In addition to the previous note: as the Consumer Rights Directive, like most EU consumer law, continues to rely on information duties for sellers ('an informed consumer will make the right choice'), it might be wise to keep in mind the limited effectiveness of disclosure rules. Omri Ben-Shahar (Chicago Law School) and Carl Schneider (University of Michigan) just published an interesting book on the topic. Its summary reads:
Friday, 27 June 2014
While the enactment of EU consumer legislation usually attracts quite some attention, the dates on which new rules enter into force may pass by almost unnoticed. With a slight delay because of busy end-of-the-academic-year schedules, therefore, an update on the Consumer Rights Directive: as of Friday 13 June, the provisions laid down in the CRD replace the Directive 97/7/EC on the protection of consumers in respect of distance contracts and Directive 85/577/EEC on contracts negotiated away from business premises.
Thursday, 12 June 2014
12 June 2014: CJEU in case Digibet and Albers (C-156/13)
We've discussed previously a few Austrian cases where the CJEU was asked to evaluate various prohibitions and limitations in organisation of online gambling in this country (see e.g.: Austrian winners may still take it all). The case Digibet and Albers is a German one and concerns the same topic. Germany allows each federal state to regulate online games of chance and except for Schleswig-Holstein all other federal states prohibited the organisation and facilitation of online games of chance. The more liberal regulation of Schleswig-Holstein was recently repealed but for 13 months it was possible to organise and facilitate online games of chance, as well as advertise them, and the authorisations issued remain valid for a transitional period of several years. The question raised in this case was whether the liberal policy adopted by Schleswig-Holstein undermines the public policy's justification used by other federal states to prohibit online games of chances contrary to the freedom to provide services' principle. The CJEU states that this is not the case, and as long as German laws on games of chance are proportionate to the objective they pursue in limiting the freedom to provide services, which is for German courts to establish, they are compliant with EU law. (Par. 40-41)
Wednesday, 11 June 2014
Last Friday one of the authors of the blog attended the first Yale-Humboldt Consumer Law Lecture. The lecture aims at encouraging the exchange between U.S. and European lawyers in the field of consumer law and is organised by Professor Susanne Augenhofer from Humboldt University in Berliln. For the first lecture she invited three distinguished professors from Yale Law School: Alan Schwartz, Roberta Romano and Daniel Markovits.
In his presentation on 'Regulating for Rationality' Alan Schwartz argued that even though experimental results in psychology and behavioral economics have shown that consumers do not always act as the model of homo oeconomicus would suggest, regulators should retain the rationality premise. As long as there is no general psychological theory on how laboratory results are likely to translate into market results, regulators should stick with disclosure regulation.
Roberta Romano gave a lecture on 'The Consumer Financial Protection Bureau (CFPB) and the Iron Law of Financial Regulation'. She showed that the CFPB was created in the midst of a financial crises and pointed at the risks of such crisis-driven legislation. She suggested to sunset legislation, so that all provisions must be reviewed and reenacted after a fixed time period. Furthermore, she encouraged small scale experimentation and flexibility in implementation.
Daniel Markowits ('Sharing Ex Ante and Sharing Ex Post') argued that understanding fiduciary law requires a model besides contract. He showed that the core duties of the two relations differ. In contract law it is good faith, in fiduciary law it is fidelity or loyalty and care. Another difference is that contract partners share ex ante while fiduciaries share ex post.
Another interesting event will take place in Berlin on October 20th. Oren Bar-Gill (NYU, Harvard) will be talking about 'The Future of Consumer Law'. Looking forward to that!
Consumer's right to information about medicine's side effects - AG Szpunar in Novo Nordisk Pharma (C-310/13)
11 June 2014: AG Szpunar in case Novo Nordisk Pharma (C-310/13)
Today, AG Szpunar issued an opinion regarding interpretation of Article 13 of the Product Liability Directive (No 85/374). Article 13 determines the scope of the Directive's application, where it should not affect any rights that an injured person may have pursuant to a national special liability system existing at the moment of this Directive's notification to the Member States.
In the given case, Ms. S, domiciled in Germany, claimed that she was injured through the use of a medicinal product (Levemir) introduced on the market by Novo Nordisk Pharma. German law excludes the application of the Directive in cases of damage to consumer's health resulting from a use of medicines, since to these cases a special system of liability applies, as established by the Arzneimittelgesetz ("AMG") prior to the implementation of the Directive in German law (Par. 84 and Par. 84a AMG). To claim compensation under this liability system the consumer may demand from the pharma company information on the known to the pharma company side effects of that medicine, potential interactions, and all other test results as well as data about consequences of using this medicine on human health, as long as this data may influence the assessment of whether the health damage resulted from the use of the medicine in the given case. Novo Nordisk Pharma refused to comply with its obligation to provide this information and appealed the need to do so. BGH asks the CJEU whether the German system of liability applicable to damage to consumer's health resulting from the use of medicines falls outside the scope of the Directive and, therefore, may be regulated independently from its provisions. Clearly, without her right to this information Mrs. S would be unlikely to prove that she suffered any damage due to her use of the medicine, since it would be hard for her to find sufficient scientific evidence. Therefore, if the CJEU would exclude the application of the AMG's provisions to this case, consumers could be devoid of necessary protection against faulty medicines.
