Thursday, 28 November 2013

Vehicles should be quieter but not silent

The newest trend among my friends is to invest some money into buying noise-cancelling headphones. You use them not only in public spaces where on the one hand you may want to block out noise made by traffic and strangers and on the other hand you could try to limit the noise you are making. No, you use them also at work, at home, to improve your concentration by eliminating any external noise. Surrounding yourself with silence seems to be a goal nowadays. In similar spirit, the European Parliament´s Environment Committee endorsed on Wednesday new proposals for regulating traffic noise in order to protect pedestrians´ health (noise made by standard cars would need to be limited from 74db to 68db in 12 years).  Consumers would be better informed as to the noise level their vehicles make due to an introduction of a new labeling system. Interestingly, the soundless electric and hybrid cars raise worries among the MEPs, since they are seen as potential threat to pedestrians who won’t expect their approach and therefore, a cause for more accidents. The proposal would be to add some acoustic to these vehicles in order to increase road safety. (Environment MEPs back law to turn down harmful traffic noise)  It seems then that the goal is to limit the noise but not to cancel it.
Additionally, on Tuesday MEPs and member states’ negotiators reached an informal deal regarding new rules on CO2 emissions that should be achieved by 2020 (95g/km as mandatory target applicable to 95% of new cars). (Car CO2 emissions: MEPs reach a deal with Lithuanian Presidency of the Council)

Back to the future vehicles

In January 2013 the European Commission proposed a new Directive pursuant to which the Member States would be required to set up a specific minimum of alternative fuels stations (electricity, hydrogen and natural gas) across the EU, with common standards. This would enable European consumers to easier choose for alternative fuels vehicles, since they would be assured they could use them with ease traveling in the EU. Currently, the problem is that not many refueling stations are built since not enough consumers purchase such vehicles, while consumers do not choose for these vehicles due to lack of support system. On Tuesday the European Parliament´s Transport Committee voted in these measures. The MEPs proposal strengthened Commission’s, e.g., by requiring that consumers were better informed about the different prices of fuels offered, so that they could easily compare them; that the colors of hoses and nuzzles were harmonized across the EU facilitating consumer use thereof; that electricity was made available at airports and that consumers could recharge electric vehicles during off-peak times, when prices are lower. The Commission criticizes, however, the lack of provisions on recharging points not accessible to the public, as potentially reducing the consumers’ confidence in the electric cars market. (Alternative fuels for transport: Parliament committee vote supportsroll-out of refueling infrastructure)

Online music services

On Tuesday the Legal Affairs MEPs endorsed the new rules on copyrights that make it easier for online providers to obtain copyright licenses to stream music cross-border. This could be achieved by allowing online providers to obtain these licenses from a small number of authors’ collective management organizations  that operate across EU borders, instead of forcing them to obtain separate licenses from national organizations in every Member State they provide services to. The aim is that EU-wide online music services are made available to consumers, while at the same time music authors rights and their royalties are protected. 

Money, money, money – BEUC on recent EU proposals related to consumer payments

On 18 November the Economic and Monetary Affairs Committee of the European Parliament voted on the Commission’s proposal regarding bank accounts. The new rules aim to increase bank fees´ transparency, facilitate switching between bank accounts and make opening of a basic bank account simpler and affordable for anyone (currently 10% Europeans do not have a bank account). BEUC in its press releases criticizes certain developments with regard to the proposal: suspension of a rule that would create a system for automatic redirection  of payments from the former to the new account; Member States will need to harmonize terminology for only 10 services linked to a bank account and not all of them, which will not serve the aim of assuring full transparency. (Bank account plans: Timid steps towards more transparency)
This week BEUC evaluated two new Commission’s proposals that intend to increase consumer protection on the financial services market. First, the proposal for a Regulation on interchange fees for card-based payment transactions was positively evaluated by BEUC, even if they argue that it should remain a minimum harmonization area, so that the Member States are allowed to protect consumers more (by reducing the interchange fee caps, e.g., below the suggested 0,2% or 0,3% level). BEUC expresses also its preference for an EU-wide ban on surcharges. It argues also for the choice to be left to consumers as to what payment brand they want to use at the point of sale. The consumer should also be able to decide freely whether or not he needs two or more different payment brands on his card, telecommunication or IT device, etc. In general, the new framework would be a positive development for consumers potentially limiting the monopoly of two credit card companies that dominate the payments market in the EU (Mastercard and Visa), often prevailing over national debit cards that are cheaper to use for consumers and merchants in comparison to international cards.
Second, the proposal for the new Payment Services Directive was assessed by BEUC. BEUC again argues here for these rules to have a minimum harmonization standard, so that the Member States could maintain stricter rules they already have in favor of consumer protection. Electronic money should fall within the scope of payment services regulated by the Directive. The EU-wide ban on surcharges is required by BEUC also with respect to these rules, since surcharges are perceived as having failed in steering consumers towards more efficient and cheaper means of payment. The payment service providers should refund any unauthorized transactions from the consumers’ accounts on the same day they have become aware thereof (currently the obligation of ‘immediate’ refund is interpreted differently across the EU) and consumers should be granted an unconditional refund right for direct debit transactions. This would give consumers control over his direct debit payments and provide easy redress instruments in case of fraudulent payments or undelivered goods/services. In order to protect consumers against payment frauds and incidents thereof should be reported regularly to national and European authorities.
See BEUC's website for more detailed assessment.

