Communication from the Commission - Follow-up Communication to the Green Paper on EU Consumer Protection
Date: 2002-06-11
Institutions: European Commission
Subjects: EU law, application of EU law, approximation of laws, code of conduct, competition, consumer information, consumer protection, directive (EU), legal cooperation, restriction on competition

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 11.6.2002
COM(2002) 289 final

COMMUNICATION FROM THE COMMISSION

Follow-up Communication to the Green Paper on EU Consumer Protection

COMMUNICATION FROM THE COMMISSION

Follow-up Communication to the Green Paper on EU Consumer Protection

EXECUTIVE SUMMARY

The  Green  Paper1,  which  was  adopted  in  October  2001,  set  out  a  number  of  options  and
questions  on  the  future  of  the  regulation  and  enforcement  of  consumer  protection.  In
particular,  it  suggested  the  idea  of  developing  a  framework  directive  on  fair  commercial
practices.  In  addition,  it  suggested  the  development  of  a  legal  instrument  for  cooperation
between enforcement authorities.

The  Green  Paper  received  a  wide  response  from  businesses,  consumer  organisations  and
national  governments  and  agencies.  The  ideas  set  out  in  the  Green  Paper  were  broadly
supported  by  respondents,  although  not  all  the  ideas  were  welcomed  by  all  groups  of
respondents. The consultation identified a broad consensus along the following lines:

(cid:1)  A majority of respondents accept the case for reform of EU consumer protection
legislation.  The  current  status  quo  is  holding  back  the  internal  market  for
consumers and for businesses.

(cid:1)  A majority  of  the  respondents  who  expressed  a  preference  would  like  reform  to
proceed on the basis of a framework directive. A majority of those who expressed
a preference said that this should be on the basis of fair commercial practices.

(cid:1)  A large majority of those who expressed a view endorsed the Commission’s idea
of  developing  a  legal  instrument  for  cooperation  between  national  enforcement
bodies responsible for consumer protection.

The  Council  has  called  on  the  Commission  to  follow-up  the  Green  Paper  as  a  matter  of
priority.  The  response  to  the  consultation  has  also  given  the  Commission  clear  support  to
develop  a  proposal  for  a  framework  directive.  However,  there  is  a  strong  case  for  further
consultation on the detail before presenting a proposal. This communication therefore sets out
an  action  plan  for  further  consultation  with  the  Member  States  and  stakeholders.  As  a  first
step towards this consultation, an outline of the issues to be covered in a framework directive
is  attached  in  Annex  I.  This  will  be  complemented  in  due  course  with  more  detailed
consultation papers.

These initiatives are fully consistent and  compatible  with  existing  Community policies such
as the Commission’s audiovisual policy (notably the Television without frontiers Directive2)
and its policy on commercial communications and the follow-up to the Commission’s Internal
Market Strategy for Services.

1

2

COM (2001) 531
Council Directive 89/552/EEC of 3 October 1989 on the co-ordination of certain provisions laid down
by  law,  regulation  or  administrative  action  in  Member  States  concerning  the  pursuit  of  television
broadcasting activities (OJ L298 of 17.10.1989, p.23), as amended by Directive 97/36/EC.

2

                                                
In  the  meantime,  reactions  to  the  communication  are  welcome  and  should  be  sent  to  the
to
Commission  by  30  September  2002.  All  reactions  should  be  sent  by  email 
consultsanco@cec.eu.int. In addition, paper copies may also be sent to:

European Commission
DG Health and Consumer Protection
F101 06/52
B-1049 Bruxelles/Brussel

Separately  the  Commission  services  will  begin  the  development  of  a  proposal  for  a  legal
instrument  on  enforcement  cooperation,  consulting  informally  national  governments  and
enforcement authorities that are most concerned, with the intention of adopting a proposal by
the end of 2002.

I.

1.

2.

3.

4.

3

INTRODUCTION

The  central  argument  of  the  Green  Paper  was  that  the  fragmentation  of  EU  and
national rules on consumer protection means that the internal market does not work
properly  for  business  to  consumer  transactions.  It  identified  barriers  to  consumer
confidence  in  purchasing  cross-border  and  to  business  confidence  in  selling  cross-
border  and  in  establishing  in  several  Member  States.  The  potential  of  the  internal
market  to  stimulate competition and benefit  consumers  has  not  been  achieved.  The
Green  Paper  proposed  a  choice  for  further  harmonisation,  between  the  specific
approach  (consisting  of  additional  vertical  harmonisation  measures)  and  the  mixed
approach  of  a  framework  directive  on  commercial  practices,  complemented  as
necessary with sectoral measures).

The Green Paper suggested an important role for EU-wide codes of conduct under a
framework directive. As part of this it suggested that non-compliance with voluntary
commitments relating to commercial practices made in codes should be defined as an
unfair  practice  in  itself.  It  also  suggested  making  associations  responsible  for  the
conformity  of  their  codes  with  legislation,  but  not  liable  for  their  members’
compliance with their own codes.

The Green Paper consulted on the question of whether non-binding guidance, drawn
up either through lists by a regulatory committee of the  Member States, chaired  by
the  Commission,  or  through  Commission  recommendations  be  developed.  The
guidance could serve to guide national enforcement bodies and so reduce the risk of
fragmentation by ensuring a common approach. The Green Paper suggested that the
Committee could mandate business and consumer organisations through stakeholder
participation to negotiate non-binding  guidelines. Finally the Green Paper  proposed
the establishment of a legal framework for enforcement co-operation between public
bodies.

The consultation period closed on 15 January 2002. A public  hearing on  the  Green
Paper  was  held  on  7  December  2001  in  Brussels  and  was  attended  by  over  200
participants3.

report 

A 
at
http://europa.eu.int/comm/consumers/policy/developments/fair_comm_pract/hearing_greenpap_en.html

proceedings 

hearing 

found 

can 

the 

the 

be 

of 

of 

3

                                                
5.

II.

6.

In  its  conclusions  in  preparation  of  the  Barcelona  European  Council,  the  Internal
Market Council called for priority to be given to the follow-up to the Green Paper4.

