Communication from the Commission to the European Parliament pursuant to the second subparagraph of Article 251 (2) of the EC Treaty concerning the common position of the Council on the adoption of a Directive of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the Internal Market and amending Regulation [Consumer Protection Co-operation] and directives 84/450/EEC, 97/7/EC, 98/27/EC and 2002/65/EC (the Unfair Commercial Practices Directive)
Date: 2004-11-16
Institutions: European Commission
Subjects: advertising malpractice, approximation of laws, consumer protection, restriction on competition

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.11.2004 
COM(2004)753 final 

2003/0134(COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251 (2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a Directive of the European 
Parliament and of the Council concerning unfair business-to-consumer commercial 
practices in the Internal Market and amending Regulation [Consumer Protection Co-
operation] and directives 84/450/EEC, 97/7/EC, 98/27/EC and 2002/65/EC (the Unfair 
Commercial Practices Directive) 

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2003/0134(COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251 (2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a Directive of the European 
Parliament and of the Council concerning unfair business-to-consumer commercial 
practices in the Internal Market and amending Regulation … [Consumer Protection Co-
operation] and directives 84/450/EEC, 97/7/EC, 98/27/EC and 2002/65/EC (the Unfair 
Commercial Practices Directive) 

1- 

BACKGROUND 

Date of transmission of the proposal to the EP and the Council 
(document COM(2003) 356 final – 2003/0134(COD): 

20 June 2003. 

Date  of  the  opinion  of  the  European  Economic  and  Social 
Committee: 

29 January 2004. 

Date of the opinion of the European Parliament, first reading: 

20 April 2004. 

Date of transmission of the amended proposal: 

15 November 2004. 

Date of adoption of the common position: 

15 October 2004 
(qualified majority). 

2- 

OBJECTIVE OF THE COMMISSION PROPOSAL 

This Proposal addresses barriers to the functioning of the internal market for retail goods and 
services  arising  from  fragmented  national  regulation  and  the  consequent  costs  and 
uncertainties  for  businesses,  and  from  variable  consumer  protection  standards  which 
undermine consumer confidence. 

It  does  so  by  establishing  a  common,  EU-wide  framework  for  the  regulation  of  unfair 
business-to-consumer commercial practices (notably advertising and marketing) which harm 
consumers’ economic interests. The centrepiece of this framework is a general prohibition of 
unfair  commercial  practices,  based  on  common  criteria  for  determining  when  a  commercial 
practice is unfair. For extra legal certainty, this is supplemented by further elaboration of two 
key  types  of  unfairness,  misleading  and  aggressive  practices,  and  a  blacklist  of  practices 
which will always be unfair and are therefore prohibited up-front. 

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3- 

COMMENTS ON THE COMMON POSITION 

General comments 

The  Commission  supports  the  Council’s  common  position.  It  is  line  with  the  aims  and 
approach taken in the Commission’s original proposal and endorsed by the Parliament in first 
reading. 

Amendments incorporated in the Common Position 

The common position reflects the spirit of all or part of 51 of the 58 amendments which were 
acceptable to the Commission in full, in part or with changes, and 3 amendments which the 
Commission had originally indicated it was unable to accept. 

Legal base 

The  common  position  includes  a  reference  to  Articles  153(1)  and  3(a)  in  the  recitals  which 
reflects  the  Commission’s  position  on  Amendment  112  that  it  could  accept  an  indication  of 
the priority attached to consumer protection but that Article 95 alone is the right legal base. 

Consumer benchmark 

The common position retains the average consumer benchmark proposed by the Commission 
and  supported  by  the  Parliament  as  the  ‘default’  benchmark  against  which  the  impact  of 
potentially  unfair  commercial  practices  will  be  assessed.  The  drafting  has  been  amended  so 
that there is no longer a definition of the average consumer in the text, following concerns that 
this  would  prevent  the  concept  from  evolving  in  line  with  ECJ  jurisprudence.  The 
Commission  is  satisfied  that  the  retention  of  the  average  consumer  in  the  text  and  the  clear 
link to the ECJ jurisprudence in recital 18 have the same effect as Amendment 107.  

The  common  position  also  makes  specific  provision  for  the  protection  of  vulnerable 
consumers  in  Article  5.3  and  recital  19.  This  reflects  the  concern  expressed  in  a  number  of 
Parliament amendments (Amendments 8, 13, 106 and 111 which were acceptable in full or in 
part  to  the  Commission  and  Amendment  110  which  was  not)  that  the  articulation  between 
protection of the average consumer and of vulnerable consumers should be more explicit. The 
Commission  can  support  these  changes  because  they  do  not  require  an  assessment  of  each 
individual’s  circumstances,  which  would  be  unworkable.  They  do  ensure  that  vulnerable 
consumers can be protected when they are particularly at risk while safeguarding legitimate 
advertising practices, such as statements which are not meant to be taken literally. 

