Europe this week 21 October 2011
European Commission - ETW/11/2110 21/10/2011
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Table of content:
Galileo global satellite navigation system
Consumer Markets Scoreboard
The Common European Sales Law will allow consumers to buy across borders with greater confidence afforded by the certainty of a clear set of rights – explained in layman's terms on an information sheet – when they sign a contract under this law.
For example, if they buy a defective product from abroad, they would have the choice between receiving a full refund, replacement, repair or price reduction – a choice which consumers in many Member States do not currently have.
With businesses competing on a broader market, consumers would have a greater choice of goods at lower prices.
Businesses would not have to adapt their sales contract every time they wanted to trade in another Member State. This would save costs.
Only one contract would be necessary to be able to sell goods in the whole of the EU. This would make it easier and cheaper for all businesses, in particular very small businesses, to trade in several other EU countries – thereby stimulating economic growth.
The cost of cross-border e-commerce transactions would also fall once companies no longer have to adapt their websites to the law of each country in which they sell.
As a matter of fact
The average price differences for consumer goods across EU countries amount to approximately 24%.
Only 7% of consumers buy online from another Member State, compared to 33% who buy by internet in their own country.
At least 3 million consumers searching for better deals across the EU, in particular online, were refused sale or delivery by the trader over a one year period.
Collectively, the consumers that shop online could save €380 million if they would make at least one online cross-border purchase.
Traders who are dissuaded from cross-border transactions due to contract law obstacles forgo at least €26 billion in intra-EU trade every year.
Currently, businesses wishing to carry out cross-border transactions must adapt to up to 26 different national contract laws, translate them and hire lawyers, costing an average €10,000 for each additional export market. Adapting their websites can cost a further €3000 on average.
Consumers in smaller EU countries, such as Malta, Cyprus, the Czech Republic, Slovakia and Slovenia, are particularly disadvantaged by higher prices.
Consumers based in Portugal, Italy, Slovenia, Spain, Denmark, Romania, Latvia, Greece, Estonia, Finland, Hungary, Cyprus and Malta would particularly benefit from better prices when shopping abroad in the EU.
Free choice of remedies for consumers in case they buy a defective product is presently only available in France, Greece, Lithuania, Luxembourg and Portugal.
UK: 64% of British retailers active or interested in selling to consumers outside their national market said they were held back by a range of contract-law related obstacles in transactions with consumers and 50% in transactions with other businesses. 49% of British businesses said they would use a single EU contract law for cross-border sales to consumers and 44% for cross-border transactions with businesses. Under the Common European Sales Law, if a business fails to deliver the goods, a consumer can require the business to do so. Such a general right does not exist in the UK.
Denmark: 57% of Danish retailers active or interested in selling to consumers outside their national market said they were held back by a range of contract-law related obstacles in business-to-consumer transactions, 49% in business-to-business transactions. The Common European Sales Law would offer Danish consumers a choice between repair, replacement, price reduction or cancelling the contract if goods delivered are faulty. Under Danish law, consumers do not currently have such a free choice. If Danish businesses use the Common European Sales law, they will be given a second chance to fulfil the terms of a contract if they deliver faulty goods, even if the time period on which he had to deliver has already elapsed. Under current Danish law, the seller is only entitled to such second chance before the date the goods should have been delivered.
Germany: At present, only 6% of German consumers buy online from other EU countries, while 47% do so within Germany. Legal barriers mean businesses sometimes refuse to sell to consumers living abroad – around 3 million European consumers are affected each year in the EU, and nearly 400 000 of them are in Germany. 59% of German retailers are held back by a range of contract-law related obstacles in business to consumer transactions, 51% in business to business transactions. With the Common European Sales Law, a consumer would be entitled to receive a financial compensation for any damages caused by a faulty good. Under existing German law, such a right is limited to cases where the seller has committed a fault.
Italy: At present, only 4% of Italian consumers buy online from other EU countries, while 13% do so within Italy. More than 180 000 consumers are affected each year by legal barriers which mean that businesses sometimes refuse to sell to consumers living abroad. 45% of Italian retailers are held back by a range of contract-law related obstacles in business to consumer dealings, 43% in business to business dealings.
