Commission seeks to ensure EU single market delivers for consumers

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The Commission has announced a number of in-depth sectoral investigations to track “competition killers” depriving consumers of choice and best prices. The first to go under Commission scrutiny are the retail banking and insurance industries.

“This is a new tool to investigate markets from the consumer’s point of view. We are searching for competition killers depriving consumers of best prices, distorting price, limiting choice and preventing switching,” said Consumer Protection Commissioner Meglena Kuneva as she launched the new Consumer Market Watch process on 31 January 2008. 

The process, which aims to break down barriers holding down competition and consumer choice at the retail end, consists of three key steps: 

  • Wide-ranging screening of markets: Five indicators (prices, complaints, switching, satisfaction and safety) will be screened for some 500 different products, ranging from food and commodity items to electronics, in order to establish a comparable database at EU level. The results will be published annually in a Consumer Market Scoreboard. 
  • In-depth sectoral investigations will be conducted in sectors “picked as risky in terms of malfunctioning for consumers” to identify the reasons behind the failures. If malfunctioning is confirmed, the Commission will propose appropriate corrective action.
  • Resolving market malfunctioning through five main tools either at EU or national level. These are: 

    • Enforcement of existing legislation.   
    • Empowering the consumer through clear information.  
    • Industry codes of conduct to fix a particular shortcoming.  
    • Regulatory actions for systemic problems in particular sectors. 
    • Enforcement of competition rules in company-specific case.

“The target is ambitious as this is about a comprehensive screening exercise tracking the prices of some 500 goods in different sectors over time. It will take time and the results will not be available next year,” noted Commission spokeswoman Helen Kearns. This is particularly because the results of the first consumer scoreboard, also made public on 31 January, show that comparable data on basic products such the price of a bottle of beer or water is “strikingly absent”, said Kearns.

The first sector to go under Commission scrutiny will be retail financial services. For example, the Commission will investigate the contractual obligations, total cost of banking services, conditions for switching to another bank and the clarity of offers enabling their comparison. 

Another short-term priority for the Commission will be to identify barriers to cross-border sales in tradable goods. “I want to know what is holding consumers back from looking for better cross-border deals, in particular through the internet,” said Kuneva. The results of the first consumer scoreboard show that “whilst 26% of Europeans shopped online in their national market, only 6% did so across borders,” she added. 

"The Single Market has come a long way in 15 years, but we believe that consumers are still not getting the deal they deserve," said Consumer Protection Commissioner Meglena Kuneva. She also described the results of the first scoreboard as "striking". "There are an awful lot of gaps and a lack of comparable data at EU level on all aspects. It can't be right for us nor the consumers. I'm sure consumers are interested in why prices for the same goods vary so much between countries. For example, why telephones are much more expensive in Belgium than in the Netherlands or why electricity is twice as expensive in Italy than in Finland," she added.

"The internal market is already a reality for industry but this is still not the case for consumers - we therefore support the Commission's action to identify dysfunctioning markets and we propose our members' help and expertise in gathering consumer complaints and other consumer data," stated BEUC, the European Consumers' Organisation.

Retail association EuroCommerce also welcomes Commission's initiative aiming to achieve more comparable data on retail markets. The association will comment on the issue more in detail as soon as the Commission starts screening the data, said EuroCommerce public affairs and communications manager Mario Müller.

In May 2006, the Commission launched a major review of the single market to assess how it had evolved since 1992 and identify remaining gaps.

In particular, the Commission said it had "witnessed the appearance and proliferation of a range of practices at the retail end of the market which seem to be distorting consumer choice and behaviour and might even act as barriers to effective competition. These include strategies of obfuscation or complex pricing that impair a consumer's ability to compare offers and make an optimal decision." 

These strategies include commercial practices that exploit behavioural biases to distort consumer choice with teaser offers or by tying in offers and other smaller services which consumers pay little attention to when they make a bigger purchase. Unfair contractual terms that lock in consumers and make it difficult to switch further restrict consumer choice. 

A public consultation on the development of a Consumer Market Scoreboard and a broader monitoring initiative of consumer outcomes in the single market was conducted in autumn 2007. According to the Commission, responses from all stakeholders - including national authorities, European Consumer Centres, NGOs and industry - supported the creation of a specific scoreboard and the use of indicators to monitor whether markets are delivering for consumers. 

The ultimate aim is for the final consumer transaction to happen "by way of an undistorted and informed decision so that it can promote healthy competition based on the merits of the services and goods". 

  • 2008: In-depth investigation into retail financial services. The results will be published in 2009.
  • 2008: Consultation on the way to move towards a more harmonised EU wide system of complaint classification.
  • 2008: Investigation into cross-border sales in tradable consumer goods (cameras, CDs, books etc.). A report will be published this year. 
  • 2008: Targeted work on consumer redress at national and cross-border level.

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