Opinion of the European Economic and Social Committee on the ‘proposal for a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the Unfair Commercial Practices Directive)’ — COM(2003) 356 final - 2003/0134 (COD)
Date: 2004-01-29
Institutions: European Economic and Social Committee
Subjects: approximation of laws, competition law, consumer protection, restriction on competition

30.4.2004

EN

Official Journal of the European Union

C 108/81

Opinion of the European Economic and Social Committee on the ‘proposal for a Directive of the
European Parliament and of the Council concerning unfair business-to-consumer commercial prac-
tices in the Internal Market and amending Directives 84/450/EEC, 97/7/EC and 98/27/EC (the
Unfair Commercial Practices Directive)’

COM(2003) 356 final - 2003/0134 (COD)

(2004/C 108/17)

On 25 July 2003 the Council decided to consult the European Economic and Social Committee, under
Article 95 of the Treaty establishing the European Economic Community, on the above-mentioned
proposal.

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 16 December 2003. The rapporteur was Mr
Hernández Bataller.

At its 405th plenary session (meeting of 29 January 2004) the European Economic and Social Committee
adopted the following opinion by 77 votes to eight with ten abstentions.

1. Introduction

2. Content of the proposed directive

1.1
In the green paper on consumer protection in the Euro-
pean Union (1), the European Commission outlined the case for
reform of EU consumer protection legislation,
identifying a
framework directive containing a general duty in relation to
unfair commercial practices as a possible basis for reform.

The proposal defines the conditions which determine
2.1
whether a commercial practice is unfair;
it does not impose
any positive obligations which a trader has to comply with to
show that he is trading fairly.

1.2
The Committee issued an opinion on this green
paper (2), expressing support for a framework directive and
agreeing that ‘a general clause containing 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).

The follow-up communication to the green paper (4)
1.3
provided information on the results of the consultation and an
outline of how the framework directive harmonising the rela-
tionship between unfair competition, consumer protection and
the role of codes of conduct could be structured.

Around the same time the Commission approved a
1.4
Communication on sales promotions in the Internal Market
and a Proposal for a European Parliament and Council Regu-
lation on sales promotions in the Internal Market (5).
In its
opinion on these documents (6) the Committee recommended
taking particular
that
account of the public debate on the green paper on consumer
protection, so as to ensure that the various Community policies
are consistent with each other.

the Commission revise the proposal,

(1) COM(2001) 531 final
(2) OJ C 125 of 27.5.2002.
(3) Ibid.
(4) COM(2002) 289 final
(5) COM(2001) 546 final
(6) OJ C 221 of 17.9.2002. COM(2001) 546 final.

2.2
It contains an internal market clause which provides
that traders have to comply only with the requirements of the
country of origin and prevents other Member States from
imposing additional requirements on those traders who do so
(i.e. mutual recognition).

2.3
It fully harmonises EU requirements relating to unfair
business-to-consumer commercial practices and provides –
according to the Commission – an appropriately high level of
consumer protection.

This harmonisation relates to those unfair commercial
2.3.1
practices which harm consumers' economic interests. Hence
consumer health and the safety aspects of products are outside
its scope, except misleading health claims which will be
appraised under the provisions on misleading commercial prac-
tices.

The proposed directive will apply where there are no
2.3.2
specific provisions
legislation governing unfair
commercial practices. Where such specific provisions do exist,
they will take precedence over the framework directive.

in sectoral

2.4
It contains a general prohibition which will replace
existing national general clauses and divergent principles. Its
aim is to define a common EU framework.

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It

establishes

2.4.1
The general prohibition covers unfair commercial
for determining
practices.
whether a practice is unfair. A plaintiff will have to demon-
strate that all three conditions are satisfied in order for a prac-
tice to be judged unfair:

conditions

three

— the practice must be contrary to the requirements of profes-

sional diligence;

2.6.5
It describes three ways in which a commercial practice
can be aggressive, namely harassment, coercion and undue
influence.

It incorporates the business-to-consumer provisions of
2.7
the misleading advertising Directive and limits the scope of the
existing directive
advertising and
to business-to-business
comparative advertising which may harm a competitor, but
where there is no consumer detriment.

