The "Fitness Check"
The European Commission has conducted a "Fitness Check" of six key consumer protection and advertising protection directives:
- The Misleading and Comparative Advertising Directive (2006/114/EC) – which prohibits advertising that misleads traders and regulates comparative advertising.
- The Unfair Commercial Practices Directive (2005/29/EC) – which prohibits misleading and aggressive commercial practices.
- The Price Indication Directive (98/6/EC) – which deals with the indication of the selling price and the price per unit of measurement of products offered to consumers.
- The Unfair Contract Terms Directive (93/13/EEC) – which protects against the use by traders of standard contract terms which create a significant imbalance in the parties' rights and obligations to the detriment of the consumer.
- The Sales and Guarantees Directive (1999/44/EC) – which sets the rules (and remedies) for when products are in conformity with the contract and deals with commercial guarantees.
- The Injunctions Directive (2009/22/EC) – which enables injunctions to be obtained if a trader’s practice breaches EU consumer law.
The Fitness Check was carried out as part of the Commission's REFIT programme which aims to reduce regulatory costs and make EU law simpler. The objectives of the Fitness Check were:
- to analyse the effectiveness, efficiency, coherence and relevance of the policy pursued by the Directives and whether EU intervention adds value; and
- to look at the extent to which the Directives enhanced consumers' trust and confidence and removed unjustified regulatory obstacles hindering cross-border trade in goods and services.
The Commission separately carried out and published results of a review of the Consumer Rights Directive (2011/83/EU). There will be a single follow-up strategy for both of the reviews.
The Commission found that the Directives are capable of addressing issues facing consumers today so long as they are effectively applied by member states.
The Commission identified issues impacting the effectiveness of the Directives, including that:
- many consumers are not aware of their rights;
- there are shortcomings in available remedies;
- there is insufficient enforcement across member states (with penalties set at varying levels); and
- consumers are often reluctant to initiate lawsuits, particularly where their loss is small compared to costs of litigation.
The European Commission recommended a number of actions to improve the effectiveness, efficiency and coherence of the Directives. These include:
- raising awareness through the creation of a Consumer Law Database, targeted awareness activities and publishing guidance on the Unfair Contract Terms Directive;
- improving enforcement through assessing need for increased penalties, introducing a direct right for consumers to an individual remedy under the Unfair Contract Terms Directive and expanding the scope of the Injunctions Directive to cover more pieces of consumer legislation; and
- improving coherence with other EU consumer and marketing laws including through working with the European Parliament to consider expanding the scope of the proposed Directive for Online Sales of Goods to cover offline sales channels.
The recommendations give an indication of the likely scope of changes that may be proposed although the detail and timeframe of any legislative changes are not yet known. Depending on the timing, the changes may need to be implemented into UK law.
One of the issues investigated was whether the Unfair Contract Terms Directive should be extended to cover business-to-business contracts, specifically to protect SMEs. The Fitness Check found that views were divided on this and no follow-up or conclusions were drawn at this stage.
Rachelle WaxmanAssociate, dispute resolution
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