Opinion of the European Economic and Social Committee on (a) ‘Proposal for a directive of the European Parliament and of the Council on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC’

(COM(2018) 184 final — 2018/0089 (COD))

and on (b) ‘Proposal for a directive of the European Parliament and of the Council amending Council Directive 93/13/EEC of 5 April 1993, Directive 98/6/EC of the European Parliament and of the Council, Directive 2005/29/EC of the European Parliament and of the Council and Directive 2011/83/EU of the European Parliament and of the Council as regards better enforcement and modernisation of EU consumer protection rules’

(COM(2018) 185 final — 2018/0090 (COD))

(2018/C 440/10)

Rapporteur: Jarosław MULEWICZ Co-rapporteur: Antonio LONGO

Referral (a) European Parliament, 2.5.2018 (a) Council, 22.5.2018 (b) European Parliament, 2.5.2018 (b) Council, 22.5.2018 Legal basis Article 114 of the Treaty on the Functioning of the European Union Section responsible Single Market, Production and Consumption Adopted in section 4.9.2018 Adopted at plenary 20.9.2018 Plenary session No 537 Outcome of vote (for/against/abstentions) 155/1/5

1. Conclusions and recommendations

1.1. The EESC acknowledges the European Commission proposal regarding the better enforcement and modernisation of EU consumer protection rules and the objective to update existing rules to take into account new consumption habits and to adapt them to the evolution of the digital single market. However, as recommended by the EESC opinion on consumer vulnerability in business practices ( 1 ) , concerns related to the lack of enforcement of existing rules still need to be addressed.

1.2. The EESC agrees with the European Commission about the need to modernise and simplify EU consumer policy and considers that the new legislative package may contribute to bridging the gap created by the exponential growth of e-commerce, undermining consumer confidence and causing distortions to the single market.

1.3. Overall, the Committee considers that the harmonisation of consumer protection law should not diminish the level of consumer protection in the Member States, while balancing it with traders’ legal certainty. The EESC acknowledges the REFIT conclusions that consumer protection rules are fit for purpose but notes, as well, that an increasing number of consumers are subject to aggressive marketing and misleading business practices.

1.4. The EESC supports the proposal to extend consumer rights to all ‘apparently free’ digital services for which users give personal and non-personal data. It also supports greater transparency and responsibility for online platforms.

1.5. With regard to the review of Directive 2011/83/EU on the protection of consumer rights, two different concerns have emerged within the Committee. Traders are in favour of updating, simplifying and adapting pre-contractual information, whereas consumers consider that this would lower the level of consumer protection.

1.6. The EESC considers that the provisions on digital content, digital services and online sales should be aligned with Digital Single Market legislation.

1.7. The EESC considers the right of withdrawal to be an efficient consumer protection tool that should not be undermined. The Committee members share different views on the Commission proposal. Traders — SMEs in particular — need additional legal certainty on unduly tested goods and early reimbursement. Consumers reject the amendment and call for the status quo to be upheld. The Committee calls on the Commission to reconsider this important provision to provide a compromise between the opposing interests.

1.8. The EESC considers that measures to protect consumers against ‘dual quality products’ are justified and supports the Commission proposal to ensure greater transparency.

1.9. The Committee supports the use of Alternative Dispute Resolution and Online Dispute Resolution mechanisms such as mediation or arbitration that should be promoted at European and national level.

1.10. The EESC calls on the Commission to ensure the effective implementation and enforcement of existing consumer protection rules by the Member States; to support the harmonisation of consumer protection rules; to promote cross-border cooperation of national authorities via the Consumer Protection Cooperation (CPC) channel and to launch a communication campaign to facilitate small and medium-sized enterprises’ compliance with consumer protection legislation.

1.11. The EESC invites the Member States to enact stricter rules to enforce existing consumer protection legislation, tackle national and cross-border infringements and uphold the existing level of consumer protection.

