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The European Commission’s Consumer Policy Strategy 2002-2006: A Critique
John Dickie, LLB, MA, PhD,
Lecturer, Faculty of Law, University of Leicester.(*)
jjd7@leicester.ac.uk
Copyright © John Dickie 2003
First published in Web Journal of Current Legal Issues
Summary
This Comment argues that the European Commission’s Consumer Policy Strategy 2002-2006 misdirects itself in promoting maximum harmonisation and in failing to address certain current weaknesses in Community consumer policy, namely those of incoherence within the consumer protection title of the Treaty, inadequate funding, and the lack of legislation on the liability of service-providers.
Contents
BibliographyIntroduction
The Commission’s Consumer Policy Strategy 2002-2006 (Commission 2002a) (“the Strategy”) does not put forward any concrete legislative proposals but rather sets out three general and over-lapping objectives:
- a high common level of consumer protection,
- effective enforcement of consumer protection rules, and
- involvement of consumer organisations in EU policies.
This Comment will first deal briefly with the latter two objectives, which are generally uncontroversial, and then go on to consider the first objective in more depth, and finally discuss certain elements which are missing from the Strategy.
The Strategy’s objective of effective enforcement of consumer protection rules envisages four areas of action: enforcement cooperation between Member States, information and data on the safety of goods and services, redress, and supporting consumer associations. Concrete proposals have now been brought forward (Commission 2002b and 2003b). An administrative framework is proposed to reinforce the structures for enforcement cooperation between Member States, and a commitment is given to improving access to justice in cross-border disputes.
The objective of ensuring the proper involvement of consumer organisations in EU policies proposes minimum requirements for Commission consultations (on which a Communication has now been adopted, see Commission 2002c) and provides for the establishing of education and capacity-building projects.
These objectives and action areas are in themselves entirely laudable. They represent a response to criticisms which have previously been directed at Community consumer policy (e.g. European Consumer Law Group 2001). The only question which hangs over them is that of funding, a question addressed in the “missing elements” section below.
A “high common level of consumer protection”
The Strategy’s objective of a high common level of consumer protection is novel. Whilst Article 153(1) EC obliges the Community to ensure a high level of consumer protection, the Commission has not previously aimed at a “common [maximum] level” of protection. The term “maximum” is here used to describe Community law prohibitive of Member State measures which are more protective of consumers; “minimum harmonisation” is that permissive of Member State measures which are more protective of consumers. Although it might be argued that “a high common level” could mean a high common minimum level, the Strategy leans towards maximalism:
“...Central to realising the benefits of the internal market is ... the establishment of common consumer protection rules and practices across Europe. This means moving away from the present situation of different sets of rules in each Member State towards a more consistent environment for consumer protection across the EU.” (Para. 3).
Further, in relation to consumers’ economic interests, the Strategy
states that, “there is a need to bring [existing consumer protection Directives]
up to date and progressively adapt them from minimum harmonisation to ‘full
harmonisation’ measures”, (at paragraph 3.1.2.1). This echoes similar
calls made by the European Parliament (European Parliament 2002 at 8).
The Treaty does not provide any general rule that Community harmonisation of consumer laws be at a minimum level; such a rule only applies specifically to measures adopted to support, supplement and monitor Member States’ policies under Article 153(3)(b) (see Article 153(5)).(1) Nevertheless, it is clear that past practice in the field of consumers’ economic interests has generally been for the Community to adopt minimum harmonisation measures. In the area of contract law, the only (part) maximum measure is Directive 2002/65 on the Distance Marketing of Financial Services (its provisions on “prior information” to be provided to consumers are of a minimum nature: Article 4(2)).
In some areas there are good grounds for the adoption of measures of maximum harmonisation, as for example in relation to Directive 2002/65 on the Distance Marketing of Financial Services - namely the need to stimulate cross-border offers in a specialised and under-developed marketplace. Yet on the whole, the criticisms noted above seriously undermine the Strategy’s case for a general policy of maximum harmonisation.
The Strategy cites two grounds for the push towards maximum harmonisation. The first is that traders would benefit from not having to establish different arrangements for selling in different Member States (paragraph 2.3.3). Yet maximum harmonisation would not necessarily mean a single set of rules. The Strategy prioritises the adoption of a general Community prohibition of unfair commercial practices (see now Commission 2003b). However, given the cultural differences which exist within the Community, it must surely be accepted that notions of fairness in trading differ therein (see Wilhelmsson 1996). The Strategy does not address this issue.
