Thursday, 15 June 2017

Mediation may be mandatory but should be free to withdraw from and of lawyers - CJEU in Menini and Rampanelli (C-75/16)

Yesterday the CJEU issued also the first judgment on the new ADR Directive in the case of Menini and Rampanelli (C-75/16). We have previously commented on the AG Saugmandsgaard Øe's opinion (First case on new ADR Directive...) and the CJEU agreed with the AG's assessment that the new ADR Directive does not preclude Italy to prescribe mandatory mediation procedure, as long as parties retain the right to access the judicial system. The "voluntary nature of the mediation lies, therefore, not in the freedom of the parties to choose whether or not to use that process but in the fact that 'the parties are themselves in charge of the process and may organise it as they wish and terminate it at any time'" (par. 50). The right to access the judicial system would be guaranteed if e.g. the outcome of the ADR procedure is not binding on the parties and if the limitation periods do not expire during such a procedure (par. 56). However, as currently the Italian mediation procedure requires consumers to use legal services (which is contrary to Art. 8(b) of ADR Directive, see par. 64) and does not allow them to withdraw from the mediation process unless they demonstrate the existence of a valid reason for such a withdrawal, these features of the mediation procedure are in breach of the ADR Directive. The latter function makes ADR procedure binding to an extent (see par. 57 and 67 on the necessity of free withdrawal from the ADR procedure at any stage).

The CJEU in providing this answer left a lot of questions posed by the national court unanswered. It left it to the national court to determine whether "an application to have an order for payment set aside and an application for a stay of provision enforcement associated with that measure constitute a complaint by a consumer, of an independent nature in relation to the order for payment proceedings instituted by a trader working in credit..." (par. 42). The ADR Directive applies only if the ADR procedure has been initiated by the consumer.


CJEU in TofuTown: if it doesn't come from a cow, it can't be milk

Soy milk, soy cream, soy cheese: all these names come forward relatively frequently on European markets. According to a decision issued by the the CJEU yesterday (C-422/16, BSV v TofuTown.com GMBH), however, all these products are currently being marketed under names that do not meet the requirements of EU law. To understand why, let us take a step back. 

In the main proceedings, a German association had sued a company producing vegetarian and vegan foodstuff claiming that it infringed German rules on unfair competition by not respecting EU food regulations. 


In particular, the company traded several vegetal products using names mainly associated with dairy products, such as "cream", "milk", and so on. The usage of these terms, however, is restricted under EU law, namely Regulation 1308/2013, to "normal mammary secretion obtained from one or more milkings" - in other words, animal products. In turn, names which designate dairy products - such as cream, butter, cheese - are in principle only to be used for products based on animal milk. A very limited set of exceptions, listing names of products traditionally using milk-related names in the Member States, is adopted by means of Commission decision 791/2010. This lists features products such as "coconut milk", "horse-radish cream" and other country-specific words - with separate sections for each language.


The defendant company, however, claimed that allowing a broader understanding of the exception, which would allow the use of diary-related words for soy and other vegetable products, would be in line with the objectives of the Regulation. According to this argument, 

"the way in which consumers understand those designations has changed massively in recent years, and that it does not use terms such as ‘butter’ or ‘cream’ in isolation, but always in association with words referring to the plant-based origin of the products concerned, for example ‘Tofu butter’ or ‘Rice Spray Cream" (para 17).

The CJEU did not really engage with the submission, rather reasoning on whether an interpretation that would not allow such a reading would itself go against the Regulation's purposes. According to the court, it would not. 

"As is clear from recitals 64 and 76 of that regulation, the objectives pursued by the provisions at issue consist, in particular, in improving the economic conditions for the production and marketing as well as the quality of such products. The application of such standards is therefore in the interest of producers, traders and consumers, to protect consumers and to maintain conditions for allowing competition. Those provisions, in so far as they provide that only the products which comply with the requirements they lay down can be designated by the term ‘milk’ and the designations reserved exclusively for milk products even if those designations are expanded upon by explanations or descriptions such as those at issue in the main proceedings, contribute to the attainment of those objectives." (para 43)

The limitations, according to the court, are necessary for a proper identification of actual milk-based products. Without such limits, both consumers and producers of milk would be harmed. The contextual use of "clarifying or descriptive terms indicating the plant origin of the product at issue" is not sufficient to circumvent the restrictive rules of the Regulation (see also para 31).

In essence, the CJEU saw no reason to investigate whether in the case at stake a risk of confusion existed, either by using an "average consumer" test or otherwise. The Court simply considered itself bound by the list detailed in the Commission's decision of 2010, especially in light of the fact that the Commission would be able to revise such decision with relatively minor troubles.

