EUROPEAN COMMISSION REGULATORY SCRUTINY BOARD OPINION

Transcription

1 EUROPEAN COMMISSION Brussels, SEC(2018) 185 REGULATORY SCRUTINY BOARD OPINION Proposal for a Directive of the European Parliament and of the Council amending Council Directive 93/13/EEC of 5 April 1993, Directive 98/6/EC of the European Parliament and of the Council, Directive 2005/29/EC of the European Parliament and of the Council and Directive 2011/83/EU of the European Parliament and of the Council as regards better enforcement and modernisation of EU consumer protection rules Proposal for a Directive of the European Parliament and of the Council on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC {COM(2018) 185} {COM(2018) 184} {SWD(96)} {SWD(98)}

2 EUROPEAN COMMISSION Regulatory Scrutiny Board Brussels, Ares(2018) Opinion Title: Impact Assessment / New Deal for Consumers (version of 29 January 2018) Overall 2 nd opinion: POSITIVE (A) Context President Juncker recently announced a package of initiatives that aim to ensure fair and transparent rules for EU consumers. A large body of consumer protection legislation exists today. Two recent evaluations of the legislation found that EU consumer rules are fit for purpose. 1,2 The evaluations suggested improvements in some areas. This impact assessment builds on the evaluations. It assesses the impacts of two sets of measures. The first aims to increase compliance with EU law. It would raise penalties for non-compliance and empower consumers. The second aims to amend consumer protection legislation to better reflect today's digital society and reduce for traders who comply with EU law. (B) Main considerations The Board acknowledges significant revisions to the report to address earlier Board concerns. The context of the proposed initiative is now clearer. The report now transparently reflects in detail stakeholders' views throughout the report and describes the options better. The Board gives a positive opinion, with a recommendation to improve the report further with respect to the following key aspects: (1) The revised report does not sufficiently demonstrate the need for legislative action at EU level on collective redress in view of the 2013 Commission Recommendation on this topic. (2) The report does not sufficiently discuss potential risks, unintended consequences and trade-offs associated with the preferred package of measures. 1 2 Note that this opinion concerns a draft impact assessment report which may differ from the one adopted.

3 (C) Further considerations and recommendations for improvement (1) The report could expand on the motivation and arguments brought forward by Member States and other stakeholders in favour of an EU legislative initiative on collective redress. On the basis of the reasons that the 2013 Commission Recommendation provided for the low uptake by Member States, the report could better demonstrate why the proposed measure would more effectively protect consumers from mass harm. The impact section gives only very broad indications of the need for adjustment of the national legal frameworks for injunction and redress. But it highlights that all Member States will have to introduce the European procedure. The impact analysis should conclude with an overall assessment on the size of legal changes for different groups of Member States. (2) The report could add a section summarising factors that affect the overall success of the preferred option. It could explain the measures proposed to mitigate related risks. It could also discuss any relevant tradeoffs in attaining the dual objectives of consumer protection and smooth functioning of the internal market. (3) The report could better explain why it discarded co- and self-regulation approaches to online marketplaces and "free" digital services. The report could cite any similar examples where co- or self-regulation proved to be effective and efficient instruments. It could further discuss whether similar conditions for success are met here.. (4) The report could be shorter and more reader-friendly. Sections to streamline include those describing the options, analysing their impacts and comparing these options. Simpler, less technical language would also help. Use of sub-headings would simplify navigation through the document. The Board takes note of the quantification of the various and benefits associated to the preferred option(s) of this initiative, as assessed in the report considered by the Board and summarised in the attached quantification tables. Some more technical comments have been transmitted directly to the author DG. (D) RSB scrutiny process The lead DG shall ensure that the recommendations of the Board are taken into account in the report prior to launching the interservice consultation. The attached quantification tables may need to be adjusted to reflect any changes in the choice or the design of the preferred option in the final version of the report. Full title Reference number Date of RSB meeting New Deal for Consumers - Impact Assessment for legislative package PLAN/2017/1565 Written procedure