SUMMARY OF RESPONSES

The  Green  Paper  has  generated  a  large  degree  of  interest,  with  169  responses
received5,  the  majority  from  business  organisations.  The  annexed  table  (Annex  II)
provides a more detailed breakdown of the responses. However, the response to the
consultation  was  not  geographically  balanced.  All  Member  States  responded  to  the
consultation. Of the EU institutions, the Economic and Social Committee has to date
produced  an  opinion6,  which  broadly  supports  the  mixed  approach  of  the  Green
Paper, whilst calling for more clarification.

The need for reform

7.

8.

9.

On the overall  case for  reform, the responses to the  Green Paper were divided, but
with a majority of those who expressed a clear view (114 out of 141) agreeing with
the  Commission’s  analysis.  All  Member  States,  with  one  exception,  accepted  the
need for reform. Two other Member States only accepted the need to reform existing
EU  directives.  Business  associations  and  company  respondents  were  fairly  evenly
divided.  An  important  group  (36)  and  most  of  the  multinational  corporations  that
responded (8) confirmed this analysis. Some gave examples of barriers. Many argued
that  inconsistency  between  the  national  laws  transposing  the  consumer  protection
directives containing minimum clauses was also a significant barrier.

Another  important  group  of  business  associations  (24  respondents)  argued  that  the
analysis  was  unproven.  They  called  for  more  evidence  on  attitudes  to  cross-border
trade  generally  and  the  role  of  consumer  protection  in  these  attitudes.  Some  within
this  group  were  less  sceptical  than  others:  they  were  open  to  being  convinced  by
further  evidence.  For  others  the  nature  of  any  legal  proposals  was  the  determining
factor. 17 business associations and 3 companies did not express a clear view either
way.

A clear majority (30 out of 31) of Consumer organisations agreed with the need for
reform and some supplied examples. One rejected the Green Paper analysis entirely;
arguing that consumer protection was best carried out at national level.

Harmonisation

10.

4

5

6

A large majority of the Member States (12)  supported  the  mixed approach and a
framework directive based on full harmonisation and fair commercial practices. The
remaining three expressed a preference for the specific approach and considered that
simplification and harmonisation of existing legislation should be the priority. These
countries  also  expressed  concerns  that  the  framework  directive  might  not  reduce
fragmentation  sufficiently.  Two  Member  States  argued  that  the  objective  of  the

Report of the Internal Market/Consumer Affairs/Tourism Council of 1 March 2002 - Council Document
6503/02
A full list of respondents and copies of all responses can be found at:
http://europa.eu.int/comm/consumers/policy/developments/fair_comm_pract/responses/responses_en.ht
ml
CES 344/2002

4

                                                
framework  directive  should  be  to  protect  consumers,  competitors  and  the  general
public  by  means  of  a  ban  on  unfair  trading  practices.  They  maintain  that  the
framework  directive  should  be  drafted  in  such  a  way  that  includes  business-to-
business trading relations as under their system of unfair competition, which includes
trading practices such as protection of trade secrets or slavish imitation. They argued
that this extension of the scope of the directive is justified by the fact that not only
consumers,  but  also  competitors,  and  particularly  SMEs,  need  protection  against
unfair commercial practices.

Most  consumer  associations  (29)  were  in  favour  of  the  mixed  approach  with  a
framework  directive  based  on  fair  commercial  practices.  However,  two  of  them
expressed  concerns  about  the  idea  that  a  framework  directive  would  eliminate  the
justification  for  minimum  clauses  in  consumer  protection  directives  and  create  the
conditions for the application of the country of origin principle.

Business was again fairly evenly divided, with views ranging from strong support to
profound scepticism. 31 business associations and companies expressed a preference
for pursuing the mixed approach. 27 expressed a preference for the specific approach
and 30 expressed no clear preference, calling for further information, clarification or
consultation.  18  business  associations  and  companies  preferred  the  idea  of  a
framework  directive  based  on  fair  commercial  practices,  16  based  on  misleading
practices, with 54 expressing no clear preference.

In general, those who were most sceptical were concerned that a framework directive
would  result  in  an  increase  in  fragmentation  of  the  internal  market.  These
respondents  questioned  whether  a  framework  directive  would  work  in  practice  or
whether  it  would  truly  harmonise  national  rules.  In  general  these  respondents  also
called for more evidence that a framework directive could overcome these obstacles.
Several businesses would be more willing to contemplate a framework directive if it
consolidated and simplified existing rules.

11.

12.

13.

Codes of conduct, non-binding guidance and stakeholder participation

14.

15.

The Green Paper ideas on codes of conduct have provoked the most questions and
the  highest  levels  of  ‘don’t  knows’,  probably  because  of  their  novelty  and  because
they  were  only  briefly  sketched  out  in  the  document.  A  majority  of  business
association and company respondents were in favour of developing EU-wide codes
of  conduct  in  principle  (55  for,  11  against,  22  no  clear  view).  Some  argued  that
codes, especially in advertising, had a strong quasi-regulatory role. Others argued the
opposite: that codes of conduct could not be a complement to regulation or that too
great a reliance on codes would confuse business and consumers.

A large majority of those business associations and companies who expressed a view
(28  out  of  35)  were  against  the  idea  of  making  voluntary  commitments  binding.
However,  53  expressed  no  view  on  this  point.  The  role  of  nationally  based  codes
raised  many  questions,  especially  from  one  Member  State  where  codes  are  more
established. There was support for the Green Paper line that codes of conduct should
remain genuinely voluntary but some argued in favour of Commission endorsement
of codes. Some concerns were expressed about making code-owners responsible for
their codes.

5

16.

17.

18.

19.

20.

Consumer  groups  and  other  respondents  were  cautiously  positive,  being  more
strongly in favour of making commitments binding. Of those who expressed a view,
the idea of defining non-compliance with a commitment as unfair was a critical pre-
condition for their support for codes of conduct (8 in favour, 0 against, 25 no view).

