Opinion of the Economic and Social Committee on the "Green Paper on European Union Consumer Protection" (COM(2001) 531 final)
Date: 2002-03-20
Institutions: European Economic and Social Committee
Subjects: approximation of laws, code of conduct, consumer protection, domestic market, professional ethics, trade regulations

27.5.2002

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Official Journal of the European Communities

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II

(Preparatory Acts)

ECONOMIC AND SOCIAL COMMITTEE

Opinion of the Economic and Social Committee on the ‘Green Paper on European Union
Consumer Protection’

(COM(2001) 531 final)

(2002/C 125/01)

On 4 October 2001 the Commission decided to consult the Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the ‘Green Paper on European Union
Consumer Protection’.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 1 March 2002. The rapporteur was
Mrs Davison.

At its 389th Plenary Session (meeting of 20 March 2002), the Economic and Social Committee adopted
the following opinion by 52 votes to three with one abstention.

1.

Introduction

1.1.
On 2 October 2001, the European Commission adopt-
ed a Green Paper on European Union Consumer Protection.
Its purpose is to launch an extensive public consultation on
the future direction of EU consumer protection in the area of
commercial practices, and particularly on options to improve
the functioning of the business-to-consumers (B2C) Internal
Market. The area of consumer protection covered here is the
regulation of consumer economic interests in marketing,
advertising, payment and after sales service excluding health
and safety matters and other connected concerns in marketing.

1.2.
The Green Paper follows an analysis made by Com-
mission services that shows that existing EU rules on consumer
protection are not up to the challenge posed by a rapidly
changing marketplace. Partly as a result of confusion over
which national consumer protection rules apply and the
limited scope of EU consumer protection legislation, con-
sumers lack the confidence to participate directly in cross-
border transactions, and businesses, especially small and

medium-sized enterprises, hesitate to offer their goods and
services EU-wide. Today, the ‘consumer internal market’ has
not achieved its potential nor matched the development of the
internal market in business-to-business development.

1.3.
The Commission acknowledges that this situation is
not new. However it sees a case for further action to complete
the consumer internal market now, due to the introduction of
the Euro, E-commerce, enlargement, the recognition at political
level of the need to enhance the consumer dimension of the
internal market, and the need to bring the EU closer to its
citizens.

The Commission aims at achieving a greater degree of
1.4.
harmonisation of the rules that regulate business-to-consumer
commercial practices where cross-border restrictions to busi-
ness-to-consumer trade exist. Consumer contract law issues,
which require detailed regulation are not being reviewed here.

The Commission has invited all interested parties to
1.5.
comment on the Green Paper, and organised a hearing, at
which its ideas received a generally favourable reception.

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1.6.
The central choice revolves around the type of method
needed to achieve greater harmonisation. There are essentially
two options:

— a specific approach based on the adoption of a series of
further directives, which is the approach adopted in most
cases for the last two decades; or

— a mixed approach of a comprehensive framework direc-
targeted directives, where

supplemented by

tive,
necessary.

One of the key questions is the scope of the directive if
1.7.
the second option were chosen. The Green Paper offers a
choice between the concepts of ‘fair commercial practices’ or
‘misleading and deceptive practices’. Both concepts have some
basis in existing EU law.

In this context, the Green Paper also presents new
1.8.
ideas for the use of self-regulatory codes within a legislative
framework. The Commission believes that a framework direc-
tive could make it possible to work towards effective EU-wide
self-regulation in the field of consumer protection.

1.9.
Finally, the Green Paper develops ideas for better
enforcement of consumer rights in business-to-consumers
transactions. Currently there is no legal framework for inter-
governmental co-operation between the bodies enforcing
consumer rights in the Member States. Ideas are developed to
set-up a system for co-operation between national consumer
protection agencies to help consumers to get their rights
respected in other EU Member States.