The Court also briefly considered whether major complaints could be raised against the Regulation under the principles of proportionality and equal treatment. As to proportionality, the analysis remarked that the EU legislator enjoys wide discretion in matters of agricultural markets regulation, due to the broad mandate it enjoys under the Treaty.  Concerning equal treatment, and in particular the different approach to producers of non-dairy replacements for animal products (eg veggie burgers), the Court observed that different sectors show different concerns and thus equal-treatment here cannot be invoked to require different situations to be treated equally.

Producers in several member states will now likely have to change their labelling and marketing practices, and/or massively lobby the Commission for amendments to its 2010 decision.



Tuesday, 13 June 2017

General nutrition and health principles for reduction of sugar consumption - CJEU in Dextro Energy (C-296/16 P)

In anticipation of more directly consumer law-related judgments of the CJEU (tomorrow the judgment will be given in the first case pertaining to the ADR Directive), it might be interesting to bring our readers' attention to the judgment of 8th of June in the Dextro Energy case (C-296/16 P). The CJEU dismissed the appeal against the General Court's judgment, upholding its decision. The case pertained to nutrition and health claims.


Dextro Enegry is a producer of various products made mostly of glucose, which are sold on the German and European markets. In 2011 it requested authorisation of various health claims, such as "glucose contributes to normal energy-yielding metabolism" or "glucose contributes to normal muscle function". Pursuant to Regulation No 1924/2006 health claims need to be authorised and included on the list of authorised health claims before they can be used by producers. In 2015 the Commission refused, however, to authorise these health claims as they were seen to convey "a contradictory and ambiguous message to consumers, as they encouraged the consumption of sugar, whereas national and international authorities recommended a reduction in sugar intake, on the basis of generally accepted scientific advice." (The Court confirms that a number of health claims relating to glucose cannot be authorised) The Commission's opinion was not changed in case the health claims would be used only under specific conditions or accompanied by additional warnings. Dextro Energy relied on the positive opinion of the European Food Safety Authority (EFSA) stating that there is a causal link between the consumption of glucose and normal energy-yielding metabolism. Despite the Commission not questioning the EFSA's opinion, the General Court refused to authorise these health claims, considering that other relevant and legitimate factors might have led the Commission to its decision.

The interesting finding of this case is the General Court's recognition of generally accepted nutrition and health principles, pursuant to which average consumers must reduce their sugar consumption (par. 58). Such principles stand in this case in the way of authorising the use of nutrition and health claims that even if accurate may endanger consumer health.

Monday, 29 May 2017

REFIT report of EU consumer law: exciting times ahead

Readers of this blog will know that 1,5 years ago the European Commission published a 'roadmap' for an evaluation and fitness check of EU consumer law (as a part of its 'Regulatory Fitness and Performance Programme'; REFIT). Today, the Commission presented an analysis which is intended to "serve as a basis for further improving the legal framework of consumer and business" (click here for the press release). According to the Commission, "[t]he results show that while European consumers already benefit from strong consumer rights, there is room for improvement for instance when it comes to enforcing these rights or making them fit for the digital age".

For this analysis, six consumer directives have been reviewed, including the Unfair Commercial Practices Directive, the Consumer Sales Directive and the Unfair Contract Terms Directive. Several issues are identified that should be addressed, such as limited redress possibilities and consumer rights not being fully adapted to the digital world. The Commission has announced that it will further examine rules concerning, inter alia, (civil law/contractual) remedies, online services and online platforms. It will also look into strengthening and harmonising the level of sanctions as well as injunctions and collective redress. This year (2017) a public consultation and an impact assessment will follow. 

We will keep you informed about any relevant (legislative) developments on this blog. For more information about the review of EU consumer law, see here.

Wednesday, 24 May 2017

EuCML - call for papers on digital sphere and consumers

CALL FOR PAPERS

New technologies are evolving at a fast rate, serving consumers and posing new threats in equal measures. It is for lawyers to keep up and perhaps anticipate what regulatory needs may present themselves in future. While the European Commission is busy with a review of intermediary's liability and the Regulation of the platform economy, other technologies are worthy of attention, although they may not yet be on the legislative agenda. EuCML (Journal of European Consumer and Market Law) wishes to attract articles at the cutting edge of development in the digital sphere. We therefore welcome articles on (but not limited to) the legal implications of:
  • big data, deep learning
  • chat bots
  • progressive web apps
  • 3D printing
  • human microchips
  • block chain technology
  • driverless cars
  • internet of things
  • the use of artificial intelligence
  • any other subject we have not yet come across and that will have an impact on consumers and their protection.
Submissions should be sent digitally via e-mail in Word format to the Editors at editors@eucml.eu
All articles are double blind peer-reviewed. Articles should preferably not be longer than 10.000 words and follow our submissions guidelines (OSCOLA), available at: 

Tuesday, 16 May 2017

New roaming rules in books and in action - several insights from Poland

How did this all come about?