The Member States were mainly supportive of the use of codes of conduct in general.
One  called  for  further  consultation.  Two  others  supported  the  idea  of  codes  of
conduct  in  consumer  protection  in  general.  One  of  these  two  in  particular  argued
strongly in favour of public endorsement of codes. Four Member States favour more
public involvement in the negotiation of codes.

The  ideas  on  non-binding  guidance  and  a  regulatory  committee  also  provoked
questions.  There  is  broad  support  for  the  use  of  EU-level  guidance  as  providing
additional clarification of fair commercial practices. Consumer groups (15 in favour,
1 against, 17 no view) especially value this since it increases the adaptability of the
regulatory  framework.  Business  associations  and  companies  were  fairly  evenly
divided: 19 in favour, 17 against, 52 no clear view). Those in favour welcomed the
idea  as  a  contribution  to  certainty  and  clarity.  Those  against  feared  that  guidance
would not solve the problem of fragmentation. There is no clear view as to preferred
form and legal character of this guidance: many respondents ignored these issues or
have responded with questions.  A  small  number  of  business  respondents  expressed
concerns about how the guidance would be drawn up or would work in practice.

Those business respondents who  expressed a view either had strong  reservations to
the idea of a regulatory committee producing non-binding guidance in general or had
many  questions  about  its  operation  and  membership.  Those  Member  States  who
supported the framework directive also generally supported the need for non-binding
guidance.

Finally  there  was  strong  support  for  stakeholder  participation  from  consumer
groups (20 in favour, 0 against, 13 no view). A majority of business associations and
companies liked the idea of being strongly involved as stakeholders (32 in favour, 11
against, 45 no view). Those Member States who supported the framework directive
also generally supported stakeholder participation

Enforcement

21.

This idea was strongly welcomed by those Business associations and companies (30
for, 7 against) and consumer associations (18 for, 1 against) who responded and most
Member  States  (10)  have  also  strongly  welcomed  this  proposal.  A  few  businesses
expressed concern that information about companies should be kept confidential, so
that  unsubstantiated  allegations  are  not  made  public.  Of  the  Member  States,  one
which does not have a tradition of public enforcement bodies in this area, preferred
to emphasise the role of judicial cooperation and did not see a need for an instrument
at  this  stage.  Another  also  emphasised  judicial  cooperation  and  pointed  out  the
obstacles  to  cooperation  between  its  national  enforcement  body  and  other  Member
States  from  its  confidentiality  rules  on  criminal  law  proceedings.  While  supporting
the need for enforcement cooperation in general, three other Member States preferred
to enhance informal cooperation further in the short term.  All other  Member States
strongly endorsed the need for such an instrument.

6

Follow-up

22.

A large majority of respondents support the idea that the Commission proceeds with
a proposal on enforcement co-operation and have not requested further consultation
on this initiative. On a framework directive, most businesses have requested a White
Paper. Most other respondents would  either like to see further  consultation  or have
raised  questions  that  they  wish  to  see  answered.  A  majority  of  the  Member  States,
whilst  supporting  the  framework  directive,  would  also  like  further  consultation  on
the contents of such a directive, but would not insist on a White Paper if this would
slow progress.

III.

NEXT STEPS

The need for reform

(cid:1)  The response to the consultation is more than sufficiently clear to  justify further
steps towards reform. A number of respondents and the majority of the Member
States  have  indicated  that  disparities  between  national  rules,  in  particular  in  the
field of marketing practices, do give rise to appreciable distortions of competition.

(cid:1)  The Commission recognises the need to continue to develop research work in this
area. Accordingly  a number of further surveys are planned, designed  to improve
the  general  understanding  of  business  and  consumer  attitudes  to  trading  cross-
border  and  their  perception  of  the  barriers  that  they  face  and  to  measure  price
divergences. These surveys will help the Commission identify the Internal Market
barriers that a future framework directive would resolve.

(cid:1)  In  due  course  any  major  proposals  would  be  accompanied  by  an  impact

assessment and a list of the relevant obstacles to cross-border trade.

Further  evidence  has  come  to  light  since  the  Green  Paper  was  published.  The
Commission’s  Cardiff  report  on  the  functioning  of  the  internal  market7  pointed  to
significant price divergences  that  remain in  the  internal  market.  The  report  showed
that some retail prices can be up to 40% above or below the European average and
that  the  average  price  difference  is  around  30%.  The  report  concluded  that  these
divergences  were  due  to  ‘economic’  not  ‘geographic’  factors  and  that  “economic
reform and competition measures seem best to eliminate residual price dispersion in
these markets”.  The report mentioned that the Green Paper “sets out some options to
increase competition in business-to-consumer and retail markets”. 
Certain  companies  would  clearly  benefit  from  the  continuation  of  these  price
divergences  and  may  therefore  be  opposed  to  an  increase  in  transparency  and
competition in this area.

The  European  Financial  Services  Round  Table  commissioned  a  report8  that  has
recently  been  published  on  the  benefits  of  a  working  European  retail  market  for
financial  services.  It  estimated  the  cost  saving  potential  at  5  billion  Euro  annually
and  a  possible  beneficial  effect  of  0.5%  in  economic  growth.  The  report  identifies
differing  national  rules  on  consumer  protection  and  commercial  practices  as

23.

24.

7

8

COM 2001 (736) of 7 December 2001
www.zew.de/erfstudyresults/

7

                                                
important  barriers  which  “render  a  pan-European  marketing  strategy  and
standardised products impossible”.

25.

A  recent  Eurobarometer  carried  out  for  the  Commission9  also  demonstrated  that
consumers in the EU have significantly lower confidence in making purchases cross-
border than domestically. The report showed that 32% of European consumers  feel
well  protected  when  in  dispute  with  a  business  based  in  another  Member  State,
compared to 56% when in dispute with a domestic business. This lack of confidence
is  also  reflected  in  the  general  take  up  of  e-commerce.  The  recent  eEurope
benchmarking report revealed slower than expected growth, with only 4% of users in
Europe classifying themselves as ‘frequent purchasers’10.

Harmonisation

The framework directive

(cid:1)  The  response  to  the  question  supports  the  Commission  to  pursue  the  mixed
approach and develop a proposal for a framework directive. There is a strong case
for  further  consultation  on  the  detail  of  a  framework  directive.  Elements  of  a
possible framework directive are set out in Annex I, as a basis for consultation.

