Supplementary memorandum by The Law Society
of England and Wales
During its oral evidence session of Thursday
8 May the Society undertook to provide in writing examples of
how the development of Commission proposals in so-called "policy
silos" affects the development of draft legislation. The
following summarises a few examples of this, but the Society would
be happy to provide more detailed information on request. It is
hoped that the following examples prove to be useful to their
Lordships.
COLLECTIVE REDRESS
As we stated in our initial written evidence,
initiatives on collective redress ("class actions")
provide a good example. At least two Commission Directorates General
are working actively on initiatives—both DG Competition
(DG COMP) and DG Health and Consumer Affairs (DG SANCO). While
the Society is supportive of both streams of work, that of DG
COMP is much further advanced (a White Paper with recommendations
was published in April 2008i), compared to that of DG SANCO, which
is still conducting in-depth researchii. Both streams of work
touch on developing mechanisms for collective or representative
actions as a means of redress for consumer of competition violations.
While the Society has not taken a position on
the need for EU-wide and/or national class-action systems and
what form they might take, it has nonetheless been suggested that
there could be greater consistency across the Commission policy
here. The basic policy objective is the better enforcement of
Community law rights and access to justice. This objective might
not be best served if, as appears to be the case, ideas are being
developed in "policy silos". The Commission's White
Paper makes reference to the work in the consumer policy field
but seems to reserve the right to take competition-law specific
measures in the future. It has also been suggested that already
inconsistencies can be seen in the approach taken to some of the
substantive issues at hand.
The arrival of Commissioner Meglena Kuneva in
2007 did seem to give great political impetus to the work of DG
SANCO but at that stage DG COMP was already planning to publish
a White Paper early in 2008. The relevant Commissioners and Commission
officials have been keen to emphasise that the departments are
working closely on this issue.
In a broader context, in relation to the better
enforcement of Community law rights and access to justice, it
could be argued that the issue of providing collective redress
could equally be considered in other fields of law for which the
EU has competence. The Commission's thinking on this, however,
does not seem to have extended beyond the areas at hand. DG JLS,
which is responsible for civil justice, does not seem to have
played a significant role in discussions and other DGs do not
seem to have considered the issue of collective redress at all.
APPLICABLE LAW
AND JURISDICTION
Criticism has also been levelled in the past
at the incoherence of various legislative proposals or finalised
legislation. For instance, measures concerning applicable law,
such as the Rome Conventioniii and the soon-to-be-adopted Rome
I Regulationiv, which apply the law of the consumers' residence
in consumer contracts, did not seem to fit well with proposals,
such as the Services Directivev, which contained a country-of-origin
principle, whereby traders could operate throughout the EU on
the basis of their home country law.
Similarly the interplay between the e-commerce
Directivevi and the Brussels I Regulationvii has also created
confusion. The e-commerce Directive was intended to facilitate
on-line trading and create legal certainty. The concept of "directing
activities" in the Brussels I Regulation, however, with its
consequences for which jurisdiction hears consumer disputes, has
created confusion amongst on-line businesses and probably inhibited
attempts by some to offer their goods and services cross border.
FINANCIAL SERVICES
It has been noted by practitioners that in the
field of consumer financial services, overlapping, cumulative
and sometimes inconsistent requirements are imposed by the following
directives: Markets in Financial Instruments Directiveviii, the
e-commerce Directive, the Distance Marketing of Financial Services
Directiveix and the Unfair Commercial Practices Directivex. It
is expensive for businesses to work out how to comply and then
to do so and it is unlikely to contribute in the most efficient
and effective way to consumer protection.
While the measures cited above originated from
different Commission Directorates General, it is worth bearing
in mind that this might not be the only source of divergent or
conflicting legislation. Indeed inconsistencies may appear as
a result of amendments tabled during the legislative process and
even pieces of legislation that have originated in the same Directorate
General might be inconsistent when finally adopted.
