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

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

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

Transposition, Implementation and Enforcement of EU Consumer Law – General Issues EU Acquis Lack of consistency at EU level e.g:- 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

Transposition, Implementation and Enforcement of EU Consumer Law – General Issues EU Acquis Legal gaps Legal gaps Doorstep – concluded by remote communication/contracts on street or public transport/burden of proof 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 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 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 Unfair terms – lack of monitoring of terms in advance/uncertain consequences of unfairness and lack of transparency/limited impact of rulings

Transposition, Implementation and Enforcement of EU Consumer Law – General Issues EU Acquis General clauses 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 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 7 member states do not (explicitly) mention good faith in unfair terms law Member states may apply their own conception of the concept 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 Can you harmonise on basis of general clause: Freiburger Kommunalbauten v Hofstetter Case C- 237/02 [2004] ECR I-3403

Transposition, Implementation and Enforcement of EU Consumer Law – General Issues Member States Regulatory traditions Regulatory traditions Role of civil, criminal and self-regulatory law Role of civil, criminal and self-regulatory law Whether consumer law part of general law or a discrete legal category 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) 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)

Transposition, Implementation and Enforcement of EU Consumer Law – General Issues Member States Incorrect implementation Incorrect implementation UCPD – professional diligence as an empirical standard/lack of reference to information duties in Annex II/disaggregation of black list 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 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 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 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. 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.

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

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

Case Study on UCPD and MCA – The UK experience Major reform of domestic law in relation to UCPD due to maximal harmonisation 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 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 laws affected including repeal of landmark legislation such as Trade Descriptions Act 1968 Introduction of general clause Introduction of general clause Perceived positively despite some doubts over future interpretation and enforcement Perceived positively despite some doubts over future interpretation and enforcement

European Regulatory Architecture of UCPD and MCA Twin track Twin track Consumers (maximum harmonisation) UCPD Consumers (maximum harmonisation) UCPD Traders (minimum harmonisation) MCA Traders (minimum harmonisation) MCA Consumer law becomes an isolated island 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)

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

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

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

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

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

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

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

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

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

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 Some laws or aspects of some laws can be isolated and only apply to consumers However there is often an interaction with general law 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 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 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 Less important for doorstep and distance which were developed to meet consumer needs Case study of sales law Case study of sales law

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 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 Polands choice) Poland did not integrate sales law in Civil Code (that was Polands choice) Some rules less protective for consumers than civil code Some rules less protective for consumers than civil code Should consumer be allowed to waive status as consumer? Should consumer be allowed to waive status as consumer?

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

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

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

Important debate due to the costs of maximal harmonisation Loss of traditional forms of protection Loss of traditional forms of protection Consumer protection limited to European law level of protection Consumer protection limited to European law level of protection Consumer laws separated from general law (ghettoised?) Consumer laws separated from general law (ghettoised?) Consumers may be less well protected than under existing law 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 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 Without safeguard clause or expeditious comitology procedure it may be hard to react to new concerns

Enforcement challenges Growth in use of general clauses Growth in use of general clauses How to ensure equal application? Harmonisation in practice as well as theory. 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 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 Injunctions now universal technique But local issues: OFT v Foxtons [2008] EWHC 1662 But local issues: OFT v Foxtons [2008] EWHC 1662 Injunctions Directive and specialist procedures Injunctions Directive and specialist procedures Different actors – national consumer agencies, local agencies, specialist agencies, consumer organisations Different actors – national consumer agencies, local agencies, specialist agencies, consumer organisations Different nature of consumer organisations – often linked to state funding Different nature of consumer organisations – often linked to state funding

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