Reduction of roaming surcharges in the EU is one of the European legislator's flagship projects, perceived as a much-needed positive signal in the times of growing euroscepticism. Indeed, against a background of continuous setbacks and crises, bringing down prices of foreign calls, text messages and data transfers within the EU appears to be a success story. The process began in 2007 with the adoption of Regulation 717/2007 introducing the so-called Eurotariff. Not surprisingly, even this rather modest regulatory intervention in the roaming market met with resistance from the telecom operators and was challenged before the Court of Justice. However, the effects were opposite to the ones intended: after the regulation was upheld by the CJEU, the European legislator felt encouraged to regulate the roaming prices even further. Over time, Regulation 717/2007 was substantially amended and eventually replaced with Regulation 531/2012 on roaming on public mobile communications networks within the Union, which also today is one of the key EU acts in this domain.

What brought the issue of roaming back on the front pages is the adoption of Regulation 2015/2120 in November 2015. The act introduced a number of amendments to Regulation 531/2012 and set as its aim the (almost) complete abolishment of retail roaming surcharges by 15 June 2017. 

Two further steps needed to be taken, however, before the objective set in new regulation could be reached:
  • the adoption of implementing rules concerning possible limitations to the "roam like at home" principle, namely the so-called fair use policies and exceptional authorisations which telecom operators may obtain in order to apply a surcharge - the Commission Implementing Regulation 2016/2286 to that end was adopted on 15 December 2016, and
  • the adoption of a further regulation imposing new caps on roaming charges in the wholesale market, i.e. prices which operators are charging from their foreign counterparts for using their networks. Unlike regulation 2016/2286, imposition of the lower wholesale caps had to be adopted in the ordinary legislative procedure pursuant to Art. 114 TFEU and thus required an interinstitutional agreement. As for now, everything seems to indicate that also this last hurdle will soon be overcome. The Commission tabled the respective proposal in June 2016 and after approx. 6 months, on 31 January 2017, a provisional agreement between the Council and the European Parliament was reached. The EP voted on the regulation in its April session and the Council is expected to follow suit very soon.

What are the new rules...

Following the recent reform, Article 6a was added to Regulation 531/2012, which reads as follows: 

With effect from 15 June 2017, provided that the legislative act to be adopted following the proposal referred to in Article 19(2) [new rules on the wholesale charges] is applicable on that date, roaming providers shall not levy any surcharge in addition to the domestic retail price on roaming customers in any Member State for any regulated roaming calls made or received, for any regulated roaming SMS messages sent and for any regulated data roaming services used, including MMS messages, nor any general charge to enable the terminal equipment or service to be used abroad, subject to Articles 6b and 6c.

From the user's perspective, Articles 6b and 6c are, of course, a fly in the ointment. The provisions lay down the two instances in which the "roam like at home" principle might be limited.

Article 6b refers to the so-called fair use policy, which roaming providers may apply in order to prevent abusive or anomalous usage of regulated retail roaming services by roaming customers, such as the use of such services by roaming customers in a Member State other than that of their domestic provider for purposes other than periodic travel. Fair use policies shall, however, enable the roaming provider’s customers to consume volumes of regulated retail roaming services at the applicable domestic retail price that are consistent with their respective tariff plans.

Example: mobile data 

Operators may, for instance, impose a certain limit on data use during roaming if a subscriber has unlimited mobile data or very affordable data package (a so-called 'open data bundle', cf. Article 4(2) of the implementing regulation). Roaming providers who decide to apply such a fair use policy, must inform the subscribers about this fact and alert them once the limit is reached. Beyond this threshold, subscribers can continue to use mobile data abroad, subject to a charge of maximum €7.70/GB + VAT. The charge will decreased gradually to reach €2.50/GB as of 2022.

Furthermore, Article 6c stipulates that in specific and exceptional circumstances, with a view to ensuring the sustainability of its domestic charging model, where a roaming provider is not able to recover its overall actual and projected costs of providing regulated roaming services in accordance with Articles 6a and 6b, from its overall actual and projected revenues from the provision of such services, that roaming provider may apply for authorisation to apply a surcharge

Specifics of both limitations are set out in the implementing regulation mentioned above.

