EUROPEAN COMMISSION 
Brussels, 29.11.2011 
SEC(2011) 1409 final 
  
COMMISSION STAFF WORKING PAPER 
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 
Accompanying the document 
Proposal for a Directive of th e European Parliament and of the Council on Alternative 
Dispute Resolution for consumer disputes (Directive on consumer ADR) 
 
and 
 
Proposal for a Regulation of  the European Parliament and of the Council on Online 
Dispute Resolution for consumer disputes (Regulation on consumer ODR) 
 
{COM(2011) 793 final} 
{SEC(2011) 1408 final}  
 
EN 2   EN Disclaimer 
This Impact Assessment report commits only th e Commission’s services involved in its 
preparation and the text is pr epared as a basis for comment and does not prejudge the final 
form of any decision to be taken by the Commission. 
 
EN 3   EN 1. INTRODUCTION  
Consumer protection legislation at EU and Member States’ level has been significantly 
strengthened in the past decades. However, when their rights are violated European 
consumers do not always obt ain effective redress.  
This is because consumers belie ve court proceedings to be expensive, time-consuming and 
burdensome. Cumbersome and ineffective proceedings and their uncertain outcome 
discourage consumers from even trying to seek re dress. In addition, c onsumers are not always 
aware of what their rights entail in concrete  terms and therefore do not seek compensation 
when they are entitled to it. 
The lack of effective redress poses particul ar challenges in cross-border transactions. 
Naturally wary of venturing into an unfam iliar commercial environment, consumers are 
especially worried about some thing going wrong with a purchase made in another Member 
State. They are concerned about differences in  legislation between Member States, language 
barriers, potentially higher costs and unfamilia r procedural rules in dispute resolution in 
another Member State. Consumers often give up  their cases simply b ecause they do not know 
where to address their dispute in another Member State. Uncertainty about securing redress affects consumers' confidence in shopping acro ss borders and dissuades them from taking 
advantage of the Single Market. 
In addition to traditional dispute resolution th rough judicial means, consumers and businesses 
in some Member States can refer their claims to the so-called Alternative Dispute 
Resolution  ("ADR" ) schemes. The term alternative disp ute resolution covers non-judicial 
procedures, such as conciliation,  mediation, arbitration, complain ts board. For the purposes of 
this Impact Assessment (IA), ADR  refers to the resolution of disputes between consumers and 
traders (B2C) linked to the sale  of goods and provision of serv ices by traders. ADR schemes 
aim to settle disputes arising between part ies through the intervention of an entity (e.g. 
conciliator, mediator, ombudsman, complaints board etc). ADR does not cover the resolution 
of disputes by internal compla int handling systems run by businesses. ADR schemes aimed at 
resolving disputes between consumers and traders via an online procedure are called Online 
Dispute Resolution  schemes ( "ODR" ) and could be an effective tool, particularly for solving 
disputes linked to online transactions. However,  ODR is currently not sufficiently developed
1. 
The need to improve access to redress for consumers through alternative dispute resolution 
schemes calls for a reflection at EU level. The present analysis takes full account of the 
different level of development of ADR in the Me mber States and the various types of existing 
ADR schemes. The divergence in  national policies on ADR schemes (or lack thereof) shows 
that unilateral action by Member States does not lead to a satisfactory solution to consumers 
and businesses. The lack of coherent and effi cient ADR systems in the Member States has 
also an impact on the possibility for consumer s to rely on these ADR systems in cross-border 
and online disputes, for which access to ADR/ ODR procedures remains very limited. The 
                                                 
1 ODR can also exist for disputes between traders (B2B) which, as ADR, are not covered by this Impact 
Assessment. An example of B2B ODR is a service of the Czech Arbitration Court ( www.adr.eu ) which 
helps brand and trade mark owners, domain name registrants and registration companies all over the 
world to resolve conflicts through an online procedure.  
 