1.12. The EESC supports the proposal for specific criteria for the establishment of fines as an effective consumer protection instrument. It is important to have truly dissuasive penalties for companies that infringe the rules, amounting to a significant percentage of their annual turnover and taking into account EU-wide infringements.

1.13. The EESC acknowledges the proposal for a directive on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC. However, the Committee regrets that the recommendations of the EESC opinion on a European Framework for collective redress ( 2 ) have not been taken into account when drafting the legislative proposal.

1.14. Easy and fast access to justice should be granted to all EU citizens. Consumers should be able to obtain compensation in case of suffered prejudice as a consequence of breach of contract. A tailored redress system for collective prejudice is therefore welcome. It should be pragmatic, cost-effective, provide the relevant safeguards and take into account existing national judicial systems.

1.15. The EESC acknowledges the Commission’s efforts to identify the qualified entities able to claim collective redress, in accordance with the principle of subsidiarity and national legislation.

1.16. Moreover, Member States should support the creation of litigation funds for qualified entities. In cases where prejudice is of a small amount and where it is impossible to track down all people who have suffered prejudice, the EESC supports the Commission’s proposal to allocate such amounts for public purposes; however, the Committee calls for clarification on their nature (e.g. consumer assistance, information and education programmes, litigation funds).

1.17. Finally, an important safeguard that should be included in the Directive is the possibility to opt in and opt out from a collective action. In keeping with the recommendation of the EESC opinion on a European Framework for collective redress ( 3 ) , consumers should be free to decide if they wish to opt in or opt out from collective action.

2. Background information and introduction

Omnibus directive

2.2. The Commission proposal COM(2018) 185 on better enforcement and modernisation of EU consumer protection rules is aimed at completing existing mechanisms for consumer protection, cross-border infringements and e-commerce, as well as reducing the burden on traders. The proposal follows the conclusions of the fitness check in the framework of the REFIT programme on EU consumer rights and marketing ( 8 ) law and the assessment on directive 2011/83/EU on consumer rights.

2.3. In particular, the Omnibus Directive proposal contains:

2.3.1. The introduction of effective, proportionate and dissuasive sanctions in a coordinated manner for both national and cross-border infringements;

2.3.2. Enhanced transparency in the Digital Single Market with transparency obligations for online platforms;

2.3.3. The expansion of consumer protection in the sphere of digital services, especially those where consumers do not pay but provide personal and non-personal data which has an economic value and therefore cannot be considered ‘free’;

2.3.4. The reduction of burdens for businesses, allowing professionals to use new means of online communication, such as web forms or chat as an alternative to email;

2.3.5. The revision of certain aspects relating to the right of withdrawal. In particular, the trader is allowed to reimburse the consumer only after having inspected the goods and verified that the consumer has not ‘used’ the goods rather than being limited to testing it;

2.3.6. The possibility for Member States to restrict unsolicited aggressive and misleading practices in the context of door-step selling and excursion sales;

2.3.7. The explicit inclusion of ‘dual quality’ products and all the marketing actions connected to it, including misleading commercial practices, particularly widespread in the agri-food sector.

Representative actions directive

2.4. The Commission proposal COM(2018) 184 on representative actions for the protection of the collective interests of consumers lays the foundations for a European collective redress mechanism against widespread infringement of consumer protection law. This tool, already available in some EU Member States, should be extended to all. Nevertheless, the subsidiarity principle should apply allowing Member States to define this system at national level while maintaining existing ones.

2.5. Only qualified entities at national level should be able to act on behalf of consumers and should comply with some of the minimum requirements introduced by the European Commission.

2.6. The compensation mechanism is linked to an injunction decision. Qualified entities should be able to initiate a case of collective redress only after a court or an administrative authority has ascertained an infringement of consumer rights. The directive applies to infringements committed at national and EU level, enabling cross-border collective redress for consumers.

2.7. In terms of compensation for prejudice suffered by consumers, the proposal makes a distinction between small amounts where compensation directed to a public cause and substantial amounts where impacted consumers are compensated directly.

