if the Cyprus did not implement the provisions of the Directive in time its provisions may not be directly invoked by the parties. The Directive does not have a direct horizontal effect, which means that the national service providers could only rely on the national provisions implementing it and not on the rights granted to them by the Directive itself. Failing the timely interpretation, the national court is obliged to the consistent interpretation of the national law with the EU law. (Par. 54-56)

More than you wanted to know - a virtual symposium

On ContractsProf Blog, a virtual symposium is currently taking place on the book 'More than you wanted to know' by Omri Ben-Shahar and Carl E. Schneider. 

The book, of which we posted a summary earlier, addresses the problem of lacking effectiveness and potential harmfulness of mandatory disclosure rules in consumer contract law. 

Contributions to the virtual debate so far include an introduction of the authors and blog posts by:

I. Aditi Bagchi

II. Steven Burton

III. Ryan Calo

IV. Robert Hillman

V. Ethan Leib

VI. Lauren Willis

New IACL website

The International Association of Consumer Law has a new website - http://www.iacl.net.au/. Even though the old one is still functional it has stopped being updated some time ago so I refer everyone to the new one.

Checked-in baggage at additional prices - CJEU in Vueling Airlines (C-487/12)

18 September 2014: CJEU's judgment in the case Vueling Airlines (C-487/12)

The CJEU agreed today with the suggestion given by the AG Bot (see our earlier post: Airlines may freely determine checked-in luggage costs) to leave it to the market to determine whether the cost of the checked-in baggage would be included in the air transport service charge or whether it would be charged separately by the airlines, as an optional supplement. Therefore, the provision of the Spanish law that prohibits air carriers from charging for checking in passengers' baggage in the form of an optional price supplement is not in compliance with the European consumer law. The CJEU reached this conclusion upon determining that the purpose of the Regulation No 1008/2008 is to ensure information and transparency with regard to prices for air services. (Par. 32) Even if the Regulation does not specifically mention prices to be paid for carrying baggage, it has to apply to them, as well, so that it was possible to effectively compare prices for air services. (Par. 33) The Regulation distinguishes between two different charges and sets different rules for them depending on whether the price to be paid constitutes an unavoidable and foreseeable item included in the price of the air service or whether it is an optional price supplement in respect of a complementary service. (Par. 37) The CJEU mentions that the most recent business models of airlines demand that a different price could be set for an air ticket, depending on whether the passenger wants to travel with just his carry-on or check-in baggage. Many consumers would prefer to travel light if that saves them some money on their travel expenses. It is not longer feasible, therefore, to expect from the airlines to accept all check-in baggage without incurring supplementary charges. (Par. 38) This means that the price to be paid for the carriage of air passenger's checked-in baggage constitutes an optional price supplement (Par. 39) contrary to the hand baggage (Par. 40).

The CJEU ascertains, however, in its judgment that such an optional price supplement would need to remain optional - that is it should only apply to the air transport service on an opt-in basis, the choice whether to opt-in should be given to consumers at the beginning of the booking process before they become invested in the particular service, and it should be drafted in a transparent, unambiguous way so that consumers are clearly informed about this financial burden. (Par. 46 read together with the opinion of AG Bot)

News from EU consumer law in the UK: UKSC in Robertson v Swift

Although this blog usually deals with developments at the European level, sometimes it can be interesting to take a look at national practices affecting the implementation of European consumer law. 

In particular, this week the UK Supreme Court (hence, UKSC) released a judgement which signals the Court's intention to "take EU consumer law seriously" when it is called to fill in the gaps left by UK implementing legislation. 

In the case under discussion, Robertson (Appellant) v Swift (Respondent) [2014] UKSC 50, concerning a contract for the transportation of goods concluded between Dr Robinson, a private party seeking to move his furniture to his new home and Mr Swift, a professional mover, two questions had to be decided:

- first, whether the contract fell under the Cancellation of Contracts made in a Consumer’s Home Regulations 2008, entitling the consumer to a right of cancellation and to receiving the related notice;

- second, whether, lacking this notice, the consumer should still be entitled to cancellation within the term provided by the applicable legislation (7 days).

Previous instances had been dealing with the first question, concluding that, in light of Directive 85/577/EEC, that the Regulations sought to implement, the rules on doorstep sales should be applicable to the case- even though the negotiations had been initiated by the consumer and there had been more than one visit to his home, a circumstance that might have given Dr Robertson a better chance to consider whether he really wanted to take the offer. 

More interesting, however, is the second question. UK legislation had failed to provide a sanction for the violation of the duty to inform the consumer of his right to cancel a doorstep contract within a given time. In this context, the Court of Appeals had considered that the cancellation right could not be validly exercised. The UKSC, on the other hand, observed that it felt bound to interpret the national legislation in light of the original European directive; in this sense

"the court must not only keep faith with the wording of the Directive but must have closely in mind its purpose. Since the overall purpose of the Directive is to enhance consumer protection, that overarching principle must guide interpretation of the relevant national legislation. [para 22]"

In this regard, 

"The centrality of the right to cancel a contract as a feature of the protection which the Directive is designed to afford to the consumer was emphasised by CJEU [para 23] [...] 

The requirement to give notice of the right to cancel should not therefore be seen as a technical prerequisite to the arousal of the right but as a means of ensuring that the consumer is made aware that he is entitled to cancel the contract after a period of reflection. [para 24]"

As a consequence, 

"if the right to cancel could be effectively nullified by a failure (or refusal) of a trader to give written notice of the right to the consumer, this would create a considerable gap in the level of protection that the Directive sought to provide. [para 25]"

Interestingly, the UKSC observes that in this case the customer was well-educated, skilled and capable of negotiating and looking after his interests, but is "is clearly the intention of both the Directive and the regulations that those less well equipped than Dr Robertson should have what is considered to be the necessary protection. [para 26]"

Finally, the result thus reached by the Court is also consistent with what had been stated by the CJEU in Heininger (C-481/99). By adopting a "purposive construction" of the 2008 Regulations, the UKSC argues, it is possible to achieve such consistency.