... and how telecom operators read them?

First indications about the impact of the new law on the market practice can already be observed in several countries, for example in Poland, where telecom operators have just disclosed their new tariffs. Rather unsurprisingly, each of the four major telecom operators decided to impose certain limits on data use during roaming (from 1 to 8 GB depending on the subscriber's tariff plan). Interestingly, only one operator decided to apply the "roam like at home" principle without any significant limitations as regards the number of incoming and outgoing calls as well as text messages sent. The remaining three players established yearly limits, which would also be applicable to subscribers whose plans provide for unlimited domestic calls and SMS. Such an interpretation of the fair use policy appears to be at odds with what the European Commission had in mind.

The proposed price lists are currently being reviewed by the Polish telecom regulator, the President of the Office of Electronic Communications (UKE). What is already known today is that the new tariffs had not been welcomed in the Polish consumer protection agency, the Office of Competition and Consumer Protection (UOKiK), as well as in the EC, which may call upon the UKE to take action. It thus seems that interesting developments are still ahead!




Thursday, 11 May 2017

Services provided by Uber are transport services not information society services, Advocate-General says

Earlier today, the long-awaited opinion of Advocate-General Szpunar in case C‑434/15 Uber Spain was published. The analysis concerns one of the two cases brought before the CJEU in connection with the controversial mobile app. The key question addressed in both cases is whether services provided by Uber should be classified as information society services or as transport services. This categorization is of paramount importance from the point of view of EU law.

The opinion is bad news to Uber Technologies Inc. and its European subsidiaries. The Advocate-General took the view that services provided by Uber do not constitute information society services, but should rather be regarded as services in the field of transport. Consequently, the activity of Uber falls outside the scope of both E-Commerce Directive and Services Directive. Such an interpretation would allow Member States to subject Uber to a number of sectoral requirements.

The opinion is based on several factual assumptions about the practical operation of the analysed business model. Primary focus remains on the service marketed as UberPOP. These factual elements are, of course, for the national court to verify. More importantly, however, the opinion also includes a more abstract interpretation of the legal issues at hand. If followed by the Court of Justice, the framework proposed by the AG could be used in the assessment of other digital business models. 

The essential part of the opinion concerns the notion of an information society service. By way of reminder, the term refers to "any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services" (Article 2(a) of Directive 2000/31/EC in connection with Article 1(2) of Directive 98/34/EC). Since the business model at hand involves both electronically and non-electronically supplied services, the following questions have arisen: 1) which services are actually provided by Uber and 2) are these services provided at a distance and by electronic means.

According to the AG, the decisive question in this respect is whether the service which is not supplied by electronic means is economically independent of the service which is provided by that means. The relevant framework of assessment is set out in para. 35, which reads as follows:

"Where the provider of the service supplied by electronic means is also the provider of the service not supplied by such means or where he exercises decisive influence over the conditions under which the latter service is provided, so that the two services form an inseparable whole, it is necessary to identify the main component of the supply envisaged, that is to say, the component which gives it meaning in economic terms. For a service to be classified as an information society service, this main component must be performed by electronic means."

Assessment of the Uber business model led the Advocate-General to believe that, in that factual context, the connection of passengers and drivers is neither self-standing, nor the main supply in relation to the supply of transport. Consequently, the service provided by Uber cannot be classified as an ‘information society service’. The opinion cites the examples of other digital services, such as platforms for the online sale of goods (para. 36) and platforms for the purchase of flights or hotel bookings (paras. 57-60), and draws a distinction between operators of such platforms an Uber. The AG also points to the difference between Uber and ride-sharing platforms, but does not elaborate on that aspect any further (para. 42). He similarly distances himself from competition and labour law issues.

The overall line of argumentation along with the conclusions reached are summarised in paras. 71-72 of the opinion.

71. (...) In the case of composite services, consisting of a component provided by electronic means and another component not provided by such means, the first component must be either economically independent of the second or the main component of the two in order to be classified as an ‘information society service’. Uber’s activity must be viewed as a whole encompassing both the service of connecting passengers and drivers with one another by means of the smartphone application and the supply of transport itself, which constitutes, from an economic perspective, the main component. This activity cannot therefore be split into two, for the purpose of classifying a part of the service as an information society service. Consequently, the service must be classified as a ‘service in the field of transport’.

