Documents considered by the Committee on 2 November 2016 Contents

3Cooperation on enforcement of consumer protection laws

Summary and Committee’s conclusions

Committee’s assessment

Legally and politically important

Committee’s decision

(a) Cleared from scrutiny; (b) Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy and Industry Strategy Committee

Document details

(a) Commission Report assessing the effectiveness of the current Regulation on cooperation between national authorities responsible for the enforcement of consumer protection laws (2006/2004) (the CPC Regulation); (b) Proposal for a new CPC Regulation

Legal base

(a) —; (b) Article 114 TFEU; ordinary legislative procedure; QMV


Business, Energy and Industrial Strategy

Document Numbers

(a) (37820), 9702/16, COM(16) 284; (b) (37814), 9565/16 + ADDs 1–3, COM(16) 283

3.1These two documents are part of the e-commerce package launched by the Commission to enable consumers and companies to buy and sell products and services online across the EU more easily and confidently.

3.2Document (a) is a Commission report reviewing the current CPC Regulation as required by Article 21a of the Regulation. The current Regulation14 makes available to national enforcement authorities—the Competition and Markets Authority15 (CMA) for the UK—a number of minimum powers and procedures to tackle cross-border infringements of consumer legislation and to coordinate market surveillance and enforcement activities. It currently covers some 20 Directives and Regulations concerning existing EU consumer and marketing law. Proposal (b) builds on the current CPC Regulation. It aims to increase consumer trust in cross border enforcement by improving national coordination, tackling in particular the threat posed to both consumers and legitimate business competitors by rogue online traders and their untrustworthy websites.

3.3We first considered these documents in our Report of 6 July. We said that:

3.4Since then Reasoned Opinions have been issued by four other national parliaments/chambers, which we review later on in this chapter. The Government has also responded to our Report and has provided copies of their responses to the EU Consumer Law REFIT18 and review of the Consumer Rights Directive.19

3.5We thank the Minister for this exemplary letter in terms of the attention paid to answering the specific questions we asked in our last Report. Her response is set out in paragraphs 3.13 to 3.23 below.

3.6We are particularly glad of the helpful information about the expected timetable for this negotiations of the proposal and their likely impact on the UK before Brexit. We hope that as the Government’s Brexit strategy becomes clearer and more public the Minister will be able to factor that into her future updates.

3.7We remain of the view that there are no material subsidiarity concerns arising from the proposal, having reviewed the interesting Reasoned Opinions that four other national parliaments/chambers issued. These highlight common concerns about the proportionality of the proposal rather than raising subsidiarity issues. We will continue to monitor the Government’s updates on the negotiations of the proposed Regulation to assess whether a proportionate approach is being taken to the coordination of the activities of national consumer enforcement authorities, particularly in relation to minimum enforcement powers and the threshold for joint action in relation to “widespread infringements”.

3.8We clear document (a) but retain document (b) under scrutiny pending the Minister’s response. In so doing, we draw this chapter and document (b) to the attention of the Business, Energy and Industry Strategy Committee as they published a report on the Digital Economy before the summer recess.20

Full details of the documents

(a) Commission Report: Assessing the effectiveness of Regulation (EC) No. 2006/2004 of the European Parliament and the Council of 27 October 2004 on the cooperation between national authorities responsible for the enforcement of consumer protection laws: (37820), 9702/16, COM(16) 284; (b) Proposal for a Regulation of the European Parliament and of the Council on cooperation between national authorities responsible for the enforcement of consumer protection laws: (37814), 9565/16 + ADDs 1–3, COM(16) 283.

Common subsidiarity concerns raised by national parliaments

3.9A total of four national parliaments/chambers submitted Reasoned Opinions on this proposal, amounting to six votes under the subsidiarity control mechanism: the Bundesrat (Federal Council), the Chamber of Deputies of the Czech Republic and two unicameral parliaments—the National Assembly of Bulgaria and the Riksdag of Sweden.

3.10Common concerns of those national parliaments/chambers are:

Our assessment of the grounds of those Reasoned Opinions

3.11Many of these objections, though understandable, concern either the proportionality of the proposal (not subsidiarity) or address the allocation of institutional power within the EU rather than the question of whether action should be taken at EU level at all. We would not have recommended a Reasoned Opinion on those grounds, though we are reassured to see other national parliaments are monitoring the proportionality of the proposal. As set out in the conclusions to this chapter, we will continue to monitor proportionality issues with the Government in our ongoing scrutiny of this proposal, in particular the issues of minimum enforcement powers and the threshold for joint enforcement action on “widespread infringements”.

