Following loudly expressed reservations from numerous corners, the latest move to harmonise EU consumer protection laws on various fronts seems to have hit the buffers. Stephen Groom sheds no tears.
Topic: Consumer protection
Who: European Commission
When: March 2010
Law stated as at: 29 March 2010
European Commissioner Viviane Reding told a committee of Euro MPs that after getting on for eighteen months of controversy over its merits, the Commission may admit defeat and abandon the draft Consumer Rights Directive ("CRD") in its current form.
The CRD was first proposed in October 2008. The idea was that it would take the EU a significant way down the track towards achieving the Holy Grail of a genuine single market for consumers.
The plan was to merge no less than four existing consumer directives into one. The earmarked directives were:
• Directive 99/44/EC on Sale of consumer goods and guarantees;
• Directive 93/14/EC on Unfair Contract Terms;
• Directive 97/7 on Distance Selling; and
• Directive 85/577 on Doorstep Selling.
The objective was to create a single "horizontal" directive whose aim was to simplify and complete the existing regulatory framework on consumer protection.
The targeted areas were:
• quality and condition of the products bought;
• price and payment;
• contract terms;
• redress for defective products; and
• unfair selling techniques.
Maximum harmonisation approach
Unlike the directives the CRD was to replace, the CRD was pitched at "maximum harmonisation" level, in other words the local laws of member states could not be stricter than the CRD.
Since its publication the CRD has been criticised by many including our own Law Commission, BIS and House of Lords and also and perhaps most devastatingly, the European Parliament.
Devastating critique from Euro MPs
In the European Parliament's "Working Document" on the CRD published in May 2009, various criticisms included:
• the European Commission had not provided a sufficiently detailed analysis of the legal implications of the proposal;
• there had been no proper assessment of the national legislation affected;
• the exclusion of package travel from the scope of the CRD was criticised by both businesses and consumer organisations;
• the proposed principle that a trader is liable to a consumer for a period of two years if the goods are not in conformity with the contract would in many member states mean a substantial reduction in the local period, for instance down from 6 years in the UK;
• the scope of the CRD needed to be made more concise and simplified, in fact a complete overhaul of the structure was needed;
• there was lack of clarity as to the relationship between provisions in the CRD and national contract law remedies such as the UK's right to reject; and
• there was also uncertainty as to the interaction between member state case law and the CRD lists of contract terms that were to be regarded as in all case unfair ("black list") and those that were to be regarded as unfair unless the trader proves otherwise ("grey list").
In light of this trenchant criticism, Commissioner Reding's March 2010 announcement is not surprising.
First and foremost, it is now accepted that blanket maximum harmonisation is not necessarily the way forward. There would instead be "targeted harmonisation" where the extent of harmonisation would depend in each case on the benefit to consumers.
For instance for distance contracts such as internet shopping there would still be maximum harmonisation because security for consumers and legal clarity for operators was crucial. For "direct transactions" on the other hand, a more pragmatic, targeted solution would be looked at.
The upshot in terms of next steps is that in April 2010 a proposal will be tabled for an amended directive which fleshes out the "variable harmonisation" approach. Then a "draft report" will be submitted to the Internal Market Committee "before the summer" with the matter coming before the European Parliament in November 2010. In the meantime the Commission would arrange a series of studies analysing the optimum degree of harmonisation, going through the directive "chapter by chapter." In short, the long grass.
Why this matters:
This is not far short of a humiliating climb down for the Commission. With all available data continuing to show low take-up by EU consumers of opportunities to make cross-border purchases, the Commission has been anxious to do all in its power to change perceptions and attitudes. The CRD was seen as a giant step towards this, but now that plan, and the timetable for change, is in disarray.
It now seems unlikely we will see any concrete results from this initiative in the form of local law changes until 2012 at the earliest.
In the meantime it's "as you were" for member states such as the UK who have been awaiting developments in Brussels before further progressing their own consumer law reform plans, although in the UK at any rate, a certain other development in the form of a general election may supervene and send those plans back to the drawing board as well!