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Brussels, 11 June 2002

'Fair Trading' for consumers and business in the internal market: Commission consults on legislation

The European Commission today adopted a follow-up communication to the 2001 Green Paper on consumer protection. In response to the Green Paper, a large majority of the Member States and a majority of other respondents wanted the Commission to develop a framework directive on fair commercial practices ('fair trading'). A framework directive would harmonise national rules on the fairness of commercial practices (advertising, aggressive marketing, after-sale customer assistance) between businesses and consumers. A fully harmonised system will bring advantages to both consumers and businesses and complete the internal market in this area. Consumers would be more confident in buying abroad in the knowledge that the same rules applied. Businesses could sell as easily cross-borders as at home. The Commission will now consult on the detail of a possible framework directive before making proposals. Separately, the Commission will now proceed with a proposal for improving the enforcement of consumer protection rules in the EU, something widely welcomed in the responses to the Green Paper.

"The Green Paper certainly stirred up the debate » Commissioner David Byrne commented. "169 organisations responded. I was especially pleased that twelve Member States wanted the Commission to develop a framework directive on fair commercial practices. Such a directive could bring significant benefits in terms of competition but also in demonstrating that the EU has the day-to-day concerns of its citizens at heart. I do however recognise that this is a complex area. We need to work closely with national governments, the European Parliament, business and consumers to get the detail right before making proposals. The programme of consultation outlined in the communication will enable us to develop proposals that give consumers the confidence to take the plunge into the internal market directly, exploiting the price differences that the Euro has uncovered. Wherever they shop, they should be treated fairly. I also think we can develop legislation that simplifies the rules for businesses, especially SME's, and enables them to tap into the enormous pool of consumer demand in Europe as easily as at home. »

Today's paper follows-up the Green Paper of October 2001. That paper presented an analysis of the shortcomings of the internal market, from the perspectives of consumers and the businesses that sell to them. Fragmentation along national lines is still the rule. The Euro and e-commerce opened up new opportunities for consumers and business alike and have exposed national rules on commercial practices as barriers for consumers and business.

The Green Paper set out two main options to tackle these barriers either a series of limited harmonisation measures or a framework directive complemented, where appropriate by specific measures. It also set out ideas to improve the enforcement of EU rules by enabling consumer authorities to cooperate better.

The Green Paper provoked an impressive reaction 169 responses, including all the Member States(1). 12 Member States supported development of a framework directive. Three of them preferred the other approach without entirely ruling out a framework directive. Consumer organisations overwhelmingly preferred the framework directive option. Business organisations were fairly evenly divided. The concerns of those who were more reticent about a framework directive were generally that it would not succeed in harmonising national rules.

The Commission has listened carefully to these comments. Rather than moving straight to the stage of making a legal proposal on "fair trading", it has decided to consult further on the detail and the substance of a future framework directive. Respondents raised many important questions and concerns on the substance, whether they preferred the development of a framework directive or not.

The follow-up communication therefore sets out an action plan of consultation with national experts, business, consumers and the European Parliament to address these questions. This consultation will both help the Commission to produce the best possible proposal and to build consensus among stakeholders on the key questions: the appropriate level of harmonisation, consumer protection and simplification needed to complete the internal market and fulfil the Treaty requirement of a high level of consumer protection.

The follow-up communication includes a working document that outlines the key issues for a framework directive. This is designed to provide a sound basis for the consultation and also demystify the idea of a framework directive. The outline sets out a possible model and examples of different parts of a framework directive. It identifies a possible 'general clause' a fundamental principle defining fair commercial practices articulated into four possible 'fairness categories' or key rules as follows:

  • A prohibition on business from engaging in commercial practices that are misleading or likely to mislead the consumer;

  • A duty to disclose to the consumer all material information which is likely to affect the consumer's decision;

  • A prohibition on the use of physical force, harassment, coercion or undue influence by business;

  • Effective information disclosure and complaint handling in the after-sales period.

The response to the Green Paper confirmed that voluntary codes of conduct have an important part to play in completing the internal market. The follow-up communication provides for further consultation on how to ensure that they can play as effective and large a part as possible.

Finally, the positive response to the Commission's ideas on enforcement cooperation has encouraged it to proceed with the development of a proposal for a legal instrument. Such an instrument would not apply to businesses but instead provide national authorities responsible for enforcement in the Member States with reciprocal rights and responsibilities to exchange information and stop rogue traders who act across borders to undermine the internal market. Similar instruments exist in other EU policy areas, such as competition, taxation, customs and financial services.

See also MEMO/02/135

(1) The responses can be found at HYPERLINK

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