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

Transposition, Implementation and Enforcement of EU Transposition, Implementation and Enforcement of EU

Consumer Law: Current State and Future ChallengesConsumer Law: Current State and Future Challenges

Geraint HowellsGeraint Howells

Professor of Commercial LawProfessor of Commercial Law

Manchester UniversityManchester University

Scope of talkScope of talk

Unfair Commercial Practices DirectiveUnfair Commercial Practices Directive Four topics covered in Proposed Four topics covered in Proposed

Consumer Rights DirectiveConsumer Rights Directive DoorstepDoorstep DistanceDistance Sale Sale Unfair TermsUnfair Terms

Transposition, Implementation and Enforcement of Transposition, Implementation and Enforcement of EU Consumer Law – General IssuesEU Consumer Law – General Issues

Issue relating to EU acquisIssue relating to EU acquis InconsistenciesInconsistencies Legal gapsLegal gaps General clausesGeneral clauses

Issues relating to domestic implementationIssues relating to domestic implementation Regulatory traditionsRegulatory traditions Incorrect implementationIncorrect implementation Remedying defects in acquis by using minimum Remedying defects in acquis by using minimum

clauseclause Ensuring coherency with general lawEnsuring coherency with general law Delay in transpositionDelay in transposition Enforcement traditions (deal with at end)Enforcement traditions (deal with at end)

Transposition, Implementation and Enforcement of Transposition, Implementation and Enforcement of EU Consumer Law – General Issues EU AcquisEU Consumer Law – General Issues EU Acquis

Lack of consistency at EU level e.g:-Lack of consistency at EU level e.g:-

(i) Consumer;(i) Consumer;

(ii) Trader/business/ (ii) Trader/business/ organizer/vendor/supplier/seller; organizer/vendor/supplier/seller;

(iii) Withdrawal period; (iii) Withdrawal period;

(iv) Consequences of failing to provide (iv) Consequences of failing to provide informationinformation


Legal gapsLegal gaps Doorstep – concluded by remote Doorstep – concluded by remote

communication/contracts on street or public communication/contracts on street or public transport/burden of prooftransport/burden of proof

Distance selling – does the notice only have to be Distance selling – does the notice only have to be despatched in withdrawal period/ coverage of digital despatched in withdrawal period/ coverage of digital productsproducts

Sale – remedies in relation to Sale – remedies in relation to damages/software/spare parts and after-sales damages/software/spare parts and after-sales service/cross border enforcementservice/cross border enforcement

Unfair terms – lack of monitoring of terms in Unfair terms – lack of monitoring of terms in advance/uncertain consequences of unfairness and advance/uncertain consequences of unfairness and lack of transparency/limited impact of rulingslack of transparency/limited impact of rulings


General clausesGeneral clauses Radical break from tradition in some systems e.g. Radical break from tradition in some systems e.g.

good faith in unfair terms in UK: see good faith in unfair terms in UK: see Director General Director General of Fair Trading v First National Bank Plcof Fair Trading v First National Bank Plc [2001] UKHL [2001] UKHL 5252 and in relation to unfair commercial practices and in relation to unfair commercial practices

7 member states do not (explicitly) mention good 7 member states do not (explicitly) mention good faith in unfair terms lawfaith in unfair terms law

Member states may apply their own conception of Member states may apply their own conception of the conceptthe concept

Can you harmonise on basis of general clause: Can you harmonise on basis of general clause: Freiburger Kommunalbauten v HofstetterFreiburger Kommunalbauten v Hofstetter Case C- Case C-237/02 [2004] ECR I-3403237/02 [2004] ECR I-3403

Transposition, Implementation and Enforcement of EU Transposition, Implementation and Enforcement of EU Consumer Law – General Issues Member StatesConsumer Law – General Issues Member States

Regulatory traditionsRegulatory traditions Role of civil, criminal and self-regulatory lawRole of civil, criminal and self-regulatory law Whether consumer law part of general law or Whether consumer law part of general law or

a discrete legal categorya discrete legal category Form of laws – Form of laws – [2001] ECR I-3541 [2001] ECR I-3541

Commission v NetherlandsCommission v Netherlands (relying on (relying on existing law) existing law) Commission v SwedenCommission v Sweden [2002] [2002] ECR I-ECR I-4147 (relying on preparatory text)4147 (relying on preparatory text)


