25 Cooperation to strengthen cross-border
consumer protection
| Committee's assessment
| Politically important |
| Committee's decision | Cleared from scrutiny
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| Document details | Commission Report on the functioning of Regulation (EC) No. 2006/2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws (the Regulation on consumer protection cooperation) (36198), 11589/14, COM(14) 439.
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| Legal base | —
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| Department | Business, Innovation and Skills
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Summary and Committee's conclusions
25.1 The 2004 Regulation on consumer protection cooperation
("the CPC Regulation") established a network of public
authorities responsible for enforcing consumer protection laws
(the CPC network) and required each Member State to designate
a single liaison office. The Competition and Markets Authority
operates as the UK's single liaison office. The CPC Regulation
seeks to ensure a consistently high level of consumer protection
across the EU. It includes provision for the exchange of information
and mutual assistance to identify infringements of EU consumer
laws and to coordinate market surveillance and enforcement action.
25.2 The Commission has produced two reports on the
functioning of the CPC Regulation, in 2009 and 2012. Both concluded
that the CPC network had yet to reach its full potential, suggested
a number of improvements to ensure a better coordinated and more
structured approach to cross-border enforcement, but ruled out
any further legislative changes for the time being. The Commission's
latest report considers whether the operational mechanisms set
out in the CPC Regulation are effective, in light of an external
evaluation carried out in 2012, reports submitted by Member States
as part of a biennial review process, and a broader public consultation
on a Commission Roadmap earlier this year identifying possible
areas for improvement. This third Commission report is intended
to pave the way for a more detailed impact assessment which will
examine a full range of options and policy responses, including
the possibility of legislative changes to the CPC Regulation.
It makes the case for better and more consistent enforcement of
EU consumer protection laws to boost market transparency, reduce
economic detriment to consumers, and maintain a "level playing
field" for businesses within the internal market.
25.3 Although only an interim report, pending
the completion of an impact assessment, it seems likely that the
Commission will propose legislative changes to the CPC Regulation.
We share the Government's concern that any changes to the operation
of the CPC network should be approached with caution, to ensure
that they do not distort the mechanisms already in place at national
level to identify and prioritise enforcement work, or divert resources
unnecessarily.
25.4 The report has no immediate legal or policy
implications for the UK but provides a useful early indication
of the type of legislative changes which the Commission may seek
to introduce later this year. As any changes stemming from the
report will be subject to further scrutiny, we are content to
clear the document from scrutiny but, in doing so, draw it to
the attention of the Business, Innovation and Skills Committee
Full details of the document:
Commission Report on the functioning of Regulation (EC) No. 2006/2004
of the European Parliament and of the Council on cooperation between
national authorities responsible for the enforcement of consumer
protection laws (the Regulation on consumer protection cooperation):
(36198), 11589/14, COM(14) 439.
The Commission report
25.5 The report provides a positive assessment of
the functioning of the CPC Regulation, suggesting that the creation
of a network-based cooperation mechanism has ensured a more uniform
application of EU consumer protection laws and serves as a model
for enforcement cooperation in other areas of the internal market.
The report highlights, in particular, the innovative use of coordinated
internet compliance checks or "sweeps" to identify breaches
of consumer laws in various on-line markets across all Member
States. The Commission has also facilitated discussions between
enforcement authorities and sectors of industry, notably in-app
purchasing for online games, to improve compliance with consumer
protection laws.
25.6 Despite these benefits, the Commission suggests
that a number of barriers remain to effective enforcement which
may require changes to the CPC Regulation. These changes may include:
· clarification and strengthening of the
existing mechanisms for mutual assistance — the Commission
suggests there is insufficient awareness and understanding of
the CPC Regulation amongst national authorities;
· the extension of common enforcement actions,
such as "sweeps", to other sectors, accompanied by further
guidance to the CPC network on how to use and coordinate simultaneous
enforcement actions;
· further development of the CPC market
monitoring and alert mechanism to identify emerging threats more
rapidly and to involve a wider range of actors, such as consumer
organisations;
· clarification of the "toolbox"
of minimum common powers that all competent national enforcement
authorities should possess to tackle infringements effectively
— the report highlights "notable differences in resources
and enforcement capacity across the Member States", as well
as considerable diversity in national enforcement systems and
the powers vested in the competent national enforcement authorities;[112]
· a possible strengthening of the Commission's
role so that it plays a more active role within the CPC network,
particularly with regard to "EU level relevant infringements"
which cause significant detriment across the EU; and
· more effective cooperation with international
partners in response to the globalised digital economy.
25.7 The Commission report notes that the CPC Regulation
covers 18 pieces of EU consumer protection legislation. Whilst
the outcome of the evaluation indicated that the scope of the
Regulation remained appropriate, the Commission suggests that
future changes may be needed specifically to address new digital
challenges, notably price transparency. It also acknowledges widespread
dissatisfaction with the CPC database.