EN 4   EN cross-border aspects of the identified problems in ADR and ODR are dir ectly linked with the 
national situation. Improving cross-bord er ADR relies on improving national ADR.  
The Impact Assessment focuses exclusively on th e area of out-of-court dispute resolution. It 
aims to analyse a range of policy options to improve consumer redress through ADR and ODR. Other existing instruments enhancing the app lication of consumer rights in the internal 
market through judicial means and enforcement ac tion do not fall within th e scope of this IA. 
2. P
ROBLEM DEFINITION  
A substantial proportion of Europ ean consumers encounter problems  when buying goods and 
services in the internal mark et. In 2010, this was the case for approximately one in five 
European consumers2. Despite a generally high level of  consumer protection guaranteed by 
legislation, problems encountered by consumers ar e often left unresolved. The losses incurred 
by European consumers because of problems with  purchased goods or services are estimated 
at 0.4% of EU GDP. This includes the detrim ent suffered by European consumers in relation 
to cross-border shopping, which is estimated between €500 million and €1 billion3. 
Four main shortcomings which hinder the effectiv eness of ADR have been identified. Gaps in 
ADR coverage, low awareness and quality of ADR schemes  
European consumers do not enjoy the same leve l of access to quality  ADR schemes in the 
EU. Despite roughly 750 existing national ADR schemes gaps still remain both 
geographically and sector ally. In addition, the lack of detailed information constitutes for 
consumers a significant barrier for the use of AD R. Businesses rarely provide consumers with 
information on the competent ADR scheme to deal  with their dispute either at the point of 
sale or post-sale. Finally, ADR schemes do not always respect core principles such as 
transparency, impartiality and effectivene ss, as laid down in the two Commission 
recommendations of 1998 and 2001. 
ODR for cross-border e- commerce transactions  
Lack of ADR coverage in Member  States across the EU results  in non-effective resolution of 
disputes related to e-commerce transactions. In 2010, more than half of compla ints (56.3%) 
received by the ECC-Net were linked to e-commerce transactions, out of which less than 9% could be referred to an ADR scheme in a nother Member State. Very few existing ADR 
schemes offer the possibility to have the enti re process online. Handling the entire process 
online would allow savings in terms of time and ease communication between the parties. 
                                                
 
2 EB 342, p. 169. 
3 Assuming that the individual losses are similar for both domestic and cross-border purchases, it is 
estimated that the detriment suffered by EU consumers, related to cross-border shopping, is between 
€500million and €1 billion. This assumption is for example also supported by the fact that when 
comparing the shopping experience of domestic and cross-border distance s hoppers, there does not 
seem to be significant differences in encountered problems. 16% of shoppers experienced a delay with a 
product purchased cross-border in the EU while 18 % of shoppers experienced a delay with a product 
purchased domestically.  
 
EN 5   EN 3. SUBSIDIARITY AND NEED FOR EU ACTION  
Consumer protection belongs to shared compet ences between the EU and the Member States. 
As stipulated in the Article 169 of the Treat y on the Functioning of the European Union 
(TFEU), the EU shall contribute, inter alia , to protecting the economic  interests of consumers 
as well as promoting their right to informati on and education in order to safeguard their 
interests. An ADR/ODR initiative based on Ar ticle 114 of the TFEU will help to achieve 
these objectives in the context of the proper functioning of the internal market. At the same 
time it will respect the principles of  subsidiarity and proportionality. 
Developing consumer ADR/ODR is crucial to benefit cons umers and businesses and to 
improve the functioning of the internal market, as was c onfirmed by all sections of 
stakeholder opinion in the public  consultation and debates. 
Twelve years after the Commission Recomme ndations on consumer ADR schemes, the 
analysis of the current situation indicates that  action taken solely at national level has not 
produced sufficient coverage of ADR. A number of shortcomings still hinder the effectiveness of ADR schemes and well functioning and ac cessible ODR schemes for cross-border e-
commerce transactions remain underdeveloped. European consumers therefore do not enjoy 
the same level of access to ADR schemes across the EU. Neither is the provision of 
information to consumers on ADR in all retail market sectors guaranteed. If the development 
of ADR is left to Member States' action alon e, quality ADR schemes will continue to be 
absent in some sectors of the retail market  and in some geographical areas of the EU. 
Consumers' and businesses' awareness levels will remain low, while the monitoring of 
national ADR will be done by Member States on a voluntary basis. Finally, there will be no 
assurance that ADR/ODR scheme s respect key principles guara nteeing their quality. This 
insufficient and fragmented development of ADR in  the EU is in contrast with the objectives 
of the TFEU since it will undermine or create ne w obstacles to the func tioning of the internal 
market, create unequal consumer protection in the EU and variab le commercial conditions for 
business. Moreover, without a well-functioning  system of domestic ADR on which cross-
border ADR can be based and anchored, the deve lopment of an efficient and effective ADR 
for cross-border disputes will not be achieved. 
The lack of efficient ADR/ODR limits the poten tial of this means of dispute resolution and 
creates imbalances in the effectiveness of ha ndling consumer disputes in different Member 
States, in particular as rega rds cross-border disputes. This situation affects consumers' 
confidence in shopping across borders. Both businesses
4 and consumers clearly state that 
concerns about potential redr ess problems in another Member  State discourage them from 
selling and buying across borders and thus not fully  reaping the potential benefits of internal 
market5. Particular attention needs to  be paid to generating cons umer confidence of in the 
internal market and to ensuri ng a level playing field for busin esses across Member States. 
                                                 
4 In particular for SMEs since their limited administrative capacity would not allow them to pursue 
claims through judicial means. The availability of easy dispute resolution such as ADR could address 
such concerns of small and medium enterprise. 
5 Reportedly, 1 in 20 consumers faced problems with cross-border purchases of goods or services, while 
59% of traders said that an important obstacle to th em selling cross-border is the potentially higher cost 
in resolving complaints and conflicts cross-border compared to domestically. 
 