— the benchmark consumer to be considered in assessing the

impact of the practice is the ‘average’ consumer;

— the practice must materially distort or be likely to materially

distort consumers' economic behaviour.

An annex to the directive contains a short black list of
2.8
commercial practices. These are practices which will
in all
circumstances be unfair and therefore banned in all Member
States. An ex ante prohibition is therefore imposed on these
specific practices.

2.5
The benchmark consumer is the ‘average consumer’ as
defined by the case-law of the European Court of Justice, rather
than the vulnerable or atypical consumer. For the ECJ the
average consumer is ‘reasonably well-informed, observant and
circumspect’, with the proviso that where a specific group of
consumers
the average
member of that group are taken into account in assessing the
impact of the practice.

the characteristics of

targeted,

is

2.6
It identifies two key types of unfair commercial prac-
tices: those which are ‘misleading’ and those which are ‘aggres-
sive’. These provisions apply all
the same elements as are
contained in the ‘general prohibition’, but function indepen-
dently of it.

2.6.1
This means that a practice which is either misleading
or aggressive according to the corresponding provisions is
automatically unfair; if the practice is neither misleading nor
aggressive, the general prohibition will determine whether it is
unfair.

2.6.2
A commercial practice may mislead either through
action or omission, and this division is reflected in the structure
of the articles.

3. General comments

The EESC endorses the Commission's aim of providing a
3.1
high level of consumer protection and facilitating the operation
of the internal market. It acknowledges not only the timeliness
of the proposal, but also the effort put into the public debate
sponsored by the Commission and the ex ante assessment
drawn up before the presentation of the proposal. It hopes that
the same approach will be followed for future proposals
concerning consumer protection.

3.1.1
The EESC has already approved the Commission's new
approach consisting of general legislation backed up by codes.
It agrees on the need to avoid excessively detailed regulation,
which is neither in the interest of consumers nor of business,
and to introduce progressively the highest possible level of
harmonisation of consumer protection legislation by the most
appropriate means (7).

3.1.2
the
The EESC particularly welcomes the fact
specific directives are to have precedence over the framework
directive where there are divergences between them.

that

It

is also important

3.1.3
that protection from unfair
commercial practices applies before and after the point of sale
and/or service delivery.

2.6.3 With regard to fair or unfair after-sale commercial
practices, the proposal does not contain any definitions but
instead applies the same fairness principles to commercial prac-
tices before and after the point of sale.

2.6.4
The proposal acknowledges that codes of conduct are
fundamentally voluntary in nature and establishes criteria to
indicate when the trader's performance in relation to the code
might reasonably be expected to influence the consumer's deci-
sion.

The EESC has already welcomed (8) the drawing-up of
3.1.4
codes of conduct to which firms subscribe voluntarily, provided
that they are of good quality, concentrate on the definition of
good practices and are monitored by the public authorities and
(employers, consumers, etc.) which have
the associations
subscribed to them. For this reason it
the
proposal provides for the possibility of legal penalties if the
decisions of the bodies responsible for applying and monitoring
the codes are not complied with.

is pleased that

(7) OJ C 95 of 23.4.2003.
(8) Ibid.

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The

that

EESC recommends

3.1.5
the Commission
strengthen the protection afforded by the proposal as regards
new technologies, especially their use by the most vulnerable
groups (children in particular), so as to supplement the legal
framework established by the adoption of the directive on elec-
tronic commerce (9).

Notwithstanding these comments, the proposed directive

3.2
raises a number of basic questions:

3.3. Specific comments

M i ni mum h ar moni sat i on

The EC Treaty imposes on the Commission a duty to
3.3.1
achieve results with its proposals to harmonise legislation, to
ensure that they provide ‘a high level of consumer protection’.
This proposal, however, places more emphasis on ‘establishing
uniform rules at Community level and (…) clarifying certain
legal concepts at Community level to the extent necessary for
the proper functioning of the Internet Market and to meet the
requirement of legal certainty’ (4th recital to the proposal).

the proposal will

The EESC fears that

3.3.2
lower the
existing level of consumer protection in the Member States and
thinks that this will be difficult to explain to people (10). Hence
it would like to see a standstill clause inserted in the proposal
guaranteeing that existing levels of protection will not fall.