Professional diligence 

The common position adjusts the concept of professional diligence to incorporate the concept 
of good faith (thus addressing Amendment 108 and 29) and referring to the standard of skill 
and care that a trader may reasonably be expected to exercise, in line with Amendment 21.  

Economic behaviour 

The  common  position  includes  a  definition  of  ‘transactional  decision’  to  clarify  what  is 
included  within  a  consideration  of 
the 
Commission’s view this responds to the aim of Amendments 34, 39 and 45 which include a 
focus on consumers’ ‘economic behaviour’. 

the  consumer’s  ‘economic  behaviour’.  In 

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Codes 

The  common  position  deletes  the  references  to  European  level  codes  in  line  with 
Amendments 19 and 103. It also clarifies, in recital 20, that consumer associations could be 
informed and involved in the drafting of codes, as sought by Amendments 10, 61 and 104 and 
deletes the reference to professional diligence here in line with Amendment 9. The definition 
of ‘code’ has also been adjusted to reflect the change sought by Amendment 17. Article 6.2(b) 
distinguishes firm from aspirational code commitments, as sought by Amendment 24, and the 
second indent has been revised to reflect Amendment 40. Amendments 65 and 67 sought to 
ensure that code owners would not be held liable for non-compliance with the code by those 
who  are  bound  by  it1.  This  has  been  addressed  in  the  common  position  by  clarifying  that 
action may be taken against code owners where the code itself promotes non-compliance with 
legal requirements. 

Choice of law 

The Commission’s proposal had included a provision specifying that the law of the country 
where  the  trader  was  established  would  always  be  the  applicable  law  (i.e.  a  choice  of  law 
rule). The Parliament’s Amendment 26 had proposed excluding the rules which determine the 
law  applicable  to  non-contractual  obligations  from  this  provision.  The  Commission  had 
indicated that this Amendment was not acceptable because it could have the effect of making 
traders subject to the public law requirements of one country and, simultaneously, under the 
laws  governing  international  private  law,  the  law  of  another  member  state.  In  the  common 
position, the choice of law rule was deleted in part because of most Member States’ concern 
that in cross-border disputes consumers could be disadvantaged if the law of the trader were 
applied. The Commission does not share these concerns because of the full harmonisation and 
the  high  level  of  consumer  protection  achieved  in  the  proposal.  However,  the  Commission 
does  not  consider  it  essential  to  insist  on  this  point  in  this  particular  case  given  the 
considerable  simplification  arising  from  the  full  harmonisation  and  the  consequent  internal 
market benefits. The  Commission also considers that deletion of the  choice of law rule is a 
better solution than that proposed in Amendment 26. For these reasons the Commission can 
agree to the deletion of the choice of law rule from this proposal. In line with normal practice, 
the applicable law in cross-border disputes will therefore be determined by the courts. 

Temporary derogation 

The common position includes in Article 3 a temporary derogation for national laws based on 
the minimum clauses in existing directives, which reflects that proposed in Amendment 109. 
It also includes a clause calling for a review of the application of the directive after four years, 
reflecting Amendment 69. The Commission is prepared to accept this derogation on the basis 
that  it  is  limited  and  temporary,  to  enable  Member  States  to  manage  the  transition  from 
minimum to full harmonisation. 

Annex 1 

The Common Position incorporates the clarification of the status of the Annex sought by the 
Parliament  in  Amendments  7  and  33  through  changes  to  Article  5.5  and  a  new  recital  12a. 

1  

Amendment 64 contained the same text as Amendment 65 but with a different justification which was 
not  acceptable  to  the  Commission.  The  change  sought  by  Amendment  64  has  been  incorporated  in 
including Amendment 65. 

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Although the common position does not specify that Annex 1 can only be amended through 
the co-decision procedure, this remains the case and no alternative procedure is specified. 

Other 

Amendments 1, 5, 6, 23, 25 (first part), 47 (second part), 68, 99 (second part), 71, 73, 84, 85, 
87,  91,  and  92  have  been  incorporated  verbatim  or  with  minor  drafting  changes.  The 
Commission is prepared to accept Amendment 91, which it had originally indicated it could 
not  accept,  in  the  light  of  concern  from  both  the  Parliament  and  the  Council  about  abuses 
arising from demands to return unsolicited products. 