EN 6   EN Furthermore, despite the low level of current cross-border e-commerce transactions, there is a 
rapidly expanding digital retail ma rket within the Member States6. Thus, ensuring simple, 
low-cost and effective means of  out-of-court redress is even more important for consumers 
and traders in order to engage in online tran sactions across border. Action at Member State 
level will not lead to the establishment of an EU-wide online dispute resolution which, as 
indicated in the Digital Agenda, is an e ssential tool in promoting e-commerce.  
The objectives pursued can be be tter achieved by measures at EU level by reason of its effects 
and scale. A clear advantage in the definition  of common principles and criteria for ADR 
schemes in all Member States will be an e ffective and adequate tr eatment of consumer 
disputes linked both to the domestic and cross-bor der transactions. It will also ensure that 
ADR/ODR is developing in a more homogenous manner in the EU. 
Unilateral actions at Member State level canno t sufficiently provides consumer and traders 
with the benefits mentioned above. Uncoordina ted efforts by Member States are likely to 
result in further fragmentation of ADR, which in turn will contribute to unequal treatment for 
consumers and traders in the internal market a nd create diverging levels of consumer redress 
in the EU. 
4. POLICY OBJECTIVES  
The general objectives are the foll owing: i) To improve the functi oning of the retail internal 
market, including the retail digital market; ii) To  achieve a high level of  consumer protection; 
iii) To enable consumers and traders to resolve their disputes in an effective manner. The table below describes the speci fic and operational objectives:  
Specific Objectives Operational Objectives 
ADR coverage, information and quality 
To ensure access to ADR schemes to facilitate out-of-
court dispute resolution for consumers in domestic and cross-border disputes with traders.  • To increase the proportion of domestic and cross-
border consumer disputes solved by ADR schemes. 
• To reduce the number of unresolved consumer 
problems with purchased goods or services at the 
national level and in cross-border cases. 
To ensure that consumers and businesses are aware of the existence of ADR schemes  • To ensure that consumers receive information about 
the ADR scheme competent to deal with their 
dispute, in particular in cross-border situations. 
• To ensure that consumers and businesses are aware 
of the general information related to ADR schemes 
and to their use, in pa rticular in cross-border 
situations.  
To ensure that ADR schemes offer a quality service 
to consumers and businesses • To ensure that ADR schemes provide an impartial 
service to businesses and consumers. 
• To ensure that ADR sche mes provide a competent 
and transparent service to businesses and 
                                                 
6 Between 2004 and 2010, the percentage of individuals who ordered goods or services over the internet 
in the EU-25 rose significantly, from 22% to 37%, in particular in the UK, Luxembourg, Germany, the 
Netherlands, France and the Nordic  countries, where 45% to 65% of internet users are online buyers. 
 
EN 7   EN consumers. 
• To ensure that ADR schemes provide an effective 
service. 
• To ensure that ADR schemes are regularly 
monitored.  
Online Dispute Resolution (ODR) for cr oss-border e-commerce transactions 
To ensure that consumers and businesses can rely on 
a mechanism to solve thei r cross-border, e-commerce 
disputes online.  • To give consumers and businesses the possibility to 
handle all cross-border e-commerce disputes online 
and out-of-court by providing a web-based tool at 
EU level.  
• To develop common criteria upon which the web-
based system will be based in order to boost its 
effectiveness.  
5. POLICY OPTIONS AND ITS ANALYSIS  
The tables below summarise the policy options identified for the two problem areas. 
5.1. ADR coverage, information and quality  
Option 1 No EU action (baseline scenario) 
Option 2 Non-binding legal instrument to encourage th e development of quality ADR schemes for 
all domestic and cross-border consumer disputes, to encourage businesses to provide 
consumers with information on the ADR schem e competent to deal with their dispute 
and to encourage ADR schemes to particip ate in existing EU sector-specific ADR 
networks.  
Option 3  Binding legal instrument to ensure that cons umers can refer all their domestic and cross-
border disputes to quality ADR schemes, cove ring also online services; that consumers 
receive information on the ADR scheme competen t to deal with their dispute; and that 
ADR schemes participate in existing EU sector-specific ADR networks. 
Option 4 Binding legal instrument to establish an EU model for quality national ADR schemes to 
cover all domestic and cross-bor der consumer disputes, including in relation to online 
purchases. This legal instrument will also en sure that consumers receive information on 
the ADR scheme competent to deal with their dispute and that EU networks of sector-specific ADR schemes are created. 
5.2. Online Dispute Resolution (ODR) for cross-border e-commerce transactions  
Option 1 No EU action (baseline scenario)  
Option 2 Non-binding legal instrument to connect national ADR schemes dealing with cross-
border e-commerce disputes online in an EU network.  
Option 3 Binding legal instrument to establish a EU sy stem consisting of a web-based platform 
directly accessible by consumers, which will be based on national ADR schemes and 
will be able to deal with cross-border e-co mmerce disputes online (ODR); and to define 
common criteria for the functioning of the web-based platform. 
Option 4 Binding legal instrument to create a single EU body dealing with all cross-border e-
 