The EESC has already spoken out

3.3.3
for maximum
harmonisation, considering that protection of consumers in
line with Article 153 should be at the highest level (11).

3.4.1.1
The EESC considers that the simultaneous establish-
ment of two different legal regimes to regulate the same subject
– misleading advertising – according to which economic agent
is affected, traders or consumers, could considerably complicate
the current legal framework and could result in inconsistencies
and differences in treatment and regulation. All of this goes
against the principle of legislative simplification and could lead
to a lack of legal security.

3.4.1.2
The EESC considers that it would be better to have a
single set of rules on misleading advertising, with this proposal
either repealing the current directive or amending it. The legis-
lative aim should be to focus on organising the internal market
and strengthening consumer protection through an objective
regulation which is concerned with ‘the facts’ – misleading
advertising – and which simultaneously gives protection to all
those concerned, instead of establishing two regulations which
may differ in content and protection mechanisms depending
on the areas in which they apply (supply or demand).

Assuming that the Commission does not intend to
3.4.2
substantially widen the scope of the directive along these lines,
it should, as a first step, at least provide for mandatory applica-
tion mutatis mutandis (‘reflex-application’) in those cases where
a commercial practice which is unfair
in a business-to-
consumer relation forms part of a business-to-business contrac-
tual relation at an earlier stage in the distribution chain.

3.4.3.
The provision whereby the State in which the head
office is located has to ensure compliance with the rules gives
rise to practical problems in cases where an enterprise is
involved in cross-border activities. The EESC calls upon the
Commission to expand upon how the provision is to be
applied in this context.

3.3.4 More progress is possibly needed on the harmonisa-
tion of contractual law along the lines already laid down in the
last Commission communication (12).

3.5 Legal basis

3.4 Scope

3.4.1
The proposed directive creates a new legal regime for
misleading advertising in relation to consumers, but does not
replace the old rules which would continue to apply, with a
few changes, in relation to traders. The regulation of compara-
tive advertising is excluded from this proposed directive on
consumer protection and would be covered, with the proposed
changes, by the present Directive 1984/450/EEC, as amended
by Directive 1997/55/EC, on misleading advertising in relation
to traders. In addition, and contrary to what is stated in the
proposal, this would enable the Member States to maintain or
adopt provisions affording greater protection for traders and
competitors from misleading advertising.

(9) Directive 2000/31/EC of

the
Council of 8 June 2000 on certain legal aspects of information
society services, in particular electronic commerce

the European Parliament and of

(10) See footnote 7
(11) See footnote 2
(12) COM(2003) 68 final

The basis of the proposal

3.5.1
is Article 95 of the ECT
which concerns the approximation of legislation affecting the
establishment or functioning of the internal market. However,
it is Article 153 of the ECT which states that the Community
must ensure a high level of protection and contribute to
protecting consumers' economic interests. The EESC would
prefer to base the proposal on the latter article (13) or possibly
on both articles.

3.6 Concept of the ‘average consumer’

The Commission uses the term ‘average consumer’ in
3.6.1
its proposal, as interpreted in the case law of the Court of
Justice, i.e. a consumer who is ‘reasonably well-informed, obser-
vant and circumspect’.

(13) Footnote 2

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the use of

The EESC fears that

3.6.2
this interpretive
criterion will mean that consumer-protection policy loses its
protective nature and, notwithstanding the special attention
that the proposal devotes to the most vulnerable groups, fails
to protect less well-informed or less well-educated consumers.
It should not be forgotten that there is a material inequality
between the parties in consumer-to-business relations.

3.6.3
The ‘average consumer’ referred to in the proposed
directive has to be able to make ‘informed’ decisions. Under the
case law prevailing in some Member States, advertisements are
not required to mention anything which might be negative or
detrimental for the product or service being offered. Consumers
can, however, only make informed decisions if they have this
information. In the EESC's view, it is important to find a clear
and practical solution to this problem.