3. General comments on the Omnibus directive

3.1. The EESC acknowledges the European Commission’s proposal regarding better enforcement and modernisation of EU consumer protection rules and the objective to update existing rules to take into account new consumption habits and to adapt them to the digital single market evolution. However, as recommended by the EESC opinion on consumer vulnerability in business practices ( 9 ) , concerns related to the lack of implementation of existing rules still need to be addressed.

3.2. The EESC wishes to refer to the Information Report on Consumer and Marketing law ( 10 ) evaluating how civil society organisations across the EU perceive the implementation of EU consumer and marketing law and the EESC Information Report on the Consumer Rights Directive ( 11 ) assessing the implementation of the Directive. These information reports have been drawn from three different data collection tools: a questionnaire, an expert hearing and 9 fact-finding missions to Riga, Rome, Warsaw, Madrid, Paris, Athens, Vilnius, Lisbon and Brussels.

3.3. The EESC remarks that the Commission proposal takes stock of the information reports, calling for more awareness-raising, training and coordination efforts with regards to consumer policy and the regulation of online platform and the digital economy. However, the EESC concerns on the harmonisation of consumer policy; the fragmentation of national enforcement; the need to fund awareness campaigns; encourage life-long training; support SMEs; simplifying legal information to consumers and promoting alternative dispute resolution schemes, self-regulation and codes of conduct are not appropriately addressed in the proposal.

3.4. The EESC acknowledges that consumers can find themselves in situations where they are misled or aggressively forced to conclude contracts. Specific issues have been flagged regarding call-centres selling energy, telecommunications or water contracts that are misleading consumers. Likewise, similar pressure sales have been flagged during excursions organised to sell products to certain categories of vulnerable consumers. In these situations consumers should be entitled to withdraw from the sales contract and/or be compensated for the prejudice they suffered.

3.5. As recommended by the EESC opinion on consumer vulnerability in business practices, appropriate individual remedies such as reimbursement, replacement or termination of the sales contract should be offered to consumers. Remedies should also be adapted to the situation of each consumer, enabling them to opt for tailor-made solutions.

3.6. The EESC also believes that the harmonisation achieved by the EU consumer protection legislation should not be lowered. Taking a step backwards is not creating a level playing field; it does not benefit consumers or traders.

3.7. The EESC underlines that aggressive and misleading sales tactics are already banned by the full harmonisation Directive 2005/29/EC on Unfair Commercial Practices Directive. The EESC encourages the European Commission to ensure stricter enforcement of existing rules by the Member States.

3.8. The Committee is divided on the Commission proposal to restrict certain distribution methods. Traders believe these measures should not be limited to door-step selling, stigmatising an entire economic sector, but should target all aggressive practices; consumers support the possibility for Member States to restrict certain sales methods for targeted categories of goods (such as drugs, weapons, pharmaceuticals) for health and safety reasons.

3.9. In that respect, the cooperation between Member States’ Consumer Protection Authorities in the framework of the CPC regulation is key to efficiently tackling malpractices, without penalising legal operators. Information about traders should be accessible for consumers, and awareness campaigns should be promoted at national and EU level.

3.10. With regard to the review of the Directive 2011/83/EU on the protection of consumer rights, two different positions and concerns emerged within the Committee. Traders are in favour of updating, simplifying and adapting pre-contractual information, whereas consumers consider that this would lower the level of consumer protection. The Committee is in favour of a balanced approach between consumer protection and traders’ legal certainty. The EESC considers that the provisions on digital content, digital services and online sales should be aligned with Digital Single Market legislation.

3.11. As regards online platforms, transparency about their identification and responsibility should prevail. The EESC believes that it is essential for a consumer to obtain all relevant information about his counterpart at the time of signing a contract. Furthermore, the transparency of online platforms is a key factor for the development of the Digital Single Market, both for consumers and for businesses (B2B) ( 12 )

3.12. Furthermore, the EESC also supports the proposal to extend consumer rights to all ‘free’ digital services for which users give personal or non-personal data. As such data has a commercial value, it would be unfair to consumers to consider it ‘free’ and not provide the relevant protection. The set of measures proposed by the European Commission makes it possible to rebalance, at least in part, the relationship between the major global players of online platforms and individual users.

