12 Cross-border enforcement of consumer
protection
| (a)
(24786)
11830/03
COM(03) 443
(b)
(25494)
—
—
|
Draft Regulation on cooperation between national authorities responsible for the enforcement of consumer protection laws
Amended 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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| Department | Trade and Industry
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| Basis of consideration | (a) Minister's letter of 31 March 2004
(b) EM of 22 April 2004
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| Previous Committee Report | (a) HC 63-xxxiii (2002-03), para 14 (15 October 2003)
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| To be discussed in Council | 17 May 2004
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| Committee's assessment | Politically important
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| Committee's decision | (Both) Cleared
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Background
12.1 In its 2001 Green Paper on consumer protection, which we
cleared in January 2002,[22]
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.[23] A
related issue was dealt with by adoption of the Injunctions Directive.[24]
12.2 Document (a) was 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,[25] if adopted,
as that Directive would potentially widen the scope of EC consumer
law. When we considered document (a) in October 2003 we noted
that the Government regards the approach in the draft Regulation
as the only one that can address fully cross-border consumer protection.
But we added that before considering the document further we
would like to hear from the Minister about the outcome of the
planned consultations and to have a Regulatory Impact Assessment.
The new document
12.3 Document (b) is an amended draft Regulation
resulting from negotiations in the Council. The main features
of the draft Regulation remain:
- formalised co-operation, through
a network of public enforcement bodies, on intra-Community infringements
of consumers' interests;
- a minimum level of enforcement powers for those
bodies;
- requirements for the exchange of information
and co-operation on cross-border cases and for a single liaison
body in each Member State to facilitate this co-operation;
- a co-ordinating and supporting role for the Commission,
including for information and education projects; and
- an Advisory Committee to assist the Commission
in implementing the practical procedures for the operation of
the Regulation.
12.4 The main changes in the new draft are:
- competent authorities are now
able to require enforcement activity of other bodies (including
private bodies) under certain specified conditions;
- competent authorities may now exercise their
enforcement powers in conjunction with other public bodies;
- a requirement to give competent bodies powers
to freeze or sequester assets has been deleted;
- a requirement that competent bodies should have
"reasonable suspicion" of an intra-Community infringement
before undertaking investigative activity has been inserted; and
- Member States are no longer obliged to co-ordinate
their actions on a whole range of consumer protection activities,
but can do so on a voluntary basis.
The Government's view
12.5 The Parliamentary Under-Secretary of State for
Employment Relations, Competition and Consumers, Department of
Trade and Industry (Gerry Sutcliffe) writes[26]
now about the Government's consultations. He says:
"All respondents fully supported the principles
of better enforcement and co-operation behind the proposed Regulation.
All respondents thought that this was an area that needed improvement
as opportunities for cross border scams increased. Beyond general
support, views were largely split between those (largely business
groups) that thought the scope was too wide and that the Regulation
went too far in the obligations it imposes upon, and enforcement
powers it requires consumer protection bodies to be given. Others
(including consumer groups) thought the Regulation could go further
in these areas.
"The DTI is very grateful for all of the responses
to this consultation and has considered all of the comments and
suggestions made … Many of these points have been taken up
in our negotiating position."
12.6 On the amended draft Regulation in document
(b), the Minister comments that the changes in it "are all
very welcome and reflect our negotiating objectives, which include
ensuring that: The new network [of public enforcement bodies]
fits comfortably with existing enforcement structures; and that
enforcement activity is appropriate and proportionate to the infringement".
12.7 The initial Regulatory Impact Assessment accompanying
the Minister's Explanatory Memorandum concludes:
"Only a regulatory approach — in the shape
of the proposed Regulation — will deliver the necessary
changes to effectively tackle cross-border consumer fraud and
help create a harmonised vision of consumer protection that will
support the internal market."
Conclusion
12.8 We are grateful to the Minister for this
further information on progress on cross-border consumer protection
and note particularly the improvements that have appeared in the
revised draft Regulation. We have no further questions to ask
and clear both documents.
22 (22924) 12613/01: see HC 152-xii (2001-02), para
18 (16 January 2002). Back
23
(23575) 10045/02: see HC 152-xxxvi (2001-02), para 17 (10 July
2002). Back
24
Directive 98/27/EC; see OJ No. L 166, 11.06.1998, pp.51-6. Back
25
(24683) 10904/03: see HC 63-xxxii (2002-03), para 6 (17 September
2003). Back
26
See Summary attached to Explanatory Memorandum of 22 April 2004 Back
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