Wednesday, 9 August 2017

Is there a need to reform European financial supervision for the benefit of consumers?

The European Commission has recently closed its public consultation on the Operation of the European Supervisory Authorities (see the feedback statement here).

The supervision of financial firms in the EU is subject to a complex, multi layered system consisting of national and EU supervisory authorities that has became even more complex after the creation of the Banking Union. For us here most important are the European Supervisory Authorities (ESAs). The ESAs, the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA) has been created in 2010 as a response to the financial crisis. Although they are primarily concerned with prudential supervision (ensuring that financial firms have enough capital to operate, that they are safely and soundly), consumer protection is also on the list of their objectives.

Consequently, the recently held consultation asked whether the current tasks and powers of the ESAs are sufficient to protect consumers and how they could be improved in this respect.

Many stakeholders found that the scope of ESAs' tasks and powers is adequate and should not be extended. Instead, they should use their existing powers more efficiently, and should be more aligned with the problems at national level. However, some stakeholders saw room for extending ESAs' powers, e.g. by giving ESAs the right to prohibit or restrict certain products for investor protection purposes, want to see more work in the financial innovation space, including on virtual currencies, or on financial education, cross-border protection, big data etc. Finally, some, like Better Finance, advocate for the overhaul of the current system of supervision by opting for a 'twin-peak' model instead of the current 'silo' approach. The argument is that the current ESAs priortise prudential matters over consumer protection matters (see their press release here).

Learning from the experience of the UK, the twin peak model could be an interesting option. In the UK, the former Financial Services Authority has left behind a number of scandals causing significant detriment to consumers (PPI, payday loans, etc). Having both the objectives of prudential supervision and consumer protection, it had not been sufficiently sensitive to consumer problems, and prudential matters had often been prioritized. The creation of a separate consumer protection authority (the Financial Conduct Authority) has improved consumer protection standards and practice, and the approach so far seems to work well for the UK. However, we must admit, that although the solution of having only one supervisory authority for the entire EU financial market sounds appealing, it is a radical suggestion that requires, among others, substantial background research.

What do you think, is there a need for an EU Financial Consumer Protection Authority, and is it a viable solution?

Wednesday, 26 July 2017

E-commerce: consumer confidence grows significantly

Yesterday, the Commission published the 2017 edition of the Consumer Conditions Scoreboard. 

Next to the observation that the share of consumers buying online has pretty much doubled over the last 10 years (from 29.7% in 2007 to 55% in 2017), the most striking finding is that consumer trust has increased quite dramatically since the 2015 edition. The study records a 12 points increase of trust vis à vis "national" retailers and 21 points(!) improvement when ordering cross-borders. 

copyright European Union
The study also checked whether consumers were aware of certain key rights (right to return a product bought at distance within 14 days without giving any reason; right to a replacement and/or the repair of faulty products;  right to neither pay nor return unsolicited products) that they enjoyed when shopping online. Only 12% of the surveyed consumers gave correct answers in respect of all three rights, showing 3 points improvement compared to 2015.

While the study also investigated complaints and dispute resolution and paid some attention to the issue of vulnerability, the results are less striking in these areas. 
The full report can be downloaded here and a factsheet can be downloaded under yesterday's press release.

Monday, 24 July 2017

Debt collection requires consumer protection, too - CJEU in Gelvora (C-357/16)

From previous European case law we already know that commercial practices directed at consumers have been broadly interpreted by the Court of Justice (see e.g. CHS Tour Services). In the most recent case - Gelvora (C-357/16) - which was decided last Thursday, July 20, the CJEU decided to encompass within this notion also services of debt collection agencies, which collect debts resulting from consumer credit agreements.

Gelvora is a private debt collection agency operating in Lithuania, which contracted with banks not consumers, to take over banks' claims from consumer credit contracts. Upon being assigned the debt, Gelvora would start recovery actions, sometimes in parallel with enforcement procedures following judicial decisions. Consumer debtors filed a complaint about unfair commercial practices of Gelvora with the Lithuanian consumer protection authority (Valstybinė vartotojų teisių apsaugos tarnyba). The CJEU was asked as to whether the UCPD could apply at all to such practices.