A framework directive should bring about:

(cid:1)  maximum harmonisation with a high level of consumer protection. Given the need
to  achieve  a  properly  functioning  internal  market,  further  consultation  is  needed
on the required level of harmonisation in the framework directive.

(cid:1)  Simplification and, where possible, deregulation of existing provisions should be

prioritised.

(cid:1)  Application of  the principle of mutual  recognition  and control by the  country  of

origin (Internal Market principles).

(cid:1)  A  balance  between  legal  certainty  and  adaptability  to  market  circumstances.  On
the one hand, it is essential that the legislation provides a sufficient level of detail
both to genuinely harmonise, and to provide certainty for business and consumers.
It should be clearly drafted to ensure that questions of interpretation are kept to a
minimum.  On  the  other  hand,  the  legislation  should  be  as  ‘time-proof’  and
technology-neutral as possible, avoiding overly prescriptive rules.

(cid:1)  The  scope  of  the  legislation  should  be  based  on  the  wider  concept  of  ‘fair
commercial  practices’  and  not  only  the  narrower  concept  of  ‘misleading
practices’. It should also be phrased in terms of actions that are unfair – in other
words an obligation not to trade unfairly, rather than a duty to trade fairly.

(cid:1)  A framework directive should be based on a general clause, which could consist
of two  core  elements:  the  unfairness  of  the  practice;  and  a  “consumer  detriment
test” (developed in the annex). The general clause would have to be substantiated
by  a  number  of  specific  rules  (the  “fairness/unfairness  categories”)  concerning

9

10

FLASH BE 117 ‘Consumer Study’ January 2002
COM (2002) 62 final of 5 February 2002

8

                                                
different  stages  of  the  business  to  consumer  relationship.  In  order  to  further
illustrate  the  general  clause  and  categories,  a  non-exhaustive  list  of  examples
would be drawn up.

(cid:1)  Possible elements of fairness/unfairness categories include:

– 

– 

– 

– 

A  prohibition  on  business  from  engaging  in  commercial  practices  that  are
misleading or likely to mislead the consumer;

A duty to disclose to the consumer all material information which is likely to
affect the consumer’s decision;

A  prohibition  on  the  use  of  physical  force,  harassment,  coercion  or  undue
influence by business;

Effective  information  disclosure  and  complaint  handling  in  the  after-sales
period.

(cid:1)  The  primary  focus  should  be  on  unfair  practices  that  cause  detriment  to  the
interests  of  consumers  as  a  whole,  rather  than  individual  cases,  in  line  with
existing practice. The legislation should provide that injunctions could be taken to
ensure  such  unfair  practices  are  withdrawn  rapidly.  The  framework  directive
would  be  included  in  the  list  of  the  directives  covered  by  Article  1  of  the
Injunctions Directive11.

In addition:

(cid:1)  According  to  two  Member  States,  a  framework  directive  should  also  cover
fairness in business to business commercial relations. As it is clear from the Green
Paper the Commission’s initial orientation was to  limit  a  framework  directive to
business  to  consumer  transactions.  On  the  one  hand,  there  are  some  unfair
practices, such as protection of trade secrets or slavish imitation, which appear to
be  purely  “business  to  business”  in  nature  and  should  be  outside  the  scope  of
application  of  the  framework  directive.  On  the  other  hand,  there  are  practices,
such as misleading advertising, which may affect both consumer and competitors’
interests,  which  fall  more  clearly  within  the  scope,  as  far  as  consumers  are
concerned.  Given  that  no  other  Member  State  advocated  the  extension  of  a
framework directive to all business to business relationships, the Commission sees
no reason to change its initial orientation of covering solely business to consumer
transactions.

(cid:1)  The decision to pursue the framework directive approach does not mean, as was
made clear in the Green Paper, that the use of sector-specific measures such as the
Television  without  frontiers  Directive  will  be  abandoned.  Where  necessary  they
will continue to be used.

The  Commission’s  proposal  for  a  Regulation  concerning  sales  promotion  in  the
Internal Market is compatible with the mixed approach. The Council has stated that
priority should be given to the effective follow-up to the Commission’s Green Paper

Directive 98/27/EC of the European Parliament and of the Council of 19 May 1998 on injunctions for
the protection of consumers’ interests.

9

26.

11

                                                
on consumer protection. This Communication responds to that call. The Council has
also stated that work on the proposal for a Regulation on sales promotions should be
continued. In this context, the Commission wants to restate that work on the proposal
for a Regulation on sales promotions should be continued in parallel.

Existing consumer protection directives

27.

The  Green  Paper,  in  describing  the  mixed  approach,  suggested  that  any  reform  of
existing  consumer  protection  directives  “would  be  undertaken  once  a  framework
directive  has  been  established  and  experienced  has  been  gained  of  its  operation  in
practice”. The fundamental basis for this approach has not changed. The insistence of
the Member States  to  insert  minimum  clauses  into  Commission  proposals,  was  not
an  idle  caprice.  Rather  it  was  due  to  the  underlying  differences  of  approach  to
consumer  protection  identified  in  the  Green  Paper.  Despite  the  wishes  of  some
respondents, it is not politically realistic to expect the Member States to abandon the
minimum clauses in existing consumer protection directives without addressing these
underlying differences.

(cid:1)  There  is  however  some  scope  for  repealing  certain  provisions  of  existing
consumer  protection  directives  and  incorporating  them  into  the  framework
directive.

(cid:1)  The possibilities for reform of contract  law  provisions  in  existing  directives  that
have proved problematic would be examined in the context of the follow-up to the
communication  on  European  contract  law12,  which  will  be  submitted  before  the
end of the year.

Codes of conduct, non-binding guidance and stakeholder participation

Codes of conduct

28.

According to the Green Paper, a framework directive would address two aspects of
codes of conduct:

(cid:1)  Definition of non-compliance with voluntary commitments contained in a code as

an unfair commercial practice.

(cid:1)  The  compatibility  of  codes  that  recommended  commercial  practices  with  the

framework directive.

