Answer to Parliamentary Question: Proposal for a directive on consumer rights

Publication date: 20 May 2009

Oral question by Arelene McCarthy on the proposal for a directive on consumer rights

Subject: Proposal for a Directive on Consumer Rights

The IMCO Committee supports the objectives of the proposal for a Directive on Consumer Rights (COM(2008)0614), namely to contribute to the better functioning of the internal market by enhancing consumer confidence and reducing obstacles to cross-border trade. As stated in the European Parliament resolution of 6 September 2007 (P6_TA(2007)0383(1)), the Committee welcomes the goal of modernising, simplifying and improving the regulatory regime for consumers and businesses in the internal market.

The Committee does however recognise the concerns expressed by stakeholders regarding the practical implications of the current proposal. The Committee believes it is important to fully address these concerns and asks the European Commission:

Will the Commission undertake to work with the Member States on the practical effects of the proposal at national level? 

Can the Commission clarify the interaction between the harmonised rules in the proposal and elements of national general contract law which apply to consumers (such as remedies including the right to reject faulty goods in the UK and the latent defect guarantee rules in France or in Belgium)?

Could the Commission clarify the interplay of the draft CFR proposal with existing Community legislation, in particular the Unfair Commercial Practices Directive, e-commerce Directive, Services Directive and the Rome I Regulation?

Will the Commission undertake further work on the impact assessment to clearly demonstrate the benefits and costs of this proposal and its alternatives, including in light of the above work?

Will the Commission inform the Parliament of steps the Commission will take to support further dialogue between consumer and business organisations regarding this proposal?

Arlene McCarthy (PSE, UK) stated the following: “Mr President, I know Commissioner Kuneva is here, and I very much welcome the opportunity at this last session of Parliament’s mandate – even at this very late hour – to have an exchange of views on the Commission’s consumer rights proposal.

We have produced a working document and you will recall that the IMCO Committee working group, led by myself as chair and rapporteur, made a decision not to rush this proposal without taking full consideration of all its implications, in particular since it has been described as the most far-reaching change in approach to consumer law in Europe.

The committee, I believe, has very diligently carried out its work with a public hearing, several exchanges of views, a presentation suggested by Mr Harbour on the impact assessment, and an online consultation with has received around 100 responses from organisations across Europe in just three weeks.

We also held an exchange of views with representatives from the 27 national parliaments to which the Commissioner was also invited. Commissioner, I know that you and your staff are fully aware that this is a controversial proposal that merits further examination in a number of areas.

We appreciate the drive to improve consumers’ rights in the internal market. We also agree that there is a need to improve the functioning of the business-to-consumer internal market by removing barriers to cross-border trade, but there is also a need to reassure our consumers that they can continue to expect a high level of protection.

During our deliberations, debate and consultations with stakeholders, we received numerous representations concerned about the lack of clarity and certainty in this proposal. We encouraged consumer organisations and business stakeholders to initiate their own dialogue on how we can make this proposal work, and I know that the Commissioner has received a jointly drafted letter from business and consumer organisations which has been copied to all MEPs. I would like to quote from that. They say, ‘we attach great importance to the legal clarity and quality of the proposal, as well as to the need to know what consequences and changes it would bring about compared with the current situation. We believe there is a high degree of uncertainty about the scope and the consequences of this proposal in particular in relation to its impact on national legal orders.’

Their concerns are clear. We need to be clear in our final proposal. Are we asking consumers to give up some of the rights they have under national law? If so, what does the consumer get in return? And if we are not asking them to surrender certain contract law rights, such as the right to reject in UK and Irish law, then is business still not faced with 27 different sets of consumer rules, the abolition of which was a key objective in the first place?

My colleagues and I believe that our first priority is to evaluate what this proposal will do for consumers and business in real practical terms. That is why tonight’s oral questions identify some key issues that we would like to work with you on, and that we need to make sure are addressed, in order to produce a workable set of rules that benefit all stakeholders. Our questions therefore focus on the details of specific areas where we would like to see further work.

Some members of the working group were concerned at perceived flaws in the impact assessment and want to see more evidence of the costs of legal fragmentation if we do not act. They also want more information on the economic impact of the proposal, not only on the impact of the information requirements.