Poland: At present, only 9% of Polish consumers buy online from other EU countries, while 35% do so within Poland. 130 000 consumers are affected each year by businesses refusing to sell to consumers living abroad. 66% of Polish retailers active or interested in selling to consumers outside their national market say they are held back by a range of contract-law related obstacles. 69% of Polish businesses say they would use the EU contract law for cross-border sales to consumers. Under the Common European Sales law, Polish customers who receive a defective product would maintain their rights to repair, replacement, etc. even if they do not inform the seller of such a defect immediately. Under present Polish law, they have to notify any defect within two months after having discovered the defect.
March 2010: The Commission adopted the Europe 2020 strategy, which included tackling bottlenecks in the EU's Single Market to drive economic recovery. A European contract law was included as one way of tackling such bottlenecks.
July 2010: The Commission put forward several options in a Green paper for a more coherent approach to contract law and held a public consultation that ran until 31 January 2011.
May 2011: The Commission consulted stakeholders and citizens following the publication of a feasibility study carried out by an expert group.
June 2011: The European Parliament backed an optional European contract law in a plenary vote on an own initiative report.
The proposal will now pass to the European parliament and the Council of Ministers of the EU. Once adopted, the law will enter into force 20 days after its publication in the EU's Official Journal.
European Commission – Common European Sales Law website:
Homepage of Vice-President Viviane Reding, EU Justice Commissioner:
These are examples of Galileo applications which are already being tested.
Galileo is the name given to the EU-funded satellite navigation development programme. As well as the United States' well-known GPS system, Russia, Japan, India and China are also developing their own systems.
Galileo will be composed of 27 operational and 3 spare satellites in Medium-Earth Orbit (MEO) while the infrastructure is made up of:
Thanks to global navigation satellite systems (GNSS), new business opportunities are developing. The system underpins many sectors of the European economy through its services: electricity grids, fleet management companies, financial transactions, shipping industry, rescue operations, peace-keeping missions.
As a matter of fact
The combination of Galileo and GPS signals in dual receivers will open the door to new applications that require a higher level of precision than is available today with GPS alone.
Satellite navigation amounts to about 7% of the EU GDP in 2009.
The Galileo programme is expected to deliver €90 billion over a period of twenty years in terms of additional revenues for industry and in terms of public and social benefits.
The global annual market for global navigation satellite products and services is currently valued at €124 billion and is expected to grow at 11% compound annual growth rate over the next decade, leading to an estimated market size of €244 billion in 2020.
Research and development investment by the aerospace sector generates a social return of around 70%: every €100 million invested in R&D leads to an increase in GDP of €70 million in the longer term in other sectors (e.g. health and medicine, transport, computer science). The cumulative direct benefits emanating from upstream market and spill-overs are estimated to amount to €17 billion between 2010 and 2027.
The definition and validation phase of Galileo over the years 2000 and 2001 was financed by the EU and the European Space Agency (ESA). The EU and ESA contributed around €80 million each.
Total costs of the development phase, which was launched in 2003 under the auspices of the ESA, is currently around €240 million, with the EU providing roughly up to two-thirds of the funding.
The deployment phase is entirely financed by the EU's budget. Of the total €3405 million made available, €560 million were re-attributed to the development and validation phase and around €2400 million are earmarked for the deployment phase of Galileo. €417 million have been set aside for EGNOS.
The total cost of implementing EGNOS to date has been around €1100 million. Of this, more than €400 million were financed by ESA, €200 million came from previous EU financing programmes and €417 million have been made available under the current budget framework.
The European Commission's proposal for the EU budget 2014-20 foresees a budget of €7000 million for the provision of Galileo and EGNOS.
Member States of the European Space Agency: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
Canada takes part in some projects under a Cooperation agreement. Romania signed its Accession Agreement with ESA on 20 January 2011 and will soon become the 19th Member State.
Hungary, Poland, Estonia and Slovenia are ‘European Cooperating States’. Other countries have signed cooperation agreements with ESA.
The nature of Galileo is such that all EU Member States will be able to benefit from the technology.
1999: EU Council of Ministers calls on the European Commission to develop a global system managed by public civil authorities.
2005 and 2008: launch of two navigation satellites, GIOVE-A and –B, reserving radio frequencies set aside for Galileo by the International Telecommunications Union and testing key Galileo technologies.