A further argument against the push towards maximum harmonisation is that part of the Community’s strength lies in its legal pluralism (see generally Wilhelmsson 2002). Many of the more successful Community consumer protection laws can be traced to initiatives which were originally local. Two good examples of successful “transplants” are those of Directive 87/102 on Consumer Credit, inspired by English law, and Directive 93/13 on Unfair Terms, inspired by German and Scandinavian law.
The second ground which the Strategy adopts to support its push towards maximum harmonisation is that a common level of protection across the Community would benefit consumer confidence (paragraph 2.3.3). The Strategy cites a Gallup Survey showing that whilst only 31% of consumers felt that they would be well-protected in a cross-border dispute with a supplier, 56% of consumers would feel well-protected regarding a similar domestic dispute. However, the “procedural” problems involved in resolving cross-border disputes are arguably much more potent barriers to confidence than dissimilar laws. Such problems include the possible need physically to cross a border in order to complain or litigate, language, ignorance of lawyers and consumer associations in the supplier’s State, consumers’ fear of the supplier not paying them proper attention by virtue of their residence, etc., etc. (Consumers’ Association 2001, at 1).
The Commission is taking steps to deal with “procedural” barriers to confidence, including a unified “consumer complaint form” for use in cross-border disputes, which was piloted between 1999 and 2000 (an evaluation can be found on the Web site of DG Consumer Protection). Further, the Strategy outlines improvements to be made in relation to alternative dispute resolution, European consumer centres, and judicial cooperation in civil matters (paragraph 3.2.3). However, all the steps being taken to deal with procedural barriers to confidence are in an early stage of development, and they should be allowed to mature before the issue of maximum harmonisation of substantive law is addressed. It should be further noted that the Community recently passed up an opportunity to adopt a potentially important confidence-building rule, namely “networked” manufacturer liability for non-conforming goods, i.e. allowing consumers to take faulty goods bought within the Community to any other outlet for the manufacturers’ goods therein (Bradgate and Twigg-Flesner 2002). Such a rule would have permitted consumers largely to avoid the above-mentioned difficulties associated with resolving “cross-border” disputes, but was not included in Directive 1999/44 on consumer sales.
The Strategy’s grounds for adopting a general policy of maximum harmonisation are further undermined by the Community’s weak substantive record in the field of consumer law. Put another way, there are problems with current Community consumer law which should be remedied before a general policy of maximum harmonisation is even considered. Some of these problems are recognised within the Strategy, for example the need to ensure the effectiveness of consumer law, as has been discussed above. This need is in itself onerous: the public resources needed to ensure the effectiveness of Community consumer law can be argued to be much greater than those needed to make the law in the first place, as the latter is an inherently paper-based activity and private incentives to enforce the law are often lacking. Other problems with Community consumer law have been recognised elsewhere by the Commission, for example that of making existing Directives more coherent (see Commission 2003a). Three serious problems which have not been acknowledged are discussed in the next section of this Comment.
The Treaty does not provide any general rule that Community harmonisation of consumer laws be at a minimum level; such a rule only applies specifically to measures adopted to support, supplement and monitor Member States’ policies under Article 153(3)(b) (see Article 153(5)).(1) Nevertheless, it is clear that past practice in the field of consumers’ economic interests has generally been for the Community to adopt minimum harmonisation measures. In the area of contract law, the only (part) maximum measure is Directive 2002/65 on the Distance Marketing of Financial Services (its provisions on “prior information” to be provided to consumers are of a minimum nature: Article 4(2)).
In some areas there are good grounds for the adoption of measures of maximum harmonisation, as for example in relation to Directive 2002/65 on the Distance Marketing of Financial Services - namely the need to stimulate cross-border offers in a specialised and under-developed marketplace. Yet on the whole, the criticisms noted above seriously undermine the Strategy’s case for a general policy of maximum harmonisation.
The Strategy cites two grounds for the push towards maximum harmonisation. The first is that traders would benefit from not having to establish different arrangements for selling in different Member States (paragraph 2.3.3). Yet maximum harmonisation would not necessarily mean a single set of rules. The Strategy prioritises the adoption of a general Community prohibition of unfair commercial practices (see now Commission 2003b). However, given the cultural differences which exist within the Community, it must surely be accepted that notions of fairness in trading differ therein (see Wilhelmsson 1996). The Strategy does not address this issue.
A further argument against the push towards maximum harmonisation is that part of the Community’s strength lies in its legal pluralism (see generally Wilhelmsson 2002). Many of the more successful Community consumer protection laws can be traced to initiatives which were originally local. Two good examples of successful “transplants” are those of Directive 87/102 on Consumer Credit, inspired by English law, and Directive 93/13 on Unfair Terms, inspired by German and Scandinavian law.