2. General comments

2.1.
The Committee welcomes the Commission’s initiative
which responds in part to ESC proposals for simplification of
legislation and a greater commitment to consumer protec-
tion (1). The title of the Green Paper is slightly misleading as it
covers only commercial practices, and the ideas in it need
further clarification. Nonetheless the Committee agrees that
consumer and small business participation in the Internal
Market (2) needs to be encouraged and that enforcement is a
sensible target for improvement.

2.2.
The Committee sees some scope for simplification and
consolidation of existing legislation — without endangering
the consumer acquis. The sometimes fragmentary and overly
detailed nature of EU legislation points to the need for
regulatory reform in parallel with the introduction of any new
legal structure. For example the time-share directive quickly
became out of date and loopholes emerged. As the proposed
regulation on sales promotion is a sectional regulation, the
Committee suggests speeding up the process of consultation
on the ideas in the Green Paper. Thus the principle of the way
forward with co-regulation and a general clause would be
determined before finalisation on sales promotions and the
two properly coordinated. It is important to avoid a period of
confusion and legal uncertainty.

the Committee would support

2.3.
The Committee has been exploring the options for self
regulation and co-regulation and considers that a general
requirement for fair commercial practices could provide a
basis for a more flexible approach to the detail of consumer
protection in this area, although not for contract law. For this
reason,
the more general
proposal rather than a restriction to misleading and deceptive
practices. The EU already has the model of a general product
safety directive and misleading advertising and Sweden success-
fully follows this model. It is possible to define fairness. For
example, fairness has been defined in the context of the unfair
contract terms directive and also in the OECD guidelines on
E.Commerce.

2.4.
However, the Committee would like to emphasise that
the proposal for a framework directive and a general clause
cannot be fully assessed on the basis of the Green Paper. The
Commission has not yet clarified how this legal system would
work at Community level. It should aim for simplification
rather than a lot of further legislation. In particular, further
details are needed on mechanisms to be put in place to
guarantee unified application and a level playing field across
the EU. The Committee would propose the use of Article 153.
The Committee points to a shortage of coordinated EU
research on consumer issues and asks the new Framework
Programme on Research to address this.

The Committee welcomes the option of giving an
2.5.
increased role for co-regulation in the framework of this new
approach commercial practices regulation. The role of Codes
of Conduct which businesses may voluntarily subscribe to is
useful provided that:

(1) ESC Opinion on Simplification, OJ C 48, 21.2.2002.
(2) See also the forthcoming ESC Opinion on sales promotions.

— the resulting Codes of Conduct or Codes of Good
Practices are of good quality and concentrate on the
definition of good practices within the limits of the
framework directive and,

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— there is monitoring by government and by consumer

organisations;

2.8.
The Committee is in favour of much more harmonis-
ation, and considers that protection of consumers in line with
Article 153 should be at the highest level.

— the Codes of Conduct are associated with redress mechan-

isms;

3. Specific comments

— violation of self regulation rules by participants is fully

addressed.

3.1.
The Commission asks for specific answers to certain
precise questions. The Committee would like to contribute to
the discussion of each main question.

The Committee appreciates the inclusion, in the new
2.6.
approach, of a greater effort in avoiding divergence in the
interpretation of existing and future regulations by means of
non-binding practical guidance in plain, user-friendly language,
for the benefit of consumers, business, judges and enforcement
authorities. The role of the regulatory committee needs to be
clarified.

2.6.1.
The Committee would oppose the idea of using this
guidance to expand legislation through a committee. The
Committee stresses that the official interpretation of directives
or regulations is the exclusive competence of national courts
and, at last instance, of the Court of Justice. The aim over time
will be to create a clear corpus of consumer rights based on
the framework directive.

2.7.
In order to ensure the full involvement of the main
partners, business and consumers, and the participation of the
rest of civil society where required, the Committee would also
propose clarifying the role of business-consumer dialogue,
under the framework of the new general clause on fair
commercial practices, namely in the definition of the guidelines
for the interpretation and application of the ‘hard’ and ‘soft’
regulations. Payment, or provision of research support will be
necessary to ensure full participation of all the players.

The first question deals with the key elements of a
3.2.
general clause, the general criteria and the core rules for
regulating commercial practices.

