Documents considered by the Committee on 28 November 2018 Contents

1Digital Single Market: Consumer contract rights for the supply of digital content and the sale of goods

Committee’s assessment

Legally and politically important

Committee’s decision

(a) Cleared from scrutiny; further information requested; (b) Not cleared from scrutiny; scrutiny waiver granted for the General Approach expected at the JHA Council of 6–7 December; drawn to the attention of the Business, Energy and Industrial Strategy Committee

Document details

(a) Proposed Directive on certain aspects concerning contracts for the supply of digital content; (b) Amended proposal for a Directive on certain aspects concerning contracts for the sale of goods, amending Regulation (EC) 2006/2004 and Directive 2009/22/EC and repealing Directive 1999/44/EC

Legal base

Article 114 TFEU; ordinary legislative procedure; QMV

Department

Business, Energy and Industrial Strategy

Document Numbers

(a) (37389), 15251/15 + ADDs 1–2, COM (15) 634; (b) (39194), 13927/17 + ADD 1, COM(17) 637

Summary and Committee’s conclusions

1.1In December 2015 the Commission published two proposals aimed at boosting the EU digital economy by reducing contract-law related barriers to trade and making it easier for consumers to shop online across the single market. It envisaged a uniform set of rules on business-to-consumer contracts across the EU, which would support the EU’s Digital Market Strategy.

1.2The two proposed Directives addressed aspects of:

1.3We have been scrutinising negotiations on the Digital Content proposal. We understand that it is unlikely that the UK will have to implement this proposal before the end of the implementation/transition period.4 A General Approach was agreed on 1 June 20175 for which we granted a scrutiny waiver. The General Approach met one of the Government’s concerns about the scope of the original proposal being wider the UK’s Consumer Rights Act 2015 (CRA). This is because content and services provided in exchange for personal data are included in the EU proposal, as well as those supplied in exchange for money. However, some narrowing down of that scope was achieved in the General Approach.

1.4Following a consumer law REFIT,6 the Sale of Goods proposal (document (b)) was published on 31 October 2017 to replace the Tangible Goods proposal. As a result, negotiations are not as advanced on this document. The proposal extends to offline sales of goods as well as the online and distances sales covered by the Tangible Goods proposal. The new proposal reflected the concerns of the UK and other Member States about the possibility of different contractual rules for online and offline sales. The Government has told us that the extension in scope is significant, covering over 90% more sales transactions across the EU than the Tangible Goods proposal. It would capture many businesses who do not sell online or at a distance and who may not enjoy single market benefits. The Government has also highlighted points of divergence between the “maximum harmonisation” proposal (where more or less stringent national requirements cannot be maintained) and current UK law, mainly the CRA. The potential loss of the UK consumer’s short term right to reject and be refunded for faulty goods7 are key concerns of the Government.

1.5A detailed account of both proposals, the Government’s view of the proposal and progress to date in the negotiations, is set out in the previous Reports of this and previous Committees listed at the end of this chapter.

1.6We last considered both documents in July of this year. Responding to the letter of 18 June from the Government which focused on the Sale of Goods proposal, we said in our letter of 11 July that we noted that the UK is unlikely to have to implement that proposal before the end of the proposed implementation/transition period.8 However, we recognised the risks of a maximum harmonisation measure to current high levels of UK consumer protection should the measure feature in any way as part of a future UK- EU future economic relationship. We therefore supported the UK’s efforts in trying to negotiate a favourable text, particularly in respect of the short-term right to reject faulty goods and to be refunded for them.

1.7We also asked the then Minister to explain the relevance to proposals of the new European Electronic Communications Code (EECC), politically agreed in June. We asked for an update on both proposals to cover any relevant and emerging Brexit developments. The current Minister for Small Business, Consumers and Corporate Responsibility (Kelly Tolhurst) now writes in two separate letters on the respective proposals to respond to our letter of 18 June and to update us.

1.8In a letter of 6 November concerning the proposed Digital Content Directive, the Minister tells us that trilogue negotiations between the Council, Commission and European Parliament (EP) did not commence until December 2017. However, they are now nearly complete despite the complexity of the proposal, interinstitutional differences and linkage to the delayed negotiation of the Sale of Goods proposal. The current Austrian Presidency wants to make up progress on the Sale of Goods proposal so that the two files can progress better together and both be adopted in time for the European Parliament (EP) elections in May. It is possible that a vote on final adoption will be sought in December.