Wednesday, 27 November 2013

Scope of required disclosure when buying securities - AG Sharpston in Timmel (C-359/12)

26 November 2013: AG Sharpston opinion in case Timmel (C-359/12)

It's a cliche but financial services are often complex and consumers often require more strict protection measures with respect to such services. Currently, many consumer protection measures rely on information duties (despite raising criticism of this instrument it is still predominant) and what kind of information is to be disclosed and in what form often is subject to lengthy disputes. In the Timmel case AG Sharpston gave its opinion on the mandatory information that needs to be revealed in a 'prospectus' to the public interested in purchasing securities. 

The Prospectus Directive requires such information to be conveyed that enables investors to make an informed assessment of the financial position of the issuer and of the rights attaching to the securities in question. Regulation No 809/2004 sets detailed requirements for the content and format in which information should be presented in a prospectus. Interestingly, while the Directive mentions certain information as mandatory, the Regulation allows the issuer of a prospectus to omit such 'required' information if it is not known at the time when a base prospectus is approved and can only be determined at the time of issue (Par. 38). Mr Timmel subscribed for Dragon FX Grant securities (drawn up by Lehman Brothers Treasury Co.), for which certain required information was omitted from the base prospectus and from a supplement to it. He argued that he had a right to withdraw from the contract due to not valid publication of the securities in question, which right of withdrawal is granted to consumer-investors (private persons acting on their own account, not on behalf of a company). The AG Sharpston considers the supplement to the prospectus as having a function of correcting any material mistakes or inaccuracies as well as revealing significant new factors (Par. 41). If the required information became known to the issuer after the prospectus has been published but would not materially influence the assessment of securities, it does not have to be revealed in the supplement but may be added to the final terms instead (Par. 51).

Not only the base prospectus or its supplements did not contain required information, but they were also not made publicly available. The documents could only be found and retrieved for awhile on the homepage of the Luxembourg Stock Exchange, following a lengthy and complicated registration process, upon which only two documents per month could be consulted free of charge. This contradicts according to the AG Sharpston the requirements of Art. 29 Regulation, pursuant to which a base prospectus should be easily accessible to an investor when entering the website (Par. 68).

Additionally, the AG clarifies the issue as to where the base prospectus must be made available: at the registered office of the issuer and at the offices of the financial intermediaries (Par. 84).

Tuesday, 26 November 2013

Belgian improper implementation of Unfair Commercial Practices Directive - AG Cruz Villalón in Commission v. Belgium (C-421/12)

26 November 2013: AG Cruz Villalón opinion in case Commission v. Belgium (C-421/12)

AG Cruz Villalón was busy in the last couple of days since he also issued an opinion today in the EU case against Belgium, in which it was claimed that Belgium did not properly implement Unfair Commercial Practices Directive. In general, the AG supports all three claims made by the Commission against Belgium. 

First, while the UCP Directive is applicable to all traders, regardless of their legal status or the sphere of their commercial activity, Belgium decided to exclude certain professions from the application scope of its national law implementing the Directive, namely: representatives of liberal professions, dentists and physiotherapists (only misleading and comparative advertisement is prohibited in Belgium with respect to these professions).