29.

The development of codes of conduct at EU level in the field of consumer protection
should be governed by the following criteria:

(cid:1)  The essence of codes of conduct is that they are voluntary: businesses should not
be obliged to write codes nor to join them. Business should also not be obliged to
negotiate codes with public authorities or other third parties. Codes should not be
applied to non-signatories.

12

Communication  from  the  Commission  to  the  Council  and  the  European  Parliament  on  European
Contract Law (COM(2001) 398 final)

10

                                                
(cid:1)  Ensuring that commitments made in codes of conduct are respected is essential if
the Member States where  there is  no tradition of codes  of conduct are  to  accept
their  wider  use  and  a  corresponding  shift  to  less  intrusive  legislation.  Non-
compliance with a voluntary commitment should be considered as misleading and
therefore an unfair commercial practice.

(cid:1)  Only  commitments  that  concern  business-consumer  commercial  practices  would
be covered.13. In addition, only non-compliance with a firm commitment, such as
an  undertaking  to  follow  certain  ‘good  practices’  could  be  construed  as
misleading.  Non-compliance  with  an  aspirational  commitment  (‘best  efforts’)
would not be misleading.

(cid:1)  Code-owners  should  be  responsible  for  ensuring  the  conformity  of  their  codes
with legislation but not legally liable for the compliance of their members with the
code. Ensuring code-owners are responsible for their own codes should reinforce
their credibility.

(cid:1)  The development of EU-wide codes should be encouraged. Membership of a code
could  provide  an  implicit  ‘presumption  of  conformity’  equivalent  to  the  role
played by standards under the New Approach. At present, it is almost impossible
to  develop  a  genuine  EU-wide  code,  given  the  differences  in  national  rules.  In
addition,  the  status  of  commitments  made  in  codes  differs  greatly  between
Member States.

(cid:1)  Public endorsement of codes of conduct must always come at a price, in terms of
changes  that  may  be  demanded  by  the  public  authority.  The  Commission  will
consult further on whether there is a need to provide for endorsement of codes and
the  mechanisms  needed  to  ensure  that  such  codes  are  in  conformity  with
Community  law.  Public  endorsement  would  give  rise  to  a  presumption  of
conformity  with the provision  of  the  framework directive,  but  would  be  without
prejudice  to  the  compatibility  of  the  codes  with  the  Community  or  national  law
provisions on competition.

30.

Important  concerns  have  been  expressed  about  extending  the  role  of  codes  of
conduct. Codes of conduct are not a panacea. They can be abused either to mislead
consumers or for anti-competitive reasons. Codes do not have the same legal status
as  legislation.  The  ultimate  fallback  of  sectoral  legislation  will  always  remain.
Effective codes of conduct simply means that there will be less need to have recourse
to  this  safeguard.  In  this  context,  the  Commission  encourages  the  development  of
codes which, rather than setting minimum compliance requirements,  go beyond the
provisions of the directives and provide a higher level of consumer protection.

Non-binding guidance and stakeholder participation

31.

13

These  instruments  should  be  seen  together  with  a  framework  directive  as  a  whole,
with  each  element  providing  a  different  degree  of  certainty  and  adaptability.  The
value  of  the  guidance  would  lie  principally  in  supplying  a  point  of  reference  for
business, consumers, enforcement authorities and judges and in minimising the risk

The Commission has launched an initiative on business-to-business codes of conduct in the area of e-
commerce. See http://europa.eu.int/comm/enterprise/ict/policy/b2b-market-fair-trade.htm

11

                                                
of differing interpretations arising. The use  of such  guidance  is  an  important aid to
clarity  in  several  national  consumer  protection  regimes  in  the  EU  and  in  other  EU
policies.  Although  not  binding  it  is  a  practical  tool  for  building  consensus  on  new
issues.  Most  importantly  it  would  provide  the  basis  for  reaching  consensus  among
national public authorities whose own interpretations have a significant impact on the
market.

32.

Further consultation is needed both on the form and development of guidance and on
the  possible  role  for  stakeholders  in  developing  guidance.  While  the  latter  was
welcomed  in  principle,  further  consultation  and  examination  is  needed  on  the
mechanisms needed to give stakeholders a role in identifying the consensus.

Enforcement

33.

IV.

34.

The clear welcome to the Commission’s proposals for enforcement cooperation has
given  clear  support  for  work  to  proceed  on  a  legislative  proposal  to  establish  a
framework for cooperation. The Commission will now begin work  on  this with the
intention  of  making  a  proposal  by  the  end  of  2002.  Before  making  a  proposal,  the
parties  most  concerned,  national  governments  and  enforcement  authorities  will  be
consulted  informally.  The  detailed  ideas  (e.g.  establishment  of  a  central  national
liaison point,  mutual  assistance  and  common  enforcement  actions)  presented  in  the
Green Paper will be the basis of the Commission proposal.

FOLLOW-UP

Further consultation on the questions that remain open should proceed on the basis of
working documents. The outline of a framework directive set out in Annex  I  is the
first such working document.

Fair commercial practices

Initial areas for investigation and assessment methodology

35.

36.

The first step will be to build on the outline framework by consulting with national
experts and interested stakeholders to identify possible options. The initial key areas
for  investigation,  which  may  be  discussed  on  the  basis  of  one  or  more  working
documents,  will  cover  the  national  notions  of  fairness,  namely  general  clauses  and
fairness/unfairness  categories;  codes  of  conduct;  non  binding  guidance;  and
stakeholder  participation.  Any  relevant  information  will  be  gathered  in  order  to
evaluate the impact of the proposals.

As regards the notions of fairness, the objective is to identify the notions/categories
of fair/unfair commercial behaviour (“notions of fairness”), which are common to the
legal  systems  of  most  Member  States.  The  notions  which  are  not  common,  but
specific  to  the  systems  of  one  or  a  minority  of  Member  States  will  have  to  be
characterised  by  taking  into  account  the  following  criteria:  (i)  the  public  interest
objectives motivating the measure; (ii) whether the measure is linked to the invoked
public interest objective; (iii) how efficient is the measure in achieving the invoked
public  interests  objectives;  (iv)  whether  the  measure  is  characterised  by  cultural  or
social peculiarities.

