14 Cross-border enforcement of consumer
protection
| (24786)
11830/03
COM(03) 443
| Draft Regulation on cooperation between national authorities responsible for the enforcement of consumer protection laws.
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| Legal base | Article 95 EC; co-decision; QMV
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| Document originated | 18 July 2003
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| Deposited in Parliament | 30 July 2003
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| Department | Trade and Industry
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| Basis of consideration | EM of 9 September 2003
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| Previous Committee Report | None; but see (22924) 12613/01: HC 152-xii (2001-02), paragraph 18 (16 January 2002), (23575) 10045/02: HC 152-xxxvi (2001-02), paragraph 17 (10 July 2002) and (24683) 10904/03: HC 63-xxxii (2002-03), paragraph 6 (17 September 2003)
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| To be discussed in Council | Not known
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
14.1 In its 2001 Green Paper on consumer protection, which we
cleared in January 2002,[33]
the Commission sought views on whether an EU legal framework was
needed for improving cooperation between consumer protection enforcement
agencies. In its follow-up Communication in June 2002 the Commission
undertook to develop a legislative proposal; we cleared this document
in July 2002.[34] A related
issue was dealt with by adoption of the Injunctions Directive.[35]
The document
14.2 The present document is the draft Regulation promised by
the Commission. It aims to eliminate barriers to effective cross-border
enforcement of EU consumer protection legislation by creating
a formalised co-operation mechanism between public enforcement
agencies in each Member State. The expectation is that better
enforcement of consumer protection laws would give businesses
more confidence to sell, and consumers to shop, across frontiers,
thereby supporting the smooth functioning of the internal market.
It would also support the Directive on Unfair Commercial Practices,[36]
if adopted, as that Directive would potentially widen the scope
of EC consumer law.
14.3 The draft Regulation would:
· formalise
co-operation, through a network of public enforcement bodies,
on intra-Community infringements of consumers' interests;
· set a minimum
level of enforcement powers for those bodies;
· require the
exchange of information and co-operation on cross-border cases;
· require a single
liaison body in each Member State to facilitate this co-operation;
· give the Commission
a co-ordinating and supporting role, including for information
and education projects; and
· establish an
Advisory Committee to assist the Commission in implementing the
practical procedures for the operation of the Regulation.
The Government's view
14.4 The Minister for Industry and the Regions and
Deputy Minister for Women and Equality, Department of Trade and
Industry (Jacqui Smith) tells us:
"One of the key DTI objectives underpinning
our vision to create 'prosperity for all' is placing empowered
and protected consumers at the heart of an effective competition
regime. This involves championing enforcement of consumer law,
in the UK and across borders.
"Despite a substantial set of EU consumer protection
laws, cross border enforcement is very difficult to achieve in
practice as enforcement mechanisms vary greatly between Member
States. The Injunctions Directive …. gives designated enforcement
bodies the power to apply for injunctions in other Member States
if an infringement there has effects on consumers in the enforcement
body's home state. However, the lack of a public enforcement body
in some countries is a particular problem as it means that co-operation
and information sharing can be severely limited.
"In the UK, the Enterprise Act 2002 provided
the OFT with more power to share information on consumer cases
with overseas public enforcement bodies. It also gives our consumer
protection a more international focus by providing that enforcement
authorities can act in the interest of foreign consumers under
certain circumstances. Welcome though these developments are,
they are only effective if a public enforcement body exists in
another Member State. There is also no guarantee that other countries
will reciprocate by acting in the interests of UK consumers.
"As well as the legal framework, co-operation
also takes place on an informal basis, the main forum being the
European sub-branch of the International Consumer Protection Enforcement
Network (ICPEN). The forum meets twice a year to discuss and exchange
information on cases and to share best practice. This informal
network is a valuable channel of co-operation, but it can only
operate within the existing legal co-operation frameworks.
"The
Government considers that only this regulatory approach fully
addresses the reality that current informal co-operation arrangements
are not geared up to effectively tackle cross border scams. Effective
enforcement of consumer protection measures is crucial to building
up confidence for business and consumers to trade across borders,
thus helping to strengthen the internal market. Enforcement is
differently applied across Europe and we see evidence of rogue
traders who are able to exploit the gaps. Cases the OFT have
dealt with recently include alleged 'psychics' and clairvoyants;
misleading health and diet claims; misleading prize draws (including
some that claim to be UK based but have a PO Box hiding an overseas
connection); and timeshare and holiday club scams. This can often
involve small and nimble companies that can emerge and re-emerge
in different guises and in different countries.
"Most other Member States support the Regulation.
However some countries that do not currently have a public enforcement
authority, including Germany, Netherlands and Luxembourg, do not
favour a Regulatory approach as it would require substantial changes
to their enforcement regimes. They do however see the need to
address the issue of cross-border consumer fraud and are positively
engaged in the negotiation process."
14.5 In the UK the draft Regulation would build upon
Part 8 of the Enterprise Act 2002, which contains all the necessary
provisions to ensure the full implementation of the Injunctions
Directive, including the facilitation of cross-border enforcement.
(The Injunctions Directive gave certain bodies, notably consumer
associations nominated by the Member States, the right to seek
injunctions in courts in other Member States against rogue traders.)
The draft Regulation would take this further by creating a network
of public authorities with obligations to act in the interests
of consumers in other Member States when requested and by conferring
new powers on enforcement bodies. It would not therefore create
any new protections, but would strengthen the enforcement of existing
ones. The Minister adds that as the UK already has public enforcement
bodies, there would be no fundamental changes required here.
14.6 The Minister also says that a consultation exercise
is currently under way with UK consumer groups, enforcement authorities
and industry representatives and that her Department is preparing
a Regulatory Impact Assessment.
Conclusion
14.7 We note that the Government regards the approach
in the draft Regulation as the only one that can address fully
cross-border consumer protection. But before considering the document
further we would like to hear from the Minister about the outcome
of the consultations and to have the Regulatory Impact Assessment.
Meanwhile we will hold the document under scrutiny.
33 See headnote. Back
34
See headnote. Back
35
Directive 98/27/EC; see OJ L 166, 11.06.1998, pp.51-5. Back
36
See headnote. Back
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