Second, while the UCP Directive intends to fully harmonize unfair commercial practices in Europe, Belgium sets consumer protection level higher with respect to informing consumers about discounted prices. Namely, prices may be marked as discounted only if their price is lower than the lowest price that has been set by the same trader on them in the given month. Since the Directive does not blacklist a commercial practice that would inform consumers about discounted prices in other circumstances than mentioned in the national law, the national law may not do that either.

Third, the UCP Directive does not prohibit certain commercial practices as unfair that have been declared as unfair and prohibited in Belgian law: many forms of off-premises sales and travelling trading (the value of the off-premises sale may not be higher than 250 euro per consumer; health products, health plants or products made thereof, medical devices, lenses, metals, jewels, pearls, weapons and ammunition may not be sold off-premises). Since these prohibitions have not existed in Belgian law prior to the adoption of the Directive they should not fall within the scope of national provisions that could remain upheld in the transitional period by national legislators.

Ius est ars boni et aequi - Opinion of AG Cruz Villalón in Case C-314/12 UPC Telekabel Wien

What responsibilities do digital service providers have towards copyright holders? Can an internet provider be required to block access to a website on which movies are made available without the consent of the film industry?

Case C-314/12 UPC Telekabel Wien v Constantin Film Verleih & Wega Filmproduktionsgesellschaft, which is currently pending before the Court of Justice of the EU, gives a clear illustration of the problem. The case concerns the access to a website on which more than 130,000 (!) movies were made available for streaming and downloading without permission of copyright holders. The owners of the website, which was taken offline after criminal investigation, were prosecuted in Germany. The present case regards the legal responsibility of an internet service provider whose services allowed Austrian users to access the illegal website. The question at issue is whether the internet provider, who had no (contractual) relation at all to the makers of the website, was under a legal duty to prohibit users from accessing the website.

In a nuanced Opinion in this case, Advocate General Cruz Villalón submits that it is not compatible with EU law to impose a general prohibition on an internet provider to allow its users to view a website that violates copyright law, without giving any specific guidance as to concrete measures that should be taken so as to prevent access to the site. According to the AG, moreover, this is not different in case a provider may avoid sanctions by demonstrating to have taken all reasonable measures to uphold the prohibition.

Still, in AG Cruz's opinion, a national measure specifically requiring a certain provider to block access to a designated website is not as a matter of principle disproportionate for the sole fact that it requires the service provider to incur not inconsiderable costs, while users may easily circumvent the technical measures taken by the service provider. It remains the task of national judges to strike the delicate balance of parties' rights in specific cases.

The AG bases his conclusions on the balancing of fundamental rights within the ambit of what is 'fair and equitable' and 'proportionate' in the sense of Article 3 of Directive 2004/48 on the enforcement of intellectual property rights. The balance involves the right to protection of intellectual property (Article 17(2) of the EU Charter of Fundamental Rights) and, on the service provider's side, freedom of information (Article 11 of the Charter) and freedom to conduct a business (Article 16 of the Charter). As AG Cruz points out, imposing a general obligation de résultat on the service provider to prevent access to websites that violate copyright law does not reflect a fair balance of these rights. Giving a service provider the possibility to avoid sanctions by showing to have taken all reasonable measures does not restore the balance, as it pushes back the consideration of relevant fundamental rights argumentation to the second stage of the assessment. Moreover, while a copyright holder has strong claims in hand, a digital service provider who is not infringing copyright himself would hardly have any defence against the imposition of a burdensome general measure aimed at preventing the abuse of intellectual property rights by third parties to which the provider has no contractual relationship.

In sum, the complex task of balancing the interests and rights involved in cases of massive copyright infringements through the internet would remain a task of national judges in specific cases.

See also the CJEU's press release (which, interestingly, leaves out most of these nuances of its heading).

Monday, 25 November 2013

Are you watching your tv or is your tv watching you?

Smart TVs are devices which combine the features of a traditional TV screens with interactive media. Basically, they allow their owners to not only watch content, but also to store it and browse among different sources, using local networks as well as- most importantly for our story- accessing the internet.

A few days ago, the reputed website Ars technica first reported that a blogger had "offered evidence that his Internet-connected television has been transmitting detailed information about his family's viewing habits, including the times and channels they watch and even the names of computer video files stored on connected USB drives." 