The CJEU reminds that to qualify certain commercial actions or omissions as a commercial practice, there is no need for a contractual relationship (para 20). The practice needs to be 'directly connected with the sale of a product', which covers also actions undertaken to obtain a payment for the product (para 21). In the given case, banks provide consumers with credit (a service) in exchange for consumers' repayment (together with interest) (para 22). Subsequently, Gelvora provides debt recovery activities  - which should be seen as a 'product' provided by debt collection agencies under Art. 2(c) Unfair Commercial Practices Directive (para 23). At the same time, these activities could be perceived as a commercial practice, as the activities of debt collection agencies may influence consumers' decision as to the payment of the product (para 25). It is irrelevant that the bank provided the original service (credit), as the debt collection activities form a part of after-sales commercial practices, that may be facilitated by third parties (para 26). The CJEU clearly emphasises also the danger of excluding such practices from the scope of application of the UCPD - as it could then be tempting for service providers to separate the recovery of payment phase from the provision of the service, avoiding the application of consumer protection (para 28).

Sunday, 16 July 2017

Time limits for consumer claims under Consumer Sales Directive - CJEU in Ferenschild

Setting the scene

The European debate on consumer sales law has taken an interesting turn these days. Its legislative dimension appears to be fixated on the two digital proposals tabled in 2015: on online and other distance sales of goods and on the supply of digital content. By contrast, case law on the good old Consumer Sales Directive has become awkwardly dominated by disputes related to the sales of used cars (see e.g. the widely commented Wathelet case from last year). Of course, legal questions addressed in this context remain of much broader relevance. This was also the case in C-133/16 Ferenschild, on which the Court of Justice ruled this Thursday.

In the commented case the CJEU was called upon to provide its guidance on several procedural stipulations of Directive 1999/44/EC. As indicated above, the case involved a purchase of a second-hand car which did not work out quite as planned. The source of non-conformity was rather unusual: the vehicle itself worked well, but could not be registered directly after delivery since its documents had earlier been used as a cover for a stolen car. Nevertheless, the actual crux of the dispute lied in its specific timing: although the defect became apparent shortly after delivery, formal claim for compensation was only made over one year later. 

This would not have been an issue had we been dealing with a regular sale of brand new products. After all, Article 5(1) read in conjunction with Article 3(1) of Directive 1999/44/EC provides that the seller shall be liable for the lack of conformity which exists at the time the goods were delivered and which becomes apparent within two years from delivery. It further clarifies that the limitation period for claims arising from the lack of conformity, if laid down by national law, shall not expire within an analogous period of two years. 

The situation can nevertheless be different with respect to contracts for the sale of second-hand goods. Article 7(2) of Directive 1999/44/EC allows Member States to provide, by way of derogation, that the seller and consumer may agree on a shorter time period for the liability of the seller arising from such contracts (although no less than one year). At the same time, the directive remains silent as to the duration of the limitation period which should apply in this situation. Since that question appeared to be of direct relevance to the unfortunate buyer in the case at hand, the referring court decided to stay the proceedings and seek guidance from the CJEU. 

The question referred can be summarised as follows (para. 32):

Must Article 5(1) and the second subparagraph of Article 7(1) of Directive 1999/44/EC be interpreted as precluding a rule of a Member State which allows the limitation period for action by the consumer to be shorter than two years from the time of delivery where the Member State has made use of the option given by the latter of those two provisions, and the seller and consumer have agreed on a period of liability of the seller of less than two years for the second-hand goods concerned?

Judgment of the Court

The Court largely followed the pro-consumer interpretation proposed by Advocate-General Szpunar earlier this year (see also our earlier post here), holding that a national rule, which would allow the limitation period afforded to consumers to be shortened as a consequence of the reduction of the period of liability of the seller to one year, is precluded by Article 7(1) of Directive 1999/44/EC.

In reaching that conclusion the CJEU relied on the following set of arguments. Firstly, it drew a distinction between two types of time limits referred to in Article 5(1), namely the period of liability of the seller and the limitation period (para. 33-35). The Court further emphasised the difference between aims pursued by both types of time limits as well as other factors which, in its view, supported the claim that duration of the limitation period was not contingent on that of the period of liability (such as the fact that the former does not necessarily commence at the time of delivery or that no reference to the first sentence of Article 5(1) is made in the second sentence of that provision). It then went on to discuss the wording on Article 7(1), read in conjunction with recital 16, and concluded that the derogation provided therein concerns only the period of liability of the seller and not the limitation period (para. 42-45). This interpretation was further supported by the fact that the second subparagraph of Article 7(1) constituted an exception to the rule expressed in its first part (on binding nature) and, as such, had to be interpreted strictly.