4 ANNEX: Quantification tables extracted from the draft impact assessment report submitted to the Board on 29 January 2018 (N.B. The following tables present information on the and benefits of the initiative in question. These tables have been extracted from the draft impact assessment report submitted to the Regulatory Scrutiny Board on which the Board has given the opinion presented above. It is possible, therefore, that the content of the tables presented below are different from those in the final version of the impact assessment report published by the Commission as the draft report may have been revised in line with the Board s recommendations.) I. Overview of Benefits (total for all provisions) Preferred Option Description Amount Comments Direct benefits Improve compliance with EU consumer law The preferred package of Options will increase deterrence, which ultimately will result in higher compliance rates among traders. This package focuses on outstanding drivers of the lack of compliance that have not already been addressed by other initiatives. The preferred package of Options will support the effective functioning of the revised CPC Regulation. Probability for consumers to encounter unfair commercial practices from domestic retailers is 4 percentage points lower in MS with links between remedies and breaches of the UCPD. Similarly, in MS with links between remedies and breaches of the UCPD the probability of experiencing a problem with the product/service purchased is lower (by 3.2 percentage points). The effect of remedies linked to UCPD breaches By strengthening penalties, providing direct civil law consequences for breaches of EU consumer law and by strengthening injunctions procedure by redress effect this package will increase deterrence and also provide an incentive for infringing traders to offer voluntary commitments to settle infringement cases, including in the context of coordinated CPC enforcement actions. This indicates that ensuring remedies for victims of unfair commercial practices improves compliance with EU consumer law by traders Commission européenne, B-1049 Bruxelles - Belgium. Office: BERL 6/29. regulatory-scrutiny-board@ec.europa.eu

5 Modernise consumer protection rules and eliminate unnecessary for compliant traders on the likelihood to have experienced a UCP is strongly amplified in countries imposing a high level of sanctions and in countries with the highest level of public monitoring of compliance with consumer legislation. Likelihood of consumers to get satisfactory outcome when complaining is influenced by UCPD remedies: 8.7 percentage points difference in satisfied consumers between MS with links to UCPD remedies and other MS. 53% of the respondents to the ID survey predicted an increase of deterrence, 56% - a reduction of consumer detriment, 53% - procedural efficiencies. Following pre-contractual information on online marketplaces, 72%of consumers correctly remembered who their contractual partner is. Instead of differing and unclear requirements in Member States, transparency obligations for online marketplaces will be harmonised. This indicates that ensuring remedies for victims of unfair commercial practices helps consumers solve problems when their rights have not been respected. With improved collective injunctive relief and redress, there will be an increase of compliance with EU consumer law, particularly for businesses that are sensitive to reputational damage from collective actions. Providing for more transparency on online marketplaces will reduce consumer detriment and increase consumer trust This brings simplification for cross-border transactions in the internal market. In reply to the public consultation, around 80% of consumer associations reported that consumers would use "free" digital services even more often, if they had the right to pre-contractual information and to withdraw. 60% of business associations replying to the public consultation stated that companies incur unnecessary due to diverging rules on information requirements and right of Ensuring consumer protection in "free" digital services will reduce consumer detriment and increase consumer trust, also leading to possible uptake of the volume of transactions. Extending the scope of the CRD to "free" digital services would reduce current unnecessary of compliant traders linked to the need to check and comply with possible national mandatory rules on pre-contractual information and right of withdrawal for 4