The  content  of  Amendment  105  is  reflected  in  new  text  in  recital  6  which  clarifies  the 
relationship with national rules governing aspects of unfair competition which are outside the 
scope of the directive, in line with the Commission’s intention. 

Amendment  14  is  partially  reflected  in  the  definition  of  Article  2(b)  which  the  common 
position  amends  to  clarify  that  anyone  acting  in  the  name  of  or  on  behalf  of  a  trader  is 
captured. The Commission can support this clarification. 

Amendment 27 has been captured through the introduction of points 3.8 to 3.10 which deal 
with authorisation schemes and areas requiring specific provision. 

Amendment 28 has been addressed through a fuller explanation of the scope of the Directive 
in recital 9. 

Article  6.1(f)  of  the  Commission’s  proposal  was  deleted  in  the  common  position,  with  the 
Commission’s  agreement,  because  of  confusion  about  the  implications  for  the  burden  of 
proof. This deletion deals with the concern underlying Amendment 37. 

Article  7  has  been  amended  to  take  appropriate  account  of  the  physical  limitations  of  the 
communication medium used for the commercial practice, reflecting Amendments 43, 44 and 
45.  The  Commission  can  accept  this  solution  although  it  did  not  originally  support 
Amendment 43 because there is no requirement included for consumers to specifically ask for 
information. 

The  criterion  in  Article  9(c)  has  been  tightened  to  refer  to  the  “exploitation”  of  grave 
misfortune, to address the concern underlying Amendment 59. 

In Annex 1, the drafting of point 12 of the list of misleading practices in the Commission’s 
proposal  has  been  re-worked  to  avoid  the  problem  created  by  the  phrase  “liquidation  sale” 
which Amendment 76 sought to address. Point 4 of the list of aggressive practices has been 
deleted,  which  addresses  the  concern  about  legitimate  sales  to  bereaved  or  seriously  ill 
consumers raised in Amendment 88. Point 6 of that list has also been revised to ensure that it 
covers  an  appeal  to  any  adult  to  buy  a  product  for  a  child,  not  just  the  parent,  in  line  with 
Amendment 90. 

In the light of the significant degree of alignment between those of Parliament’s amendments 
acceptable  to  the  Commission  and  the  common  position,  the  Commission  was  prepared  to 
accept  a  compromise  which  did  not  include  a  small  number  of  amendments  which  it  could 
have accepted at least in part (Amendments 2, 4, 60, 62, 72, 80, 89). 

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New provisions introduced in the Council’s common position 

No  significant  new  areas  have  been  introduced  in  the  common  position.  It  includes  minor 
adjustments  to  the  criteria  for  misleading  actions  in  Article  6  and  several  new  examples  in 
Annex 1, all of which are coherent with the criteria set out in the substantive provisions in the 
body  of  the  directive  (i.e.  they  are  unfair  in  accordance  with  the  tests  established  in  the 
directive). 

Some clarifications of the scope have been included in the recitals (eg recitals 8, 15 and 21) 
and  technical  changes  have  been  made  to  Articles  14  to  reflect  changes  elsewhere  in  the 
directive,  in  Article  15  to  ensure  consistent  treatment  of  the  two  directives  dealing  with 
distance  selling2,  and  in  Article  16  to  reflect  the  adoption  of  the  regulation  on  consumer 
protection co-operation3. 

4. 

CONCLUSION 

The Commission welcomes the common position which in its view will achieve the objectives 
of the Commission’s original proposal and which retains the approach to achieving those aims 
which the Parliament had endorsed in its first reading of the Commission’s proposal. 

5. 

COMMISSION DECLARATIONS 

The Commission made a declaration which was attached to the minutes of the Council and is 
also attached in Annex to this communication. 

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Directive 97/7/EC concerning the protection of consumers in respect of distance contracts and Directive 
2002/65/EC concerning distance marketing of consumer financial services. 
COM(2003)443 final, 2003/0162(COD). 

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ANNEX: COMMISSION DECLARATION 

The  Commission  can  only  agree  to  the  deletion  of  article  4.1  of  its  proposal  on  the 
understanding  that  the  present  directive  provides  for  a  full  harmonisation  of  the  domain 
covered by the directive and that for this reason article 4.1 is not legally required to ensure the 
proper  functioning  of  the  internal  market  in  this  field.  The  practical  implementation  of  this 
directive  will  be  actively  monitored  by  the  Commission  so  as  to  achieve  its  uniform 
application. 

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