1.9In another letter of 6 November relating to the proposed Sale of Goods Directive, the Minister tells us that since the Government’s last letter of 18 June, a second draft of the proposal was published based on the outcome of the Justice and Home Affairs Council on 4 June. Technical working group meetings are continuing throughout the autumn. She says that it is likely a General Approach will be sought in December.

1.10In both letters the Minister provides some detailed explanation of the key issues emerging in negotiations of both proposals. Given that we base our decisions concerning future scrutiny of these proposals heavily on this information, we set it out in full at paragraphs 0.15 and 0.16 below.

1.11We thank the Minister for her detailed and helpful letters on these two proposals. We note that neither proposal may have to be implemented by the UK during the planned implementation/transition period. However, we are keen to give the Government as much flexibility as possible to influence the negotiations on these texts whilst it still has a vote. We recognise the importance trying to facilitate a future EU-UK relationship on consumer protection but at the same time not undermine current UK legal protection for consumers.

1.12Based on the Minister’s detailed explanations provided on the key issues and UK objectives in the respective negotiations of these proposals, we now clear the Digital Content proposal from scrutiny and grant a scrutiny waiver for the expected General Approach on the proposed Sale of Goods Directive. We also grant the waiver on the basis that we are reassured by the Governments’ commitment to marshalling support amongst Member States:

1.13However, we ask that the Government report fully on the outcomes of the respective meetings, supplying us with copies of the agreed texts. We would expect to be told of any significant changes to the texts affecting when the proposals might have to be implemented and or which could particularly affect future EU-UK cooperation on consumer protection.

1.14We draw this chapter and these documents to the attention of the Business, Energy and Industrial Strategy Committee.

Full details of the documents:

(a) Proposal for a Directive of the European Parliament and the Council on certain aspects concerning contracts for the supply of digital content: (37389), 15251/15, + ADDs 1–2, COM(15) 634; (b) Amended proposal for a Directive of the European Parliament and of the Council on certain aspects concerning contracts for the sale of goods, amending Regulation (EC) 2006/2004 of the European Parliament and of the Council and Directive 2009/22/EC of the European Parliament and of the Council and repealing Directive 1999/44/EC of the European Parliament and of the Council: (39194), 13927/17 + ADD 1, COM(17) 637.

Detailed summary of issues emerging in the trilogue negotiations: document (a)

1.15The following information is provided in the Minister’s letter of 6 November on the proposed Digital Content Directive:

1.16The Minister then turns to questions we have raised during our past scrutiny:

Detailed summary of issues emerging in the Council negotiations: document (b)

1.17The following information is provided in the Minister’s letter of 6 November on the proposed Sale of Goods Directive:

Previous Committee Reports

(a) Second Report HC 301–ii (2017–19), chapter 2 (22 November 2017); Fortieth Report, HC 71–xxxvii (2016–17), chapter 3 (25 April 2017); Thirty-fifth Report HC 71–xxxiii (2016–17), chapter 1 (15 March 2017); Eighteenth Report HC 71–xvi, chapter 3 (16 November 2016); Sixth Report HC 71–iv (2016–17), chapter 3 (15 June 2016) and Twenty-third Report HC 342–xxii (2015–16), chapter 4 (10 February 2016); (b) Fifth Report HC 301–v (2017–19), chapter 1 (13 December 2017); Second Report HC 301–ii (2017–19), chapter 3 (22 November 2017); 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).


1 2015/287, COM (2015) 634: Proposal for a Directive of the Council and the European Parliament on certain aspects concerning the supply of Digital Content.

2 Distance selling is where the two contracting parties are not in the same place at the same time (i.e. sales that are not face-to-face).

3 2015/0288, COM (2015) 635: Proposal for a Directive of the Council and the European Parliament on certain aspects concerning contracts for the online and other distance sales of goods.

4 Article 21 of the original proposal provides for a transposition date of two years after the entry into force of the proposal.

5 See General Approach text (Council document 9901/17)

6 A Regulatory Fitness and Performance review of EU legislation.

7 The right to obtain a refund or discount for goods not conforming with the sales contract without having to afford the trader multiple attempts to repair or replace the item.

8 This stated that “It is too early to judge this with accuracy, but the best estimate currently is that the file will be adopted during the first quarter of 2019. This means that transposition of the Directive is likely to be required by the first quarter of 2021, which falls outside the proposed Implementation Period following the UK’s EU withdrawal”.




Published: 4 December 2018