Soon, a second user provided similar evidence. The revelations apparently prompted a reaction from the producer, LG, which released a statement whose most important passage goes as follows:

"Information such as channel, TV platform, broadcast source, etc. that is collected by certain LG Smart TVs is not personal but viewing information. This information is collected as part of the Smart TV platform to deliver more relevant advertisements and to offer recommendations to viewers based on what other LG Smart TV owners are watching. We have verified that even when this function is turned off by the viewers, it continues to transmit viewing information although the data is not retained by the server. A firmware update is being prepared for immediate rollout that will correct this problem on all affected LG Smart TVs so when this feature is disabled, no data will be transmitted."

The issue might remain slightly controversial even once the disabling function is brought to work: should the consumer actually be expected to know that, unless she actively prevents it, her TV will send information about her habits to its producer (not only LG)? Or should the default be that the no information can be collected, unless the consumer explicitly allows it? Also, the distinction between "viewing" and "personal" information does not mean automatically that companies should feel free to collect it without further ado.

In the lengthy discussion which has so far accompanied the political process of revising the EU privacy rules, much of the attention has been concentrated on websites, e-commerce and so on. What about this? It is not easy to find the right approach when dealing with a dimension which evolves so rapidly as that of technology & privacy, but this is no reason to simply give up...

Thursday, 21 November 2013

Compliance required

Italy was asked to comply with EU rules granting certain rights to rail passengers. At the moment, there are no enforcement authorities nor sanctions for violations of passengers rights established in Italian law, which means that whoever travels by train in Italy may not be able to claim their rights when things get... derailed.

Luxembourg was given two months to take measures to comply with the requirement to deliver proper market analyses to European Commission. Such analyses allow to see whether the given market sector (offering products and services to consumers within the electronic communications sector) is competitive enough, etc.

See more: November infringements package

Restrictions on hazard

Online gambling is quite a controversial service in Europe. In general, European countries are allowed to put restrictions on provision of online gambling within their borders, due to public interest objectives (such as consumer protection, fraud prevention etc.). However, the justification for applying such restrictions needs to be real and concrete, and applied consistently, since otherwise freedom of provision of services within EU should prevail (see e.g. out post on recent AG's opinion in the CJEU case Pfleger). During the last year, the European Commission was evaluating current national provisions restricting online gambling. Yesterday, it was announced that at the moment Sweden does not apply its national restrictions systematically. While national rules give exclusive rights to certain service providers for providing online betting services and online poker services, the compliance with these restrictions is questionable (at the same time, Finland was seen as properly having enforced compliance). Some other countries were asked to provide more information on possible restrictions and licensing procedures with regards to online gambling services. (see more: Commission requests Member States to comply with EU law when regulating gambling services)

Small Claims, big relief for consumers and SMEs

Over a year ago we mentioned on this blog the importance of a small claims procedure and European plans to reform it (Making the Small Claims Procedure effective). After many months, the European Commission finally published its proposal on how the existing procedure (in force as of 2009) should be adapted to better suit the internal market needs. Consumer and SMEs protection will increase due to the extension of the application scope of this procedure: today only claims below 2.000 Euro may be submitted, but this limit will be raised to 10.000 Euro. This should be especially relevant for SMEs, who often suffer more damage in cross-border trade than consumers (this should cover ca. 50% of business claims). Moreover, it will be easier to claim this procedure due to new, broader definition of what 'cross-border transaction' is and due to lower court fees (not exceeding 10% of the claim's value, with minimum fee not exceeding 35 Euro). Additionally, it will be possible to start this procedure online and to pay court fees online, as well, while email and tele- or videoconferencing will be part of the procedure. (Shopped online and want your money back? Commission Proposal on Small Claims helps consumers and SMEs)

Tuesday, 19 November 2013

Assuring informed choice in life assurance contracts - EFTA court (E-11/12)

On 13 June this year the EFTA court gave a judgment in the case Koch, Hummel and Müller v. Swiss Life (E-11/12) which concerned the duty to inform and the duty to advice in life assurance contracts, as regulated by the Consolidated Life Assurance Directive 2002/83/EC and the Insurance Mediation Directive 2002/92/EC

The case was referred to the EFTA court from the Principality of Liechtenstein where the defendant, a life assurance company Swiss Life was registered. The plaintiffs were German and Austrian national residents who independently concluded unit-linked life assurances with Swiss Life. In all cases, the parties agreed on a type of investment "as per the attached investment strategy". The plaintiffs paid assurance premiums which were then invested by Swiss Life as cover funds, in accordance with investment strategies. Unfortunately, these investments have not been successful which led the plaintiffs to claim damages from Swiss Life, mainly on the grounds that they were not able to estimate the level of risk involved in the investment, and that there was no transparency in the products' structure. It was established that Swiss Life did not inform the plaintiffs about the relevant investment products, but it claimed that it were the plaintiffs who put a request for these particular investment strategies to be included in their contract (Par. 36).

