An updated version of the EU's Consumer Rights Directive was approved by the European Parliament's internal market committee yesterday (1 February). But socialist MEPs rejected the text and accused their centre-right colleagues of "selling off" the rights of European consumers, suggesting that further battles lie ahead before the legislation becomes law.
Internal market (IMCO) committee members were voting on draft proposals by the European Commission to update EU consumer protection rules, which are currently spread across four separate directives and pre-date the digital revolution.
Just before Christmas, the Belgian EU Presidency angered consumer groups by deleting the most contentious parts of the draft Consumer Rights Directive, including chapters on unfair contract terms and legal guarantees or consumers in the event that a trader breaches a contract, in order to secure a deal on the law before the end of its term at the EU helm.
Belgium's decision to remove controversial parts of the draft where it felt that full harmonisation of laws in all 27 member states could not be achieved was formally endorsed by governments on 24 January.
"In this vote the internal market committee has taken the position that full harmonisation is possible: however, only if consumer protection levels are taken seriously," said German MEP Andreas Schwab (European People's Party), the European Parliament's rapporteur on the directive.
Schwab was speaking after the IMCO committee had passed his draft text with 22 votes in favour and 16 against amid one abstention.
The German MEP said the new law would help boost consumer confidence in the digital single market and allow SMEs to prosper.
Splits along party lines
But IMCO committee members have long been divided over the new directive and yesterday's vote, which saw MEPs sift through a series of amendments to Schwab's report, confirmed long-standing splits across party lines.
Full harmonisation is seen as desirable from a business perspective because it creates a level-playing field for firms seeking to trade throughout Europe. But it obliges member states with more stringent rules in place to water down their legislation to comply with the EU-wide standard, meaning opponents of full harmonisation prefer a mixed approach.
The IMCO committee backed the position of rapporteur Schwab, who compromised by supporting a mixed approach of minimum and maximum harmonisation to benefit small and medium-sized enterprises (SMEs) and consumers alike.
The committee wants to fully harmonise areas such as information requirements, delivery deadlines and a right of withdrawal for distance and off-premises sales to give SMEs legal certainty and ensure transparency for consumers, while leaving member states free to retain higher standards in other areas.
'Huge step back' for SMEs
But Socialist & Democrat group members voted en masse against the amended draft, which they felt did not go far enough to protect consumer rights. And even SME groups described yesterday's outcome as a "huge step back" that would place higher burdens on SMEs without clear benefits.
The Greens also voted against the final package, which they said risked reducing consumer rights in some EU countries, while the liberal ALDE group supported it.
Ahead of the vote, MEPs in the committee were split over the direction the directive should take, with some, including Schwab, who is in charge of steering the file through the Parliament, partly endorsing the approach taken by member states in the Council of Ministers.
But internal market committee chair and UK Conservative MEP Malcolm Harbour thought that "many members of the committee feel that this important directive would be better considered in two readings" given that "the deletion of significant elements by no means has full support amongst the groups in the committee".
Indeed, speaking after the vote, Harbour said the final content was "likely to be significantly changed before it is voted in plenary".
"We will also need to assess the likelihood that the Parliament will be able to agree with the Council of Ministers at first reading. We have moved forward a step in agreeing this directive and, for the sake of consumers and businesses, I hope we can reach a compromise in due course," he added.
‘Selling off' rights of EU consumers
Meanwhile, the European People's Party group stood accused by the Socialists & Democrats yesterday of "selling off" the rights of European consumers.
Socialist MEPs were particularly alarmed by plans to harmonise rules on distance selling and door-to-door selling. "The maximum harmonisation being advocated for this type of contract means that member states will no longer be able to have tougher protection standards, which is unacceptable," said German MEP Gebhardt, S&D group spokesperson on internal market issues.
The S&D group also wants financial services – such as offers of small loans sent by text message – to be covered by European legislation. "At present there are no plans for such services to receive any European protection," complained Gebhardt.
Rapporteur Schwab expressed regret that he had not managed to secure cross-party support for his report. "We have focused on the priority issues of cross-border business. I regret that, after months of negotiations, the Socialists and the Greens have in the end denied their support for my compromise package," he said.
"Still, I am confident that we can now reach a good deal in the negotiations with Council. Citizens expect European added-value instead of red tape. And this is what the EPP Group is committed to achieving", said Schwab.
Despite the split, yesterday's vote gives an indication of the European Parliament's position for upcoming negotiations with the Council on the new Consumer Rights Directive.
Updated EU consumer rights legislation "should cover all purchases, whether made in a shop, by phone, postal order or on the doorstep," the committee decided.
"In particular, it should improve the rights of online shoppers, so as to boost consumer confidence and cross-border trade," the MEPs said.
But the EU assembly's formal position will not be established until MEPs have backed the committee's view in plenary. A vote is expected in March.