AG Szpunar looks at the text of Article 13 and concludes that it means to allow consumers to use an alternative compensation scheme that predated the Directive. (Par. 28) However, pursuant to AG Szpunar literal interpretation of this provision points out that with regards to the special liability systems (like AMG), the Directive limits the possibility to use them only to circumstances when the rights of consumers under such special liability systems existed at the time of the Directive's implementation. It is not, therefore, the special liability system that needed to be in force prior to the Directive's implementation but consumer's entitlement to claim certain rights under this system. (Par. 30-32) Due to such interpretation, it will not be possible for one Member State (Germany) with regards to one production sector (medicine products) to differentiate and further develop a liability system. (Par. 37) This would mean that since Mrs S rights under the AMG system arose after the Directive's implementation, she could not claim her damages using AMG's provisions.
At the same time, however, AG Szpunar remarks that the duty to inform by a pharma company as established in Par. 84a AMG has not been subject to any direct regulation in the Directive. (Par. 45) If a consumer is given a right to information it will enable her to easier prove the defect in a medicine that could have contributed to the health damage. The burden of proof is regulated by Article 4 of the Directive. This Article specifies what the consumer needs to prove to claim damages in product liability cases but it does not determine the methods thereof. The consumer's right to information as established in Par. 84a AMG does not reverse the burden of proof but is only meant to alleviate it, by balancing the information asymmetry between consumers and pharma companies. (Par. 46) As unregulated by the Directive, this matter may, therefore, be left to the national law's discretion. (Par. 47) Consequently, even if Mrs S would now be forced to claim her damages under the Product Liability Directive's scheme, she should still be able to benefit from the right of information as established in Par. 84a AMG to help her prove her damage.
Tuesday, 10 June 2014
Lawrence Solum's Legal Theory Blog pointed our attention to an interesting new paper by Tess Wilkinson-Ryan presenting 'A psychological account of consent to fine print'. The abstract reads as follows:
Thursday, 5 June 2014
To what extent are public libraries free to offer digitised versions of their books to their users? In his Opinion in case C-117/13 Technische Universität Darmstadt v Eugen Ulmer KG, Advocate General Jääskinen provides the CJEU with some suggestions as to how to answer this question in light of EU law.
The case concerns a dilemma that is of interest to many public libraries, in particular those attached to universities, such as in casu the library of the Technical University of Darmstadt (Germany): how to make accessible to a large public its resources, both on paper and in digital format. As many publishers nowadays offer their products both as printed books and as 'e-books', a library's choice in individual cases can be between a) buying a physical copy of a book and possibly digitising is, b) acquiring access to the digital version (e-book) of the work, and c) a combination of both. If a library already has a physical copy of a book in its collection, it will usually prefer the first option over the other two, for rather obvious economic reasons.
In the present case, the university library in Darmstadt had digitised a textbook on contemporary history ('Einführung in die neuere Geschichte') published by Eugen Ulmer KG. The publishing house seeks to prevent the library from this type of digitisation of the book and from making available the digital copy to library users via electronic reading points. Earlier, it offered the library the possibility to buy e-books of the textbook concerned, but the library did not make use of this offer.
AG Jääskinen considers that, as long as no licensing contract on the use of e-books has been concluded, the Copyright Directive does not prevent Member States from allowing a library to digitise books that are part of its collection. Neither does EU law stand in the way of having libraries make available digitised books through dedicated terminals. This particularly regards copyrighted works that are either old, fragile or rare, or that might suffer disproportionate wear because of a large number of students photocopying them.
However, according to the AG, the relevant provisions of EU law do not provide space to allow a library to digitise its entire collection, but regard individual works. Moreover, users of dedicated terminals should not be given the possibility to save digitised books on a USB device; they may print a paper copy.
The AG's Opinion is not yet available in English. A summary can, however, be found in the CJEU's press release regarding the case.
Price agreements may not only affect the participants to a cartel, but may also drive up prices of other competitors in the same market. In today's judgment in the case of Kone and others the Court of Justice of the EU holds that national legislation should not prevent undertakings in the latter category to claim damages from cartel members in order to compensate loss resulting from the fact that such undertakings set their prices higher than they would otherwise have done under competitive conditions.
The Kone judgment is a follow-up to the fine the European Commission imposed on Kone, Otis, Schindler and ThyssenKrupp in 2007 for their participation in cartels involving the installation and maintenance of elevators and escalators in Belgium, the Netherlands, Germany and Luxembourg. In case C-199/11 Otis, the CJEU established that also the EU, as a customer of the participating companies, is not precluded from claiming damages under civil law. In today's decision, the Court further clarifies who fall within the circle of parties able to claim damages for losses sustained as a result of anti-competitive behaviour:
'32 It is true, as pointed out in paragraph 24 of the present judgment, that it is, in principle, for the domestic legal system of each Member State to lay down the detailed rules governing the application of the concept of the ‘causal link’. However, it is clear from the case-law of the Court, referred to in paragraph 26 of the present judgment, that that national legislation must ensure that European Union competition law is fully effective (see, to that effect, VEBIC EU:C:2010:739, paragraph 63). Those rules must therefore specifically take into account the objective pursued by Article 101 TFEU, which aims to guarantee effective and undistorted competition in the internal market, and, accordingly, prices set on the basis of free competition. In those circumstances, the Court has held, as noted in paragraph 22 of the present judgment, that national legislation must recognise the right of any individual to claim compensation for loss sustained.
33 The full effectiveness of Article 101 TFEU would be put at risk if the right of any individual to claim compensation for harm suffered were subjected by national law, categorically and regardless of the particular circumstances of the case, to the existence of a direct causal link while excluding that right because the individual concerned had no contractual links with a member of the cartel, but with an undertaking not party thereto, whose pricing policy, however, is a result of the cartel that contributed to the distortion of price formation mechanisms governing competitive markets.'
See also the CJEU's press release on this case.