3.7 Unfair commercial practices

3.7.1
The Committee has already agreed that a general
clause containing a legal standard is a flexible and suitable
instrument
in a very
for governing marketing behaviour
dynamic area, which is constantly developing and undergoing
change (14).

The proposal has a negative approach to commercial
3.7.2
practice and appends a list of practices that are considered
unfair. The EESC considers, however, that it should adopt a
positive approach to unfair commercial practice, more in line
with relevant modern legislation. A commercial clause with
this approach would make it possible to adjust to changing
market conditions and competitive practices and to monitor
dubious practices for fairness.

3.8. Conceptual clarity of the proposal

All

3.8.1
laws should provide legal security and certainty.
The proposal contains concepts alien to the laws of many
Member States, e.g. ‘professional diligence’, which, according to
the Commission, is analogous to ‘good business conduct’. The
EESC would suggest that the Commission clearly explain in the
explanatory memorandum to the proposal what this concept
means so that legal, economic and social players can under-
stand the scope of the proposal precisely.

Brussels, 29 January 2004.

(14) Footnote 2

3.9 Consistency with other Community legislation

The EESC fears that the adoption of the directive will
3.9.1
not
increase transparency in business-to-consumer relations
and that it will not be fully consistent with other Community
legislation. In particular it hopes that fears of a possible clash
with the proposed regulation on sales promotions in the
internal market (15) are unfounded. The two texts should be
complementary. The Committee calls on the Commission to
provide further guidance on the relationship between this direc-
tive and the existing sectoral directives and other areas of law
(e.g. contract law), and to make it available before the directive
enters into force.

3.9.2
Some of the terms used in the proposal should be
checked in the various language versions, in particular ‘aggres-
sive commercial practices’; it is not really appropriate to use
words like ‘coercion’ and ‘threat’
in a private law text since
such conduct would be considered a crime in many Member
States' legislation.

3.10 Out-of-court settlements

3.10.1
To complement the codes of conduct, the proposal
should consider the possibility of adopting measures for the
out-of-court settlement of disputes enabling consumers and
businesses to rapidly and flexibly resolve disputes over unfair
commercial practices before appropriate bodies. This would be
without prejudice to the fundamental right
to proper legal
protection from the courts. Such bodies should at all events
comply with the principles of independence, transparency, the
adversarial principle, effectiveness, legality, liberty and represen-
tation
Recommendation
98/257/EC (16).

Commission

out

set

as

in

such as

the possibility of

3.10.2
The proposal sets out some implementing measures
that the Member States have to take in order to make the direc-
the adoption of preventive
tive more effective,
measures or
to
substantiate claims in relation to products and services. The
EESC believes that consideration should be given to other
measures which are only regarded as optional in the proposal
and which would reinforce the application of the framework
directive, such as the publication in the mass media, at the
court's discretion, of the judicial decisions enforcing the cessa-
tion of unfair commercial practices.

requiring the

trader

The President

of the European Economic and Social
Committee

Roger BRIESCH

(15) Footnote 6
(16) Commission recommendation on the principles applicable to the
consumer
for out-of-court

settlement of

bodies
disputes. OJ L 115 of 17.4.1998

responsible

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to the Opinion of the European Economic and Social Committee

The following amendments were defeated although they obtained at least a quarter of the votes cast.

APPENDIX

Point 3.6

Delete points 3.6.1 and 3.6.2.

Result of vote:

For 24, against 55, abstentions 3.

Point 3.7.2

Delete.

Result of vote:

For 24, against 59, abstentions 4.

The following text from the section opinion was defeated in favour of an amendment, but obtained at least a
quarter of the votes cast:

3.3.1
The EC Treaty imposes on the Commission a duty to achieve results with its proposals to harmonise legislation,
to ensure that they provide ‘a high level of consumer protection’. This proposal, however, places more emphasis on ‘estab-
lishing uniform rules at Community level and (…) clarifying certain legal concepts at Community level to the extent
necessary for the proper functioning of the Internet Market and to meet the requirement of legal certainty’ (4th recital to
the proposal).

Result of vote:

For 28, against 53, abstentions 5.