2008: after the failure of negotiations on a public-private partnership, the European Parliament and the EU Council of ministers decided to complete the constellation using the EU budget. The European Commission is charged with the overall management of the Galileo and EGNOS programme (EGNOS is a satellite-based augmentation system that improves the accuracy of positioning information given by GPS, by correcting errors caused by atmospheric disturbance factors. It also disseminates integrity signals in real-time, providing information on the health of GPS constellation, a vital functionality for safety-critical applications).
2009: Open Service of EGNOS launched.
March 2011: the Safety-for-Life Service destined for use by the aviation community is operational.
2011 and 2012: four operational satellites are being launched to validate the Galileo concept in both space and on Earth. Once this In-Orbit Validation (IOV) phase has been completed, additional satellites will be launched to reach Initial Operational Capability (IOC) around mid-decade.
From the end of 2012: it is expected that two satellites will be launched every quarter.
Galileo will start becoming operational from 2014 onwards. It will provide the following initial services:
European Commission Enterprise Directorate-General: http://ec.europa.eu/enterprise/policies/satnav/index_en.htm
Launch of first two Galileo satellites:
ESA mini-site dedicated to the launch
Other service markets which are not working well for consumers are: TV provision, train services, electricity services, internet provision, mobile phone services, current bank accounts and consumer credit ("loans and credit cards").
Goods markets on the whole appear to be working considerably better, except for second-hand cars and vehicle fuels.
As a matter of fact
In 2011, the three lowest-scoring markets in terms of trust are second-hand cars, real estate services and mortgage loans. Train services is the market with the largest percentage of highly dissatisfied consumers (16% of "very poor" scores). Compared with 2010, the largest deterioration in overall scores is registered for "fuels and electricity".
The Autumn Scoreboard covers 51 different markets in all EU countries, which are responsible for over 60% of the consumer budget.
54% of consumers find it easy to compare goods and services, compared to 52% in 2010.
In terms of comparability, the three lowest-scoring markets are investments (including pensions and securities), electricity services and water supply.
Consumers' trust in suppliers' compliance with consumer protection rules has seen a slight increase in 2011, with 45% of consumers rating it as "very good". Nevertheless, more than half of consumers are not entirely confident in their suppliers.
One consumer out of 10 experienced one or more problems with the markets surveyed, for which they thought they had a legitimate reason to complain. Compared with 2010; the largest increase in the percentage of consumers who experienced problems was in mobile telephone services.
One in five consumers who experience a problem did not complain, whether to the company, a complaint body, to a friend or family.
In 2011, 58% of consumers were satisfied overall with the markets surveyed.
Only 9% of consumers actually switched supplier and 7% switched their service type or tariff while remaining with their current supplier.
64% of consumers are satisfied with the choice of goods or providers, across all markets.
In general, prices of services show a wider divergence across EU countries than prices of goods. This reflects lower tradability of services.
Among goods, car prices show low divergence, which can be explained by intense competition and the enhance potential for cross-border trade.
2009: bank fees study shows that opaque and complex tariffs are linked to higher current account prices.
2009: e-commerce study show that the greatest potential for savings and increase choice goes unfulfilled as retailers refuse six in 10 cross-border online orders.
2010: study on consumer behaviour in the retail investments sector shows that less than only 1 in 50 consumers are able to select the right investments options.
November 2010: retail electricity study show that EU consumers could save €13 million in total by switching to the cheapest electricity provider. Very few consumers compare offers or switch suppliers.
2011: a survey of consumer empowerment reveals reveal startling facts about the skills and knowledge of EU consumers, such as: less than half of EU citizens are able to solve simple numerical problems that they would encounter in their role as consumers.
The European Commission will launch two in-depth market studies on consumer credit and fuels, based on the scoreboard results.
The Consumer Credit EU law (Directive) comes up for review in 2013. Consumer credit scores poorly, particularly in terms of trust and comparability. The findings will provide rich evidence for assessing the impact for current rules.
The fuels market ranks second-lowest among goods markets as has seen the largest deterioration since 2010. It is the fourth largest market in terms of its share in the household budget. The multitude of fuel designations can be confusing for consumers.
The Commission will consider the Scoreboard data when deciding on the target markets for the future enforcement "sweep" (co-ordinated EU-wide check of specific markets by national consumer authorities, co-ordinated by the Commission)
The full report, including national ranking results, can be found at:
Consumer Market Monitoring Dashboard
An interactive web tool providing detailed breakdowns on different aspects of the data