IMPACT STATEMENT
Proposal for a European Parliament and Council Directive on the
sale of consumer goods and associated guarantees.
1(a) Taking account of the principle of subsidiarity, why is Community
legislation necessary in this area and what are its main aims?
The main aims of the proposal are:
-- to improve the functioning of the single market;
-- to strengthen consumer confidence in the single market
and enable consumers to benefit fully from the abolition of frontiers
and to contribute actively to better integration of the European
economy;
-- to secure for European consumers a minimum corpus of rights
which will provide them with a high level of protection when purchasing
consumer goods, irrespective of the Member State in which the
purchase is made.
These objectives cannot be realised adequately by the Member States
and hence, given the dimensions and effects of the envisaged measure,
can better be accomplished at Community level, in the form of
a Directive designed to approximate existing national laws and
to create a minimum corpus of rights for consumers throughout
the Community.
1(b) What other merits or demerits might the proposal have?
The proposal has additional merits over and above its primary
objectives. Advantages include global improvement in product quality
in the European market, enhanced competitiveness of the European
economy and greater product durability, with beneficial effects
on the environment (by reducing over-exploitation of natural resources
and waste) and unemployment (through the growth of repair and
inspection services, which are by definition labour-intensive).
Moreover, the proposal contributes to simplifying the legal framework
relating to the sale of consumer goods and commercial guarantees
that currently exist, hence making things easier for firms, notably
when planning commercial strategies in the field of guarantees.
1(c) Are other solutions envisaged and what would be the results
(for example: codes of conduct, self-regulation at sectoral level)?
The Directive's main objective-the approximation of national legislation
pertaining to the legal guarantee-is incompatible with a code
of conduct type solution. Moreover, the sector concerned is so
heterogenous that it would be difficult to establish codes of
conduct at European level. The consultations in the context of
the Green Paper were proof enough: although the Commission, in
the Green Paper, invited the economic operators to submit any
self-regulation proposals they found desirable and although it
even published, by way of example, a code of conduct for commercial
guarantees drawn up by the British retail trade, no concrete proposal
or initiative has yet been received by the Commission in this
area.
Nonetheless, the proposal for a Directive gives enormous latitude
to self-regulatory initiatives. Moreover, the provisions concerning
commercial guarantees merely lay down certain basic general principles
and rules which ideally should be fleshed out in the context of
self-regulation. The Commission will do its utmost to encourage
initiatives in this regard.
2(a) Who will be affected by the proposal? Which sectors of
business? Which sizes of business and what is total employment
in the sector?
The sector of activity concerned by the proposal is that of the
sale of consumer goods. Obviously the size of the affected firms
varies greatly-since large firms are to be found side by side
with small and medium-sized ones.
2(b) Does this sector have specific characteristics-for example,
do a small number of firms enjoy a dominant position?
No.
2(c) What will the proposal's impact be on very small firms,
skilled trades and the liberal professions?
In the case of very small retailers, the proposal will give them
the right to seek remedies against their suppliers in the distribution
chain.
2(d) Are there particular geographical areas of the Community
where these businesses are found?
No.
3(a) What obligations will the proposal impose on firms?
What are the costs of compliance?
Compliance costs are negligible. In so far as the proposal extends
the duration of the legal guarantee-by comparison with the laws
of certain Member States-and makes it easier for the consumer
to seek remedies from the economic agents liable, in the case
of defective products, one might expect a small increase in costs
associated with handling defective products. Nonetheless, these
costs are very limited and can be assessed perfectly in advance
on the basis of the product's reliability record. After all, the
proposal for a Directive concerns only the defective good itself
(repairs, recall, etc.), to the exclusion of any other direct
or indirect injury to the consumer caused by the defective good.
To avoid this hypothetical increase in costs, economic agents
may be encouraged to improve or adapt global quality control systems
so as to identify and rectify internal sources of inefficiency,
hence contributing substantially to a progressive reduction in
costs. Specialists estimate that the potential reduction in costs
associated with introducing appropriate quality management may
exceed 10 per cent of turnover. Moreover, the proposal, by clarifying
the liability regime, may contribute to reducing the number of
disputes and the attendant costs.