UK response to REFIT on EU Consumer Law and the review of the Consumer Rights Directive (CRD)

3.12We have reviewed the Government’s responses on REFIT and the CRD review but there do not appear to be any relevant insights which are relevant to the question of enforcement (cross-border or otherwise).22 We will therefore look at these responses in more detail when we report shortly on the two proposed Directives on the supply of digital content and on contracts for online and other distance sale of goods.23

The Minister’s letter of 10 October 2016

3.13In her letter of 10 October, the Minister for Small Business, Consumers and Corporate Responsibility (Margot James) responds to our last Report as follow:

How will the timetable for the proposed Regulation fit with the likely timetable for EU exit?

3.14The Minister says that:

Participation in negotiations and the post-EU exit position

3.15The Minister repeats the usual Government position that until exit all EU rights and obligations remain in force in relation to the UK and in negotiations it will continue to represent the interests of UK businesses and consumers and to exercise their full voting rights in Council in line with the national interest. She explains that she cannot prejudge the outcome of Brexit negotiations. The way in which the proposed Regulation will be reflected in domestic law depends on the UK’s future relationship with the EU.

3.16On the devolved administrations she says:


3.17Turning to the potential subsidiarity concerns identified in the Government’s non-paper,24 she confirms that none of them have been raised by the published proposal. She says that the Government will continue to monitor previous areas of concerns and let us know if any new subsidiarity concerns emerge, explaining that:

“The Commission, in recent working groups, have clarified that although the Commission can launch a coordinated action or be nominated to lead a coordinated action, it is the responsibility of Member State enforcers to assess, investigate and enforce the law with regard to the infringement. There is no new direct enforcement role for the Commission in this proposal. The Commission has also clarified that if Member State enforcers find no real evidence of consumer harm then the case goes no further.”


3.18Reassuring us that the Government will continue to monitor the proportionality issues we highlighted,25 she adds that:

Domestic enforcement

3.19The Minister clarifies that:

Stakeholder Views

3.20Overall, the Minister reports that stakeholders have been supportive of proposal’s overall objectives and intention. The Government will continue to consult stakeholders closely as negotiations continue. She adds:

Implementing Acts

3.21The Minister confirms the Government view that the implementing act powers comply with the IIA for Better Regulation but will reflect the Committee’s concerns in making sure that the powers are defined as tightly as possible as an outcome of negotiations.

3.22She adds:

REFIT and the review of the CRD

3.23The Minister then explains the background to both reviews, while enclosing the Government responses to both:

Previous Committee Reports

Seventh Report HC 71-v (2015–16), chapter 4 (6 July 2016).

14 Regulation (EC) No 2006/2014.

15 The CMA, formerly the Office of Fair Trading, is responsible for enforcing consumer protection legislation in the UK.

16 Subsidiarity is the principle that action at EU level is only warranted where Member States cannot themselves achieve a policy objective sufficiently but it can be better achieved by the EU by reason of scale or effects.

17 Interinstitutional Agreement.

18 REFIT stands for Regulatory Fitness and Performance Programme. The Commission’s website on this specific Consumer REFIT is accessible here.

19 Directive 2011/83.

20 Second Report, HC 87 (2016–17), dated 12 July 2017.

21 This Article provides that “where there is a reasonable suspicion that a widespread infringement infringement, harmed, harms or is likely to harm consumers in at least 3/4 of Member States accounting together for at least 3/4 of the population of the Union, the Commission shall launch an action”.

22 There is some reference to enforcement action taken by the Competition and Markets Authority (CMA), particularly enforcement sweeps in relation to various areas of consumer law and sectors e.g. in relation to the Cloud and Higher Education, but all this on a domestic level.

23 15252/15, COM(15) 635 and 15251/15, COM(15) 634.

24 The Review of the EU Regulation on Consumer Protection Cooperation, a UK Non Paper, May 2016.

25 Issues which we understand the Government and other national parliaments share (see our assessment of the Reasoned Opinions of other national parliaments).

26 Bodies that are not lead enforcers but have a legitimate interest in the cessation or prohibition of infringements e.g. Trading Standards.

27 Our understanding is that the Alert mechanism is set out at Article 34. It obliges national authorities to notify “without delay” the Commission and other national authorities of “any reasonable suspicion that an infringement is taking place on its territory that may affect consumer interests in other Member States”.

4 November 2016