Concluding thought

By holding that the duration of the limitation period for action by the consumer should, in all cases, not be shorter than two years from delivery, the Court confirmed its strongly pro-consumer stance, which had already been visible in its earlier judgments - both on Consumer Sales Directive (Wathelet) and on Unfair Contract Terms Directive (from Aziz to Banco Primus). In the commented case, the Court relied heavily on the advice of the Advocate-General. However, as seen from the recent opinion in case C-598/15 Banco Santander (see also our post here), AGs are not always arguing in a similar vein. Therefore, even if the Court has so far remained largely consumer-friendly, and probably rightly so, one has to wonder if this pro-consumer direction is not going to reach its limit sometime soon. 

Thursday, 6 July 2017

The Uber saga continues

Roughly two months ago we commented on the opinion of Advocate-General Szpunar in case C-434/15 Uber Spain. His conclusion that the popular ride-hailing platform should not be considered as an information society service, but rather as a transport service was very bad news for Uber. We also wrote that the same AG was currently drafting an opinion in a related case, C-320/16 Uber France, which left the provider of the (in)famous transport app with little grounds for optimism. The opinion was eventually published this Tuesday and, indeed, comes as no surprise.

Background of the case

The case deals with a specific provision of the French transport code, introduced in 2014. It prohibited and penalised the organisation of a system for putting customers in touch with persons who engage in the carriage of passengers in breach of applicable market access requirements. The provision was aimed as a new weapon for national authorities and private parties against providers of services such as UberPOP (part of the ride-hailing business model involving non-licensed private drivers). Soon after it came into force, the provision was put to test in the first proceedings.

Uber naturally fought back. It argued, among others, that the national provision invoked against it constituted a technical regulation within the meaning of Article 1(11) Directive 98/34/EC, as amended, and was therefore covered by the notification requirement laid down in Article 8(1) of that directive. According to the defendant, since no such communication had been made, the provision relied upon in the proceedings should be deemed inapplicable and hence unenforceable.

Two heavy blows from Advocate-General

"UberPOP not an information society service"

Advocate-General Szpunar was not convinced. He began the assessment by recalling his earlier opinion in Uber Spain, in particular the proposed guidelines as to how "composite services" (i.e. services consisting of a component provided by electronic means and a component not provided by such means) should be approached. What is more, he used the opportunity to make two additional points in support of his claim. First, he distinguished the type of activities pursued by Uber from the situation considered by the CJEU in case C-339/15 Vanderborght (see also our earlier blog post on that matter here). Furthermore, he drew a distinction between the case at hand and the legal relationship arising from a franchise contract. The AG concluded by reiterating his earlier view that services provided by Uber should not be classified as information society services, but rather as services in the field of transport.

"Either way, national provision at issue not a technical regulation"

The Advocate-General did not stop here, however. He went on to argue that the question of whether the contested provision of French law constituted a technical regulation could be resolved irrespectively of the classification of the UberPOP service. And, not surprisingly, also that line of reasoning was not very helpful to Uber.

The assessment focused on the wording of Article 1(5) of Directive 98/34/EC, as amended (on a side note, the act was recently repealed and replaced by Directive 2015/1535). The analysed provision defined "rules on services" as requirements of a general nature relating to the taking-up and pursuit of the activities of information society service providers, excluding any rules which are not specifically aimed at those services. It also clarified that "a rule shall not be considered to be specifically aimed at information society services if it affects such services only in an implicit or incidental manner".

The analysis started well for Uber. The Advocate-General agreed with the defendant that the contested national provision was "principally directed at systems for connecting the two parties by electronic means", thus rejecting arguments of the French government to the contrary. However, he went on to argue that - since the prohibition in question was limited to the organisation of a system for putting customers in touch with persons providing transport services illegally - the impact of that prohibition on information society services was merely incidental

In one of the most illustrative parts of the opinion the AG submitted: 

"If every national provision that prohibited or punished intermediation in illegal activities had to be regarded as a technical regulation merely because the intermediation most likely takes place by electronic means, then a great number of internal rules in the Member States, written and unwritten, would have to be notified as technical regulations. That would lead to an unwarranted extension of the obligation to notify without that really contributing to the attainment of the objectives of the notification procedure, the purpose of which is to prevent the adoption by the Member States of measures that are incompatible with the internal market and to enable economic operators to make more of the advantages inherent in the internal market. Instead of that, an excessive notification obligation, with the penalty of regulations that have not been notified being inapplicable, would facilitate circumvention of the law and engender legal uncertainty, including in relationships between individuals." (para. 31)

