Attempts to introduce a Common European Sales Law are designed to boost cross-border trade. But Ursula Pachl, the deputy director-general of the European consumer group BEUC, argues that there is no evidence that the new law would achieve this and urges the Parliament – which will consider the proposal this autumn – to reject it.
Ursula Pachl is responsible for BEUC’s consumer legislation strategy. She has worked for BEUC since 1997, before which she worked for at the Austrian Federal Ministry of Health and Consumer Protection in Vienna.
When in October 2011 the European Commission put forward legislation for an “optional” EU sales law system, which would operate in parallel with national laws, it said the two main beneficiaries would be consumers and SME retailers, particularly online.
Known as the Common European Sales Law (CESL) regulation, the justification proffered was the diversity of 28 national contract laws. These apparently stunted cross-border trade within the single market by hindering businesses from offering internationally as they have to juggle and adapt to each of the various legal regimes. It concluded this was the main reason why a lamentably low 9% of Europe’s online business-to-consumer transactions were cross-border.
But both European online retailers and consumers – the two alleged beneficiaries – remain entirely unconvinced after almost 2 years of thorough analysis.
On 9 July, the European Parliament’s Internal Market and Consumer Affairs Committee voted to reject the proposal’s “optional” approach and convert it to a traditional Directive for consumer contracts, thereby giving a strong signal about how consumer legislation should develop in the future.
Consumer organisations and e-commerce businesses contend that such a European sales law system would muddy the waters of Europe’s marketplace – it would both perplex consumers with a complicated, secondary legal setup which could undermine national standards of protection while at the same time increase regulatory complexity and compliance costs for business.
Ecommerce Europe (which represents more than 4,000 companies selling products and services online to consumers) and BEUC outlined these concerns in a public letter – their joint conviction being that CESL should be rejected by EU legislators. For us, a persuasive case has not been made for why such a project, ill-conceived at the outset, is being pursued.
There is a distinct lack of evidence to support CESL. But furthermore, two of the most comprehensive EU market analysis sources – the Eurobarometer and annual Consumer Market Scoreboard – have both actually unearthed statistics which categorically contradict the need for it.
These found that 90% of EU businesses “do not, or nearly never, refuse cross-border sales due to the variety of national laws”. They also revealed that consumers hesitate to purchase across borders not for legal reasons, but much more mundane, practical, realistic ones: 62% of consumers cited fear of fraud, 59% feared what to do if problems arose and 49% were concerned about delivery.
CESL does not address any of these problems which are the real obstacles to a more competitive, fair and thriving single market.
Indeed, 79% of traders say harmonised European contract law “would make little or no difference to their business”.
The EU has revisited the crucial issue of consumer law only recently with the recent adoption of the Consumer Rights Directive which was a valuable overhaul of the legal framework. Member States are currently implementing this into national law and it will be the legal basis for all business-to-consumer online contracts as of 2014.
Ecommerce and the distance business-to-consumer contracts in the single market clearly need boosting, but this starts with consumer confidence. CESL would erode this, not embolden it, thus it is not an adequate response.
Market fragmentation is another likely corollary. Different rules for online and off-line purchases, cross-border or domestic transactions, will have to be assessed. European consumers will be faced with a situation in which different rules apply to the same products and they will have to bear in mind how, and under which conditions, they have bought something in order to know which rules apply. This is not the clear and solid legal framework that European consumers need and want.
CESL was proposed as an “optional” legal instrument, designed to sit alongside national laws for use if wanted. But this creates a false impression: it is only “optional” for the trader, not the consumer.
Clearly this will increase complexity for consumers and traders alike, while consumers would end up in a ‘Catch-22’ – traders may decide to offer CESL only in countries where its level of protection is lower. Where it is higher than the consumer’s national safeguards, then they will not be inclined to offer it.
By rejecting the proposal for an ‘optional’ sales law, the IMCO MEPs demonstrated a readiness to defend consumer rights and take the lead in building robust EU consumer policy that operates within a vibrant single market.
The European Parliament’s Legal Affairs Committee will vote in September and Europe’s consumer organisations hope these MEPs draw the necessary conclusions. They should reconsider their approach after the strong messages from IMCO and stakeholders and instead utilise their resources differently in the name of more meaningful legislative initiatives.