The relevant legal questions were: whether Swiss Life had a duty to advice the plaintiffs on investment strategies and whether there was a duty to inform about the unit-linked assurance products and their risks?

The EFTA court considers that Life Assurance Directive intends to protect consumers by granting them a right to informed choice (Par. 62). Life assurance contracts are perceived by the court as generally complex and detailed, which may make them difficult to understand for the average consumer (reasonably well informed and reasonably observant and circumspect). Additionally, such contracts often bring about serious financial consequences for consumers over a long period of time. Both these factors convince the court that transparent information on these contracts is crucial to consumers (Par. 63). The consumer must, therefore, "be provided with whatever information is necessary to enable him to choose the contract which best meets his requirements" and the Directive's information requirements should only be seen as a minimum standard that needs to be fulfilled (Par. 64-65). However, the Directive does not impose a duty to advice on the assurance company (Par. 69, 72) and instead trusts in the ability of an average consumer to compare essential elements of the contract as long as he is provided with clear and sufficient information (Par. 70). Notwithstanding the above-mentioned, national legislators could impose such a duty to advice on assurance companies (Par. 75).

Since the performance of the duty to inform is seen as crucial to guarantee consumer protection, it does not surprise that consumers do not need to look themselves for information and instead may await this information being given to them by service providers. The EFTA court states that the relevant information on the units to which benefits are linked should be given to consumers in writing prior to contract's conclusion, and it may not be required of them to use a search engine to find and access the necessary information (in compliance with the Content Services, CJEU case) (Par. 96). The information should be clear, complete and accurate and allow consumers to define the units to which the benefits are linked, and to describe the nature of the underlying assets (Par. 102). At the same time, it does not matter who provides the consumer with the relevant information - the assurance company or an insurance intermediary (Par. 110). What is important is that the consumer gets necessary information and not who he gets it from.

Friday, 15 November 2013

Taking a chance on a game of chance - AG Sharpston in Pfleger (C-390/12)

14 November 2013: AG Sharpston in Pfleger (C-390/12)

Another opinion issued yesterday and related to consumer protection concerned authorisation of gaming machines in Austria. Currently, only a limited number of licence holders may organise games of chance in Austria, and other operators who are prohibited from offering such services may object against it by claiming unjustified restriction on the freedom to provide services as guaranteed by art. 56 TFEU. (Par. 51) By the way, questioning the national policy under art. 56 TFEU seems more reasonable than what parties in these proceedings have done - operating gaming machines without a licence, getting caught, being held criminally liable for it, and then trying to get out of it under the TFEU provisions.

The CJEU considered earlier that certain justifications are allowed to restrict provisions of gambling services, e.g., consumer protection (incl. protecting players from gambling addiction) and crime prevention, as long as they are proportionate, while some other reasons don't suffice, e.g., increasing tax revenue. The Austrian court will need to determine what the objective was in the given case and to adjudicate accordingly. (Par. 54-55) In general, however, the AG Sharpston reminds the national court that a limitation of number of licence holders automatically limits opportunities for gambling, and therefore seems proportionate to achieve the objectives of consumer protection and crime prevention.(Par. 57) There are, however, many factors that only a national court may take into account in trying to establish Austrian authorities' objective, like, scope of a gambling problem in Austria, intensity of controls applied to licensed establishments etc. At the same time, it may be an argument against Austrian government's claim that they pursue consumer protection, the fact that license holders are currently engaging in aggressive advertising campaigns to promote positive image of games of chance and encourage active participation.

