Online sales divides MEPs ahead of consumer rights vote

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Consumer groups have warned of missed opportunities in the EU's draft Consumer Rights Directive ahead of a crucial vote on the legislation in the European Parliament next week (1 February), which sees MEPs split over its direction.  

EU consumer group BEUC this week (24 January) cautioned that if adopted in its current form the Consumer Rights Directive would harmonise consumer protection law across Europe "at an unsatisfactory level".

Moreover, it would represent a "missed opportunity to establish essential rights for online digital purchases" like music, video and software, which BEUC believes are not adequately covered by current legislation which predates the digital revolution.

"There is currently a gaping hole in the rights of consumers with regard to digital products," BEUC said, warning that despite the growing popularity of the digital market, "Europeans currently don't benefit from clear rules or appropriate means of redress if things go wrong".

"We have asked the EU to get its foot in the door and begin the process of establishing such comprehensive and urgent rights," it said.

The Belgian EU Presidency surprised BEUC by "basically deleting" half of the Consumer Rights Directive just before Christmas. It removed the most contentious clauses to secure a deal on the law before the end of its term at the EU helm.

"It was a difficult situation," the group's deputy director-general, Ursula Pachl, told EURACTIV in an interview. "Some member states just didn't want to risk any kind of decrease of consumer rights in their country, whereas others didn't want to see any kind of minimal harmonisation".

To break the deadlock, Belgium decided to push for full harmonisation of laws in all 27 member states, deleting parts of the directive where it felt that could not be achieved, such as unfair contract terms and legal guarantees for consumers in the event that a trader breaches a contract.

Member states this week (24 January) formally endorsed Belgium's decision by agreeing a common negotiating position for upcoming negotiations on the directive between the EU institutions.

All eyes on Parliament

"The Council has given up on the controversial issues. This could be the last chance to protect consumers for decades," said Monique Goyens, director-general of European consumers' organisation BEUC.

"Tuesday's opportunity should not be missed," she said.

The European Parliament's lead committee on the file, the IMCO (internal market) committee, is set to vote on the revised directive on Tuesday 1 February.

"Next week the European Parliament needs to clearly show to citizens that this review of EU consumer protection legislation is aimed at their benefit, [and] not the contrary," said BEUC Director-General Goyens.

"But it's all about businesses. Consumer policy is a tool to enhance the environment for SMEs," Goyens claimed, arguing that legislators want to create a level-playing field for business because they think it will boost cross-border trade by SMEs.

"But consumers don't buy across borders. They don't trust the market, they are afraid of not being able to send products back and there are language barriers. They aren't worried about legal fragmentation," she said.

"Even business is worried about the Commission's notion that eliminating legal fragmentation will benefit business and consumers. SMEs tell us that VAT and transport/delivery logistics are the issues, not legal fragmentation," Goyens claimed.

"Big business has teams of lawyers and they're not worried about legal fragmentation either," she added.

Parliament divided ahead of vote

Meanwhile, splits have emerged within the internal market committee ahead of the vote, which will define the Parliament's position for upcoming inter-institutional negotiations on the file.

Andreas Schwab (European People's Party), the German centre-right MEP in charge of steering the file through the Parliament, has endorsed the Council's approach.

"I am pleased to see that the Council is in line with the Parliament regarding key elements in the new legislation, such as standardised cancellation rules for orders placed by Internet or phone," said Schwab this week (24 January).

"Cancellation rules are a central point. Only if rules are transparent and common will consumers feel confident shopping across borders. This would strengthen all suppliers in the internal market and create new market opportunities, eventually bringing more choice, competition and dynamism in the market," Schwab argued.

Other MEPs, however, warned against drawing premature conclusions and stressed the need to agree a deal that is beneficial to both businesses and consumers alike.

Internal market committee chair and UK Conservative MEP Malcolm Harbour warned ahead of next week's vote that "many members of the committee feel that this important directive would be better considered in two readings".

"The deletion of significant elements by no means has full support amongst the groups in the committee," Harbour said.   

The divisions in the committee emerged as early as last June when the new directive was first discussed.

BEUC, for its part, fears that by pushing for full harmonisation in a bid to create a level-playing field for European business at all costs, Schwab is running the risk of reducing consumer protection in some member states, where laws currently go further than the draft directive.

"With full harmonisation, it is very much a case of one size does not fit all. But it is not inevitable. The European Parliament has a second-to-last opportunity to rescue this directive and tailor it to the quickly evolving needs of EU consumers," BEUC said.  

Instead, the group is advocating a "mixed harmonisation" approach whereby a minimum level of EU-wide harmonisation would be defined but member states would be allowed to exceed this if they wish, ensuring that countries with more robust protection would not be compelled to water down their laws to the EU level.

Commission backing member states

"The key issue is whether the Parliament will agree with the Council. The Commission has indicated that it could live with what the Council has done," said BEUC deputy director-general Pachl.