The approximation of national laws on the sale of consumer goods,
guarantees and after-sales services will also simplify the existing
legal framework at European level and may thus contribute, in
a general manner, to reducing the costs incurred by economic operators
in interpreting and applying different national laws.
3(b) Are there other administrative procedures or documents
to be filled in?
No.
3(c) Are licences or authorisations for placing on the market
required?
No.
Will charges be levied?
No.
4(a) What economic effects is the proposal likely to have (costs,
advantages, etc.) on employment?
In so far as the proposal for a Directive inter alia provides
for the repair of goods and may encourage the production of more
durable goods, there will be an increased demand for maintenance
and quality control services, which by definition are very labour-intensive.
4(b) on the investment and creation of new businesses
For the reason mentioned above, the proposal should encourage
the creation of new firms providing repair and maintenance services.
4(c) on the competitive position of businesses, both in the
Community market and elsewhere?
The proposal will encourage competitiveness. First, it will significantly
bolster consumer confidence in the single market and encourage
consumers to shop around. The increase in cross-border consumer
shopping will contribute to removing barriers to trade and the
artificial compartmentalisation of markets. There will be greater
competition and this will make firms more competitive.
Secondly, the proposal will encourage better working relations
between economic operators at different levels in regard to marketing,
with a view to satisfying the final consumer.
Thirdly, the proposal may lead economic operators, in particular
producers of consumer goods, to establish appropriate quality
control systems, with the attendant growth in competitiveness.
Fourthly, the proposal will encourage economic agents to make
more accurate representations in regard to their goods and discourage
the use of dubious or indeed fraudulent claims concerning goods.
This will improve market transparency and consumers will find
it easier to compare products, which in turn will also encourage
competition.
Finally, the Directive will enlighten consumers as to their rights
in connection with the purchase of defective products and will
make it easier for consumers to exercise these rights. The consumers'
obligation to notify any defect discovered within a short period
(on pain of forfeiting their rights) makes them the final link
in the "quality control" chain , and gives the economic
operators the feedback they need in order to identify and eliminate
sources of inefficiency.
4(d) on the authorities responsible for implementing the provisions?
The proposal will not lead to any particular costs for the national
authorities.
4(e) Are there other indirect effects?
No.
4(f) What are the costs and benefits of the proposal?
-- Costs
In certain circumstances, particularly in the case of less efficient
firms operating in Member States where the legal guarantee is
less protective than the one provided for in the proposal there
may be a slight increase in costs associated with the handling
of defective goods.
-- Advantages
-- The stimulus given to quality policy, which may lead to
savings. Greater competitiveness.
-- Greater market transparency. More intensive competition.
-- Greater consumer confidence in the single market; More
cross-border purchases. Strengthening of economic integration.
Strengthening of competitiveness and competition.
-- Positive effects on employment and the environment.
-- Conclusion: the benefits exceed the costs.
5(a) Impact on SMEs. Does the proposal contain measures to
take account of the specific situation of SMEs-if not, why not?
Are reduced or different requirements appropriate?
There are no particular measures for SMEs in this proposal. Nonetheless,
given that one of the weak points of SMEs is their problem in
coping with the complexity of the legal environment, the proposal
may make life easier because it simplifies this environment. The
clarification of the rules governing liability contained in the
proposal may also contribute to reducing the number of disputes
between SMEs and consumers, because the latter will be in a better
position to assess the scope of their rights and will be less
likely to submit complaints that have no foundation in law.
Moreover, by stimulating the creation of repair and maintenance
firms, the proposal will benefit SMEs most of all. It also seems
that sellers and even producers will tend increasingly to subcontract
after-sales services to independent specialised firms.
5(b) Are higher thresholds, which exclude SMEs without compromising
the measures, effectiveness, envisageable?
No.
CONSULTATION
6(a) When did consultations take place and what was the date
of publication of the plan to introduce regulatory measures?
