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MEMO/09/312

Brussels, 2 July 2009

Enforcement Package

SECTION 1 – GENERAL INFORMATION

What is today’s package comprised of?

The adoption of the 'enforcement package' marks a milestone in the enforcement of consumer rights, since the initiatives seek to secure the highest level possible of consumer protection which will in turn give consumers confidence to exploit the full potential of the single market .

  • The Communication

The Communication is to be seen in the overall context of the EU consumer policy strategy which emphasises enforcement as one of its key pillars.

Based on an analysis of the state of play and, of what has been achieved so far, the Communication takes stock of consumer enforcement action, and aims to identify the main challenges that need to be overcome to ensure more effective enforcement of EU consumer law.

  • The Biennial Report:

The Biennial report stems from a legal obligation under the CPC Regulation which requires that, every two years, the Commission reports to Parliament and Council on the application of that Regulation. The Regulation links national public enforcement authorities in an EU-wide Enforcement Network which has been given the means to exchange information and to work together to put an end to cross-border breaches of consumer protection laws.

The Commission's report is based on national reports from Member States, statistical data extracted from the IT-tool used by the CPC Network and the practical experience gained through the coordination of the Network's first joint enforcement actions, the EU-sweeps.

It is the first such report adopted by the Commission and covers the years 2007 and 2008.

What exactly do you mean by enforcement?

'Enforcement' is the act of making sure that consumer rules are respected. This encompasses a wide spectrum of activities, by a variety of actors, using different instruments. These include formal enforcement proceedings primarily undertaken by public enforcement authorities, but also enforcement actions by self-regulatory bodies, as well as consumers themselves acting to defend their own rights through private enforcement or other dispute-resolution mechanisms. An effective enforcement response combines activities which promote compliance through information and education of consumers and businesses, with more formal enforcement measures.

Why does enforcement matter?

It matters to every consumer that they can return a faulty product or have it repaired. It matters that a product ordered over the internet arrives in working order. Consumers can enjoy these rights where consumer rights are respected, and implemented. When those rights are not respected, this must be corrected and action must be taken to make sure the rules are enforced.

The EU has developed a set of consumer rules, aiming for a strong, healthy and competitive single market, in which consumers can confidently buy goods and services within the EU, but rules on their own are not enough – they must be applied properly in practice if we want them to deliver tangible results for citizens, and that is why enforcement matters.

What are the challenges to effective enforcement?

The need to ensure that enforcement is effective is a recurrent concern in the area of consumer protection. Effectiveness is critical to compliance and deterrence. However, enforcers face new practical challenges in their ability to be effective due to a variety of factors including: the growing complexity of products and services resulting in more complex choices for consumers; the emergence of e-commerce; the enlargement of the single market and the increasing globalisation of trade which brings new challenges to enforcers who are constrained by jurisdictional boundaries.

What makes enforcement effective?

The Communication identifies the different elements needed to ensure effective enforcement.

First of all, enforcement presupposes a clear set of rules, defining the standard of consumer protection to be reached. It requires actors and mechanisms that ensure that the market complies with these rules. They must be given adequate resources and the relevant powers to detect, investigate and ultimately stop commercial practices that are not compliant. A last important element is the availability of data and information on consumer markets which enables enforcers to target efforts at markets which are failing consumers and to assess the effectiveness of their enforcement actions.

What is the European Commission’s role in enforcing consumer laws?

The European Commission does not have direct enforcement powers vis-à-vis traders in enforcing consumer laws, which are the prerogative of Member States. However given the emergence of new factors such as e-commerce, the enlargement of the single market and the increased globalisation of trade in goods and services, enforcement can no longer be seen as confined to national boundaries.

In this context, the Commission has a unique pan-European vantage point which can bring value- added to an effective, coherent and optimal enforcement policy in the EU. I t can promote effective enforcement by a variety of actions coordinating and facilitating cross-border cooperation and exchange of know-how and by keeping political attention focused on enforcement. It has a role to play to ensure that EU legislation is transformed into tangible benefits for European consumers. It also provides EU level coordination in the product safety area by collecting and disseminating information to authorities and consumers on dangerous products.