Incorrect implementationIncorrect implementation UCPD – professional diligence as an empirical standard/lack of UCPD – professional diligence as an empirical standard/lack of

reference to information duties in Annex II/disaggregation of reference to information duties in Annex II/disaggregation of black listblack list

Doorstep -exc of contracts concluded by notaries/withdrawal Doorstep -exc of contracts concluded by notaries/withdrawal period starting before info supplied/exc of contracts concluded period starting before info supplied/exc of contracts concluded during excursionsduring excursions

Distance – granting total rather than partial exemptions/no Distance – granting total rather than partial exemptions/no general obligation to confirm prior information/ withdrawal general obligation to confirm prior information/ withdrawal period/lack of duty to inform goods unavailableperiod/lack of duty to inform goods unavailable

Sale - definition of sale/lack of general conformity requirement Sale - definition of sale/lack of general conformity requirement or ambiguity/application of remedies/no reversed burden of proofor ambiguity/application of remedies/no reversed burden of proof

Unfair Terms –need for consumer to invoke/application to single Unfair Terms –need for consumer to invoke/application to single use pre-formulated contracts/only transposing part of use pre-formulated contracts/only transposing part of annex/principle of transparency/rights of consumer associations.annex/principle of transparency/rights of consumer associations.


Delays in transposition Delays in transposition Varies from State to State and Varies from State to State and Directive to DirectiveDirective to Directive Depending on national proceduresDepending on national procedures Discreteness of area of lawDiscreteness of area of law Cut and paste or integration into national lawCut and paste or integration into national law Maximal harmonisation can cause delay due to need Maximal harmonisation can cause delay due to need

to remove legislationto remove legislation Minimal harmonisation can cause delays through Minimal harmonisation can cause delays through

debates on enhancing laws to remedy gaps and debates on enhancing laws to remedy gaps and integrating with general law to promote coherencyintegrating with general law to promote coherency

Transposition, Implementation and Enforcement of Transposition, Implementation and Enforcement of EU Consumer Law – General IssuesEU Consumer Law – General Issues

Positive notesPositive notes EU has improved quality of protection in many statesEU has improved quality of protection in many states Fundamental policies have been largely alignedFundamental policies have been largely aligned Common concepts and terminology developedCommon concepts and terminology developed

But need to strike right balance between EU and But need to strike right balance between EU and national competenciesnational competencies

Is coherency of national beyond consumer law Is coherency of national beyond consumer law important?important?

Case Study on UCPD and MCA – Case Study on UCPD and MCA – The UK experienceThe UK experience

Major reform of domestic law in relation to Major reform of domestic law in relation to UCPD due to maximal harmonisationUCPD due to maximal harmonisation

Need to reform existing laws due to Need to reform existing laws due to “transactional decision test” and prescriptive “transactional decision test” and prescriptive mandatory pre-contractual informationmandatory pre-contractual information

22 laws affected including repeal of landmark 22 laws affected including repeal of landmark legislation such as Trade Descriptions Act 1968legislation such as Trade Descriptions Act 1968

Introduction of general clauseIntroduction of general clause Perceived positively despite some doubts over Perceived positively despite some doubts over

future interpretation and enforcementfuture interpretation and enforcement

European Regulatory Architecture European Regulatory Architecture of UCPD and MCAof UCPD and MCA

Twin trackTwin track Consumers (maximum harmonisation) UCPDConsumers (maximum harmonisation) UCPD Traders (minimum harmonisation) MCATraders (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 FindingsTransposition Findings

Maintaining unified domestic approach Maintaining unified domestic approach (=divergence from European architecture)(=divergence from European architecture) AustriaAustria GermanyGermany

Consumer Codes or Consumer Protection ActsConsumer Codes or Consumer Protection Acts (= potential fragmentation of national laws)(= potential fragmentation of national laws)

BelgiumBelgium FranceFrance ItalyItaly

Civil CodeCivil Code Czech?Czech?