The second ground which the Strategy adopts to support its push towards maximum harmonisation is that a common level of protection across the Community would benefit consumer confidence (paragraph 2.3.3). The Strategy cites a Gallup Survey showing that whilst only 31% of consumers felt that they would be well-protected in a cross-border dispute with a supplier, 56% of consumers would feel well-protected regarding a similar domestic dispute. However, the “procedural” problems involved in resolving cross-border disputes are arguably much more potent barriers to confidence than dissimilar laws. Such problems include the possible need physically to cross a border in order to complain or litigate, language, ignorance of lawyers and consumer associations in the supplier’s State, consumers’ fear of the supplier not paying them proper attention by virtue of their residence, etc., etc. (Consumers’ Association 2001, at 1).
The Commission is taking steps to deal with “procedural” barriers to confidence, including a unified “consumer complaint form” for use in cross-border disputes, which was piloted between 1999 and 2000 (an evaluation can be found on the Web site of DG Consumer Protection). Further, the Strategy outlines improvements to be made in relation to alternative dispute resolution, European consumer centres, and judicial cooperation in civil matters (paragraph 3.2.3). However, all the steps being taken to deal with procedural barriers to confidence are in an early stage of development, and they should be allowed to mature before the issue of maximum harmonisation of substantive law is addressed. It should be further noted that the Community recently passed up an opportunity to adopt a potentially important confidence-building rule, namely “networked” manufacturer liability for non-conforming goods, i.e. allowing consumers to take faulty goods bought within the Community to any other outlet for the manufacturers’ goods therein (Bradgate and Twigg-Flesner 2002). Such a rule would have permitted consumers largely to avoid the above-mentioned difficulties associated with resolving “cross-border” disputes, but was not included in Directive 1999/44 on consumer sales.
The Strategy’s grounds for adopting a general policy of maximum harmonisation are further undermined by the Community’s weak substantive record in the field of consumer law. Put another way, there are problems with current Community consumer law which should be remedied before a general policy of maximum harmonisation is even considered. Some of these problems are recognised within the Strategy, for example the need to ensure the effectiveness of consumer law, as has been discussed above. This need is in itself onerous: the public resources needed to ensure the effectiveness of Community consumer law can be argued to be much greater than those needed to make the law in the first place, as the latter is an inherently paper-based activity and private incentives to enforce the law are often lacking. Other problems with Community consumer law have been recognised elsewhere by the Commission, for example that of making existing Directives more coherent (see Commission 2003a). Three serious problems which have not been acknowledged are discussed in the next section of this Comment.
The missing elements
The Strategy does not properly address problems relating to its own funding, to the coherence of the consumer protection title of the Treaty, or to suppliers’ liability for services.
Funding
The Strategy does not address the issue of how to fund its proposed actions, many of which will be heavily dependent upon adequate funding, in particular those of involving consumer organisations in EU policies and of effectively enforcing consumer protection rules. The Commission’s practice is to deal separately with consumer policy strategy and related financial issues, the next funding base being due for adoption before the end of 2003 (the current funding base is Decision No 283/1999/EC). It would be useful for future consumer policy strategies and financial plans to be adopted together (European Parliament Committee on the Environment, Public Health and Consumer Policy 2003 at para. 6). The prognosis for the Strategy’s budgetary needs is not good. Despite long-standing recognition of problems with enforcement and consumer representation (e.g. Council 1994), there have been no substantial increases in related funding in recent years.
The coherence of the consumer protection title of the Treaty
The coherence of the consumer protection title of the Treaty can be regarded as deficient in three aspects. The first is that of the minimal impact of Article 153(2), which provides - “Consumer protection requirements shall be taken into account in defining and implementing other Community policies and activities.” It is difficult to find evidence that Article 153(2) has had substantial impact. The Strategy does go some way towards dealing with the general problem of policy co-ordination by promising the establishment of a comprehensive impact assessment mechanism, a promise since fulfilled through the adoption of the Communication on Impact Assessment (Commission 2002c).(2) However, the Strategy might have gone further in suggesting periodical progress reports by DG Consumer Protection, as well as the presence of a consumer representative at high-level meetings of other DGs.(3) A strengthening of Article 153(2) might also have been envisaged, perhaps along the lines of Article 6, which states as a principle of the Community that, - “Environmental protection requirements must be integrated into ... Community policies and activities, in particular with a view to promoting sustainable development.”