As guardian of the Treaty, the Commission monitors the implementation of Community law by Member States including their obligation to properly enforce EU consumer protection rules. Where a Member State does not comply with this obligation the Commission will bring infringement proceedings pursuant to Article 226 EC Treaty.

SECTION 2 – THE COMMUNICATION

What is the purpose of the Communication adopted today?

The Communication is part of a "consumer enforcement package" that was adopted to boost EU-wide enforcement of consumer rules so that consumers can shop with confidence knowing their rights will be equally protected and enforced wherever they buy in the EU. It identifies the main challenges to enforcers in the context of the current economic crisis and rapidly evolving consumer markets, and sets out five priority areas with accompanying actions to enhance enforcement, building on a variety of instruments already available.

How will the Communication contribute to making enforcement in the EU more effective?

The EU has a solid framework of consumer rules - the priority now, is to provide for the application, implementation and effective enforcement of these rules. The Communication identifies the challenges that need to be met to achieve this and identifies five priority areas with accompanying actions to improve enforcement and thereby delivering to EU consumers the highest possible level of consumer protection without increasing the administrative burden on companies.

SECTION 3 THE BIENNIAL REPORT

The biennial report assesses the application of the CPC Regulation in 2007 - 2008.

What is the CPC Regulation?

To better protect consumers, the Consumer Protection Cooperation Regulation was adopted in 2004. It establishes an EU network (CPC Network) for coordinated action against cross border breaches to consumer rules and against rogue traders which came into operation on 29 December 2006. The ultimate goals of the Regulation are to guarantee a consistently high level of consumer protection throughout the EU and to reinforce consumers' confidence in the internal market.

What is the CPC Network?

The CPC Network (Consumer Protection Cooperation Network) is an EU network made up of public authorities from all Member States (and EEA countries) which are responsible for enforcing consumer legislation. The Network is in operation since December 2006.

CPC authorities have been given the means to exchange information and to work together to put an end to cross-border breaches of consumer protection laws, as defined in the annex of the CPC Regulation which sets up the network. The Network also carries out joint market surveillance and enforcement exercises ("sweeps") which are coordinated by the Commission and engages in other common activities.

Why is the CPC Network important for consumers?

The CPC Network has proved to be a powerful tool contributing to an increased level of consumer protection in the EU - it closes a gap by giving national enforcers a means of effectively putting an end to commercial practices harming consumers in cross border situations. It also makes it easier to join forces to create a credible enforcement environment in the EU.

The Network is producing tangible results for consumers so that their rights are enforced right across the EU wherever they may be. For example, the cooperation between Spanish and French authorities in April 2008, led to the arrest of 87 persons and the clamping down of a lottery scam operated from Spain. The EU-sweeps are another good example of this cooperation.

Is there co-operation with countries beyond the EU to try to ensure that other countries respect the rights of EU consumers when they operate in any of the EU Member States?

The Regulation provides a legal basis to enter into cooperation agreements with enforcement authorities in third countries. Contacts exploring options for cooperation with the US authorities and Switzerland, both identified in discussions with the Member States as priorities, are being stepped up.

How does the CPC Network function in practice?

In the CPC Network, authorities are able to call on each other for assistance in investigating possible breaches of consumer protection legislation ( information requests) and in taking action to stop illegal commercial practices of sellers and suppliers targeting consumers living in other EU countries ( enforcement requests). They may also alert each other about breaches to consumer laws or in cases of reasonable suspicion that such a breach occurs ( alerts). In its first two years of operations, the Network activity has reached a total of 719 of these mutual assistance requests. The information related to these activities is exchanged through a secure IT-tool (managed by the European Commission) to which only the Network authorities have access.

The Network also carries out joint market surveillance and enforcement activities for instance in the form of internet sweeps during which authorities check websites for compliance with legal requirements. In cases of irregularities appropriate follow up measures are taken to ensure compliance.