3.13. The EESC is in favour of introducing modern mechanisms of information exchange between traders and consumers (i.e. chatbots, online forms). The Committee considers that these mechanisms should simplify the dialogue between the parties provided that adequate safeguards for consumers are included, such as the possibility to track the information exchange, to obtain additional information and to submit complaints. In particular, it should always be possible to use traditional forms of contact (such as call centres, for example).

3.14. The EESC supports the concept of the right of withdrawal and recognises its role as an efficient consumer protection tool that should not be undermined. The Commission proposal risks limiting consumer rights without providing adequate evidence as to the systematic and widespread abuse of such rights. On the other hand, traders and SMEs in particular, need additional legal certainty on unduly tested goods and early reimbursement. The Committee calls on the Commission to reconsider this important point in order to reach a balanced compromise.

3.15. The EESC welcomes the clarifications around dual-quality products as it appears that some products, food in particular, were labelled identically even if their composition was different with the risk of misleading consumers. Misleading description and labelling of products should be banned to ensure transparency.

3.16. The EESC supports the proposal for specific criteria for the establishment of fines as an effective consumer protection instrument. As pointed out by the European Consumer Consultative Group, it is important to have dissuasive penalties amounting to a significant percentage of the annual turnover of companies that infringe the rules and taking into account the EU-wide dimension of the infringement. The Commission should examine the possibility of aligning the proposal with the provisions of the General Data Protection Regulation

3.17. The EESC also supports the use of Alternative Dispute Resolution and Online Dispute Resolution mechanisms ( 13 ) such as mediation or arbitration, which should be promoted at national level. Out-of-court settlements can be an option prior to court actions and should be supported if relevant. The courts should remain an option of the last resort. The European Commission proposal should further support these options to resolve consumer protection issues.

3.18. Overall, the EESC considers that sustainability and quality should be at the heart of the supply chain, to ensure consumer protection during the entire production life-cycle.

4. Specific comments on collective actions in the EU

4.1. The EESC acknowledges the proposal for a directive on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC ( 14 ) . However, the Committee regrets that none of the recommendations of several EESC opinions on a European Framework for collective redress ( 15 ) have been taken into account when drafting the legislative proposal.

4.2. The REFIT Fitness Check evaluation showed that the risk of infringements of EU law affecting the collective interests of consumers is increasing due to economic globalisation and digitalisation. In addition, a number of Member States do not provide for effective collective compensatory redress mechanisms tailored for mass prejudice situations and have not implemented the safeguards provided by the European Commission 2013 Recommendation on collective redress ( 16 )

4.3. Easy and fast access to justice should be granted to all EU citizens. Consumers should be able to obtain compensation in case of prejudice suffered as a consequence of a breach of contract. However, the same applies to traders, who should not be the target of undue litigation. Collective actions are a judicial tool, a procedural right, a fundamental right to allow diffuse, collective and individual homogeneous interests to be judicially protected under Article 81 of the TFEU that should be neutral and not limited to consumers (environment, workers, SMEs rights, energy, sharing economy, circular economy, platforms, all digital rights, etc.).

4.4. A tailored redress system for collective prejudice is therefore welcome. It should be pragmatic, cost-effective, provide the relevant safeguards and take into account existing national judicial systems (e.g. Norway or Denmark). The EU Directive should define the major guidelines for harmonised EU group action, clearly stating what should be governed by an EU legal instrument and what should be left to Member States, according to subsidiarity; ensure that the scheme contributes to a more efficient, quick, affordable and fair application of justice, enable effective and total compensation for damages and grant the sustainability of this mechanism in terms of adequate funding. The current Commission proposal does not fulfil these objectives.