Proposed Consumer Rights Directive- Proposed Consumer Rights Directive- addressing concerns of lack of uniformityaddressing concerns of lack of uniformity

Improper implementationImproper implementation Broader scope to implementing measuresBroader scope to implementing measures Taking advantage of options or measure in Taking advantage of options or measure in

directives that leave choices to Member directives that leave choices to Member StatesStates

Use of minimal harmonisation clauseUse of minimal harmonisation clause

See See EC Consumer Law CompendiumEC Consumer Law Compendium

EU Directives do not represent the EU Directives do not represent the limits of national lawslimits of national laws

Broader implementing measuresBroader implementing measures DoorstepDoorstep

Definition of consumerDefinition of consumer Additional situationsAdditional situations Less exemptionsLess exemptions

DistanceDistance Definition of consumerDefinition of consumer Additional situationsAdditional situations Less exemptionsLess exemptions

EU Directives do not represent the EU Directives do not represent the limits of national lawslimits of national laws

SaleSale Apply to other supply contractsApply to other supply contracts Extend definition of consumer, seller and Extend definition of consumer, seller and

consumer goodsconsumer goods Unfair termsUnfair terms

Definition of consumerDefinition of consumer Covering terms reflecting mandatory Covering terms reflecting mandatory

provisionsprovisions Individually negotiated termsIndividually negotiated terms

What happens at limits of EU law?What happens at limits of EU law?

Is everything outside scope of directiveIs everything outside scope of directive

left to member states? orleft 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 toCommunity has positively decided not to

regulate and Member States cannot provideregulate and Member States cannot provide

greater protection?greater protection?

Use of minimum harmonisationUse of minimum harmonisation

The following national measures are potentially threatened by The following national measures are potentially threatened by Proposed Consumer Rights Directive Proposed Consumer Rights Directive

DoorstepDoorstep Additional information requirementsAdditional information requirements Standard format for informationStandard format for information Extended right of withdrawalExtended right of withdrawal More favourable remedies (time limits and liens)More favourable remedies (time limits and liens) BansBans Licensing requirementsLicensing requirements Time restrictionsTime restrictions


DistanceDistance Bans on marketing of medicinal productsBans on marketing of medicinal products Burden of proofBurden of proof Additional information requirementsAdditional information requirements Standard format for informationStandard format for information Extended right of withdrawalExtended right of withdrawal


SalesSales Free choice of remedy to consumerFree choice of remedy to consumer Longer time periodsLonger time periods Rescission for minor defectsRescission for minor defects Mandatory guaranteesMandatory guarantees No duty to notify defects (optional in present No duty to notify defects (optional in present

Directive)Directive)


Unfair termsUnfair terms Review of incorporation of termsReview of incorporation of terms Omitted reference to good faithOmitted reference to good faith BlacklistBlacklist Take account of post-contractual eventsTake account of post-contractual events Covers subject matter and priceCovers subject matter and price Broader scope for adjustmentBroader scope for adjustment Standard Terms RegisterStandard Terms Register

Consumer law becoming in “island”Consumer law becoming in “island”-the rush to become non-consumers?-the rush to become non-consumers?

Some laws or aspects of some laws can be isolated and Some laws or aspects of some laws can be isolated and only apply to consumersonly apply to consumers

However there is often an interaction with general lawHowever there is often an interaction with general law We have noted in relation to UCPD different approaches We have noted in relation to UCPD different approaches

taken as to the need for a unified approachtaken as to the need for a unified approach This is also pronounced in the context of sales law and This is also pronounced in the context of sales law and

unfair termsunfair terms Less important for doorstep and distance which were Less important for doorstep and distance which were

developed to meet consumer needsdeveloped to meet consumer needs Case study of sales lawCase study of sales law

Sales Law in Poland Sales Law in Poland Zoll “Remedies for Non-performance in the Proposed Consumer Zoll “Remedies for Non-performance in the Proposed Consumer

Rights Directive and the Europeanisation of Private Law” in Rights Directive and the Europeanisation of Private Law” in Howells/Schulze Howells/Schulze Modernising and Harmonising Consumer Contract Modernising and Harmonising Consumer Contract LawLaw

Poland did not integrate sales law in Civil Poland did not integrate sales law in Civil Code (that was Poland’s choice)Code (that was Poland’s choice)

Some rules less protective for consumers Some rules less protective for consumers than civil codethan civil code

Should consumer be allowed to waive status Should consumer be allowed to waive status as consumer?as consumer?