Concluding remark

The commented opinion deals with a delicate interface of regulation and innovation and is bound to attract mixed responses. One may wonder, for instance, how national provisions like the one at issue should be assessed in the light of Article 15 of Directive 2000/31/EC on electronic commerce and whether some sort of notification mechanism would not be desired to ensure compliance with this norm. The question would, of course, be devoid of meaning if the Court were to follow the AG's understanding of the nature of Uber's activity in the first place. In this respect the Advocate-General appears to share the view that the company, which he classifies as a transport company, should be distinguished from the "genuine sharing economy". Last but not least, it is worth noting that some of the criteria referred to by the AG in support of this claim overlap with the indicative benchmarks formulated by the Commission in its collaborative economy communication (particularly references to the level of control or influence exerted by the platform provider). Quite ironically, however, the Commission itself had reportedly been pleading - at least in Uber Spain - against the proposed line of reasoning. This shows that the matter remains highly controversial and its eventual resolution is far from clear. The doubts should be allayed by the end of this year.

Pricing of flights - CJEU in Air Berlin (C-290/16)

CJEU issued a judgment today in the area of air travel, following on its previous decisions in cases (see our post here) and Vueling Airlines (see our post here). The judgment Air Berlin (C-290/16) first clarifies that airlines are obliged to indicate to air passengers prices of taxes, airport charges and other fees and surcharges separately from the price of the air fare. Air Berlin was shown to have had indicated as the price component of the final price a tax amount that had been much lower than the taxes the airline had to pay in reality. This could be misleading for consumers, as the remaining amount of the tax would be added to the final price, and could be seen as part of the air fare. The CJEU perceives Article 23(1) and (3) of the Regulation 1008/2008 on common rules for the operation of air services in the Community as requiring such a separate indication of air fares from taxes etc., in order to guarantee price transparency.

Furthermore, the CJEU in this judgment confirms that the Unfair Contract Terms Directive is also applicable to the area of air travel. The German consumer organisation argued that the flat-rate handling fee of 25 Euro that was charged by the airline also in cases when the passenger did not take the flight or cancelled their booking was clearly detrimental and could be considered unfair. The airline objected to this assessment by invoking the pricing freedom of air services in the EU. While the principle of pricing freedom indeed applies in this area, that does not mean, pursuant to the CJEU, that terms of contracts of carriage by air could be excluded from the unfairness control.

Friday, 30 June 2017

"Sorry, we can't help you": AG Wahl to referring court in Case C-598/15 on mortgage enforcement procedure

This case is one of the latest in a string of cases relating to Spanish mortgage enforcement procedure (see previously e.g. Aziz, Sánchez Morcillo and, more recently, Banco Primus). In preliminary references to the CJEU, Spanish courts have been questioning the compatibility of their national legislation with, in particular, Directive 93/13/EEC on unfair terms in consumer contracts. The present case, Banco Santander v. Sánchez López (C-598/15), concerns the extrajudicial enforcement of a mortgage before a notary, followed by a simplified procedure in order to evict the consumer-debtor from her home. There were several potential problems from the perspective of effective consumer protection, including:
- a clause in the mortgage agreement allowing for extrajudicial enforcement and empowering the bank to represent the mortgage debtor at the signature of the public deed of sale;
- the fact that the immovable property had been sold (to the bank, or so it appears) for only 59.7% of the attributed value, leaving the debtor with a significant debt;
- the fact that the public deed of sale, transferring the property, was drawn up without the participation of the debtor;
- the absence of judicial control, except in the simplified procedure for eviction when review of the terms of the mortgage agreement was no longer possible.

The procedural regime at issue enables the bank to swiftly enforce the mortgage, while the referring court seems to have had doubts whether the rights of consumers are sufficiently protected in light of the Directive.

AG Wahl: "I am perplexed"...
Yesterday, Advocate General Wahl presented his Opinion. He observes that he is "perplexed by the wording of the referred questions" (para. 35). His answer to these questions can be summarised as: "sorry, we can't help you". In his view, the present case must be distinguished from previous cases on the basis that, in short, this case is not - or rather: no longer - about the enforcement of a mortgage agreement. Instead, it concerns a property right ("right in rem"), which is not based on a contract but on the extrajudicial recognition of that right. The transfer of the property had already taken place; the contract supposedly containing an unfair term was extinguished, together with the mortgage itself. Therefore, Directive 93/13/EEC is not applicable.

