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MEMO/09/44

Brussels, 2 February 2009

The Consumer Markets Scoreboard and the MarketWatch Process. Questions & Answers

Section 1: The Consumer Markets Scoreboard

Consumer MarketWatch is a process to investigate markets from a consumer perspective to assess if they are functioning effectively for consumers – or if further investigative or corrective actions are necessary.

At the heart of the process is the ANNUAL CONSUMER SCOREBOARD REPORT which provides an analysis of the consumer environment in three dimensions:

  1. CHAPTER 1: Screening consumer retail markets: The first section of the scoreboard screens key consumer markets across the economy against 5 indicators (price, complaints, switching, safety, satisfaction) from a consumer perspective. Problem sectors are identified and in-depth market studies can be launched where markets require further investigation.
  2. CHAPTER 2: Tracking progress in retail market integration. The second section of the scoreboard examines progress in cross border trade and explores the reasons behind consumers and retailers reticence to shop / sell cross border. The section presents data on cross-border trade, cross-border complaints and disputes and attitudes of consumers and retailers vis-à-vis cross-border transactions.
  3. CHAPTER 3: Benchmarking the national consumer environment. The scoreboard presents data on consumer conditions at EU and national level – for example in terms of, enforcement, empowerment, redress, complaint handling etc (national country profiles are annexed to the main scoreboard report).

Section 2: What Are The Main Results Of The Second Consumer Markets Scoreboard?

1. Available evidence on the key indicators – complaints, prices, satisfaction and switching – point to possible malfunctioning in a number of consumer markets which could merit further investigation:

  • Satisfaction: A clear division between services and goods markets is evidenced in the satisfaction data from 19 goods and services markets. Consumers are less satisfied with the functioning of services markets and are more likely to experience problems. The consumers using urban and extra-urban transport services are experiencing the lowest satisfaction and the highest number of problems: less than one out of two consumers is satisfied with urban and extra-urban services (trains, buses, trams) and one out of four experienced problems. Overall satisfaction is also low for fixed telephony, postal services and energy (electricity and gas supply) with less than 60% of consumers who find that these markets function satisfactorily.
  • Available complaints data also show a high number of complaints in the services markets, especially transport, communication (postal services and telephone services), and the category of group of goods and services including financial services and insurance.
  • Switching data highlight the importance of switching opportunities on the price evolution. The analysis shows that in markets with higher switching rates, consumers as a whole are less likely to report price increases. Dynamic markets such as telecommunications and car insurance with switching rates close to or over 20% show less reports of price increases than markets in which consumers switch less. Banking services and energy (electricity and gas supply) are problematic in terms of comparability of offers, ease of switching and actual switching. Electricity and gas supply score particularly bad in this respect, with only 7-8% of consumers who switched providers in a context where 60% reported price increases and only 3-4% saw price decreases.
  • Prices: Analysis of average prices of products and services across Europe shows price variation is often correlated to differences of individual consumption between the Member States. But this is not always the case. The market clearly requiring attention is banking, where bank fees and interest rates are highly differentiated among the Member States in a way not easily explained. For example, adjusted interest rates on consumer credit between 1 and 5 years vary between 0,21% in Sweden and 12,12% in Estonia, showing divergences after accounting for cost of capital.

2. One out of four consumers has made a cross-border purchase in the last year and a similar number of retailers are selling cross-border through a distance channel: this evidence shows that cross-border trade has not increased since 2006. Nevertheless, while 25% of consumers have shopped cross-border in the last 12 months, 33% are considering doing so in the next year. And, if harmonised consumer regulations were put in place across the EU, almost one out of two retailers would be interested in selling cross-border.

While online shopping is becoming more widespread, cross-border e-commerce is not developing as quickly as the domestic side as a result of cross-border barriers to online trade. Thirty-three percent of consumers have shopped online in 2008, compared to 27% in 2006. This growth is not reflected in the figure for cross-border shopping over the internet, which is stable (6% in 2006 and 7% in 2008).

3. Country data: show that enforcement and empowerment across the EU are far from uniform and that most countries have strong and weaker points. How well consumers believe existing measures protect them varies considerably between Member States. Half of Europeans are confident that existing measures protect consumers well, but country figures range between 13% and 74%. More than half of Europeans (54%) believe public authorities protect their rights well and slightly more (59%) believe sellers and providers respect their rights.

The next steps

  • Following the analysis presented in the Scoreboard Report 2009, the priority market for in-depth investigation will be the retail electricity market.
  • As a follow-up to the first Consumer Scoreboard presented in 2008, the Commission is preparing two in-depth analyses on e-commerce and retail financial services. A first e-commerce report, presenting data the current state of e-commerce in the internal market will be published in February 2009. This will be followed by an analysis of geographical market segmentation finished in Summer 2009, focusing on the hurdles consumers encounter when shopping online across borders and the efforts under way to address these. The report on retail financial services will be published in Summer 2009.

Section 3: The Data For The Scoreboard – Sources And Next Steps

Data for the second Scoreboard has been collected through EU wide surveys on consumer satisfaction, switching, and consumer and retailer attitudes towards cross-border trade and consumer protection, as well as in co-operation with Eurostat (the Statistical Office of the European Communities), Member States' statistical offices, consumer agencies and regulators.

However, comparable data on many indicators for the Scoreboard analysis is still insufficien. More evidence is needed to complete the assessment of all main consumer markets. In terms of data collection, the priority sectors which will be addressed in 2009 are as follows:

  • further development and regular collection of average prices of comparable consumer products and services in collaboration with Eurostat and the national statistical offices
  • development of an EU-wide harmonised complaints classification system
  • development of indicators to monitor enforcement activities and the consumer movement in the Member States, in collaboration with national authorities and consumer organisations.

The work to provide comprehensive EU wide comparable data on a full range of key indicators will take several years. However it will enable the Scoreboard to become a rich source of comparative data for EU and national policymakers in the consumer, competition and other areas to help them identify market malfunctioning. The process complements the monitoring and analysis proposed in the recent Single Market Review.

Section 4. What Kind Of Remedial Actions Can Be Taken Following The Analysis Presented In The Scoreboard An Market Studies?

There is a wide range of remedial actions that can be taken at EU or national level. The five main tools to resolve market malfunction are as follows:

  • Enforcement of existing legislation: probably the most efficient one when legislation already exists that can address the issue at stake. This may require action at national or EU level, to clarify and enforce applicable legislation.
  • Information: empowering consumers with clear and manageable information to help them chose, exercise their rights, and spot and avoid fraud and deception
  • Codes of conduct with industry: when possible a targeted code of conduct discouraging or encouraging business practices will be the less intrusive way to resolve an issue.
  • Regulatory actions: for systemic problems in particular sectors that cannot be addressed by lighter remedies, regulatory intervention might be necessary.
  • Competition action: when the market is working badly because of the conduct of an abusive firm or group of firms, competition authorities will be able to enforce competition policy and resolve the case.

Section 5: Does This Kind Of Market Monitoring Exist At National Level?

Monitoring markets from the consumer perspective is also ongoing at national level. In Denmark, an annual 'Consumer Condition Index' is published for fifty-seven markets which are rated in relation to each other. The index looks into trust, transparency and terms of complaints.

Based on this methodology, Norway developed a similar 'Consumer Satisfaction Index' and the UK a 'Consumer Conditions Survey'. France, the UK and Portugal have developed comprehensive complaints systems for policy making and several Member States have set up price observatories.


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