In January and February 1993 the Commission organised two hearings,
one with the Member States and the other with the business circles
concerned. The ongoing work was presented, followed by a debate,
at the CCD (Committee on Commerce and Distribution) in April of
the same year. These consultations were organised in tandem with
bilateral contacts with all the social players who evinced an
interest in the subject. In the second three-year action plan
on consumer policy (1993-1995), called "Placing the single
market at the service of European consumers" (COM(93) 378
final of 28 July 993), the Commission officially announced the
forthcoming publication of a Green Paper on the subject.
On 15 November 1993 the Commission published the Green Paper on
guarantees for consumer goods and after-sales services (COM(93)
509). This Green Paper contains an in-depth analysis of the law
in force in each of the 12 Member States and at Community level
which directly or indirectly governs guarantees and after-sales
services, as well as an examination of trade practices concerning
the guarantee offered by the economic operators. The Green Paper
also recapitulates the main bugbears facing consumers and economic
operators in the context of the single market and sets out a range
of concrete proposals for Community measures with a view to resolving
them. These proposals focus on possible harmonisation of the legal
guarantee and a full specific regime is proposed in this regard.
The deadline for consultations was 30 April 1994. In a communication
published in OJ No. C 338 of 15 December 1993, the Commission
invited all interested parties, notably the social players concerned,
to supply all information and data of an economic, social and/or
legal nature which they considered relevant, to propose any measure
they deemed suitable for improving the functioning of guarantees
and after-sales services in the context of the single market and,
more specifically, to comment on the solutions aired in the Green
Paper, The Commission also stated that anyone who sent in a written
submission could be invited to a hearing.
Several conferences were also organised on this subject. The European
Commission participated in a study day organised by the University
of Utrecht in the Netherlands and a two-day conference at Buxton,
organised by the University of Sheffield in the United Kingdom.
Attendees included representatives of the academic community,
consumer advocates, and the economic operators concerned.
The hearing on the Green Paper took place on 18 July 1994. Approximately
50 persons representing the main interest groups, participated.
The first European Consumer Forum, held in Brussels on 4 October
1994, had the Green Paper as one of its main discussion topics.
A total of 350 persons participated in the European Consumer Forum,
representing various professional groups from 19 countries (producers,
distributors, representatives of consumer associations and the
legal world, academic experts in consumer law, members of the
Community institutions, etc.).
6(b) List the organisations which have been consulted about
the proposal, which have communicated their general view in a
detailed manner, including any misgivings or objections concerning
the final proposal. Why is it not possible-or desirable-to accommodate
their demands?
There were a total of 77 formal replies, broken down as follows:
--five replies from the "institutions" (European Parliament,
EP-Legal Affairs Committee, Economic and Social Committee, Consumers'
Consultative Council, and the Committee on Commerce and Distribution);
-- 36 replies from professional bodies;
-- 13 replies from consumer associations;
-- 12 replies from states or institutions belonging to the
States;
-- one reply from a university group (ECLG-European Consumer
Lawyers Group);
-- two replies from individual firms;
-- eight replies from individuals (law professors or company
lawyers).
6(c) Member States
Only four Member States officially replied in writing via their
Permanent Representations. However, certain ministries or semi-public
agencies in four other Member States replied directly to the Commission.
The EFTA countries agreed to submit a common position, with the
exception of Sweden which made an independent contribution.
As a rule the Member States' replies are quite positive and encouraging.
Some have come out clearly in favour of Community measures to
harmonise the legal guarantee and to adopt a Community legal framework
for commercial guarantees (this is also the position of the EFTA
countries). Others are more circumspect but say they will support
initiatives in at least one of these domains (legal guarantee
and commercial guarantee).
6(d) The European Parliament
The two EP committees responsible (Committee on the Environment
and Consumer Protection-chef de file; Legal Affairs Committee-for
opinion) submitted very positive reports. The European Parliament
adopted its resolution on 6 May 1994. This resolution was quite
detailed and urged the Commission to prepare by the end of 1994
a proposal for a Directive designed to ensure minimum harmonisation
of the legal guarantee and to establish a legal framework for
commercial guarantees. The resolution also invites the Commission
to scrutinise the question of after-sales services more closely
than it did in the Green Paper.