A 'Catch-22'?
The purpose of the simplified procedure brought before the referring court is to recognise and give effect to a property right entered in the land register. The court could only verify the bank's property right with a view to the exercise of that right, resulting in eviction of the debtor. This presents the referring court with a 'Catch-22': the term alleged to be unfair is the very term which ultimately led to the contract and the mortgage being extinguished. Thus, the mortgage agreement between the consumer-debtor and the bank does no longer exist and its terms cannot be assessed by the court.

If the referring court can neither assess the mortgage agreement nor - according to AG Wahl - question the procedural regime at issue, then who can? Probably not the notary, who is not a "court of tribunal" that can make a preliminary reference to the CJEU (cf. Margarit Panicello regarding the position of the Secretario Judicial). The notary can apparently warn consumers of the existence of unfair terms or give them an opportunity to lodge a claim in separate legal proceedings (see question 4 of the referring court). In ERSTE Bank Hungary, the CJEU has deemed it sufficient that consumers were able to bring the matter before a court that could then provide interim relief. In the present case, the consumer could also oppose the enforcement or seek a suspension (Opinion of AG Wahl, para. 70). However, one could question whether this is indeed an effective remedy, because it places the burden entirely on the consumer (cf. the Opinion of AG Kokott in Margarit Panicello). Thus, there is a risk that the matter never comes before a court at all, until it is "too late".

The relevant question here is whether the interpretation of EU law that is sought by the referring court "bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer" (Aziz, para. 35). Unlike Mr. Aziz, Ms. Sánchez López had had - technically speaking - the opportunity to contest the terms in the mortgage agreement. The referring court lacked jurisdiction to determine the unfairness of those terms. However, the problem seems to be that cases like this might never come before a court, exactly because the existence of a term allowing for extrajudicial enforcement and the transfer of property in the absence of the consumer-debtor.

In the interest of the consumer...?
Later on in his Opinion, AG Wahl draws attention to some circumstances of the case that possibly explain the "inertia" on the part of Ms. Sánchez López herself. The bank allowed her to remain on the premises as a tenant. It would not necessarily be in her interest to challenge the definitive transfer of the property right. In the words of AG Wahl, "effective consumer protection includes the option not to exercise consumer rights" (para. 80). It might be true that invalidity of the mortgage agreement and annulment of the property transfer would endanger the social tenancy agreement subsequently concluded between the bank and Ms. Sánchez López. But was Ms. Sánchez López, who still owes a significant residual debt to the bank (as far as we know), actually aware of her rights? Has she ever appeared before the notary at all? Is the whole course of events and the current arrangement truly in her interest? Such an argument is less convincing. In this respect, it is telling that AG Wahl also refers to the principle of legal certainty and the security of acquired property rights (para. 77), where the conclusion that the case does not fall within the scope of Directive 93/13/EEC would have sufficed. This, as well as his earlier astonishment at the referred questions, suggests that AG Wahl does not really see any problem with the procedural regime at issue, even if the Directive would be applicable. 

Thursday, 29 June 2017

Can CJEU interpret UCPD in relation to a B2B practice? Bold opinion of Advocate-General in C-295/16

Earlier today the Advocate-General Saugmandsgaard Øe delivered a very interesting (if not to say contestable) opinion in case C-295/16 Europamur Alimentación. At first sight the case deals with a rather unoriginal question: can national legislation establish a general prohibition on certain commercial practices irrespective of the black list laid down in the Annex I of Directive 2005/29/EC (hereinafter UCPD). Nevertheless, the importance of the case goes well beyond the actual questions referred.

Background of the case

The contested Spanish provision, set out in the Law 7/1996 regulating retail commerce, provided that "selling or offering to sell to the public at a loss shall be prohibited" unless two exceptional circumstances occur. The act did not seem to clarify if the said prohibition referred to B2B transactions only, or to B2C sales alike. What was clear from a further part of the provision, however, was that it also applied "to entities engaging in wholesaling, whatever their legal nature". 

