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Consumer rights

Reform of the EU consumer contract law

Seizing the benefits of a digital single market without losing the necessary balance between business and consumers

The untapped potential of e-commerce in Europe

E-commerce is growing, but its full potential remains unexpressed both for businesses and consumers in Europe: only 12% of EU retailers sell online to consumers in other EU countries, while 37% do so within their own country. Similarly, only 15% of consumers purchase online from another EU country, while 44% do so from their own country.

 

Legal fragmentation, one of the obstacles to cross-border online sales

Although a certain level of harmonisation has already been reached in most Member States under the Consumer Sales Directive 1999/44/EC, consumer contract rules are not fully aligned. This residual legal fragmentation is reported to be — along with other key factors such as language, fiscal and market barriers — an obstacle to the development of a European single market in the sector of e-commerce.

 

The European Commission’s commitment to remove the existing legal barriers

Back in December 2015, in an attempt to remove the legal barriers hindering the uptake of cross-border online sales in the EU, the EC launched two proposals: one on contract rules on the supply of digital content and one on contract rules on the online sale of good. As motor vehicles dealers mainly deal with tangible goods, we only focus on the second proposal.

 

The risks of increased burden and higher costs behind the reform

Going well beyond the declared objective of harmonising consumer contract rules, when approaching the reform, the EC has tried to use this opportunity to increase the EU consumer protection standards. But such a laudable objective, in principle, has negative consequences for European businesses and particularly for those operating in the retail industry, like vehicle dealers.

 

Problematic rules in the original proposal include:

· An extended period for the reversal of burden of proof (from 6 months to 2 years)

· A longer guarantee period with no distinction between new and second-hand goods

· A right to terminate the contract even for minor lacks of conformity with the contract

 

Since the launch of the proposal, the European Parliament has been working intensively, producing a high amount of amendments.

Some amendments are problematic!

· The introduction of a lifespan guarantee

· Free choice of the consumer among the available remedies instead of the existing hierarchy

· Extension of the scope to the face-to-face sales

· If adopted, all these proposed rules would have a negative impact on the cost-structure of European retail companies and in some cases, they could even discourage cross-border sales initiatives.

Language (and other) barriers are bigger than legal barriers when it comes to cross-border sales

The reasons why European businesses and consumers do not make yet significant online or other distance cross-border transactions are only to a limited extent the result of differing provisions of consumer law.

 

Decisive factors are rather different national languages, fiscal rules, market structures and customer preferences.

If needed, a reform of the EU consumer contract law must be fair and well balanced

The objective of the Commission proposal – which is to eliminate major contractual barriers to online cross-border trade, by reducing the complexity of the legislation and make consumers and businesses less reluctant – might be shared in principle.

In order to achieve these objectives, however, the interests of both businesses and consumers have to be equally taken into account and, to this extent, a fair legislative balance is of utmost importance. Privileging one of the contracting parties would necessarily result into a lack of acceptance and therefore not lead to the improvements sought by the European Commission in its Digital Single Market Strategy.

The way forward

Our standpoint