12

37.

On  the  basis  of  the  information  above,  the  Commission  will  carry  out  a  legal
assessment  of  whether  the  national  measure  is  a  proportionate  response  to  a
legitimate  public  interest  in  protecting  consumers  and  coherent  notably  with  other
Community consumer protection measures.

Establishment of an expert group

38.

The Commission will establish a group of experts from national governments to:

– 

– 

– 

– 

– 

– 

Facilitate  a  more  in-depth  exchange  of  views  between  the  Commission  and
Member States;

Assist the Commission in identifying key cross-border obstacles in the field of
the fairness of commercial practices faced by business and consumers, causing
appreciable distortions of competition;

Identify  and  compare  concepts  of  fair  commercial  practices  in  the  Member
States;

Identify  common  ground  and  the  issues  to  be  addressed  in  any  framework
directive,  using  the  annex  as  a  starting  point  to  structure  the  debate,  and  the
level  of  harmonisation  necessary  in  order  to  apply  the  principles  of  mutual
recognition and country of origin and thus achieve the  Internal Market in this
field;

Identify obstacles in the field of the fairness of commercial practices which do
not  cause  appreciable  distortions  of  competition  and  thus  may  be  solved
through  application  of  the  principles  of  mutual  recognition  and  country  of
origin in any framework directive without further harmonisation;

Provide  detailed  analysis  and  options  for  future  measures  in  this  area  to  be
used as a basis of wider consultation.

39.

The  Commission  will  chair  the  expert  group.  Its  members  will  consist  of
governmental  experts  from  the  Member  States.  The  Commission  will  invite
in  particular  business  associations  and  consumer
interested  stakeholders, 
organisations,  to  present  their  positions  on  specific  issues  being  considered.  The
expert  group  will  meet  on  a  regular  basis.  The  agenda  of  the  expert  group,  any
additional  working  papers  prepared  for  it  and  reports  of  meetings  will  be  made
publicly  available.  The  work  of  the  expert  group  will  be  taken  into  account  along
with in-put from other sources.

Existing expert groups

40.

The  work and  experience of a number of ongoing  expert  groups  will  be  drawn  on,
where necessary and relevant, to give further insight and reflection on key issues. In
particular,  the  work  of  the  commercial  communications  expert  group,  the  service
strategy expert group, the OECD, the  International Marketing Supervision Network
(Europe),  an  important  forum  where  Member  State  enforcers  meet  and  discuss
problems, will play a significant role. The Consumer Committee will also continue to
be involved in discussions on an ad hoc basis.

13

Academic group

41.

The  Commission  will  also  set  up  a  group(s)  of  academics  from  different  Member
States  to  help  it  identify  the  notions  of  fairness  which  are  common  to  the  legal
systems  of  the  Member  States  and  distinguish  them  from  those  that  are  specific  to
certain  Member  States.  To  this  end,  the  academic  group  will  carry  out  a
comprehensive comparative law study.

Stakeholder involvement

42.

The Commission considers that further stakeholder consultation is crucial and it will
hold further dialogue with all stakeholders over the coming months. It will organise a
number  of  open  meetings  in  Brussels  and,  where  appropriate,  on  the  initiative  of
national  governments,  in  the  Member  States  to  explore  specific  issues.  In  the
meantime  reactions  to  the  communication  are  welcome  and  should  be  sent  to  the
Commission  by  30  September  2002.  All  reactions  should  be  sent  by  email  to
consultsanco@cec.eu.int. In addition, paper copies may also be sent to:

European Commission
DG Health and Consumer Protection
F101 06/52
B-1049 Bruxelles/Brussel

43.

Unless  otherwise  explicitly  requested,  the  Commission  will  make  all  responses
received public through the Internet.

European Parliament

44.

The  Commission  will  keep  the  European  Parliament  fully  informed  of  the
developments in the consultation, especially the outcomes of the  expert  groups  and
meetings with stakeholders.

Reviewing existing acquis

45.

The Commission will  also  begin  a  comprehensive  review  of  the  existing  consumer
legislation  to  identify  areas  that  may  be  consolidated  and  simplified.  This  will
concern those parts of the acquis that address commercial practices having no effect
on the contract law provisions of  the  Member  States. The Commission  will  outline
the  key  areas  in  order  to  consult  widely  on  possible  consolidation  initiatives  and
ensure  consistency  with  any  follow-up  measures  on  the  Green  Paper.  Business,
consumer  and  some  Member  States  respondents  have  all  complained  about  the
barriers  in  this  area,  for  example,  differing  withdrawal  periods  arising  from  the
existing  directives.  As  indicated  earlier,  the  Commission  will  examine  the  barriers
that arise from the contract law provisions of the existing acquis in the follow-up to
the communication on European contract law.

14

ANNEX I

ELEMENTS OF A POSSIBLE FRAMEWORK DIRECTIVE

The following is a working document that outlines elements of a possible framework directive
in order to provide a starting point to structure the debate within the expert group above.

I. Scope

A  possible  framework  directive  could  harmonise  the  legal  provisions  of  the  Member  States
relating  to  the  fairness  of  commercial  practices  in  order  to  ensure  a  uniform  high  level  of
consumer protection and the smooth functioning of the Internal Market. The health and safety
aspects  relating  to  goods,  services  or  property  as  well  as  contract  law  and  contractual  law
remedies would not be covered.

The primary focus of a framework directive would be on unfair commercial practices harmful
to  the  collective  interests  of  consumers,  rather  than  claims  of  individuals.  Under  the
framework directive Member States would ensure that court actions under their national laws
allow  for  the  rapid  adoption  of  measures,  including  interim  measures  designed  to  terminate
any  unfair  practice.  The  framework  directive  would  be  included  in  the  list  of  the  directives
covered by Article 1 of the Injunctions Directive.