If the law applied to a B2C transaction, there would be no doubts about its non-compliance with the UCPD (see AG's opinion in paras. 53-65 supported by the earlier case law of the CJEU: C-304/08 Plus WarenhandelsgesellschaftC-540/08 Mediaprint Zeitungs- und ZeitschriftenverlagC-288/10 Wamo and, particularly, C-343/12 Euronics Belgium). What made the commented case stand out was the character of the underlying dispute: it did not relate to direct consumer sales, but rather to sales by a wholesaler, Europamur, to a number of small retailers, who were themselves reselling household and food products to consumers. This, reportedly, allowed small retailers to compete against superstores and large distribution chains. Based on the applicable Spanish law the Europamur was nevertheless fined EUR 3 001 on account of having sold certain products marketed by it at a loss thus infringing the interests of competitors and consumers. The question appeared: can the CJEU interpret UCPD in relation to a business-to-business practice like the one at hand? 

Admissibility of the request

Not surprisingly, the main part of the opinion concerned the admissibility of the request for a preliminary ruling. Doubts stemmed from the fact that consumer protection was one of the objectives pursued by the national provisions applicable to the main proceedings. This was clear from the preamble of the contested measure, national case law and administrative provisions according to which the amount of the fine was to be set. As mentioned above, if applied to a business-to-consumer transaction, the provision would certainly have fallen within the scope of the UCPD. However, as seen among others from recital 6, Article 2(d) and Article 3(1) of the directive, as well as existing case law of the CJEU and the updated Guidance document (though not cited by the AG), the scope of that directive does not extend to commercial practices which relate to a business-to-business transaction. This well-established reading of the directive was reasserted by the Advocate-General in para. 42 of the opinion. So far so good.

The Advocate-General nevertheless went on to argue that the request should be admissible. Critical from this point of view is paragraph 43 of the opinion which reads as follows:

"43. However, according to settled case-law, the Court may find that it has jurisdiction to answer questions referred to it for a preliminary ruling even if the provisions of EU law in respect of which an interpretation is sought do not apply to the facts in the main proceedings, where those provisions have been directly and unconditionally rendered applicable by domestic law. Where, in regulating situations outside the scope of the EU measure concerned, national legislation seeks to adopt the same solutions as those adopted in that measure, it is clearly in the interest of the European Union that, in order to forestall future differences of interpretation, provisions taken from that measure should be interpreted uniformly. Accordingly, the Court is required to ascertain whether there are sufficiently precise indications to enable that reference to EU law to be established, in the light of the information provided in that regard in the request for a preliminary ruling". 

This may be true, yet the ensuing interpretation of the relevant domestic legislation carried out by the AG failed to convince me that the concept cited above (perhaps arguable in itself) should be applied to the case at hand. In particular, the Advocate-General inferred, despite the assertions of the Spanish government to the contrary, that the fact that contested national provisions were not amended by the subsequent Spanish act implementing Directive 2005/29/EC was a "conscious decision" aimed to transpose that directive into the domestic legal order. This conclusion was reached irrespective of the fact that, in the said transposition process, amendments to a different national act prohibiting sales at a loss, Law 3/1991 on unfair competition, were introduced. Ironically enough, the AG even went as far as to say that, in his view, transposition of the UCPD in the contested Law on retail commerce, in consequence of which provisions of the Directive were supposedly rendered applicable to situations which did not fall within its scope, occurred "mistakenly" (para. 45). As a result, the Advocate-General concluded that provisions of the UCPD "were, at least in part, reproduced in the relevant rules of Spanish law" and "should be given a uniform interpretation by the Court, in order to forestall possible differences of interpretation in that regard and given that the reply to the questions referred seems to be decisive for the resolution of the dispute in the main proceedings" (para. 51). The request should therefore, in his view, be admissible. As to the proposed ruling on the substance the AG concluded, unsurprisingly, that UCPD should be interpreted as precluding national legislation such as that at issue in the main proceedings.

Concluding remark

The Advocate-General Saugmandsgaard Øe certainly deserves credit for not shying away from bolder interpretations. After all, this is what protects the European case law from the dangers of path dependence. However, the stakes in the case at hand are particularly high - following the advice of the AG could be seen as a serious encroachment of the Luxembourg court on the competence of national legislator. It remains to be seen if the CJEU follows the proposed line of reasoning or rather goes against its advisor as it has already done before (see e.g. our earlier comment on case C-119/15 Biuro podróży Partner). One thing is certain: case C-295/16 Europamur Alimentación is definitely worth following. 