Sale Law in UKSale Law in UK

If maximum harmonisation under If maximum harmonisation under Consumer Rights Directive the choice will Consumer Rights Directive the choice will be between:-be between:- subjecting all sales to consumer sales regimesubjecting all sales to consumer sales regime having a less protective regime for consumers having a less protective regime for consumers

with regard to right to reject and duty to notifywith regard to right to reject and duty to notify

The need to differentiate contextsThe need to differentiate contexts

Do we need to consider more carefully which rules need Do we need to consider more carefully which rules need to be harmonised to be harmonised

CompositionComposition LabellingLabelling Content of advertisementsContent of advertisements Standard form contractsStandard form contracts

Which rules it may be desirable to harmoniseWhich rules it may be desirable to harmonise Right of withdrawalRight of withdrawal Information duties (risk of overload and problems of uncertain Information duties (risk of overload and problems of uncertain

scope)scope) Which rules may not need harmonisationWhich rules may not need harmonisation

General (quality) standardsGeneral (quality) standards RemediesRemedies

Points to stressPoints to stress

There can be significant advantages to There can be significant advantages to maximal harmonisation and it may be maximal harmonisation and it may be essential in some contextsessential in some contexts

BUT there are costs.BUT there are costs.

The price must be worth paying.The price must be worth paying.

Important debate due to the costs of Important debate due to the costs of maximal harmonisationmaximal harmonisation

Loss of traditional forms of protectionLoss of traditional forms of protection Consumer protection limited to European law level of Consumer protection limited to European law level of

protectionprotection Consumer laws separated from general law Consumer laws separated from general law

(“ghettoised”?)(“ghettoised”?) Consumers may be less well protected than under Consumers may be less well protected than under

existing lawexisting law Risk of over-regulation due to need to find common Risk of over-regulation due to need to find common

accord e.g. information obligation overloadaccord e.g. information obligation overload Without safeguard clause or expeditious comitology Without safeguard clause or expeditious comitology

procedure it may be hard to react to new concernsprocedure it may be hard to react to new concerns

Enforcement challenges Enforcement challenges

Growth in use of general clausesGrowth in use of general clauses How to ensure equal application? Harmonisation in practice as How to ensure equal application? Harmonisation in practice as

well as theory.well as theory. To what extent is it legitimate to take local context into account? To what extent is it legitimate to take local context into account?

Freiburger Kommunalbauten v HofstetterFreiburger Kommunalbauten v Hofstetter Case C-237/02 [2004] Case C-237/02 [2004] ECR I-3403ECR I-3403

Injunctions now universal techniqueInjunctions now universal technique But local issues: But local issues: OFT v FoxtonsOFT v Foxtons [2008] EWHC 1662 [2008] EWHC 1662 Injunctions Directive and specialist proceduresInjunctions Directive and specialist procedures Different actors – national consumer agencies, local agencies, Different actors – national consumer agencies, local agencies,

specialist agencies, consumer organisationsspecialist agencies, consumer organisations Different nature of consumer organisations – often linked to state Different nature of consumer organisations – often linked to state

fundingfunding

Enforcement challengesEnforcement challenges Some states see role for criminal law Some states see role for criminal law

UK/FranceUK/France Local flavour – due diligence lawLocal flavour – due diligence law

Civil lawCivil law Broader in some states i.e. unfair commercial practicesBroader in some states i.e. unfair commercial practices Remedies vary greatlyRemedies vary greatly

Acceptance of soft lawAcceptance of soft law Organisation of consumer enforcementOrganisation of consumer enforcement

Role of consumer organisationsRole of consumer organisations Strong national bodies – Ombudsmen, OFT, Polish HOPCC (new Strong national bodies – Ombudsmen, OFT, Polish HOPCC (new

bodies g.e. Dutch consumer authority)bodies g.e. Dutch consumer authority) Decentralised – Germany LDecentralised – Germany Länder, TSOs, DGCCRFänder, TSOs, DGCCRF

Cross-border problemsCross-border problems Motivating states to have concern for citizens of other EU statesMotivating states to have concern for citizens of other EU states Co-ordinating EU, National, Regional and local enforcementCo-ordinating EU, National, Regional and local enforcement

Documents

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