82. The Directive, according
to the Commission's Explanatory Memorandum, "aspires to provide
European consumers with a minimum common corpus of rights throughout
the European Union". To do this, it is said, it is necessary
to approximate national legislation governing the "legal
guarantee" (those statutory rules relating to the description,
fitness for purpose and quality of goods-in the United Kingdom,
principally contained in sections 13-15 of the Sale of Goods Act)
and provide a framework of rules governing commercial guarantees.
The current proposal is described as being complementary to the
Unfair Contract Terms Directive under which, irrespective of where
goods are bought in the Community, consumers are protected against
unfair general conditions of sale.
Feasibility of harmonisation
83. A preliminary question
is whether harmonisation is feasible, having regard to the different
positions in the Member States-identifiable and explicable in
part by their legal and political histories and the fundamental
differences between the common and civil law. Experience shows
that it can be done, and done successfully. The Vienna Sales Convention,
whose success can be measured by the number and diversity of States
which have become party to it, is a pertinent example. The Convention
is an effective marriage of the common law and civil law whose
conclusion required compromise on both sides. The Convention applies
only to commercial transactions. Nonetheless the Commission has
drawn on it as a model for several provisions of the Directive.
As we shall explain below there are parts of the present proposal
which, even when allowance is made for the difference between
commercial and consumer transactions, we believe would benefit
from following more closely the approach and text of the Convention.
The Community's power to act
84. The Directive is
brought forward as a Single Market measure under Article 100a,
though its principal object is consumer protection. A number of
witnesses expressed some surprise that the Directive did not refer
in its preamble to Article 129a, being the provision in the Treaty
which directly relates to consumer protection. But, as the DTI
pointed out, Article 129a identifies two means by which the Community
can act in consumer protection matters, the first by way of measures
under Article 100a, the second in support of national measures.
Article 129a only confers a legal power to act in respect of the
latter. The Directive is not, however, seen as one supporting
or supplementing national policies and must, therefore, as the
Commission acknowledged, be justifiable as a Single Market measure
under Article 100a. We do not believe that the Directive, like
the Unfair Contract Terms Directive which precedes it, should
be regarded solely or even predominantly as a Single Market measure.
It is essentially a consumer protection measure. We accept that
if on an objective basis the aim and content of the Directive
concern the establishment and functioning of the Single Market
it can properly, in terms of the existence of legal powers, be
based on Article 100a. Whether the exercise of that power
in the present case is in fact justified is a separate question.
Is the Directive necessary?
85. The Committee readily
accepts that the benefits of the Single Market should accrue not
just for business but also for the individual citizen. But consumer
protection measures are by their nature interventionist and restrictive
of commercial behaviour. Whether there is a need for harmonisation
of such measures, in particular in relation to terms of sale and
guarantees, in order to promote circulation of goods and services
at Community level raises, we believe, three issues: the nature
and extent of any problems in practice; the extent to which any
transnational aspects cannot be satisfactorily regulated at Member
State level; and the requirement, most clearly enunciated in the
Edinburgh Guidelines on subsidiarity, that action by the Community
would produce clear benefits, in particular by reason of its scale
or effects compared with action at Member State level.
86. Placing the Directive
in its context, the Commission's Explanatory Memorandum draws
attention to the reluctance of consumers to shop abroad. A certain
amount of cross-border shopping, it cannot be disputed, occurs
already. But as to how much there is and to how many and what
sorts of problems for consumers it gives rise there is a shortage
of evidence. During our enquiry the Commission drew attention
to two studies it had commissioned and we also received the recent
report prepared by the General Council for Consumers in Northern
Ireland. The Explanatory Memorandum also draws on surveys of domestic
consumer problems. These materials are, we believe, helpful but
constitute only a first step in identifying the nature and size
of any problems at the Community level and determining to which
of them priority should be given. There is a danger, we believe,
in extrapolating national experience to seek to justify action
at Community level. Nor is it sufficient, in our view, for the
Commission to say the measure is necessary for the Single Market
on the basis of theoretical arguments relating to the distortion
of competition.
87. The Committee takes
the view that more research and analysis of the need for the proposal
should be undertaken. While we recognise that consumer protection
is important-that is evident from the existence of national laws
and the relevant Treaty Articles-and that action at Community
level may in some instances be justified, we are concerned that
the Community should act only where necessary and then in the
most effective way to advance the Single Market. We entirely support
the critical approach which has been taken by the Member States
in requesting the Commission to conduct a study into the costs
and implications of the Directive and regret that this was not
undertaken prior to the publication of the proposal. That study
should also help focus attention on the need for the Directive.
88. Can transnational
aspects be satisfactorily regulated at Member State level? The
Committee agrees with the Commission that independent measures
taken by the Member States would not necessarily ensure a minimum
standard of protection for consumers throughout the Community.
Nor would a new rule, making the sale subject to the law of the
country of the consumer's residence (ie. a conflicts rule),
necessarily help. Article 5 of the Convention on the Law applicable
to Contractual Obligations[29]
(the "Rome Convention") already gives overriding effect
to mandatory rules of law of the consumer's place of residence.
As Professor Goode said, a new conflicts rule would add nothing,
nor would it produce the desired effect where the law of the consumer's
place of residence does not have mandatory rules giving the level
of protection which the Directive proposes.
Extent of harmonisation
89. Article 129a requires
the Community "to contribute to the attainment of a high
level of consumer protection" and Article 100a obliges the
Commission, when proposing a measure concerning consumer protection,
to "take as a base a high level of protection". The
Commission has, perhaps realistically, concluded that a partial
harmonisation at a lower level which would be generally acceptable
is in practical terms the way forward. The Directive explicitly
recognises that some Member States may have, and will be able
to retain, a higher standard of consumer protection. However,
this raises, in the view of the Committee, a number of concerns.
From the standpoint of the establishment and functioning of the
Single Market, the proposal would leave disparities in national
law and the potential, at least in theory, to create barriers
to trade. As regards the principle of subsidiarity (which the
Commission pleaded in aid of leaving certain matters to the Member
States), it may also create something of a dilemma. While the
Committee is not opposed to partial harmonisation as such (in
practical terms it may be necessary to move step by step) leaving
gaps in the Directive to be filled by national law leads to an
area of uncertainty which in turn diminishes the benefits to be
had from the Directive and hence the justification for action
at Community level. The Committee is inclined to think that on
this subject the observance of the Treaty and in particular the
principle of subsidiarity makes it difficult to devise a directive
which substantially contributes to the Single Market.
Benefits and detriments
90. The Commission claims
that several benefits would flow from the Directive including
the strengthening of consumer confidence in the Single Market,
the facilitation of cross-border shopping, the simplification
of existing national rules and positive effects on competition,
business competitiveness and the European economy. Looked at in
the context of the flow of goods between the Member States cross-border
shopping appears to constitute a very small fraction of the overall
volume of inter-Member State trade. We share the doubts expressed
by witnesses whether such benefits, and in particular increasing
the volume of cross-border shopping and improving confidence in
the Single Market, would in fact accrue. It is particularly noteworthy
that scepticism was not the monopoly of the manufacturers and
retailers but was also expressed by those representing consumers
as well as other witnesses.
29
Given effect in the United Kingdom by the Contracts (Applicable
Law) Act 1990. Back