The Committee agrees that a general clause contain-
3.2.1.
ing a legal standard is a flexible and suitable instrument to
govern marketing behaviour in a very dynamic area, which is
constantly developing and undergoing change.

3.2.2.
It should be made clear that the concept of fairness
incorporates good business ethics and that self-regulatory
codes offer interpretative guidance in that respect.

It should include the provision of clear, helpful and adequate
pre-contractual information.

3.2.3.
The general clause should be complemented by a
series of definitions of practices, which should be considered
as unfair.

3.2.3.1.

This should include:

— incitation to or indulgence in unlawful behaviour;

— misleading
including;

presentations,

unsubstantiated

claims

2.7.1.
The Committee accepts its role in support of the
producer-consumer dialogue and would ask governments to
ensure a balanced and full representation of consumers on the
Committee.

— exploitation (abuse) of children’s credulity;

— inertia selling (unsolicited products).

2.7.2.
The Committee emphasises that the stakeholders
participation can supplement but never replace the role of
democratic government. Technical ‘effectiveness’ or ‘coherence’
— as stated in the Report of EP on the Commission White
Paper on European Governance
(A5-0399/2001 final,
15.11.2001) — is no substitute for democratic control.

The list should be considered as a non exhaustive and could
be amended whenever necessary.

3.2.4.
Example of unfair practices are promoting baby milk
at the expense of breast feeding, misleading consumers about
price savings that can be made by switching service providers
and inaccurate advice about work required.

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3.2.5.
The framework would enable a legal backdrop to
protect vulnerable consumers such as to give force to voluntary
rating/filtering and ‘notice and take down’ systems on the
Internet to protect children from the harmful content the
Committee has shown to be reaching them in large quanti-
ties (1). It would also imply safety messages and systems to
prevent paedophile approaches and child pornography on-
line.

3.3.1.
The Committee recognises the importance of self-
regulation in filling out the definitions of fair trade and good
marketing practices, under a legal framework, and, from this
perspective, welcomes the inclusion of a basis for self-
regulation in the framework directive.

There should be penalties for traders who sign up to codes and
then fail to comply.

A ‘grey’

list of practices should also be included,
3.2.6.
which require vigilance because they could involve unfair
practices, under certain defined and precise circumstances.
Guidelines should be produced for example on:

The third main question refers to the development of

3.4.
non-binding practical guidance.

— regard for health and safety precautions;

— liquidation, clearance and bargain sales;

— environmental claims;

— promotional sweepstakes and contests;

— financial and non-financial investment offers.

in schools

3.2.7.
Examples of grey areas where codes could help are
the promotion of prizes, which involve hidden costs, the use
of premium lines to sell information/entertainment on-line,
marketing to children such as the promotion of brands
through educational
especially sweets/drinks
materials, and accepting repeated orders for goods or services
from an elderly consumer who is clearly confused. Several
countries have self-regulation of premium lines. The UK body,
its complaints in the year 2000
ICSTIS, found half of all
relating to the Internet concerned downloads by children. One
quarter of UK and one-sixth of Austrian children recently
surveyed by European Research into Consumer Affairs and
LandesAcadamie, Lower Austria said that they had bought
something over the Internet or that they had paid for games
or entertainment.

The second main question is related to the inclusion in

3.3.
the framework directive of a basis for self-regulation.

3.4.1.
The Committee accepts the idea of complementing
the framework directive with recommendations adopted by
the Commission with non-binding practical guidelines which
interpret the meaning of the directive and other regulations
and specific directives, in a plain and user-friendly language.

The framework directive should state in a very
3.4.2.
precise manner the field of application and the ambit of these
guidelines. It should also be clearly stated in the framework
directive that these guidelines, published through recommen-
dations from the Commission, do not replace single directives
and regulations when they are needed, and should not
prejudice the existence of the above mentioned lists of unfair
practices.

3.5.
The last main question is related to the role of
stakeholders participation in the development of the non-
binding legal guidance.