The second problem with the Treaty’s consumer protection title is its minimal use as a legislative base. Although the Commission has used Article 153 to propose a number of Directives, only one has continued to adoption on that basis, namely Directive 98/6 on price indications. This can be viewed as problematic from a symbolic as well as a substantive point of view - greater use would both symbolise Community concern for consumer protection and encourage Community actors to think more clearly about related legislation. Article 153’s scope as a legislative base is limited to measures designed to support, supplement and monitor Member States’ policies (Article 153(3)(b)). That scope could usefully be widened to give an explicitly autonomous competence to the Community in the consumer field.
It is particularly disappointing that the Strategy does not address the issue of the minimal use of Article 153 as a legislative base, given that its objectives of cooperation between enforcement agencies and of access to justice are ideal candidates for development thereunder.
The third problem with the consumer protection title of the Treaty is its failure to set out overarching principles for relevant Community action. This is in contrast with the title on the environment, which includes the precautionary, preventive and polluter-pays principles (Article 174(2) EC). Article 153 could be used to establish objectives such as those of consumer confidence (long an explicit theme of secondary legislation), and of the protection of consumers’ reasonable expectations (see generally Micklitz 1995). The polluter-pays principle might be mirrored by providing that those who damage confidence by defeating consumers’ reasonable expectations should be held responsible therefor. Such objectives and principles might help to ground the establishment of “networked” manufacturer liability as discussed above.
Services liability
Community law provides various protections to consumers as regards goods: - in respect of quality, through Directive 1999/44 on consumer guarantees; in respect of safety, through Directive 2001/95 on General Product Safety; in respect of damage caused by products, through Directive 85/374 on Product Liability (as amended). Yet there are no similar general protections in respect of services (although the Commission has adopted a consultation paper on the safety of services for consumers (Commission 2002d)).(4) The services sector is currently gaining in economic importance generally, and given the potential of new technologies to stimulate cross-border trade it has added importance in the context of furthering European integration. If Community law is to give consumers the confidence they need to shop across borders for services as well as for goods, then this missing piece of the jigsaw must be put in place.
Conclusion
In sum, the Strategy over-reaches itself in pressing for maximum harmonisation
and passes over other areas which require attention. The case for maximum harmonisation
is inherently weak and appears entirely unworkable at least until existing problems
with Community consumer law are resolved, particularly in the current context
of geographic expansion.
Bibliography
BEUC (2002) “Consumer Policy Strategy 2002-2006”, www.beuc.org.
Bourgoignie, T (1993) ‘Liability of Suppliers of Services in the European Community: The Draft Council Directive’, in Cranston, R and Goode, R (eds.), Commercial and Consumer Law (Oxford).
Bradgate, R and Twigg-Flesner, C (2002) ‘Expanding the Boundaries of Liability for Quality Defects’ 25 Journal of Consumer Policy 345.
Commission (1990) Proposal for a Directive on the liability of suppliers of services, COM(90) 482.
Commission (2001a) Green Paper on EU Consumer Protection, COM(2001) 531 final.
Commission (2001b) Communication on Contract Law, COM(2001) 398 final,
http://www.europa.eu.int/comm/consumers/cons_int/safe_shop/fair_bus_pract/cont_law/index_en.htm.
Commission (2002a) Consumer Policy Strategy 2002-2006, COM(2002) 208 final, http://www.europa.eu.int/comm/consumers/overview/cons_policy/index_en.htm.
Commission (2002b) Follow-up Communication to the Green Paper on EU Consumer Protection, COM(2002) 289 final.
Commission (2002c) Communication on Impact Assessment, COM(2002) 276 final.
Commission (2002d) Consultation paper on the safety of services, http://www.europa.eu.int/comm/consumers/index_en.html.
Commission (2003a) Action Plan on European Contract Law, COM(2003) 68 final.
Commission (2003b) Proposal for a Directive on Unfair Commercial Practices, http://europa.eu.int/comm/consumers/cons_int/safe_shop/fair_bus_pract/directive_proposal_en.pdf.
Consumers’ Association (2001) Consumers’ Association Response [to Commission 2001b], http://www.europa.eu.int/comm/consumers/cons_int/safe_shop/fair_bus_pract/cont_law/comments/index_en.htm.
Council (1994) Resolution on the development of administrative cooperation in the implementation and enforcement of Community legislation in the internal market, OJ C179/1.
European Consumer Law Group (2001), “A Consumer Policy for the Years to Come” http://www.europa.eu.int/comm/consumers/overview/cons_policy/responses/index_en.htm.