In short, we would like the Commission to take some time in the intervening election period before Parliament is reconstituted in July to undertake the following work (this is all contained in the Oral Question): an analysis of the practical and legal implications of the proposal on consumer rights in each Member State; a clarification of the relationship between the fully harmonised provisions in the directive and the general remedies available in national contract law; a clarification of the interplay of the draft proposal with existing Community legislation, in particular the Unfair Commercial Practices Directive, E-Commerce Directive, Services Directive, the Rome I Regulation and, of course, the proposed CFR. We want some further evidence in the impact assessment to help us analyse and demonstrate the benefits and costs of this proposal and any alternative approaches that could be put forward.

We want you to help us, and we will work with you, to ensure that we support a dialogue between stakeholders on what measures are necessary to bring mutual practical benefits for business and consumers alike.

Commissioner, I believe it is possible to produce a workable practical proposal that is supported by all stakeholders. I pledge to you that the Members of this House wish to continue to work with you to ensure that we deliver that, and that we can at some point in time vote through this Parliament a new consumer rights directive.

Commissioner Meglena Kuneva stated; “Mr President, I thank Arlene McCarthy very much for her words because a lot has really been done on this directive. I would, however, like this directive – which we will continue to work on – not just to be adopted, but also to be embraced, by all the stakeholders. We will not spare our efforts for this to happen. As this is our last session here, may I use the opportunity to thank you all very sincerely, especially Arlene as the chair of our committee, as well as Mr Harbour and especially Mrs Cederschiöld. I expect one way or another to keep in touch with you because it was a real pleasure to work with you and I hope this will continue in another way.

I would now like to concentrate on the next important steps for the directive because I do believe that this directive is very important for all of us. We need this directive for the internal market of the 21st century. Let me make it clear that, before tabling the proposal, the Commission carried out a comparative law analysis, the ‘Compendium’, covering the laws of the Member States transposing the consumer directives under revision. The Commission is now going through the various provisions of the proposal in more detail with the Member States in order to improve its understanding of the practical impact on national law.

My services are preparing a table, which aims to illustrate the impact of the proposal on the existing levels of consumer protection across the EU. The table will cover those provisions (for example the length of the withdrawal period and of the legal guarantee) for which it is possible to assess whether the proposal will bring about an unquestionable increase or decrease in consumer protection in the various Member States. The table will be available by the end of May at the latest.

Under the proposal, Member States will be able to retain general contract law remedies for faulty goods, provided that the legal requirements for the exercise of these remedies differ from the requirements which apply to the remedies regulated in the proposal. I appreciate that this interaction between the proposal and national general contract law remedies could be made clearer in the text. This means that remedies such as the right to reject in the UK or the garantie des vices cachés in France could be maintained. However, I am also prepared to consider alternatives whereby elements of these national remedies could be incorporated into the proposal, if such a solution were to be preferred by the Council and the Parliament.

The proposal complements the Unfair Commercial Practices Directive (UCP). Whereas UCP protects consumers collectively against questionable business practices by rogue traders, the draft Consumer Rights Directive provides consumers who conclude a contract with a trader with individual contractual rights, which they can enforce before civil courts. As regards the Services Directive and the E-Commerce Directive, the information requirement in these Directives will apply in addition to those of the proposal and will also prevail in case of conflict with the proposal.

Finally, as regards the Rome I Regulation, the preamble to the proposal makes it clear that the proposal is without prejudice to the Regulation. As a consequence, the national law applicable to consumer contracts within the scope of the draft Directive will be determined exclusively by the Regulation.

The Commission, in preparing the proposal, was inspired by the findings of the contract framework of reference (CFR), for example, on the black list of unfair contract terms, the passing-off and delivery rules, as well as the streamlining of the pre-contractual information requirements.

For the future, it will be important to ensure coherence between the CFR and the Consumer Rights Directive. Given that the CFR will be a longer-term project, we will have to make sure that the final definitions and rules of the Consumer Rights Directive are incorporated in the section of the CFR dealing with consumer contracts.

The proposal for a Directive on Consumer Rights was preceded by a thorough impact assessment. The impact assessment also monetised the administrative burden that would accrue as a result of the changes proposed, and compared it with the cost of compliance that traders wishing to sell to other Member States have to incur as a result of the fragmentation of consumer protection rules and Rome I. The assessment showed that full harmonisation of the essential consumer rights would have strong positive effects on internal market integration and consumer confidence. During the initial stages of the legislative process, it appeared that further evidence and more insight might be useful on consumer behaviour and preferences regarding sales remedies. I intend to launch a qualitative study in the near future on this matter, with a view to gathering evidence following in-depth interviews with consumers and traders. The results of the study should be available in the third quarter of 2009.