72. I therefore propose that the Court should answer the first and second questions referred for a preliminary ruling as follows:

– Article 2(a) of Directive 2000/31, read in conjunction with Article 1(2) of Directive 98/34, must be interpreted as meaning that a service that connects, by means of mobile telephone software, potential passengers with drivers offering individual urban transport on demand, where the provider of the service exerts control over the key conditions governing the supply of transport made within that context, in particular the price, does not constitute an information society service within the meaning of those provisions.

– Article 58(1) TFEU and Article 2(2)(d) of Directive 2006/123 must be interpreted as meaning that the service described in the preceding point constitutes a transport service for the purposes of those provisions.

On a final note

The same Advocate-General is drafting the opinion in the second case involving Uber, namely C-320/16 Uber France, which leaves the American company with little grounds for optimism. Publication of the other opinion is scheduled for 4 July. Since opinions of AGs are not binding on the Court, Uber can, however, still hope that the CJEU will not follow the proposed line of argumentation.

Notifying about cancelled flights - CJEU in Krijgsman (C-302/16)

An interesting judgment on air passenger rights has been given today by the Court of Justice in the case Krijgsman (C-302/16). It clarifies that the airlines are responsible for paying out compensation to passengers whose flights have been cancelled (pursuant to Regulation 261/2004) in any event when the information on the cancellation has not been communicated to the passengers at least two weeks before the scheduled departure time. The airlines don't discharge their obligation by timely notifying about the cancellation the travel agent through which the passengers booked their flight, if that information is not relayed further to the passengers by the travel agent. This is consistent with keeping the compensation pursuant to Regulation 261/2004 separate from any contractual relationship between airlines and passengers.

In practice this means that anyone booking a flight through a travel agency (whether regular one or an online intermediary websites) may still expect to be compensated by the airlines in case of a flight's cancellation, unless they have received information about this cancellation at least two weeks before the scheduled departure time (either from the airline or from their travel agent).

Transparency: where art thou in consumer protection?


TRANSPARENCY:
WHERE ART THOU IN CONSUMER PROTECTION?
Date: 27 June 2017
Place: Laver LT3

Moderator: Joasia Luzak (University of Exeter, UK)

  • 10:00-10:45      Evelyne Terryn (KU Leuven, Belgium): "Transparency in the UCTD: time for reform?

  • 10:45-11:00       coffee/tea break

  • 11:00-11:45   Monika Namysłowska (University of Łódź, Poland): "Transparency in commercial practices"

  • 11:45-12:30     Alison Harcourt (University of Exeter, UK): "Media transparency in Europe"

  • 12:30-14:00      buffet lunch for participants

  • 14:00-14:45   Christopher Docksey (European Data Protection Supervisor): "Transparency online under the new GDPR rules" (TBC)

  • 14:45-15:30   Alexander Wulf (SRH Hochschule Berlin, Germany): "Analysing transparency in information obligations from a multidisciplinary empirical perspective"

  • 15:30-16:15  Kyriaki Noussia (University of Exeter, UK): "Transparency in consumer insurance contracts"


Symposium organised by: University of Exeter, Centre for European Legal Studies, Joasia Luzak

Monday, 8 May 2017

Public consultation on FinTech: closes 15 June 2017

The EU Commission is currently holding a public consultation on FinTech (see here).

FinTech, standing for financial technologies, means the use of technology in the provision of financial service. The term is very broad, it includes the provision of traditional financial services with the use of technology by traditional service providers (e.g. online banking), or the provision of innovative products by innovative startups (e.g. peer-to-peer lending and bitcoin). Creating policy solutions for protecting FinTech customers is one of the current priorities under the Consumer financial services action plan that sees FinTech a major driver for strengthening the EU single market for financial services (see for more here).

The consultation  is structured around four broad areas to reflect main opportunities and challenges raised by FinTech:

1. Fostering access to financial services for consumers and businesses;
2. Bringing down operational costs and increasing efficiency for the industry;
3. Making the single market more competitive by lowering barriers to entry; and
4. Balancing greater data sharing and transparency with data security and protection needs.

Useful material for understanding the opportunities and challenge raised by FinTech is provided by a one day conference on FinTech hosted by the EU Commission. The material is available online, including a video of the conference (see it here).

Based on the results of this public consultation and the work of the FinTech Task Force (see our post here) the EU Commission will determine which actions are required to support the development of FinTech and a technology-driven single market for financial services.

The consultation is open until 15 June 2017, and awaits reposes from consumers and organizations. So if you have any personal experience with using FinTech products and services and or if you have relevant research results, please share them. As always, we will be waiting for the results of the public consultation to report on them to you.