"While the Court has recognised that moderate advertising may be consistent with a policy to protect consumers, that is only where the advertising is strictly limited to what is necessary to channel consumers towards controlled gaming networks. Advertising that encourages gambling by trivialising it, giving it a positive image or increasing its attractiveness aims to expand the overall market for gaming activities rather than channelling the existing market to certain providers. Such an expansionist commercial policy is plainly inconsistent with an aim of achieving a high level of protection for consumers. As the Court stated in Dickinger and Ömer: ‘A Member State is not … entitled to rely on reasons of public policy related to the need to reduce opportunities for gambling in so far as the public authorities of that State incite and encourage consumers to participate in games of chance so that the public purse can benefit’." (Par. 60)

Silence is golden - AG Sharpston in OSA (C-351/12)

14 November 2013: AG Sharpston in case OSA (C-351/12)

This case may concern copyrights but its effects will impact consumers in some Member States that is why we will briefly mention here recent opinion of AG Sharpston in it. 

Imagine you are in a health spa, trying to relax while bathing in medicinal springs and enjoying spending days in the provided by the spa accommodation, which includes TV and radio sets in your room. Obviously, in order to relax you may want to listen to your favourite bands on the radio or watch a nice movie, TV show, etc. What may stand in the way of that luxury are, however, high fees that the organisations who protect copyright in the given Member State claim from the health spa for transmitting their works. In Czech Republic OSA has a right to collect such fees and the health spa was obliged to obtain a licence from them. Czech law excludes from the need to pay such fees transmission that take place in patients' rooms when providing health care in health establishments, which could encompass a health spa. OSA claims that this exception is contrary to the Copyright Directive 2001/29 and AG Sharpston agrees therewith (classifying it as communication to the public - par.28). 

What may follow the judgement of the CJEU in this matter is either an increase in prices of health spa establishments or an increase of health spa meditation establishments, where silence is golden.

Thursday, 14 November 2013

"Sir, please, leave your mobile ON."

The European Aviation Safety Agency (EASE) made a press release yesterday promising to publish by the end of this month new guidance, which will finally (!) allow air passengers to use their personal electronic devices (PED), such as mobile phones, e-book readers, tablets, mp3 players, etc., during all phases of a flight (EASA allows use of Electronic Devices on board). The devices will need to be set to a 'flight mode', but it's a huge progress over current state of affairs. For safety reasons, bigger PEDs such as laptops will still need to be stowed during taxiing, take-off and landing. But there will be no more need to stop reading your book on your Kindle just when it is getting interesting. These changes will need to be adopted by European airlines. Yay for technology progress! Or for getting rid of unnecessary bureaucratic requirements, since as Toby Ziegler once said: "We're flying in a Lockheed Eagle series L1011. It came off the line 20 months ago. It carries a Sim-5 Transponder tracking system. Are you telling me I can still flummox this thing with something I bought at Radio Shack?"

"As important as a daily glass of milk!" - AG Wathelet on health claims in Ehrmann (C-609/12)

14 November 2013: AG Wathelet in Ehrmann (C-609/12)

We have been writing more often recently on the importance of health claims' regulation (see e.g., our comments on recent CJEU case concerning health claims - Green Swan). Today the AG Wathelet issued an opinion in a German case regarding further interpretation of health claims as regulated in Regulation No. 1924/2006

Ehrmann is a producer and seller of diary products, including a fruity quark ("Monsterbacke") that is being sold as a six-pack of 50g each, mostly as a children healthy snack. The six-pack's packaging contains a nutrition label on its side listing nutrition value for 100g of this product. It is important to mention that 100g of the quark has, among others, 130mg of calcium and 13g of sugar, while the same amount of cow milk would have maybe the same amount of calcium but way less sugar (4,7g of sugar). Why am I making this comparison between the quark and the milk? Because the producer included in 2010 a slogan on top of each packaging stating something along the lines of: "As important as a daily glass of milk!" (I'm translating this from a Polish language version of the AG's opinion since the English one isn't available yet). Obviously, it could be claimed that this slogan was misleading since it did not mention the difference in sugar level in both products. What was interesting, and referred to the CJEU, was the possibility of this slogan being classified as a 'health claim' under the Regulation and, therefore, not being in compliance with its art. 10.

Art. 10 of the Regulation states, among others, that health claims are prohibited unless they are authorized and fully informative, and that health claims can only be permitted if they include on the label statements indicating importance of a varied and balanced diet and a healthy lifestyle, as well as the quantity of the food and pattern of consumption required to obtain the claimed beneficial effect. This article has not been fully complied with in the given example. While the national courts asked the CJEU for interpretation of some temporal law issues regarding the entry into force of this provision (AG decides that art. 10 requirements should apply as of 1 July 2007, like the rest of the Regulation), for us it is more interesting to look at the assessment of the slogan as a health claim adopted by the AG Wathelet.