The Commission is committed to maintaining a constructive dialogue – and this is my political commitment to you – with the stakeholders mostly affected by the draft directive during the legislative process. To that effect, I will gather consumer and business stakeholders together at a joint meeting in June 2009 to clarify elements of the proposal and to further discuss the most important aspects of the proposal. Parliament will be kept duly informed.

I would like just to add that last week I met all the consumer organisations under the umbrella of BEUC and we discussed this matter again. Two days later at least 10 representatives from the House of Lords came to discuss this directive in Brussels. This is a very good sign that interest in consumer policy is increasing, as is right for the internal market.

Malcolm Harbour (EPP-ED, UK) stated: “Mr President, I would first of all like to warmly thank Ms Kuneva for all the work she has done on consumer issues, since this is the last time in this Parliament we shall have a chance to debate with her. Commissioner, I from my side and, I think, the whole committee have really appreciated your intensive engagement.

I know it was perhaps somewhat disappointing for you that we felt we were not able to give this proposal a thorough review and get it to first reading before the end of this mandate. But I think history will show that we have done the right thing because the work that has been led very well by Arlene McCarthy – looking at the impact assessment, questioning the issues – has raised awareness in the proposal and has also got many more people engaged, as you yourself indicated.

It seems to me – and here are the crucial points I want to make in the short time available this evening – that one important thing that is missing from this proposal is the overall strategic framework that the Commission wants to follow in the evolution of the consumer acquis.

This proposal addresses goods but, at the end of this year, before we have this proposal in place, we shall have the Services Directive in place and there are many issues for consumers around that. We know that you are also looking at issues such as digital products, package, travel and so on.

I think we need to see what you intend to do with this goods package as part of a broader strategy for the direction of the consumer acquis. That is very important. It needs to be future-proofed; it needs to be part of an overall process. That is one of the things that I would be slightly critical of in the approach that has been taken so far. I hope we will be able to move that forward.

I was delighted you mentioned the House of Lords because I was also going to reflect on that. We have assured them that their report will be able to have a material contribution on the outcome, given the time we have available. We look forward in the end to an extremely good result for Europe’s consumers and the internal market.”

Commissioner Meglena Kuneva stated: “I see clearly why we need to address the issue of services, and services are definitely a very important part of the consumer strategy for 2007-2013. I fully realise that the European economy is a service economy.

As to why we are not addressing, for example, digital content, and excluding it from the scope of the proposal, I can state that the issue of consumer protection in respect of digital content services was raised in the green paper consultation. Several stakeholders, and in particular consumer organisations, consider this to be an important matter. However, it raised serious concerns in business quarters, and respondents argued that because of the complexity of the issue further careful analysis was needed.

To this end, the Commission will carry out a study in order to determine the scope of the problem and the extent of the consumers suffering detriment as a result of digital content not being covered. I would like to turn to digital issues next time, with rock solid arguments.

Without wishing to waste either the time of Parliament or of consumers and businesses, may I kindly inform you that tomorrow, together with Commissioner Reding, I will present the digital guide. This is a very practical guide based on the existing legislation – about 20 directives – which forms a kind of compendium of what we can do right now to enforce our rights, because sometimes the most important point is how we enforce legislation.

On the remarks which Mr Toubon made, I should say that, under the proposal, Member States will be able to retain general contract law remedies for faulty goods, and this means that remedies such as the right to reject in the UK, or the garantie des vices cachés in France, may be maintained.

Sometimes we need to invest more time in explaining the content of a directive, and that is what my colleagues are doing in the Council. At the least we need to make clear what we mean in one or other text, and this is the stage at which we can clearly settle questionable issues.

The Commission is now going through the various provisions of the proposal in more detail with the Member States, in order to improve understanding of the practical impact on national law, exactly as you, Mr Toubon, and Parliament asked. We will spare no effort to make everything clear. This is a legal text; this is a civil text; and how this legal text can even be translated is itself quite a challenge. We will therefore keep explaining and maintaining the good level of collaboration with the Council, and with Parliament, on this aspect.

Thank you, once again, for the last comment, Mrs Cederschiöld. I will keep your proposals in mind. You are right to say that we are negotiating the directive. I listened very carefully, but let me be very clear in saying that there is one point on which I will not compromise, and that is full harmonization.”

Source: European Parliament