4.5. The EESC acknowledges the Commission’s effort to identify the qualified entities able to claim collective redress, in accordance with the principle of subsidiarity. It should also be made clear that the place of establishment of the qualified entity should be the place of jurisdiction and should determine the applicable law. Additionally, the EESC considers that the Commission should further elaborate on the role of the judge on deciding the consistency of the claim; the burden of proof and production of evidence; the regime of the ‘ruling’ — ‘inter partes’ or ‘erga omnes’ and the regime of appeals.

4.6. All legal costs of collective actions should be supported according to national judicial aid systems.

4.7. Consumer or civil society organisations should be able to receive adequate funding and legal advice to claim redress. Specific funds should help qualified entities to remunerate legal counsels. Member States should support the creation of litigation funds for qualified entities.

4.8. In terms of compensation, the proposed legislation does not fully address the need to provide actual compensation to consumers for the prejudice suffered. The proposal should clearly refer to the compensation of the total amount lost by consumers, regardless of the prejudice suffered.

4.9. The EESC is concerned about the protection of the rights of entrepreneurs, including the safeguarding of company secrets. Without undermining the protection of consumers who have suffered prejudice, the EESC would welcome the introduction of mechanisms confirming the guarantee of confidentiality of information provided, not only at the stage of the proceedings, but also in final decisions.

4.10. Likewise, traders would welcome the possibility to settle a case within a short timeframe, including through the above-mentioned alternative dispute resolution mechanisms.

4.11. The EESC invites the Commission to incorporate into the proposal for collective redress a recommendation for Member States to use technological innovations as already done by the technologically most advanced ADR- and ODR-entities, in particular with regard to the gathering of participants for a collective action. This measure should enable significant cost savings for the organizers of the collective action and for the consumer organizations that decide to join. The Commission should also encourage the exchange of best practices with a specific focus on data collection concerning all cases that are the subject of a collective action.

4.12. In keeping with the recommendation of the EESC opinion on a European Framework for collective redress ( 17 ) , the Committee believes that consumers should be free to decide whether they wish to opt in or opt out from collective action. In particular, the EESC believes that an opt-in would be appropriate for cases involving a limited number of victims who have suffered significant prejudice, while an opt-out would be more appropriate for cases involving a large number of victims who have suffered limited prejudice.

Brussels, 20 September 2018. The President of the European Economic and Social Committee Luca JAHIER

(1) OJ C 12, 15.1.2015, p. 1.

(2) OJ C 170, 5.6.2014, p. 68.

(3) OJ C 170, 5.6.2014, p. 68.

(4) Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L 95, 21.4.1993, p. 29).

(5) Directive 98/6/EC of the European Parliament and of the Council of 16 February 1998 on consumer protection in the indication of the prices of products offered to consumers (OJ L 80, 18.3.1998, p. 27).

(6) 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).

(7) Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council (OJ L 304, 22.11.2011, p. 64).

(8) SWD(2017) 208 final and SWD(2017) 209 final, published on 23.5.2017.

(9) OJ C 12, 15.1.2015, p. 1.

(10) EESC Information Report submitted to the plenary session on 14.12.2016 (INT/796).

(11) EESC Information Report submitted to the plenary session on 14.12.2016 (INT/795).

(12) EESC opinion: TEN/662 — Fairness and transparency for business users of online intermediation services (see page 177 of this Official Journal).

(13) Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR) (OJ L 165, 18.6.2013, p. 63).

(14) Directive 2009/22/EC of the European Parliament and of the Council of 23 April 2009 on injunctions for the protection of consumers’ interests (OJ L 110, 1.5.2009, p. 30).

(15) OJ C 170, 5.6.2014, p. 68.

(16) Commission Recommendation 2013/396/EU of 11 June 2013 on common principles for injunctive and compensatory collective redress mechanisms in the Member States (OJ L 201, 26.7.2013, p. 60).

(17) OJ C 170, 5.6.2014, p. 68.