Commission Vice-President Viviane Reding has indeed backed the Council's approach, describing it as "a very important step forward".

"Strong consumer protection will help give legal certainty to businesses and will encourage e-commerce," said Commissioner Reding after the Council formally adopted its position on Tuesday.

"[Monday's Council vote] shows that consumer protection rules are gaining momentum. I look forward to working with the European Parliament and the Council to reach a final agreement in the next few months," Reding added.

Responding to Reding's announcement, BEUC's Pachl said "the Commission is like a plane without a pilot. It just wants [the Consumer Rights Directive] off its agenda".

If agreement is reached on the draft directive in the IMCO committee next week, the full Parliament is expected to vote on the file in plenary in March or April.

The Hungarian Presidency would then seek to secure a first-reading deal on the directive between all three institutions in May.

"We will hold further meetings [ahead of next week's vote] to see if there can be a consensus of groups and if we can work with the Council to get a deal that will be beneficial to consumers and to businesses that wish to exploit the single market," said UK Conservative MEP Malcolm Harbour, chair of the internal market committee in the European Parliament.

"Across Europe, few consumer rights are as crucial, as frequented and as precious as our daily shopping rights. Boosting consumers' participation in the single market requires a modern and solid legal framework with efficient and workable consumer protection for the purchase of goods and services at home or across borders," said Monique Goyens, director-general of European consumers' organisation BEUC, ahead of next week's vote.

"This includes clear consumer information, a strong right of withdrawal, easy-to-enforce redress means in case something goes wrong and the prohibition of most typical unfair contract terms across the EU. It is clear that online purchases of digital goods must be appropriately covered too," Goyens added.

UEAPME, the association representing European craft, small and medium-sized enterprises, hailed the Consumer Rights Directive as adopted by the Council on 24 January as "a step forward on the way to full harmonisation".

But it warned that the current wording on 'off-premises contracts' risks harming small entrepreneurs who often tend to work outside their business location.  

UEAPME welcomed the Council's decision to scrap two chapters of the directive on which EU-wide harmonisation of national rules "would have been impossible," but criticised clauses on contracts negotiated outside the trader's shop, which it said "could lead to excessive burdens for SMEs and craftsmen".

"We welcome the deletion of the chapters on some consumer rights in relation to sales contracts and on contract terms. The Council acknowledged that a full harmonisation of national legislation is not possible in these areas, and rightly decided to concentrate only on issues where Europe can provide an added value," said UEAPME Enterprise Policy Director Luc Hendrickx.  

"Keeping these chapters in place would have left the regulatory situation mostly unchanged for businesses and consumers, while increasing the burden on the authorities that will have to transpose the directive. Scrapping these chapters altogether is therefore a very smart move that we appreciate and fully support. We hope that the Parliament will follow in the Council's footsteps in this respect," he said.

"However, the Council ignored our warnings on 'off-premises contracts', adopting an imbalanced text that punishes small entrepreneurs and craftsmen who must visit consumers' homes to assess what needs to be done and make an offer. They will be subject to heavy information requirements, and consumers will be given two weeks to withdraw from the contract, even if they solicited the visit. As a consequence, SMEs will shun visits at consumers' homes, charge more for their services to cover risks and only start working after the withdrawal period has expired," Hendrickx added. 

"In a nutshell, today's decision will end up harming rather than protecting consumers, who will be faced with less choice, higher prices and longer delivery times. That is why the Parliament should reject this one-sided approach, which is in blatant contradiction with the 'Think Small First' principle, when voting on the directive next week," he concluded.   

At present, the contractual rights of EU consumers are set out in four separate directives on unfair contract termssales and guaranteesdistance selling and doorstep selling respectively. These date from the 1980s and 1990s, while many EU countries have since adopted stricter rules themselves. 

The proposal for a new Consumer Rights Directive, first tabled by the European Commission in October 2008, seeks to simplify this by merging the existing four EU consumer rights directives into one set of fully harmonised rules (EURACTIV 08/10/08; EURACTIV 10/10/08).

The aim is to improve the functioning of the internal market for consumers through encouraging business to sell to consumers abroad and increasing consumer confidence in cross-border purchases.

The proposed directive concerns business-to-consumer (B2C) sales contracts for goods and services and specifically covers issues such as pre-contractual information, delivery rules, 'cooling off' periods for distance sales, repairs, replacements and guarantees as well as new selling technologies.

Members of the European Parliament were divided on the proposed directive when it was discussed in the internal market and consumer protection committee in June 2010 (EURACTIV 28/06/10). 

  • 1 Feb.: European Parliament's IMCO committee to vote on Consumer Rights Directive (CRD).
  • March/April 2011: Expected date of plenary vote.
  • May 2011: Hungarian Presidency hopes to tie up inter-institutional deal on CRD.  

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