Documents considered by the Committee on 22 November 2017 Contents

3Digital Single Market: Consumer contract rights relating to online and distance sales of goods

Committee’s assessment

Legally and politically important

Committee’s decision

Not cleared from scrutiny; further information requested;

Document details

Proposal for a Directive on certain aspects concerning contracts for the online and other distance sales of goods.

Legal base

Article 114 TFEU; ordinary legislative procedure; QMV


Business, Energy and Industrial Strategy

Document Number

(37390), 15252/15 + ADDs 1–2, COM (15) 635

Summary and Committee’s conclusions

3.1This proposed Directive aims to help deliver the Digital Single Market and boost e-commerce. It fully harmonises consumer contractual rights and remedies in relation to online sales6 and sales at a distance7 in physical (“tangible”) goods. It was proposed at the same time as a parallel proposal on the sale of digital content.8By harmonising aspects of consumer law across the EU, the Commission considers that the proposal will reduce legal uncertainty and compliance costs for businesses selling goods both online and cross border, so boosting consumer confidence in such trade.

3.2Negotiations on this proposed Directive were deferred pending the completion of a REFIT9 evaluation of existing EU consumer (and marketing) law. The REFIT was completed in May 2017.10 It indicated that regulatory alignment on face-to-face and distance sales would encourage competition between them and benefit both consumers and businesses.

3.3The delay in negotiations means that the UK will not have to implement the proposal before it exits the EU on the current Brexit timetable, but that does not take account of any transitional/implementation period.11 However, it remains important for the UK to seek to influence negotiations so that the proposal is as aligned as possible with the most recent UK consumer rights legislation, the Consumer Rights Act 2015 (CRA). This would facilitate future EU-UK trade.

3.4The Minister for Universities, Science, Research and Innovation (Jo Johnson) now writes to inform us of further potential delays as the Commission and Council consider the two options for aligning distance and face-to-face sales: extending the scope of the current proposal to include “face-to-face” sales or starting again with a new all-encompassing proposal, based on the digital content proposal. The Presidency is considering its position and the Government says it would provide an update on any further developments in September, but this has not yet been received.

3.5Subsequent to the Minister’s correspondence, we understand that the Commission has published an amended proposal. We look forward to learning more about that proposal, in due course, from the Minister’s new Explanatory Memorandum. Also, as he continues to update us on any progress in the negotiations in due course, it would be helpful if he gives us an indication of when the amended proposal is likely to be adopted, taking into account both UK withdrawal and the prospect of any transitional/implementation period.

3.6That said, the Minister does recognise “the benefits of having a single coherent regime which applies to consumer transactions across all the Member States”. We are interested in how such benefits might be sustained after UK exit from the EU. How the UK might cooperate on consumer matters with the EU after withdrawal is relevant to this and other consumer-related proposals we have under scrutiny at present. We have already raised questions about future alignment and cooperation in our scrutiny relating to proposed Directive on certain aspects concerning contracts for the supply of digital content12 and the proposed Regulation on cooperation between national authorities responsible for the enforcement of consumer protection laws.13 We would therefore be grateful for any insights the Minister might have to offer on how the general outline of future civil justice cooperation set out in the Government’s Future Partnership Paper “Providing a cross-border civil judicial cooperation framework” might apply more specifically to consumer rights.

3.7We retain the document under scrutiny pending the Minister’s responses, which we will be happy to consider as part of our scrutiny of the amended proposal.

Full details of the documents:

Proposal for a Directive on certain aspects concerning contracts for the online and other distance sale of goods: (37390), 15252/15 + ADDs 1–2, COM (15) 635.

The Minister’s letter of 5 September

3.8The Minister of State for Universities, Science, Research and Innovation at the Department for Business, Energy and Industrial Strategy (Jo Johnson) says:

“The Committee will recall that Member States had been reluctant to begin negotiating a new regime for consumer contractual rights to cover distance sales while the current regime under the Directive on the Sale of Consumer Goods and Associated Guarantees (1999/44/EC) was subject to the Commission’s Regulatory Fitness (REFIT) review of EU consumer and marketing law.