A further question for consultation is whether or not the framework directive should provide
for  the  exercise  of  an  autonomous  action  by  national  enforcement  bodies  and/or  consumer
organisations. An additional issue to consider in this context is whether the most blatant and
serious  breaches  of  specific  provisions  of  the  framework  (e.g.  use  of  force,  harassment  or
coercion,  see  below)  directive  could  give  rise  to  liability  for  damages  proven  by  individual
consumers.

The framework directive would apply only in so far as there are no specific Community law
provisions regulating these commercial practices. For example, it would be without prejudice
to the information requirements to be provided under the Consumer Credit Directive, 14 or the
rules on sponsorship set out in the Television without frontiers Directive.

II. Structure

1. General clause

The  framework  directive  would  be  based  on  a  general  clause,  according  to  which  Member
States  should  ensure  that  traders  established  in  their  territory  should  not  engage  in  unfair
commercial practices.

The general clause could consist of two elements:

a)

b)

the unfairness of the commercial practice.

a  “consumer  detriment  test”,  i.e.  the  fact  that  the  commercial  practice  should
cause  or  be  likely  to  cause  direct  detriment  to  the  consumer.  This  test  would

14

Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and
administrative  provisions  of  the  Member  States  concerning  consumer  credit  and  subsequent
amendments.

15

                                                
have  to  be  measured  against  the  standard  of  the  consumer  of  average
intelligence, reasonably well informed and reasonably circumspect, as defined
by the Court of justice15. Where the business consciously directs its activities to
a specific vulnerable group of consumers (such as children) that criteria could
be adjusted accordingly.

2. Fairness/unfairness categories

The general clause would have to be substantiated by an exhaustive number of specific rules
(the “fairness/unfairness categories”) concerning different stages of the business to consumer
relationship.  In  order  to  define  these  categories  the  Commission  will  have  to  examine  the
notions of fairness, which are common to most of the legal systems of the Member States.

Some common elements could be:

-

-

-

-

misleading practices;

failure  to  provide  material  information  (“duty  to  disclose”),  including
representations, omissions and conduct;

use of force, harassment, coercion and undue influence;

failure  to  provide  after  sale  customer  assistance  and  effective  complaint
handling.

2.1 Misleading commercial practices

A framework directive should prohibit business from engaging in commercial practices  that
are  misleading  or  likely  to  mislead  the  consumer  to  whom  they  are  directed  or  effected.
Possible examples of this are:

– 

– 

– 

any technique to promote the goods or services or property on offer that is not
clearly  identifiable  as  such  by 
the  consumer.  In  particular,  features,
announcements or promotions that are disseminated in exchange for a payment
or other reciprocal arrangement should be clearly recognisable as such by the
consumer;

a  representation  that  any  good  or  service  has  sponsorship,  approval,
performance  characteristics,  accessories,  ingredients,  quantities,  components,
uses or benefits that it does not have;

a  representation  that  any  good  or  service  is  of  a  particular  standard,  quality,
grade, style or model that it is not;

In  this  context,  business  would  be  required  to  be  able  to  objectively  substantiate  all
representations/claims, other than those specifically regulated in other EU legislation, made to
consumers,  whether  direct  or  implied.  This  would  not  cover  advertising  cases  based  on
subjective claims or on correctly stated opinions if consumers are made aware of the source

15

Pall corp. v Dahlhausen, C-283/89 [1990] E.C.R. I-4827; Verband Sozialer Wettbewerb e.V v Clinique
Laboratoires SNC and Estée Lauder Cosmetics GmbH, C-315/92 [1994] E.C.R. I-317; Mars, C-470/93
[1995] E.C.R. I923; Commission v Germany “Sauce Hollandaise”, C-51/94 [1995] E.C.R. I-3299; Gut
Springenheide, C-210/96 [1998] E.C.R. I-4657, Estée Lauder v Lancaster, C-220/98 ECR I-117

16

                                                
and limitations of the communication. Further, “puffing” cases would not be covered since a
reasonable  person  can  recognise  obviously  exaggerated  claims  and  do  not  take  them
seriously.  Some  of  the  above  issues  are  partially  covered  by  the  misleading  advertising
directive, which could be subsumed into any framework directive.

2.2 Duty to disclose

Often  information  is  given  in  brochures  and  lengthy  contracts  or  in  jargon.  A  framework
directive should ensure transparency of the  key  facts such  as hidden  penalties or charges or
restrictions  on  the  goods  or  services  that  are  likely  to  have  an  important  impact  on  the
consumer’s decision to buy. The consumer should be provided with such information by the
supplier prior to the purchase of any goods or services.

A framework directive could impose on traders a duty to disclose to the consumer all material
information  that  is  likely  to  affect  the  consumer’s  conduct  or  decision  with  regard  to  the
goods or services.

For example, the following non-exhaustive aspects could be required:

– 

– 

– 

– 

– 

– 

– 

– 

the identity of the supplier and, in the  case of  contracts requiring  payment in
advance, his address;

the price of the goods or services including all taxes indicated in the applicable
currency;

delivery charges, where appropriate;

the arrangements for delivery or performance;

the existence of any return, if foreseen by EU law, or any return, exchange or
refund policy;

the cost, if above the basic rate, that a consumer would incur to communicate
with the trader, such as the use of premium telephone numbers;

information relating to available after sales service;

membership of a code of conduct and an alternative dispute settlement scheme,
if applicable;

2.3 Use of force, harassment, coercion and undue influence

A framework directive could provide that business should not use physical force, harassment,
coercion and undue influence in their relationship with consumers. This  includes  aggressive
selling and would aim to target a business that:

a)

b)

exploits characteristics or circumstances of the consumer. For example, taking
advantage  of  a  specific  situation  or  misfortune  of  the  consumer  such  as  a
bereavement or serious illness in his family or anxieties about personal security
or debt;

unduly pressures  the  consumer to agree to  the  purchase  of  goods  or  services.
For example, making it clear to the consumer that he cannot leave the premises

17

the  contract 

until 
representatives who ignore requests to leave.

is  signed;  or  prolonged  personal  visits  by  sales

2.4 After sale customer assistance and complaint handling

It will be necessary to examine which aspects of the after-sale customer assistance should be
covered in the framework Directive.