Although forming a package, the Financial Services
Action Plan measures contain major inconsistencies of regulatory
approach and overlapping provisions. For example, the approach
to who is the appropriate regulator is inconsistent—sometimes
it is home state, sometimes it is country of origin (which is
not the same thing) and sometimes it is host state. This increases
the risk of practical difficulties for businesses in seeking to
comply.
For instance, a company with multiple listings
has to comply with the insider list requirements of each Member
State—see Article 6(3) of the Market Abuse Directivexi—while
the home state notion used in the Prospectus Directivexii and
the Transparency Obligations Directivexiii could arguably have
been used instead. Also, an example of overlapping provisions
is in relation to analysts' research, which is covered by the
Market Abuse Directive and by Market in Financial Instruments
Directive.
There is no consistent approach to the treatment
of third country firms. Indeed, one might get the impression from
some directives that third country firms have no or little presence
in the single market—that the market is literally "internal"
to the EEA. Nothing could be further from the truth, and it is
important for legal certainty and fair competition that the issue
is properly addressed.
It is disappointing that the fact that the FSAP
was introduced as a package has not resulted in consistency of
approach to core regulatory concepts and definitions across the
piece. A consistency of approach should be adopted across directives.
May 2008
END NOTES
i http://ec.europa.eu/comm/competition/antitrust/actionsdamages/index.html
ii http://ec.europa.eu/consumers/redress_cons/collective_redress_en.htm
iii Convention on the law applicable to contractual
obligations (80/934/EEC), OJ L 266, 09/10/1980 p. 0001-0019
iv http://register.consilium.europa.eu/pdf/en/07/st03/st03691.en07.pdf
v Directive 2006/123/EC of the European Parliament
and of the Council of 12 December 2006 on services in the internal
market, OJ L 376, 27.12.2006, p. 36-68
vi Directive 2000/31/EC of the European Parliament
and of the Council of 8 June 2000 on certain legal aspects of
information society services, in particular electronic commerce,
in the Internal Market, OJ L 178, 17.7.2000, p. 1-16
vii Council Regulation (EC) No 44/2001 of 22
December 2000 on jurisdiction and the recognition and enforcement
of judgments in civil and commercial matters, OJ L 012, 16/01/2001
P. 0001-0023
viii Directive 2004/39/EC of the European Parliament
and of the Council of 21 April 2004 on markets in financial instruments
amending Council Directives 85/611/EEC and 93/6/EEC and Directive
2000/12/EC of the European Parliament and of the Council and repealing
Council Directive 93/22/EEC, OJ L 145, 30.4.2004, p. 1-44
ix Directive 2002/65/EC of the European Parliament
and of the Council of 23 September 2002 concerning the distance
marketing of consumer financial services and amending Council
Directive 90/619/EEC and Directives 97/7/EC and 98/27/EC, OJ L
271, 09/10/2002 P. 0016-0024
x Directive 2005/29/EC of the European Parliament
and of the Council of 11 May 2005 concerning unfair business-to-consumer
commercial practices in the internal market and amending Council
Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC
of the European Parliament and of the Council and Regulation (EC)
No 2006/2004 of the European Parliament and of the Council, OJ
L 149, 11.6.2005, p. 22-39
xi Directive 2003/6/EC of the European Parliament
and of the Council of 28 January 2003 on insider dealing and market
manipulation (market abuse), OJ L 96, 12.4.2003, p. 16-25
xii Directive 2003/71/EC of the European Parliament
and of the Council of 4 November 2003 on the prospectus to be
published when securities are offered to the public or admitted
to trading and amending Directive 2001/34/EC, OJ L 345, 31.12.2003,
p. 64-89
xiii Directive 2004/109/EC of the European Parliament
and of the Council of 15 December 2004 on the harmonisation of
transparency requirements in relation to information about issuers
whose securities are admitted to trading on a regulated market
and amending Directive 2001/34/EC, OJ L 390, 31.12.2004, p. 38-57
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