6 withdrawal for "free" digital services these services. Indirect benefits Improve compliance with EU consumer law The preferred package of Options will contribute to greater awareness about consumer rights among consumers and traders, for example by leading to more media attention about consumer rights infringements through collective injunction and redress initiatives. This package will thus complement other specific awareness raising measures. If UCPD remedies were applied in all 28 MS, reduction in consumer detriment in the 14 MS that do not have links to UCPD remedies today is estimated at Euro 560 million per year (this is a conservative estimate that doesn't take into account the synergetic effect between remedies, sanctions and active public enforcement). Positive impacts on vulnerable consumers of introducing rights to UCPD remedies and of improving collective injunctive relief and redress. Positive environmental impacts of introducing rights to UCPD remedies and of improving collective injunctive relief and redress The Fitness Check showed that lack of awareness is an important impediment to well-functioning consumer protection. In addition to this package, the Commission is working to improve awareness about consumer law through training activities for traders, awareness raising campaigns for consumers and developing further guidance on the application of EU consumer law Conservative estimate since likely synergies between remedies and sanctions are not taken into account. As shown by the results of the regression analyses, effects of UCPD remedies increase strongly when combined with high levels of sanctions. The number of vulnerable consumers experiencing unfair commercial practices increases more than the numbers for other consumer becoming victims of such practices. Vulnerable consumers are more reluctant to bring individual redress actions, so effects of introducing rights to UCPD remedies will be strengthened by also introducing collective injunctive relief and redress. Ensuring consumers rights to UCPD remedies is likely to deter more traders from presenting misleading environmental claims. Misleading environmental claims are particularly likely to create mass harm situations. 5

7 Modernise consumer protection rules and eliminate unnecessary for compliant traders Greater transparency will ensure that consumers are better informed about differences between consumer rights and rights in pure consumer-to-consumer contracts. Extending the scope of the CRD to "free" digitals services would ensure a clear and consistent legal framework at EU level, at the same time facilitating fairer competition for businesses. II. Overview of Costs Preferred Option 3 Objective/Policy Consumers/qualified entities Traders option representing consumers One-off Recurrent One-off Recurrent (per year) Improve Direct Initial familiarisation n/a 0 EUR 0 EUR compliance with EU (average EUR (average: EUR consumer law , median EUR 638) 4 for SMEs 0 EUR (average EUR 1 703, median EUR 108) for large enterprises EUR billion are the 8 484, median: EUR 655) 6 for SMEs 0 EUR (average EUR 5 000, median 0) for large enterprises. EUR billion are the Courts/authorities One-off Initial implementation Recurrent Enforcement 3 Monetary figures are based on responses to the SME panel consultation, average and median in brackets. Micro-enterprises are included under the 'SME' category. 4 The figures are highly influenced by the outlier value estimated by a Danish micro enterprise (estimates from this country range from zero to EUR , with average: EUR , median: EUR ). The 2 nd highest estimate was reported by a respondent from EL with EUR (average across the 8 replies from that country is EUR , median: zero, The 3 rd biggest range resulted from responses from ES with zero to EUR (mean: EUR , median: EUR 1 796), followed by a PT company that estimated EUR

8 EU-estimated for the retail trade industry in the EU 5 EU-estimated for the retail trade industry in the EU 7 Modernise consumer protection rules and eliminate unnecessary for compliant traders Indirect n/a n/a n/a n/a n/a n/a Introducing Direct 0 EUR EUR transparency (avcerage EUR (average EUR obligations 2 179, median 3 887, median for online EUR 50) for 0) for SMEs 11 marketplaces SMEs (598)n./a. for (598)n./a. for large enterprises large Zero EUR are enterprises 9 the EUestimated EUR 178 million are the for the retail EU-estimated trade industry in for the the EU 12 6 The maximum amount was reported by a micro-enterprise in DK. The four estimates from that country resulted in an average of EUR and median of EU 3 835). The 2 nd highest value was reported a Portuguese SME (EUR , another outlier). The average of the 12 estimates from this country amounts to EUR , the median is EUR The figure is estimated on the basis of the median observed from the SME panel consultation (by enterprises size) and the overall number of enterprises in the retail trade industry, broken down by enterprise size NACE REV2, G (Source Eurostat). Given the limited representativeness of the businesses that responded to the consultations, such estimates should be considered as only indicative and treated with caution. 7 The figure is estimated on the basis of the median observed from the public consultation (by enterprises size) and the overall number of enterprises in the retail trade industry, broken down by enterprise size NACE REV2, G (Source Eurostat). Such estimates should be considered as only indicative and treated with caution. 8 Notable is the (only) estimate from a micro-enterprise from DK (EUR ). The next highest value was reported by the (only) respondent from SK (EUR 7 933). 9 The figure is estimated on the basis of the median observed from the SME panel consultation and the overall number of enterprises in the retail trade industry NACE REV2, G (Source Eurostat). As the estimate for large enterprises are not available, they are assumed to be equal to those of enterprises with less than 250 persons employed. Such estimates should be considered as only indicative and treated with caution. 7