The Government's view
25.8 The Parliamentary Under-Secretary of State for
Employment Relations and Consumer Affairs (Jo Swinson) notes that
the Commission report does not propose any changes to the CPC
Regulation at this stage, but identifies a need to improve the
functioning of the CPC network and sets out a number of ideas
which may lead to legislation. She continues:
"Whilst we agree that improvements are needed
to the functioning of the CPC Regulation and network, we believe
this can be largely achieved within the current legal framework.
Our key concern is that any changes to the CPC Regulation may
impact on well-established national mechanisms already in place
to identify and prioritise enforcement work. Member States must
have the flexibility to allocate resources to enforcement activity
as appropriate to areas and sectors where there is the greatest
need taking into account the national, as well as European, context.
The Government does not therefore support mandatory obligations
for calls to action which may risk diverting resources and impact
on work being carried out domestically."[113]
25.9 The Minister questions the need to strengthen
the Commission's role within the CPC network or to introduce a
specific procedure for tackling "EU level relevant infringements"
which cause significant detriment across the EU. She explains:
"The Commission can provide vital input
into the process of analysing common areas of high consumer detriment
and suggesting activities which Member State enforcement bodies
could prioritise. There is also a clear role for them in ensuring
consistency in the application of the CPC Regulation, including
holding Member States to account if they fail to act in accordance
with their existing obligations, which in our view are already
clearly set out in the current legislation. We are however opposed
to the Commission having an enhanced role in directing enforcement
action. We would also oppose, as the Report suggests, any kind
of EU-level, specific procedure as this would create an unnecessary
additional level of bureaucracy and only serve to confuse."[114]
25.10 The Minister agrees with the Commission's assessment
of the enforcement challenges presented by the growth in the digital
market and the need to adjust to digital purchasing patterns,
but adds:
"We believe this can be best achieved by
strengthening current practice and information sharing mechanisms.
We see the relatively new common enforcement approaches, for example,
as a very successful extension to the cooperation tools, whereby
authorities and the Commission work together to secure agreements
with industry about complying with consumer protection principles.
We have seen a particularly successful, recent example of this
type of action (as mentioned in the Report), on in-app purchasing.
Pooling resources in this way and developing a common EU enforcement
'voice' is, in our view, what the CPC network and their international
partners can do to best achieve the shared enforcement objectives
within the resource and procedural constraints that must be taken
into account."[115]
25.11 The Minister notes the diversity in the enforcement
structures and powers available in different Member States. She
continues:
"While we also share the view that it is
important to have consistency in the powers available to enforcement
agencies across the Union, we do not agree that a blanket set
of powers should necessarily apply in all circumstances to all
the pieces of legislation listed in the CPC Annex.[116]
Neither do we believe the CPC is necessarily the appropriate forum
to dictate what powers an enforcer named under a particular piece
of sectoral legislation should have. We would therefore welcome
more flexibility from the CPC Regulation to allow Member States
the discretion to designate powers to relevant authorities as
appropriate to their activity and the sector they regulate. Further
issues can result from the lack of uniformity in the powers available
to authorities. While the UK powers are currently seen as adequate,
this is not the case in a number of other Member States, which
affects their ability to carry out certain investigations. The
Commission must compel Member States to ensure authorities have
the tools necessary to meet their obligations, including the minimum
set of powers already set out in the Regulation."[117]
25.12 The Minister accepts that consumer organisations
have an important role to play in sharing information with enforcement
authorities and in developing an evidence base for complaints,
breaches of consumer law, and sectors in which infringements are
most prevalent. She is, however, "strongly opposed to allowing
organisations other than the CPC competent authorities to post
alerts through the CPC system, or for alerts to be made public".[118]
The Minister would welcome more comprehensive guidance on the
functioning of the CPC network, including "the roles, responsibilities
and procedural rules for case handling and taking enforcement
action under the CPC Regulation".[119]
25.13 The Minister anticipates that the Commission
will produce a final report, indicating whether it intends to
put forward legislative proposals, by the end of 2014.
Previous Committee Reports
None.
112 See p 10 of the Commission report. Back
113
See para 23 of the Minister's Explanatory Memorandum. Back
114
See para 24 of the Minister's Explanatory Memorandum. Back
115
See para 25 of the Minister's Explanatory Memorandum. Back
116
This is the Annex to the CPC Regulation setting out the EU consumer
protection laws which are within the scope of the CPC network.
Back
117
See para 26 of the Minister's Explanatory Memorandum. Back
118
See para 27 of the Minister's Explanatory Memorandum. Back
119
See para 28 of the Minister's Explanatory Memorandum. Back
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