Select Committee on European Scrutiny Twelfth Report


11 Green paper on consumer law

(28372)

6307/07

COM(06) 744

Commission Green Paper on the review of the consumer acquis

Legal base
Document originated8 February 2007
Deposited in Parliament16 February 2007
DepartmentTrade and Industry
Basis of considerationEM of 2 March 2007
Previous Committee ReportNone
To be discussed in CouncilNo date set
Committee's assessmentPolitically important
Committee's decisionCleared; but further information requested

Background

11.1 In 2004, the Commission began a review of the following eight Directives on consumer protection:

  • the Doorstep-Selling Directive (Council Directive 85/577/EEC: OJ No. L 372, 31.12.1985, p.31);
  • the Package Travel Directive (Council Directive 90/314/EEC: OJ No. L 158, 23.6.1990, p.59);
  • the Unfair Contract Terms Directive (Council Directive 93/13/EEC: OJ No. L 95, 21.4.1993, p.29);
  • the Timeshare Directive (Directive 94/47/EC: OJ No. L 280, 29.10.1994, p.83);
  • the Distance-Selling Directive (Directive 97/7/EC: OJ No. L 144, 4.6.1997, p. 19);
  • the Price Indication Directive (Directive 98/6/EC: OJ No. L 80, 18.3.1998, p.27);
  • the Injunctions Directive(Directive 98/27/EC: OJ No. L 166, 11.6.1998, p.51); and
  • the Sale of Consumer Goods Directive (Directive 1999/44/EC: OJ No. L 171, 7.7.1999, p.12).

11.2 The Commission has conducted the review through an analysis of the implementation and application of the Directives by Member States; research on the way consumers and businesses perceive the existing legislation and its effects on cross-border trade; and meetings with experts and interested bodies.

The Green Paper

11.3 The Commission says that most of the Community's current consumer protection legislation "no longer meets the needs of today's rapidly evolving markets".[42] For example, on-line auctions are not covered by the legislation. Moreover, the existing Directives allow Member States to have their own more stringent rules because the Community legislation sets minimum standards ("minimum harmonisation"). Because minimum harmonisation allows wide variations in consumer protection, consumers cannot be sure that the level of protection that they enjoy in their home Member State will be available if they buy from elsewhere in the EU. And there are inconsistencies between the Directives themselves. The present Community legislation can lead to confusion, litigation and extra compliance costs for producers. These weaknesses discourage cross-border trade and the free movement of goods within the internal market.

11.4 Accordingly, the Green Paper seeks views on three policy options:

  • do nothing;
  • adopt the "vertical approach"; or
  • adopt the "mixed approach".

11.5 Under the vertical approach, each existing Directive would be retained and amended to remove inconsistencies with other Directives and to fill gaps caused by changes in technology or market conditions.

11.6 Commenting on the mixed approach, the Commission says:

"There are a number of issues which are common to all directives forming part of the Consumer acquis. Definitions of basic notions such as consumer and professional, the length of cooling off periods and the modalities for the exercise of the right of withdrawal are examples of issues that are of relevance in the context of several directives. These common issues could be extracted from the existing directives and regulated in a systematic fashion in a horizontal instrument … A second part of the horizontal instrument could regulate the contract of sale, which is the most common and broad consumer contract. For this reason, the Consumer Sales Directive would be included in the horizontal instrument. This approach would simplify and rationalise the consumer acquis in line with Better Regulation principles. It would repeal … the existing consumer directives fully or in part, and so reduce the volume of the acquis.

"The horizontal instrument will have to be complemented by a certain number of vertical actions … wherever needed ('mixed approach')."[43]

11.7 The Green paper also says that the horizontal legislation could either cover all business-to-consumer transactions within a Member State and across the EU or deal only with cross-border transactions or cover only "distance" transactions whether domestic or cross-border.[44]

11.8 A further possibility would be to replace the current minimum harmonisation of consumer protection by full harmonisation, setting EU-wide standards and removing the discretion now available to Member States to decide their own standards above the Community minimum. Alternatively, there could be a combination of minimum harmonisation with a mutual recognition clause. Each Member State would be able to introduce its own stricter standards for products manufactured in its area but would not be entitled to impose those requirements on businesses established in other Member States in a way which would create unjustified restrictions on the freedom to provide services or the free movement of goods.

11.9 Annex I of the Green Paper lists 30 subjects on which the Commission invites views by 15 May. For example, it asks how the notions of "customer" and "professional" should be defined and offers options for the definitions and whether there should be a general duty in consumer contracts to act in accordance with the principles of good faith and fair dealing.

The Government's view

11.10 The Minister for Trade, Investment and Foreign Affairs at the Department of Trade and Industry (Mr Ian McCartney) tells us that:

"The UK would not want to see any legislative proposals which involved a disproportionate increase in burdens on business and which could create barriers to the internal market. Any proposals for a revision of existing provisions will need to produce sufficient benefits to justify the cost of implementing the changes and any increases in consumer protection should be based on clear evidence of need."

11.11 Commenting on the merits of the option of maximum harmonisation, the Minister says that the Government believes that:

"maximum harmonisation worked well in the Unfair Commercial Practices Directive and our general view is that where action is required to remove barriers to the Single Market, maximum harmonisation of some detailed consumer protection law (at a sensible level) or the establishment of full mutual recognition of national laws may be necessary. The UK would however want to balance the retention of our own strong levels of consumer protection against the benefits of a clear consumer framework across the Single Market."

11.12 The Government drew the Green Paper to the attention of interested bodies, such as consumers' and business organisations, on the day of publication. It also asked for copies of the comments the bodies will send the Commission in response to the questions in Annex I of the Green Paper. The Department of Trade and Industry will have meetings with consumers, businesses and regulators as part of the preparation of the Government's own response to the Green Paper.

Conclusion

11.13 We are grateful to the Minister for his clear statement of the Government's initial views on the document. In our view, the Green Paper makes a valuable contribution to the consideration of how the EC might best help improve consumer protection in a proportionate way and remove unjustified barriers to the free movement of goods and services within the single market.

11.14 Any new proposals for legislation that emerge from the consultations will come to us for detailed consideration. We are, therefore, content to clear the Green Paper from scrutiny. We should, however, be grateful if the Minister would tell us if he has sent the Green Paper to the Trade and Industry Committee and asked if it has any views on the Commission's questions. We should also be grateful if he would send us a copy of the Government's response to the Green Paper and a summary of the comments the Department receives from consumers and businesses.




42   Green Paper, page 6, section 3.1, first paragraph. Back

43   Green Paper, section 4.2, pages 8 and 9. Back

44   Distance transactions are transactions which are not made face-to-face but, for example, by telephone. Back


 
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