The draft regulation on a common European sales law (CESL), which is up for a vote in the European Parliament, is against the interest of consumers and online traders, writes Ursula Pachl.
Ursula Pachl is the deputy director general of the European Consumer Organisation BEUC.
In October 2011, the European Commission published its plans for a Common European Sales Law (CESL), which MEPs are due to decide on in this week’s plenary session.
This proposed regulation put flesh on the bones of an idea which had been circulating among EU decision-makers for many years – a European contract law system (including consumer contracts) operating as an alternative to national laws. Such a regime would govern the legal parameters of everyday transactions and, in particular, online purchases.
The European Commission claims that the Common European Sales Law would benefit both Europe’s consumers and small enterprises by providing an option to transact under one single EU law applicable across borders. This would give uniform protections such as the rights to information, contract withdrawal, return of defective goods etc.
In practical terms, traders would be “empowered” to overrule the mandatory rights which the consumer benefits from under his home country law, contrary to the current principles for cross-border contracts.
The economic justification for CESL given by the European Commission is that the patchwork quilt of national consumer laws has, and continues, to stunt cross-border trade, particularly online.
Yet if CESL is such a panacea to Europe’s e-commerce problems then why are the very target beneficiaries themselves – consumers and online traders - so resolutely opposed? Both BEUC and Ecommerce Europe, who represent more than 4,000 products and services companies selling online, have written to MEPs calling on them to reject CESL at next week’s vote.
What’s in a name?
Consumer contract law is mandatory because it must protect the weaker party. CESL is called an optional instrument, but this requires further scrutiny. The choice of making CESL available rests with the trader, not the consumer.
This is highly risky for 2 main reasons: such an optional approach would enable traders to avoid national mandatory consumer protection standards - If the national laws of a target country are of higher standard than CESL, traders might offer it, but if they are lower they will withhold it.
Secondly, consumers are simply unable to assess the differences between two complex legal regimes before they make a purchase. Consumer laws should be designed to protect the consumer, not present them with the puzzle of measuring the risk of renouncing the familiar protection of their national law against contracting under a European self-standing body of rules.
If not even lawyers can make such an assessment easily, how can Members of the European Parliament expect a consumer to do so?
The evidence and numbers do not add up
The central argument for CESL - that the variety of national consumer contract laws stunts e-commerce - is not only unsupported by evidence, it is in fact contradicted by it. A Eurobarometer found that nearly 80% of traders said harmonised contract law in the EU would make “little or no difference to their cross-border trade".
Furthermore, the Commission’s own European market analysis inconveniently concluded after CESL’s publication that the major reasons for a lack of cross-border trade are practical. Of the millions of consumers who had not bought across a border, 62% cited fears of fraud; 59% feared what to do if problems arose and 49% were concerned about delivery.
CESL would not address, let alone remedy, any of these. It would appear to be guided more by ambition than actualities. The European Parliament’s own “health-check” of the European Commission Impact Assessment on CESL concluded that the quality and credibility of the Commission’s data are dubious.
An incorrect regulatory choice
The Commission argues that CESL will bring clarity for traders and help boost trade. But European consumers and SMEs remain unconvinced: BEUC and Ecommerce Europe are jointly calling on MEPs to reject CESL when they vote on Wednesday because obstacles to further development of the online single market other than contract law need addressing.
These include the difficulties small businesses have in accessing national markets due to unnecessary administrative barriers, differences in tax regimes, cultural barriers such as language and digital literacy, low levels of broadband penetration, territorial limitations of intellectual property rights laws and an absence of, or difficulties to use, e-payment systems.
CESL is redundant
Significant progress in addressing the need to harmonise consumer contract laws was made by MEPs when they passed the landmark Consumer Rights Directive (CRD) in October 2011. This fully harmonises the most relevant aspects of consumers’ online purchases. Member States are currently in the critical process of implementing it and it will be applicable as of mid-2014.
CESL would largely duplicate these laws. Therefore the only result will be greater complexity and confusion for shoppers and traders alike.
For all the above reasons and more, it is the hope of both European consumers and online traders that Members of the European Parliament will see that adopting this misguided European contract law plan would complicate the legal environment for traders, increase transaction costs, dilute consumer trust and protections and intrude upon recent EU law as well as longstanding national legal measures.
Therefore, MEPs should act on their responsibility to work to the real benefit of European citizens and stop further negotiations on this experimental law, one which nobody has asked for.