Transposition, Implementation and Enforcement of EU Consumer Law: Current State and Future Challenges

1. Transposition, Implementation and Enforcement of EU Consumer Law: Current State and Future Challenges Geraint Howells Professor of Commercial Law Manchester University

2. Scope of talk • Unfair Commercial Practices Directive • Four topics covered in Proposed Consumer Rights Directive • Doorstep • Distance • Sale • Unfair Terms

3. Transposition, Implementation and Enforcement of EU Consumer Law – General Issues • Issue relating to EU acquis • Inconsistencies • Legal gaps • General clauses • Issues relating to domestic implementation • Regulatory traditions • Incorrect implementation • Remedying defects in acquis by using minimum clause • Ensuring coherency with general law • Delay in transposition • Enforcement traditions (deal with at end)

4. Transposition, Implementation and Enforcement of EU Consumer Law – General Issues EU Acquis • Lack of consistency at EU level e.g:- (i) Consumer; (ii) Trader/business/ organizer/vendor/supplier/seller; (iii) Withdrawal period; (iv) Consequences of failing to provide information

5. Transposition, Implementation and Enforcement of EU Consumer Law – General Issues EU Acquis • Legal gaps • Doorstep – concluded by remote communication/contracts on street or public transport/burden of proof • Distance selling – does the notice only have to be despatched in withdrawal period/ coverage of digital products • Sale – remedies in relation to damages/software/spare parts and after-sales service/cross border enforcement • Unfair terms – lack of monitoring of terms in advance/uncertain consequences of unfairness and lack of transparency/limited impact of rulings

6. Transposition, Implementation and Enforcement of EU Consumer Law – General Issues EU Acquis • General clauses • Radical break from tradition in some systems e.g. good faith in unfair terms in UK: see Director General of Fair Trading v First National Bank Plc [2001] UKHL 52 and in relation to unfair commercial practices • 7 member states do not (explicitly) mention good faith in unfair terms law • Member states may apply their own conception of the concept • Can you harmonise on basis of general clause: Freiburger Kommunalbauten v Hofstetter Case C-237/02 [2004] ECR I-3403

7. Transposition, Implementation and Enforcement of EU Consumer Law – General Issues Member States • Regulatory traditions • Role of civil, criminal and self-regulatory law • Whether consumer law part of general law or a discrete legal category • Form of laws – [2001] ECR I-3541 Commission v Netherlands(relying on existing law) Commission v Sweden [2002] ECR I-4147 (relying on preparatory text)

8. Transposition, Implementation and Enforcement of EU Consumer Law – General Issues Member States • Incorrect implementation • UCPD – professional diligence as an empirical standard/lack of reference to information duties in Annex II/disaggregation of black list • Doorstep -exc of contracts concluded by notaries/withdrawal period starting before info supplied/exc of contracts concluded during excursions • Distance – granting total rather than partial exemptions/no general obligation to confirm prior information/ withdrawal period/lack of duty to inform goods unavailable • Sale - definition of sale/lack of general conformity requirement or ambiguity/application of remedies/no reversed burden of proof • Unfair Terms –need for consumer to invoke/application to single use pre-formulated contracts/only transposing part of annex/principle of transparency/rights of consumer associations.

9. Transposition, Implementation and Enforcement of EU Consumer Law – General Issues Member States • Delays in transposition • Varies from State to State and • Directive to Directive • Depending on national procedures • Discreteness of area of law • Cut and paste or integration into national law • Maximal harmonisation can cause delay due to need to remove legislation • Minimal harmonisation can cause delays through debates on enhancing laws to remedy gaps and integrating with general law to promote coherency

10. Transposition, Implementation and Enforcement of EU Consumer Law – General Issues • Positive notes • EU has improved quality of protection in many states • Fundamental policies have been largely aligned • Common concepts and terminology developed • But need to strike right balance between EU and national competencies • Is coherency of national beyond consumer law important?

11. Case Study on UCPD and MCA – The UK experience • Major reform of domestic law in relation to UCPD due to maximal harmonisation • Need to reform existing laws due to “transactional decision test” and prescriptive mandatory pre-contractual information • 22 laws affected including repeal of landmark legislation such as Trade Descriptions Act 1968 • Introduction of general clause • Perceived positively despite some doubts over future interpretation and enforcement

12. European Regulatory Architecture of UCPD and MCA • Twin track • Consumers (maximum harmonisation) UCPD • Traders (minimum harmonisation) MCA • Consumer law becomes an “isolated island” • See Transposition and Enforcement of the Directive on unfair commercial practices (2005/29/EC) and the Directive concerning misleading and comparative advertising (2006/114/EC) EP Briefing (Čeponytė, Schulte-Nölke and Busch)

13. Transposition Findings • Maintaining unified domestic approach (=divergence from European architecture) • Austria • Germany • Consumer Codes or Consumer Protection Acts • (= potential fragmentation of national laws) • Belgium • France • Italy • Civil Code • Czech?