An  issue  that  could  be  covered  is  complaint-handling  procedures.  Practice  varies  but  many
suppliers  do  not  give  adequate  priority  to  the  effective  handling  of  their  customers’  queries
and complaints and this is reflected in systems, resources, cultures and outcomes. Under the
framework  directive,  traders  should  ensure  that  they  respond  quickly  and  effectively  to  any
complaint and make full redress when justified. Rules should focus on outcomes here, rather
than prescribing methods, leaving companies free to organise their internal practices.

Examples of possible procedures may include:

–  Co-ordinating the handling of complaints;
–  Ensuring  that  information  from  complaints  of  general  interest  is  reported  to  the

firm’s management;

–  Informing consumers about how to make a complaint and the follow-up  of  their

complaints;

–  Contact points at which consumers can lodge a complaint; and
–  Internal controls to ensure that complaints are properly dealt with.
–  Information about third part resolution mechanisms.

A  further  question  for  consultation  is  whether  other  aspects  of  the  after-sale  ongoing
relationship between the business and consumer (e.g. failure to provide relevant information
over the life of a complex product or not having available spare parts or charging excessive
prices for them) should be  included  as  a  specific  unfair  category.  Alternatively,  such  issues
could be covered by the information requirement under the duty to disclose.

2.5. Codes of conduct

Only  voluntary  commitments  in  codes  of  conduct  made  public  by  companies  addressing
business-consumer commercial practices would be relevant for the purposes of the framework
directive.  These  commitments  could  be  adopted  collectively  by  an  industry  sector  or  an
association of companies or an individual company. A code-owner would need to be defined
as the body responsible for the development of the code (e.g. an association or the company
itself in the case of an individual code).

The  decision  to  join  a  code  would  also  be  voluntary.  The  representation  by  a  firm  of  its
association with a code gives rise to legitimate expectations. If the firm does not comply with
the  firm  commitments  in  the  code  that  type  of  behaviour  would  be  considered  as  a
misrepresentation  and  therefore  unfair  under  the  framework  directive.  A  code-owner  would
be  responsible  for  ensuring  the  conformity  of  the  contents  of  the  code  with  the  framework
directive. However, the framework directive would not seek to make code-owners liable for
the  compliance  of  code  members  with  the  code.  The  latter,  as  explained  above,  would  be
ultimately responsible if they fail to comply.

As indicated above, further consultation is needed on whether the framework directive should
include an option for the endorsement of codes by public authorities. All codes, as agreements
between  undertakings,  would  remain  under  an  obligation  to  respect  competition  rules.  As

18

stated  above,  any  endorsement  by  public  authorities  would  create  a  presumption  of
conformity  with  the  provisions  of  the  framework  directive,  but  would  have  no  bearing  on
their compatibility with competition law provisions, notably those set out in Article 81 of the
Treaty.

3. List of examples

In  order  to  further  illustrate  the  scope  of  application  of  the  general  clause  and  the
fairness/unfairness categories a non-exhaustive list of examples would be contained in a list
attached to the framework directive. For example, the following could be given as examples
of misleading practices:

– 

– 

A  representation  about  the  independence,  neutrality  or  objectivity  of  their
advice where this is not the case;

A representation about the risk or probability of risk associated with goods or
services that is not correct.

III. Mutual recognition and country of origin

The  combination  of  an  adequate  level  of  harmonisation  and  the  principles  of  mutual
recognition and country of origin (which should be enshrined in the framework directive) will
have as a consequence that divergent interpretations in jurisprudence at national level will not
result in the fragmentation of the internal market.

IV. Non Binding Guidance

Rules  for  the  use  of  guidance  on  the  general  clause  and  the  fairness/unfairness  categories
should be established in the framework directive. The framework directive would make clear
that this guidance is not  legally binding.  There are different  options  for  the  development  of
such  guidance.  One  possibility  is  through  Commission  recommendations/interpretative
communications,  after  having  consulted  Member  States’  representatives  in  an  appropriate
forum, business associations and consumer organisations.

V. Stakeholder participation

Depending on the option  chosen  for  guidance,  a  framework directive would  provide  for  the
Commission to mandate stakeholders to try and identify consensus on such guidance.

The  framework  directive  would  need  to  provide  for  general  criteria  for  the  selection  of
stakeholders. These criteria should ensure that the stakeholders chosen represent the interests
at stake in the issues concerned.

Further  criteria  for  the  granting  of  mandate  and  the  verification  that  the  mandate  had  been
respected would have to be laid down. These criteria should ensure that the mandate is precise
and that a clear deadline is supplied. The right of the Commission to produce guidance if the
negotiations failed should be safeguarded in the framework directive.

Further consultation is required on the precise nature of the above provisions.

19

ANNEX II

Reform

Approach

Practices

Codes

Guidance

Stakeholders Enforcement

No Mixed

Yes

No
View/
More
info

No
Pref./
No view/
More
info.

Spec Fair

No
Pref./
No view/
More
info.

Mislead Yes

No Yes

No Yes

No
Pref./
No view/
More
info.

No
Pref./
No view/
More
info.

No Yes

No
Pref./
No view/
More
info.

No

No
Pref./
No view/
More
info.

Member States

12

Governments
(other)

Consumer Org.

Business Assoc.

Companies

Lawyers

Others

9

30

36

8

8

11

2

1

2

1

0

1

17

24

3

0

3

0

1

0

12

6

29

27

4

5

12

0

1

2

3

3

2

13

6

22

25

25

16

5

2

1

2

2

1

2

2

9

1

4

10

46

8

6

4

1

0

1

15

1

1

1

10

6

15

49

6

3

9

2

3

11

18

4

6

4

3 10

1

5

7 15

10 16

1

0

1

3

5

7

5

5

17

44

8

4

6

0 11

0

3

1 20

17 28

0

0

1

4

4

8

4

7

13

38

7

5

6

0 10

0

5

0 18

11 26

0

0

0

4

6

7

3

5

14

44

7

3

7

2

0

1

7

0

0

0

TOTAL

114

28

27

95

36

38

70

79

20

98

48

23 61

89

19 78

80

11 76

83

10

20