Health claim is defined broadly in the Art. 2(2)(5) Regulation as:

"any claim that states, suggests or implies that a relationship exists between a food category, a food or one of its constituents and health".

As the CJEU previously decided (Deutsches Weintor) there are no limitations set in this definition as to whether the link between a product or its ingredient and health needs to be direct or indirect, how close this link needs to be or for how long it should be present. This means that this link could be easily found. (Par. 40) The slogan used by the company Ehrmann clearly indicates that their product is in the daily nutrition at least as important as a glass of milk. (Par. 47) An average consumer would presume, and the AG is basing this opinion on academic surveys, that milk has a beneficial influence on his health, especially on children's health. (Par. 48) If such a presumption wasn't common, then it would not make sense for the producer of dairy products to place this slogan on them. (Par. 49) Additionally, the slogan's wording 'as important as' indicates the link between the product and the information on it about a daily consumption of milk. (Par. 50) The slogan may, therefore, convince an average consumer (diligent and informed to a usual degree) that consuming these fruity quarks may be as beneficial to health as milk consumption. (Par. 51) Therefore, this slogan should fall within the scope of a health claim definition since it creates an impression that there is a link between consumption of this product and health. (Par. 52, 57)

CJEU once again on jurisdiction in consumer cases: C-478/12 (Maletic)

In a judgement delivered today, Armin and Marianne Maletic GmbH, TUI Österreich GmbH, C-478/12, the Court added another brick to the implementation of the consumer protection project envisaged by Regulation 44/2001. It did so by declaring that in contract which the consumer enters with a travel agent and, indirectly, with a tour operator, the fact that the former business is established in a country different than the one of which the consumer is a resident suffices to make the regulation applicable to the tour operator, as well. This means, concretely, that the consumer can sue both companies before the "courts for the place where the consumer is domiciled" (art 16(1), Regulation 44/2001)

The question that the CJEU had to answer concerned a package holiday which had not gone as smoothly as the claimants, an Austrian couple, had hoped. The tour operator had reserved a room in a different hotel than the one which the Maletics had selected on the travel agent's website, so the couple had to pay a considerable surcharge to "upgrade" to their original choice once they found out about the mistake- which only happened when they reached Egypt!

Once back, Ms and Mr Maletic sued both the travel agency,, established in Germany, and the tour operator, TUI, which has a registered office in Vienna, Austria. For Regulation 44/2001 to apply, the legal relation concerned has to entail an "international" element. It was obvious that, under the Regulation, the couple could sue the "foreign" service provider before their local court of Bludenz; the lawyers assisting TUI however, claimed that all the (national) lawsuits against the company had to be filed in Vienna. Should proceedings in cases like this one be brought separately before different courts, then?

The Court of Justice held (par 30) that an interpretation allowing "split" jurisdictions in cases such as that at hand would both water down the protection that article 16(1) of Regulation 44/2001 offers to consumers and contradict one further objective of the Regulation, namely that of avoiding conflicting decisions. It is irrelevant, to this regard, whether the whole economic operation should be considered as made of one or two contracts. The fact that one of the two counterparts (and namely, in this case, the one with which the consumer has originally come in contact) was established in a different Member State is enough for the Regulation to be applicable to cases filed against both.

Users of and similar services should feel happy to know that this judgement makes them a little better-insured against
bad surprises- and therefore hopefully more confident, which is very likely exactly what the Court wants.

Looking for the heart

Many topics of European consumer law have by now been harmonised through EU Directives. Still, as many (or maybe even more) questions related to consumer contracts in the Internal Market remain subject to rules of national laws, e.g the boundaries of what is enforceable under the law (incl. immorality of contracts) and the meaning of parties' agreement (interpretation of contracts). Insofar as national rules yield similar results, a basis for further harmonisation of laws may be found. 

In the coming days, a discussion of the similarities and differences of European laws on a variety of matters of private law will take place at the 19th meeting of the project on 'The Common Core of European Private Law' in Torino. For more information, see the website and conference programme.