14. Proposed Consumer Rights Directive- addressing concerns of lack of uniformity • Improper implementation • Broader scope to implementing measures • Taking advantage of options or measure in directives that leave choices to Member States • Use of minimal harmonisation clause See EC Consumer Law Compendium

15. EU Directives do not represent the limits of national laws Broader implementing measures • Doorstep • Definition of consumer • Additional situations • Less exemptions • Distance • Definition of consumer • Additional situations • Less exemptions

16. EU Directives do not represent the limits of national laws • Sale • Apply to other supply contracts • Extend definition of consumer, seller and consumer goods • Unfair terms • Definition of consumer • Covering terms reflecting mandatory provisions • Individually negotiated terms

17. What happens at limits of EU law? • Is everything outside scope of directive left to member states? or • If a matter is not covered does that mean Community has positively decided not to regulate and Member States cannot provide greater protection?

18. Use of minimum harmonisation • The following national measures are potentially threatened by Proposed Consumer Rights Directive • Doorstep • Additional information requirements • Standard format for information • Extended right of withdrawal • More favourable remedies (time limits and liens) • Bans • Licensing requirements • Time restrictions

19. Use of minimum harmonisation • Distance • Bans on marketing of medicinal products • Burden of proof • Additional information requirements • Standard format for information • Extended right of withdrawal

20. Use of minimum harmonisation • Sales • Free choice of remedy to consumer • Longer time periods • Rescission for minor defects • Mandatory guarantees • No duty to notify defects (optional in present Directive)

21. Use of minimum harmonisation • Unfair terms • Review of incorporation of terms • Omitted reference to good faith • Blacklist • Take account of post-contractual events • Covers subject matter and price • Broader scope for adjustment • Standard Terms Register

22. Consumer law becoming in “island”-the rush to become non-consumers? • Some laws or aspects of some laws can be isolated and only apply to consumers • However there is often an interaction with general law • We have noted in relation to UCPD different approaches taken as to the need for a unified approach • This is also pronounced in the context of sales law and unfair terms • Less important for doorstep and distance which were developed to meet consumer needs • Case study of sales law

23. Sales Law in Poland • Zoll “Remedies for Non-performance in the Proposed Consumer Rights Directive and the Europeanisation of Private Law” in Howells/Schulze Modernising and Harmonising Consumer Contract Law • Poland did not integrate sales law in Civil Code (that was Poland’s choice) • Some rules less protective for consumers than civil code • Should consumer be allowed to waive status as consumer?

24. Sale Law in UK • If maximum harmonisation under Consumer Rights Directive the choice will be between:- • subjecting all sales to consumer sales regime • having a less protective regime for consumers with regard to right to reject and duty to notify

25. The need to differentiate contexts • Do we need to consider more carefully which rules need to be harmonised • Composition • Labelling • Content of advertisements • Standard form contracts • Which rules it may be desirable to harmonise • Right of withdrawal • Information duties (risk of overload and problems of uncertain scope) • Which rules may not need harmonisation • General (quality) standards • Remedies

26. Points to stress • There can be significant advantages to maximal harmonisation and it may be essential in some contexts • BUT there are costs. The price must be worth paying.

27. Important debate due to the costs of maximal harmonisation • Loss of traditional forms of protection • Consumer protection limited to European law level of protection • Consumer laws separated from general law (“ghettoised”?) • Consumers may be less well protected than under existing law • Risk of over-regulation due to need to find common accord e.g. information obligation overload • Without safeguard clause or expeditious comitology procedure it may be hard to react to new concerns

28. Enforcement challenges • Growth in use of general clauses • How to ensure equal application? Harmonisation in practice as well as theory. • To what extent is it legitimate to take local context into account? Freiburger Kommunalbauten v Hofstetter Case C-237/02 [2004] ECR I-3403 • Injunctions now universal technique • But local issues: OFT v Foxtons [2008] EWHC 1662 • Injunctions Directive and specialist procedures • Different actors – national consumer agencies, local agencies, specialist agencies, consumer organisations • Different nature of consumer organisations – often linked to state funding

29. Enforcement challenges • Some states see role for criminal law • UK/France • Local flavour – due diligence law • Civil law • Broader in some states i.e. unfair commercial practices • Remedies vary greatly • Acceptance of soft law • Organisation of consumer enforcement • Role of consumer organisations • Strong national bodies – Ombudsmen, OFT, Polish HOPCC (new bodies g.e. Dutch consumer authority) • Decentralised – Germany Länder, TSOs, DGCCRF • Cross-border problems • Motivating states to have concern for citizens of other EU states • Co-ordinating EU, National, Regional and local enforcement