EN 8   EN commerce disputes online. 
6. THE COMPARISON OF OPTIONS AND THEIR IMPACTS  
An assessment of the policy options related to  the problem areas against the criteria of 
effectiveness, efficiency and coherence was carried out by using a scale from 0 to 5. The 
scores of each combined option for each of the cr iteria (effectiveness, efficiency, coherence) 
are presented in the cumulative table below. The final results show the extent to which each 
combined option is expected to c ontribute to the policy objectives.  
Cumulative impact 
(effectiveness, efficiency 
and coherence) Online Dispute Resolution for cross-border e-commerce transactions  
ADR coverage, 
information and quality Policy Option 1 Policy Option 2 Policy Option 3 Policy Option 4 
Policy Option 1 0 3 5 7 
Policy Option 2 3 6 6 8 
Policy Option 3 6 9 15 11 
Policy Option 4 8 8 13 12 
From the rating of the table above it can be co ncluded that the combination of options that 
entails no EU action will preserve the status quo and therefore the problems that have been identified will not be tackled. The combination of options that foresees the adoption of non-
binding legal instruments to tackle the problems identified is neither efficient nor effective. Consequently, consumers' problems will remain unresolved and losses suffered in the internal 
market unrecovered. An additional Recommendation is not expected to bring an added value 
to tackle the current problems.  
The combination of options th at foresees the adoption of binding legal instruments that 
require making ADR schemes, which are also able to deal with disputes online, available in 
sectors of the economy where they do not curr ently exist (option 3 ADR) will ensure full 
ADR coverage. As a consequence of the full AD R coverage, the required framework will be 
created, on the basis of which a EU web-based system can effectively deal with disputes 
related to cross-border e-commer ce transactions (option 3 ODR). This combination of options 
would therefore represent the most effective an d efficient means to improve the way domestic 
and cross-border disputes are dealt with.  
The combination of options that entails a high level of harmonisation in  the areas of ADR and 
ODR (options 4) would provide for a full cove rage but would be disproportionate to the 
objectives of the overall initiative. This has al so been confirmed by th e replies to the public 
consultation and the bilateral discussions he ld by the Commission se rvices with Member 
States. In addition, creating a single EU ODR body would make ADR schemes that currently 
exist at national level and deal with disputes  online, redundant. Finally, such development 
does not take into account the national situation and is disproportionate as it implies a strong 
EU "top-down" intervention that also cr eates unnecessary costs for the EU.  
 