Call for papers in Netherlands Journal of Consumer Law

Special Issue – Netherlands Journal of Consumer Law 
Consumer Law and the Impact of Behavioral Science 
Deadline (new): 06-10-2017
The Netherlands Journal of Consumer Law (Tijdschrift voor Consumentenrecht – TvC) cordially invites you to submit papers for a Special Issue in 2017 on the role of behavioral science in consumer law. Research from domains such as criminology, economics, language studies, neurology, political science and psychology has provided invaluable insights into the behavior of business and consumers. Concepts such as ‘biases’, ‘heuristics’ and ‘nudge’ appear highly important in determining regulatory and policy choices for the field of consumer law. Yet, do behavioral sciences influence consumer law? To what extent do we see behavioral insights underpin current consumer law? What kinds of insights does ‘behaviorism’ offer for the application of consumer law in general of for courts and regulatory authorities more particularly? How do lawmakers use these insights in (re)designing consumer laws, if at all? Should this be any different, taking into account the benefits and drawbacks of these analyses for the legal discipline?
The TvC editorial board welcomes papers for the Special Issue that answer these and related questions. Authors may present original empirical results, as well as review articles providing a critical perspective on the state of the art concerning the influence of behavioral science in various subdomains of consumer law, from conflict resolution to financial services and from standard terms regulation to unfair commercial practices. Accordingly the Special Issue will offer the TvC readership a broad overview of the state of the art on this topic. Submitted papers will follow the TvC peer review procedure. In addition to scientific excellence, the basic parameters for publication are:
- Papers should concern the interplay between consumer law and behavioral science and provide an overview of recent behavioral insights that (could) influence consumer law, its design or application. Original empirical evidence to support this is more certainly welcomed, but is not a requirement for publication. 
- Papers should keep to a maximum of 4.000 words; 
- Papers should include an abstract of a maximum of 150 words and 5 relevant keywords.

Papers for the Special Issue can be submitted to the editorial assistant, Mr. Jurgen Braspenning ( The deadline for submission is Friday, October 6, 2017. Please direct your queries to the editorial assistant.
About TvC 
TvC is a leading peer-reviewed academic journal, focusing on consumer law and policy in the Netherlands and Europe. For more information on its themes, editorial board and readership, please visit the TvC website.

Wednesday, 28 June 2017

Follow-up reading on W and Others in Nature

Further comments and considerations on the W and Others judgment may be found in the just published article "Vaccine ruling from Europe's highest court isn't as crazy as scientists think", authored by Laura Castells & Declan Butler for Nature. Following our blog post ("If scientists quarrel..."), we have provided comments to the authors, and some of them have been included in the article.

Monday, 26 June 2017

"Transparency: where art thou in consumer protection?" - workshop

A final reminder that tomorrow a workshop "Transparency: where art thou in consumer protection?" will take place at the University of Exeter, building LAVER LT3. The workshop is organised by Joasia Luzak, director of the Centre for European Legal Studies at the University of Exeter.

The programme is as follows:
10:00-10:45 - E. Terryn (KU Leuven): "Transparency in the UCTD: time for reform?"
10:45-11:00 - coffee/tea break
11:00-11:45 - A.-L. Sibony (UC Louvain): "Transparency in commercial practices"
11:45-12:30 - A. Harcourt (University of Exeter): "Media transparency in Europe"
12:30-14:00 - buffet lunch
14:00-14:45 - Ch. Docksey (EDPS): "Transparency online under the new GDPR rules"
14:45-15:30 - A. Wulf (SRH Hochschule Berlin): "Analysing transparency in information obligations from a multidisciplinary empirical perspective"
15:30-16:15 - K. Noussia (University of Exeter): "Transparency in consumer insurance contracts"

Friday, 23 June 2017

If scientists quarrel whether a vaccine caused a disease, it's left to the courts - CJEU in W and Others (C-621/15)

On June 21 the CJEU decided in the case of product liability related to a potentially defective vaccine - W and Others (C-621/15). Mr W was vaccinated against hepatitis B in the years 1998-1999 with a vaccine produced by Sanofi Pasteur. He was diagnosed with MS in November 2000, which first led to his disability from work, then needing round-the-clock care, and finally his death in October 2011. Together with his three family members he raised a claim against Sanofi Pasteur in 2006, arguing that his illness resulted from the administration of the vaccination.