6(e) The Economic and Social Committee
The ESC delivered its opinion at its plenary session on 1 June
1994. This report is by and large very positive, albeit somewhat
general. The ESC welcomes gradual harmonisation in regard to the
legal guarantee, and also supports framework rules and a European
consumer code concerning the commercial guarantee; as regards
after-sales services, it favours the establishment of codes of
conduct in preference to legally binding rules.
6(f) Consumer associations
Consumer associations clearly and vigorously support the Community
initiatives. At the hearings the Forum consumer organisations
were emphatic in defending their stance. Some of the Commission
proposals in the Green Paper were criticised for not being consumer-friendly
enough. Generally speaking, consumer associations want the Community
to give priority to harmonising the legal guarantee, while also
interested in far-reaching measures in regard to commercial guarantees
and after-sales services.
6(g) Professional bodies
Reactions from the professional bodies fall into one of three
classes:
-- professional bodies that are opposed to any Community initiative;
-- professional bodies that are in favour of minimum harmonisation
of the legal guarantee and agree that it would be good to adopt
codes of conduct so as to improve the situation in regard to commercial
guarantees;
-- professional bodies that in principle reject harmonisation
of the legal guarantee but do not object to Community measures
in regard to commercial guarantees, at least in the form of codes
of conduct.
The main professional bodies opposed to Community initiatives
argue that there are no major problems and that no Community action
is necessary. However, few concrete criticisms were made regarding
specific aspects of the proposed schemes, and sometimes there
was even general agreement as to the substance (for example the
Green Paper's proposed option of a legal framework governing commercial
guarantees).
Moreover, the business world has been very divided in its reaction
to the Commission proposals. While the large Europe-wide horizontal
organisations often came out quite vociferously against harmonisation
of the legal guarantee (UNICE, Eurocommerce, Committee of Commerce
and Distribution, Orgalime), the national bodies-often members
of these European federations-have been more positive or have
even clearly supported harmonisation of the legal guarantee-this
applies to the CNPF (Confederation Nationale du patronat francÀais),
the Chambre de Commerce et de l'Industrie de Paris, the CGPME
(ConfeÂderation GeÂneÂrale des Petites et Moyennes
Entreprises, France), the British Retail consortium and AMDEA
(Association of Manufacturers of Electrical Appliances-UK). Likewise,
the more branch-specific organisations, both national or European,
are by no means averse to harmonising the legal guarantee. For
example, this holds for the FeÂdeÂration de l'Horlogerie
(France), ACEA (the European carmakers' association) the British
Photographic Importers Association, the Software Publishers Association
Europe and FEDSA (Federation of European Direct Selling Associations).
Generally speaking, the professional bodies have been far more
open to harmonising the legal guarantee than to far-reaching Community
intervention in the domain of commercial guarantees and after-sales
services.
6(h) How have the comments and suggestions made been taken
into account?
Close consideration has been given to the suggestions and comments
made by the contributors in the consultation process in drafting
the proposal for a Directive. Examples include the definition
of the scope of the proposal for a Directive, the notion of lack
of conformity, the very fact that the Directive focuses on the
legal guarantee, and the abandonment of the idea of creating a
Euro-guarantee label.
6(i) Have the professional bodies of the SMEs been formally
consulted? If not, why not?
The professional bodies of the SMEs were consulted in the general
context of the Green Paper. Moreover, before and after adoption
of the Green Paper, Commission officials discussed the proposal
with SME representatives in the context of meetings organised
by the Commission or the organisations themselves.
7. Follow-up and re-examination. Indicate the procedures for following
up and re-examining the proposal in regard to the effects and
costs associated with its implementation. Will it be easy to amend
the proposal once it is adopted?
No formal procedure for following up and re-examining the proposal
is envisaged. However, the Commission will not fail to conduct
studies and surveys necessary to evaluate the proper implementation
of the Directive, once adopted.
In the absence of a comitology procedure, all amendments to the
Directive will be subject to the usual legislative process.