European Parliament (2002) Resolution on the approximation of the civil and commercial law of the Member States, OJ C140 E/538.
European Parliament Committee on the Environment, Public Health and Consumer Policy (2003) Report of 28 January (A5-0023/2003).
Green, M and Nader, R (1973) Corporate Power in America, (New York: Viking).
Howells, G and Wilhelmsson, T (1997) EC Consumer Law (Dartmouth: Ashgate).
Howells, G and Wilhelmsson, T (2003) ‘EC consumer law: has it come of age?’ 28 E.L.Rev. 370-388.
Lowry, J and Oughton, D (2000) Consumer Law into the Next Millennium: A Serious Service Fault’, in Hayton, D (ed.) Law’s Futures (Oxford: Hart).
Micklitz, H (1995) ‘Principles of Justice in Private Law within the European Union’ in Paasivirta, E and Rissanen, K (eds.), Principles of Justice and the Law of the European Union, (European Commission DGXIII).
Stuyck, J (2000) ‘European consumer law after the Treaty of Amsterdam: consumer policy in or beyond the internal market?’ (2000) 37 C.M.L.Rev. 367.
Wilhelmsson, T (2002) ‘Private law in the EU: harmonised or fragmented Europeanisation?’ 10 E.R.P.L. 77.
Wilhelmsson, T (1996) ‘Consumer Images in East and West’ in Micklitz, H (ed.), Rechtseinheit oder Rechtsviefalt in Europa? (Baden Baden: Nomos).
Footnotes
vf(*) Thanks to the anonymous referee.
Faults remain the author’s responsibility.
(1) Contrast the opinions in BEUC 2002 (at 1) and in European Parliament Committee on the Environment, Public Health and Consumer Policy 2003 (at para. 5), to the effect that minimum harmonisation of consumer laws is a general principle of the Treaty. Derogations to measures adopted under Article 95 are severely limited: Article 95(4); Case C-41/93 France v Commission [1994] ECR I-1829.
(2) This requires, amongst other things, that all relevant legislative proposals of the Commission estimate their impact upon consumers’ economic interests, namely - price, choice, quality, affordability, accessibility, market transparency and fairness. The long-standing use of ‘Environmental Impact Assessments’ perhaps indicates the usefulness of such mechanisms in protecting diffuse interests.
(3) The former suggestion is as suggested in European Consumer Law Group 2001 at 9. The latter suggestion echoes that of Green and Nader’s for “public interest” directors of private companies (Green and Nader 1973). Of course the objection can be made that such a rule would cause exclusionary ‘shadow’ meetings to be held, but even if true, the inclusion of a consumer representative would be likely, (a) to ensure some consumer input into internal decision-making processes and, (b) to provide an external early-warning mechanism of policies potentially damaging to the consumer interest.
(4) There was also in 1990 a proposal by the Commission for a Directive on the liability of suppliers of services (Commission 1990), which sought to provide protection analogous to that of Directive 85/374 on Product Liability see: Bourgoignie 1993; Lowry and Oughton 2000.
(1) Contrast the opinions in BEUC 2002 (at 1) and in European Parliament Committee on the Environment, Public Health and Consumer Policy 2003 (at para. 5), to the effect that minimum harmonisation of consumer laws is a general principle of the Treaty. Derogations to measures adopted under Article 95 are severely limited: Article 95(4); Case C-41/93 France v Commission [1994] ECR I-1829.
(2) This requires, amongst other things, that all relevant legislative proposals of the Commission estimate their impact upon consumers’ economic interests, namely - price, choice, quality, affordability, accessibility, market transparency and fairness. The long-standing use of ‘Environmental Impact Assessments’ perhaps indicates the usefulness of such mechanisms in protecting diffuse interests.
(3) The former suggestion is as suggested in European Consumer Law Group 2001 at 9. The latter suggestion echoes that of Green and Nader’s for “public interest” directors of private companies (Green and Nader 1973). Of course the objection can be made that such a rule would cause exclusionary ‘shadow’ meetings to be held, but even if true, the inclusion of a consumer representative would be likely, (a) to ensure some consumer input into internal decision-making processes and, (b) to provide an external early-warning mechanism of policies potentially damaging to the consumer interest.
(4) There was also in 1990 a proposal by the Commission for a Directive on the liability of suppliers of services (Commission 1990), which sought to provide protection analogous to that of Directive 85/374 on Product Liability see: Bourgoignie 1993; Lowry and Oughton 2000.