EN 9   EN In conclusion, the objectives pursued ca n be best achieved through separate but 
complementary instruments. The preferred op tion is the combination of the two following 
policy options: 
(1) A framework Directive to ensure that consumers can refer all their domestic 
and cross-border disputes to quality  ADR schemes, covering also online 
services; that they receive informati on on the ADR scheme competent to deal 
with their dispute and that ADR scheme s participate in existing EU sector-
specific ADR networks (Op tion 3). It will be binding to Member States while 
leaving them the choice of form and methods (how to "fill the gaps"); and 
(2) A Regulation to establish a EU system , consisting of a web-based platform 
directly accessible by consumers, wh ich will be based on national ADR 
schemes and will be able to deal with cross-border e-commerce disputes online 
(ODR); and to define common criteria for the functioning of the web-based 
platform (Option 3). 
6.1. The impact of the preferred option 
The preferred option will ma ke a real difference for consumers.  
Consumers will be able to addre ss all their disputes (no matter the business sector, the channel 
of purchase or the country where the product or service was purchased from) to an ADR 
scheme. Moreover, they will be assured that all ADR schemes will be transparent and will deal with their dispute effectively and impar tially, thus feeling better equipped and more 
empowered to turn to ADR. As a result, more consumer problems will be raised and solved. The recovered losses can be then re-used in the internal market for the purchase of goods and 
services. Similarly the savings by introducing quality ADR will be important, accounting for 
about 0.17% of EU GDP. They will receive inform ation on which ADR to turn to in case of a 
dispute with a trader in all contracts and commercial documents (e.g. receipts, invoices). 
Consequently, ADR will become common knowledge for consumers and the levels of awareness will increase substantially.  
The overall impact on businesses  will be reasonable. A number of costs will occur for 
businesses, namely: i) Businesses may be require d to set up and fund -partly or totally- ADR 
schemes in the sectors where they do not exist.  The related costs will depend on the sector, the 
disputes received and the country The Member States which will be more affected are those 
that have a few or no ADR schemes in place. However, costs for businesses in relation to the obligation of full coverage are not directly linked to the existing coverage in ADR in the 
Member State where they are established. Full ADR coverage will not require systematically businesses to create a specific ADR scheme in  each retail sector. Member States, in 
collaboration with businesses or not, may decide instead to cr eate a single or residual cross-
sectoral body to 'fill the gaps' in  their territory. In addition, it should be noted that funding of 
ADR schemes by businesses is already a common practice in  many sectors and Member 
States. ii) Businesses will have to adapt their contracts and commercial documents to include 
information on the relevant ADR schemes. This will generate certain costs to them, which 
will be one-off and will amount to about €771 million EU wide (€254 per business). 
On the other hand businesses, including SMEs, will save on a yearly basis, if they use ADR 
instead of court proceedings, from € 1.7 billion to € 3 billion, while at the same time saving 258 days. In addition, they will enhance their reputation with consumers and to a significant 
 
EN 10   EN extent address issues of reputational risk, by showing willingness to solve disputes in a non 
expensive and easily accessible way. Full covera ge for all online, off-line, domestic and 
cross-border goods and services will therefore enable businesse s to use ADR. This will allow 
them to avoid lengthy and cos tly in-court procedures and main tain their busin ess reputation. 
As a result, businesses, and in particular SMEs, will have in centives to also improve their 
internal complaint handling systems and bett er competition will be secured. As a result 
businesses will be more inclin ed to offer products and services via the internet.  
Similarly, the impact on Member States will be reasonable. Cost s will occur for the set up 
and running of new ADR, which Me mber States may need to bear  partly or to tally (depending 
on the nature of the funding of ADR, either public or financed th rough private sector 
contribution or both). The relevant implementati on costs will be similar to the ones described 
above for businesses. Member States will have the possibility to meet  the obligation of full 
coverage through several options. Member States  will also incur marginal costs for reporting 
on the development of ADR schemes. 
The impact on the  EU budget should also be considered. The EU will bear the costs to 
develop a web-based system for disputes linked to cross-border e-commerce transactions and 
the expertise required within the ECC networ k. Taking into account existing ADR schemes 
dealing with disputes online as well as similar EU tools, th e budget needed for the set up of 
the web-based system can be estimated to about €2 million and annual maintenance and running costs will amount to approximately €300.000.  
Finally, the scope of the intervention of the EU is limited to strictly necessary actions to 
achieve the objectives set. A framework Di rective on the development of ADR and a 
Regulation on the establishment of an ODR system  at EU level will provide the most effective 
means to achieve the pursued objectives at the lowest comparative costs. The action at EU 
level takes account of existing national ADR schemes. The bur den to businesses and Member 
States resulting from the preferred option are th e most proportionate as the objectives will be 
achieved at the lowest costs avoiding duplicatio n of expenses or unnecessary administrative 
burdens. In conclusion, the pref erred option respects the pr inciple of proportionality. 
7. C
ONCLUSION / MONITORING AND EVALUATION  
The proposed legislative initiatives would include a provis ion stating that a report on the 
application of the initiative and its appropriateness and effectiveness in meeting the objectives should be carried out. In addition, a number of  monitoring indicators will be used to measure 
the progress towards meeting the objectives pursu ed by the initiatives. These will include the 
increase in the number of ADR cases and in the number of consumers and traders buying and 
selling cross-border online; the increase in awareness levels, th e increase in the number of 
businesses that are willing to sell online in other Member States by 20% by 2020 and in the 
number of consumers who are willing to buy online from another Me mber State by 10% by 
2020; and the compliance levels of ADR schemes to the quality principles.