What is the role of the European Commission with regard to the CPC Network?

The European Commission does not carry out direct enforcement activities within the CPC Network; this is done by the national enforcement authorities in the Member States (and EEA countries). The Commission however has a substantial role to play which includes managing the CPC Committee which oversees the implementation of the CPC Regulation and operations of the Network. It initiates and coordinates enforcement actions such the sweeps, develops and maintains the IT-tool used by the Network, provides training to Member States' authorities and encourages through various means the dissemination of best practice.

What are the main conclusions that can be drawn from this report?

The Biennial Report shows that the new CPC instrument is fulfilling its purpose, but it also indicates that more work is needed to increase the Network's efficiency and also to further develop the broader framework for cooperation,

The Biennial Report is based on the national reports from Member States as well as the Commission's own experience drawn from the first two years of Network operation. Certain shortcomings detected relate to the Network's modus operandi, in particular in terms of efficiency and effectiveness (for instance some deficiencies in the connections to the IT-tool or in the way the tool is being used as well as the length of some of the proceedings). Other shortcomings detected are of a more horizontal nature - the need to develop a shared understanding of EU consumer rules or the questions of applicable law in situations where public authorities are exercising their powers are examples for this.

SECTION 4 – CPC Network in figures

What has the work of the CPC Network involved so far?

In two years, CPC Network activity has reached a total of 719 mutual assistance requests in two years, of which 327 requests were created in 2007 and 392 in 2008. 40% of the information requests and 30% of the enforcement requests created were closed by the authorities during the same period. Enforcement requests almost doubled in the two years.

In addition, the CPC Network has carried out two joint market surveillance and enforcement exercises ("sweeps") which took the form of internet inquiries: one on websites selling airline tickets in 2007 and one on websites offering ring tones for mobile phones in 2008. Enforcement work is still ongoing for the 2008 sweep.

The majority of infringements in the CPCS concerned misleading advertising provisions (close to a third of total number of cases) and online commercial practices (internet and mailings). In terms of sectors, the two EU-sweeps contributed to increasing the number of mutual assistance requests in the sectors where the authorities carried out their inquiries, namely 'transport' and 'communication'.

The Network’s activities are already producing tangible results for consumers. To give just one example, the airline sweep has resulted in airlines progressively improving their online booking processes and web pages to meet the requirements of EU legislation.

Total number of mutual assistance requests

Year

Alerts

(Art. 7)

Information Requests

(Art. 6)

Enforcement Requests

(Art. 8)

TOTAL

Member States only

TOTAL

including EEA countries requests

2007

71

161

95

317

327

2008

100

122

170

384

392

TOTAL

171

283

265

701

719

SECTION 5 - WHAT NEXT

What next for the package adopted today?

The consumer enforcement package sets out the principles and priorities underpinning the Commission's activities to reinforce enforcement of consumer rules in the EU and outlines how it will work in partnership with the Member States. This is also to be seen in the overall context of the EU consumer strategy. In more operational terms, the package will be the basis for detailed discussion with Member States and the European Parliament to find the most appropriate ways to move up a gear in enforcement. .

What next for the CPC Network?

The Biennial report is a Commission report which will now be sent to the other institutions, in particular to the European Parliament and Council.

At the level of the CPC Network, the Commission has already started to work with Member States addressing the issues identified in the Report. Several initiatives are either already in place or are being set up. Annual Enforcement plans defining the Network's joint enforcement activities are for instance adopted every year to better organise the Network's work. Supportive measures such as training for authorities are being reinforced. With regard to training, a network of national trainers is being set up, and less experienced Network members are being actively approached to assess their training needs. The more horizontal issues, such as questions on applicable law, are being discussed in expert groups (workshops) as well as more operational questions concerning the functioning of the Network for which a first workshop is scheduled for autumn this year.

All these efforts will be underpinned by the work done in the context of the CPC Committee, which was set up by the CPC Regulation and assists the Commission in the application of the Regulation. Ultimately, where needed, a revision of the CPC Regulation may be envisaged.


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