3.5.1.
Provided that the institutionalisation of the ‘dialogue’
does not mean the subversion of the rule of law and the
principles and structural elements of representative democracy,
the Committee welcomes the increased participation of busi-
ness and consumer organisations in the decision making
processes which lead to the definition of rules and political
orientations in consumer protection.

3.5.2.
The framework directive should therefore define
accurately the criteria for the representation of trade and
consumer organisations and the nature, organisation and
functioning of the regulatory body which shall have the power
of promoting the dialogue and defining the standards and
regulations and their interpretation.

(1) Opinion on a Programme for child protection on the Internet,
which quotes research by European Research into Consumer
Affairs, LandesAcademie, Lower Austria and the Hellenic Con-
sumers’ Association under the EU Internet Action Plan, OJ C 48
of 21.2.2002.

3.5.3.
Finally, the framework directive should state clearly
that such process of elaborating guidelines would never
exclude the possibility of recourse to courts or any other
alternative means of dispute settlement, in case of conflict.

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4. Enforcement

The Commission has been working hard to make
4.1.
existing consumer legislation work on the ground and to
improve access to justice for consumers in cases of cross-
border complaints, but problems remain. Uneven enforcement
is a barrier to fair competition and the efficient operation of
the Single Market, as well as unsatisfactory for consumers. The
Committee regrets also that there have been unnecessary
delays in Member States’ implementation of consumer laws.
Member States must transpose legislation more quickly. The
Committee therefore welcomes the proposals to organise
regular meetings with the governments on these issues and to
establish central national contact points on enforcement.
Transnational contacts between local enforcement offices
should be encouraged too.

4.2.
One problem that needs urgently to be addressed is
the fact that many Member States lack any central enforcement
body. Member States should be required, when notifying
laws implementing EU
the Commission of their national
legislation, to give details of the relevant bodies responsible for
enforcement, along with the range and type of sanctions which
are available to it under national laws and sanctions should be
harmonised and efficient. A rolling programme of reviews of
the implementation and enforcement by Member States of EU
consumer protection directives, staff exchange and joint
surveillance would ensure more consistent action.

The Committee has called in the past

4.3.
for more
cooperation between enforcement officers across Europe and
is encouraged by the establishment in 1999 of IMSN Europe,
an informal network of enforcement bodies. Details of cases
being pursued nationally could be usefully shared between
enforcement authorities,
including by means of a shared
website. Member States should be under an obligation to give

Brussels, 20 March 2002.

assistance to each others’ enforcement bodies if they require
information (already in the public domain) about the activities
of companies whose headquarters or main place of business
are within their jurisdiction.

4.4.
The Commission should consider the establishment of
minimum EU standards of enforcement, based on a number
of key principles such as efficacy and independence, and
monitored by the Commission. The Committee does not
advocate uniform standards of enforcement across the EU, as
this could lead to a lowest common denominator rather than
a general levelling up. The emphasis should be on effective
audit procedures to ensure broad equivalence in terms of
outcome, rather than in techniques. The Commission should
also establish a periodical evaluation of co-regulation and self-
regulation schemes, each two/three years, drafting a report on
the experiences of self regulation in the member states and
suggesting improvements.

4.5.
Efforts to help individual consumers obtain redress
through EEJ-NET etc. need to be redoubled. The Commission
could consider a scoreboard on implementation of consumer
legislation similar to that of DG Markt on the Single Market.

the concept of

4.6.
There is also a need to develop European consumer
education so that consumers themselves take action to secure
their rights. The Committee regrets that the Commission tends
to limit
‘consumer protection’ solely to
‘economic interests’. Information and education are also very
important, especially for the disadvantaged. The advent of the
Information Society should be capitalised on to provide
information to larger numbers of consumers, but the needs of
those without regular access should not be overlooked. The
Committee hopes that the Commission’s proposal will result
in more secure funding for consumer education at European
level and in cooperative EU level programmes by consumer
organisations.

The President

of the Economic and Social Committee

Göke FRERICHS