“On 9 June, during Purdah, my official provided a summary by email of the results of the Commission’s review. In this context the Commission’s essential conclusions in respect of the current regime were that the rules should be consistent for distance sales and face to face sales.

“In the light of the Commission’s REFIT conclusions, on 7 July the Estonian Presidency sought views from Ministers at an informal JHC Council on the scope of any proposal for new sale of goods contractual rights. It was clear at that meeting that a large majority of Member States want to see consistent rights irrespective of the means by which goods are sold. We agreed. The issue of how that might best be achieved in the face of a proposal with limited scope from the Commission was not discussed, but some expressed the view that the text of the General Approach on the digital content proposal recently agreed in Council might provide a suitable model on which progress to better harmonise sale of goods rights might be based.

“Member States now have a choice: whether to ask the Commission to work up a fresh all-encompassing proposal; or, to work with the text of the Commission’s current proposal on the understanding that the Commission will agree to extending the scope in due course.

“At a recent Council working group Member State officials provided provisional views on the way ahead. A majority favoured asking the Commission to formulate a new proposal supported by a revised and full assessment of the increased impact. The Committee will appreciate that a proposal which would apply to all sales of goods represents a very considerable extension of the scope of the original proposal; it would bring in over 90% more sales transactions across the EU and would affect many more businesses, most of which do not sell on-line or otherwise at a distance. These businesses would not stand to benefit from the single market advantages in respect of cross-border sales which are expected by achieving better harmonised rules. There is a sense, therefore, that the Commission should now consider proposing a regime which is as close as possible to the current regime in the sale of Consumer Goods Directive so as to minimise disruption to the vast majority of sales activity whilst exploring ways to achieve more harmonisation to better facilitate cross-border activity. Some Member States are clearly of the view that the current proposal is not the best starting place for an all-encompassing regime, particularly in the light of the agreed approach to digital content sales which is now better founded on the approach in the current Sale of Consumer Goods Directive.

“It will be appreciated from Commissioner Jourova’s letter to the President of the JHA Council that the Commission’s strong preference is to make progress on its original proposal and wishes. This would avoid the delay which would result from producing a fresh proposal and a full assessment of the impact, including the costs and benefits of its approach across the whole market. All of these points were made at the working group referred to above.

“The Presidency is now considering how it will handle the proposal and we expect further developments in September.

“The Government continues to take an active role in EU negotiations and expects to do so on this dossier in due course, recognising the benefits of having a single coherent regime which applies to consumer transactions across all the Member States. I shall, of course, keep the Committee informed when there are further developments.”

Previous Committee Reports

Eighteenth Report HC 71–xvi (2016–17), chapter 3 (16 November 2016); Sixth Report HC 71–iv (2016–17), chapter 3 (15 June 2016); Twenty-third Report HC 342–xxii (2015–16), chapter 5 (10 February 2016).

6 For example, the purchase of a kettle from the website of an online supplier of kitchen equipment.

7 Sales at a distance are those conducted without the simultaneous physical presence of seller and consumer (which would be a “face-to-face” sale) but using a distance method of communication to conduct the transaction e.g. text, telephone, mail order.

8 Proposal for a Directive on certain aspects concerning contracts for the supply of digital content: (37389), 15251/15 + ADDs 1–2, COM (15) 634. Sale of digital content would include the purchase of digital video or audio content from a providers such as Spotify or Netflix.

9 REFIT stands for Regulatory Fitness and Performance Programme. They are comprehensive assessments of whether the regulatory framework for a particular policy sector is “fit for purpose”. The results of the parallel review of the Consumer Rights Directive are the subject of a Government Explanatory Memorandum on the relevant Commission Report: 9661/17 + ADDS 1–7 (38762).

10 Review of EU Consumer Law (Fitness Check).

11 See the Prime Minister’s speech in Florence on 22 September 2017.

12 (37389), 15251/15, COM (15) 634.

13 (37814), 9565/16, COM (16) 283.

28 November 2017