Saturday, 9 November 2013

"Ethical" food labels and ritual slaughter

In contemporary markets, different sorts of labelling have become common. While we reflect on the merits of more "traditional" labels, new sources of consumption concerns gain ground. In particular, amidst the debate on ritual slaughter* the question of labelling can have multiple facets. Not only consumers who adhere to faiths commanding a certain slaughtering technique might find "religious" labelling useful. As a matter of fact, some consumers might also want to avoid meat derived from ritual slaughter out of ethical concerns: animal rights groups tend to have a quite negative outlook on the point. Should then the concerned products be required to bear labels which are also informative for "outsiders" to the concerned communities, hinting at the way the product has been obtained?

This is what some MEPs seem to believe. In particular, this form of labelling is presented as a midway between total non-interventionism and the prohibition of ritual slaughter. The issue remains controversial because going beyond mentioning the "halal" or "kosher" brands into "descriptive" labels (such as "meat from slaughter without stunning") is likely to immediately associate a negative image to the product and the groups to which it is primarily addressed. At the same time, it might a contrario create a sort of presumption that the means adopted for non-ritual slaughter are not only less controversial but also intrinsically "better". Such labels were also discussed, and finally discarded, during the process that led to the adoption of the recent Regulation on food information. But the discussion does not seem to have ended yet.

* The European Convention for the Protection of Animals for Slaughter requires in principle that animals should be stunned before being killed, but allows member states to enact or keep in place exceptions based on the respect of religious beliefs. The situation in the MS is varied, with some allowing ritual slaughters, some having prohibited it in more or less recent times and some trying to avoid taking an open position.

Thursday, 7 November 2013

Putting an (effective) label on energy

BEUC published today a new study "Lessons learned from past mistakes" (accessible through here) evaluating the Energy Label. The Energy Labelling Directive 2010/30/EU needs to be reviewed by the European Commission by the end of 2014 and the last year's review of Ecodesign Directive showed that there are some improvements that could be argued for. Consumer studies that have been conducted assessing the clarity, comparability, credibility, consistency and simplicity of the Energy Label suggest that consumers' understanding of this label is currently still not full. The BEUC appeals to the European Commission to consider a few changes.

First, the "A plus" classes should be eliminated from the rating scale of the Energy Label. Consumers seem to be more inclined to buy more energy efficient products if the scale is closed between A-G scales rather than when it is broadened by addition of "A plus" classes. National legislators tend also to misapply these classes by awarding them to currently most energy efficient appliances in a given category, which means that they do not leave any room for technological development and improvement. Consumers tend also to believe that the whole range of classes showed on a product should be available to them, even though many labels may show empty classes, where products are not yet on the market since there is no corresponding technology.

Second, disclosure of consumer-relevant information, affecting costs and performance, should be more transparent and comprehensible. The Directive requires the unit of "kilowatt hours per annum" to be displayed on the Engery Label, while survey showed that more than 70% tested German consumers did not understand the meaning of "per annum" on the label. Some research suggests also that consumers may prefer the label to express energy consumption per usage, i.e., "per cycle". More empirical evidence is needed as to which label is more transparent to consumers.

Lastly, BEUC believes that there is a need to reassess the relationship between the energy label, the calculation formula on which it is based and the appliance size. BEUC worries that the Directive may be promoting larger appliances, sine it is easier to receive a higher rating for a larger appliance, and the calculation formula for the energy efficiency classes takes size into account. This is a consumer-unfriendly trend since consumers may prefer to buy a bigger appliance with a higher energy-efficiency class, not understanding that they would end up spending more energy (and more money) due to the larger size of the appliance.

Tuesday, 5 November 2013

Plastic (bag) is not fantastic!

The multitude of European consumer protection rights in consumer sales sector aims to encourage Europeans to, well, go shopping. However, if we shop and purchase something we need to transport it back to our homes often in a shopping bag. If that shopping bag happens to be a plastic bag and upon coming home we immediately discard of it (since we may not want to start a collection of plastic shopping bags), what we may not realize is that it will take hundreds of years for the environment to get rid of that lightweight plastic bag. (Commission proposes to reduce the use of plastic bags) Therefore, yesterday the European Commission adopted a proposal of a Directive to reduce lightweight plastic bag consumption in the EU, which will amend the existing Packaging and Packaging Waste Directive. It will be left to the Member States to choose appropriate measure that would lead to the reduction of plastic bag consumption, e.g., charges or bans (some Member States already have such measures in place).