9 Extending rules on free digital services Indirect Direct retail trade industry in the EU 10 n/a n/a n/a n/a n/a n/a Pre-contractual information: 0 EUR (average EUR 2 956, median 0) for SMEs n./a. for large enterprises Zero EUR are the EUestimated for the retail trade industry in the EU 13 Pre-contractual information: 0 EUR (average EUR 8 367, median EUR 33) for SMEs 15 n./a. for large enterprises EUR 117 million are the EU-estimated for the retail trade industry in the 11 The three respondents from PT estimated of zero, EUR and EUR , the 2 nd highest estimate (EUR ) originates from the (only) respondent from DK, the 3 rd highest from PL (EUR ). 12 The figure is estimated on the basis of the median observed from the SME panel consultation (and the overall number of enterprises in the retail trade industry NACE REV2, G (Source Eurostat). As the estimate for large enterprises are not available, they are assumed to be equal to those of enterprises with less than 250 persons employed. However the median was stated at zero. Such estimates should be considered as only indicative and treated with caution. 10 The figure is estimated on the basis of the median observed from the SME panel consultation (and the overall number of enterprises in the retail trade industry NACE REV2, G (Source Eurostat). As the estimate for large enterprises are not available, they are assumed to be equal to those of enterprises with less than 250 persons employed. Such estimates should be considered as only indicative and treated with caution. 13 The figure is estimated on the basis of the median observed from the SME panel consultation (and the overall number of enterprises in the retail trade industry NACE REV2, G (Source Eurostat). As the estimate for large enterprises are not available, they are assumed to be equal to those of enterprises with less than 250 persons employed. However the median was stated at zero. Such estimates should be considered as only indicative and treated with caution. 8

10 Indirect Right of withdrawal: 0 EUR (average EUR 3 382, median 0) for SMEs. n./a. for large enterprises Zero EUR are the EUestimated for the retail trade industry in the EU 14 EU 16 Right of withdrawal: 0 EUR (average EUR 9 119, median EUR 50) for SMEs. n./a. for large enterprises EUR 178 million are the EU-estimated for the retail trade industry in the EU 17 n/a n/a n/a n/a n/a n/a 15 The maximum outlier estimate stems from a small enterprise in PT, the next highest value of EUR was reported by the (only) respondent from DK 14 The figure is estimated on the basis of the median observed from the SME panel consultation (and the overall number of enterprises in the retail trade industry NACE REV2, G (Source Eurostat). As the estimate for large enterprises are not available, they are assumed to be equal to those of enterprises with less than 250 persons employed. However the median was stated at zero. Such estimates should be considered as only indicative and treated with caution. 16 The figure is estimated on the basis of the median observed from the public consultation (and the overall number of enterprises in the retail trade industry NACE REV2, G (Source Eurostat). As the estimate for large enterprises are not available, they are assumed to be equal to those of enterprises with less than 250 persons employed. Such estimates should be considered as only indicative and treated with caution. 17 The figure is estimated on the basis of the median observed from the SME panel consultation (and the overall number of enterprises in the retail trade industry NACE REV2, G (Source Eurostat). As the estimate for large enterprises are not available, they are assumed to be equal to those of enterprises with less than 250 persons employed. Such estimates should be considered as only indicative and treated with caution. 9