Vaccinations have long been a controversial topic as the available medical research has not been able to either conclusively prove their detrimental effects to human health or to conclusively disprove them. This is at least confirmed in this case with respect to the lack of medical research establishing a relationship or lack thereof between the hepatitis B vaccination and the multiple sclerosis disease (par. 30). Article 4 of the Product Liability Directive requires the consumer to be able to prove not only the damage, and its cause but also the causal link between the two. What evidence was submitted in this case? Mr W and Others claimed that the short period between the vaccination and the appearance of first symptoms of MS should be considered, as well as the fact that there was no trace of family history of this disease. These facts "are such as to give rise to serious, specific and consistent presumptions as to the existence of a defect in the vaccine and as to there being a causal link between the injection of the vaccine and the occurrence of the multiple sclerosis." (par. 11) 

In French law, which was applicable to this case, the Cour de cassation stated previously that with regard to the defective vaccines and the liability of pharmaceutical companies for their production, the causal link could be derived from "serious, specific and consistent presumptions". So even if the medical research does not confirm a relationship between the vaccination and the occurrence of the disease, the court could establish the defect in the vaccine and the causal link between it and the damage based on, indeed, the lack of medical family history with this disease and the short time that passed between the vaccination and the occurrence of the disease (par. 13). I think it bears repeating: despite the lack of medical research evidencing this relationship.

Considering that the PLD does not specify what should be considered a sufficient proof of the causal link between the defect and the damage that the consumer needs to establish, it is left to the Member States to decide what evidence is admissible, the level of proof required and the rules for national courts how to evaluate it (par. 25). The established procedural rules should comply with the principle of effectiveness, of course (par. 26), which cannot lead, e.g., to the shift in the burden of proof pursuant to Article 4 PLD or undermine the effectiveness of the strict liability system adopted by this Directive (par. 27). The CJEU confirms that the French procedural rules do not lead to such a shift in the burden of proof but rather just alleviate it by making it easier for consumers to establish the causal link - without having to "produce, in all circumstances, certain and irrefutable evidence of a defect in the product and of a causal link between the defect and the damage suffered" (par. 28). The national court may then conclude that "such a defect has been proven to exist, on the basis of a set of evidence the seriousness, specificity and consistency of which allows it to consider, with a sufficiently high degree of probability, that such a conclusion corresponds to the reality of the situation." (par. 28). Furthermore, the possibility to ban the use of circumstantial methods in proving the causal link would be contrary to the PLD, esp. in situations like here: where the medical research is inconclusive (par. 30), as it would disallow consumers' successful claims of product liability due to excessively difficult burden of proof (par. 31). 

Generally then, the CJEU accepts a possibility that national law establishes producers' liability only on the basis of circumstantial evidence. However, it continues to observe that procedural rules may not harm producers by accepting "unjustified presumptions" (par. 34). When would this occur? For example, if national courts are overly rigorous in their application of these evidentiary rules and start accepting irrelevant or insufficient evidence, as a consequence (par. 35). The CJEU goes even further, if national court would draw an automatic presumption on the existence of the defect and of causal link, just because "one or more types of factual evidence were presented together" - this would lead to the disregard of the burden of proof as "the producer could then find itself, even before the courts ruling on the merits of the case had the opportunity to familiarise themselves with the producer’s evidence and arguments, in the position of having to rebut that presumption in order to defend itself successfully against the claim" (par. 36). Therefore, the producer's right to defense needs to be respected.

Concluding, the national court may use circumstantial evidence - if it is sufficiently serious, specific and consistent - to conclude that despite the producer's arguments and evidence presented by him "a defect in the product appears to be the most plausible explanation for the occurrence of the damage, with the result that the defect and the causal link may reasonably be considered to be established." (par. 37).

The CJEU actually addresses the facts of this particular case in the par. 41-42 of the judgment. It seems to advise the national court that in the given case it could be likely to establish a defect and causal link, considering the lack of medical family history of the disease, temporal proximity between the vaccination and the occurrence of the disease, but also the existence of a significant number of reported cases of the disease following such vaccines being administered. This could make it the most plausible explanation for the national court that the administration of the vaccine led to the disease and that the vaccine, therefore, did not offer the safety it should have. But such conclusions have to be drawn "in a fully enlightened manner in each specific case" - the producer's rebuttal being the most important evidence to the contrary.

I think this judgment may lead to quite some disputes. On the one hand, supporters of medical research may feel that the lack of conclusive evidence of the harmful effects of the vaccination should not lead to producers' liability. On the other hand, considering the difficulties consumers would have in acquiring conclusive proof based on medical research, that's contrary, of the harmful effects of the vaccine, the alleviation of the burden of proof might seem reasonable to others.

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 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


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
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!