The European Commission last week issued a consultation document proposing root and branch harmonisation of consumer law within the EU, including various possible routes towards harmonising the current mishmash of advertising and marketing laws.
In a related proposal the Commission has also set out specific plans to harmonise sales promotion law across the EU. This important new measure will be covered in a separate early warning shortly.
The policy makers in Brussels want to develop the internal market in B2C transactions, which is less developed than the B2B internal market. The EU has the largest pool of consumer demand in the world but this asset is not being fully exploited. Consumers tend to shop within their own borders, even when it comes to e-commerce. Cross-border shopping has had an impact in certain areas, notably car prices, but in many areas, for example branded consumer electronic goods, there are price differences of 30 or 40% between the EU countries with lowest and highest prices.
The Commission believes that one of the main reasons why the consumer internal market is not functioning properly is the uncertainty consumers feel over their rights when they go shopping abroad.
Three developments have forced the consumer internal market up the agenda: the euro, e-commerce and Enlargement. The euro and e-commerce make it easier for consumers to shop across borders. Enlargement of the EU, without further harmonisation of consumer protection rules, would make the current situation even more confused.
The Green Paper sets out two possible approaches towards harmonisation of consumer law within the EU. We could carry on with the present piecemeal approach involving specific directives on particular issues (for example, the directives on misleading advertising, distance selling contracts, consumer credit etc). Alternatively, there could be a mixed approach involving a comprehensive “framework directive” supplemented by targeted directives on specific issues where necessary.
The Commission seems to favour the framework approach, which it thinks would allow existing rules to be simplified. For example, the current directives on misleading and comparative advertising could be subsumed into the framework directive.
One problem all harmonisation measures face is that the EU remains a collection of independent countries with a perplexing variety not just of laws but also of legal philosophies. Different member states protect their consumers in different ways. Countries such as France and Italy have systems based on the principle of “fair commercial practices”. In Scandinavia there is a similar but different principle of “good marketing practices”. The UK and Ireland, as one might expect from the pragmatists of Europe, have no general legal standard at all regulating the B2C relationship (although we do still have a high level of consumer protection).
The Green Paper suggests two possible models for the general framework of consumer protection. The more ambitious approach would involve a general clause requiring businesses not to engage in “unfair commercial practices”, with general tests of fairness and specific rules to harmonise national rules on commercial practices. A simpler alternative would be to base the framework directive on the more restrictive concept of “misleading and deceptive practices”.
The Green Paper proposes a major role for self-regulation, which the framework directive would facilitate on an EU-wide basis by enabling businesses to sign up to one common code of conduct, rather than fifteen. Self-regulation would be backed up by giving legal teeth to consumer associations and public enforcement authorities (much as the UK’s voluntary Advertising Code is reinforced legally by the OFT’s power to obtain court injunctions against recalcitrant misleading advertisers).
The Green Paper has been welcomed by consumer organisations. The response from business and from marketing organisations has been more wary. The general aim of harmonising marketing and other aspects of consumer law across the EU has to be right, but the Commission is setting itself an ambitious task which will take time to plan and implement.