11 Ref. Ares(2018) /01/2018 EUROPEAN COMMISSION Regulatory Scrutiny Board Brussels, Ares(2018) Opinion Title: Impact Assessment / New Deal for Consumers (version of 8 December 2017) Overall opinion: NEGATIVE (A) Context President Juncker recently announced a package of initiatives that aim to ensure fair and transparent rules for EU consumers. A large body of consumer protection legislation exists today. Two recent evaluations of the legislation found that EU consumer rules are fit for purpose. 1,2 The evaluations suggested improvements in some areas. This impact assessment builds on the evaluations. It assesses the impacts of two sets of measures. The first aims to increase compliance with EU law. It would raise penalties for non-compliance and empower consumers. The second aims to amend consumer protection legislation to better reflect today's digital society and reduce for traders who comply with EU law. (B) Main considerations The Board acknowledges the large volume of information gathered to support this impact assessment through evaluations and stakeholders' consultations.it takes note of the intention of the services to improve the presentation of the evidence to demonstrate the support and the coherence of the initiative. However, the Board gives a negative opinion, because the report contains important shortcomings that need to be addressed, particularly with respect to the following key aspects: (1) The report does not adequately place the initiative into its broader policy context. The report insufficiently frames this initiative as a direct follow up of evaluations of the consumer acquis, in particular the Fitness Check and the review of the recommendation on collective redress. Note that this opinion concerns a draft impact assessment report which may differ from the one adopted Commission européenne, B-1049 Bruxelles - Belgium. Office: BERL 6/29. regulatory-scrutiny-board@ec.europa.eu

12 (2) The report does not present stakeholders' views in a balanced and granular way. (3) The options are not sufficiently specific, in particular for injunctions and redress. (C) Further considerations and adjustment requirements (1) The report should further highlight the findings of the evaluation of the Consumers Rights Directive and the Fitness Check on Consumer and Marketing Law as the starting point for this initiative. It should more explicitly describe the extent to which these findings frame the initiative. The report should explain how it takes on board the recommendations from these evaluations, and indicate additional developments and considerations that determined the final scope, including e.g. calls for action in relevant Council Conclusions. The impact assessment should more explicitly refer to the findings of the report on the implementation of the recommendation on collective redress. The context should more broadly introduce the rationale for a shift towards an emphasis in consumer law on enforcement and awareness. (2) The report should deliver a fair and even-handed presentation of stakeholders' views on problems, options and impacts. Potential negative consequences of measures should be identified, critically assessed and reported along with the benefits. The current version appears to have a selective reading of the evidence. For example, the main report does not sufficiently reflect concerns expressed by businesses and documented in Annex 2. Building on a more transparent presentation of diverging views between different groups, mainly businesses (distinguishing between SMEs and large businesses) and consumers, the report should further relate the political balance that it suggests to these groups' stated preferences. In view of informing policy deliberations on proportionality, the report should highlight potential trade-offs between ensuring a high level of consumer protection and a smooth functioning of the internal market. In some cases the report should be more explicit on Member States' support. For instance for collective redress, the report should explain why Member States support the action even though they have only implemented the recommendation to a limited extent. (3) What the report currently labels options are in fact individual measures. The report should identify the political choices and present options with respective impacts around these. It should better explain the context within which this proposal is developed (cf. comment (1)) and refrain from designing artificial options where the relevant choices have already been made and guidance is available. The description of the options should provide more details on their content. The report currently leaves open some parameters that matter a lot with regard to impacts (e.g. on an EU list of remedies, on the scope of the future injunctions directive, on the collective redress mechanism, on the obligations of platforms). The report should include sub-options where relevant, such as on whether or not to harmonise remedies for breaches of the UCPD. Where there is no policy choice to be made, the report could make that clear. If any elements cannot be determined at this stage, the report should at least explain when and how those will be set and discuss what they might imply in terms of impacts. (4) The baseline should explicitly take into account developments that can be expected as a result of other initiatives in sectoral legislation (e.g. in digital or financial services). The report should more clearly articulate the complementarity between consumer law and sectoral legislation, and discuss coherence and consistency with other initiatives (e.g. 2

13 regarding the use of terminology on platforms and online marketplaces). Some more technical comments have been transmitted directly to the author DG. (D) RSB scrutiny process The lead DG shall ensure that the report is revised in accordance with the abovementioned requirements and resubmitted to the Board for its final opinion. Full title Reference number New Deal for Consumers PLAN/2017/1565 Date of RSB meeting 10/01/2018 3