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Brussels, 29 May 2012
Consumers at Home in the Single Market? Questions and Answers on the 7th Consumer Scoreboard
I. THE SCOREBOARD
What is the Consumer Scoreboard for?
The Consumer Scoreboard is a tool which monitors how well the EU single market is working for European consumers in terms of choice of products and services, competitive prices, effective complaints handling and ensuring that they are supported by effective national consumer institutions.
Consumer policy can give consumers real power to act as drivers of innovation and growth. Better consumer conditions not only improve consumer welfare, but can also benefit the economy as a whole.
How often is the Scoreboard published?
From 2010 the Scoreboard is published twice a year.
The spring edition 'Consumer Conditions Scoreboard', such as the one published today (7th Scoreboard), examines progress in the integration of the EU retail market from the consumers' perspective.
It also monitors the evolution of national conditions for consumers, reflected e.g. in the consumers' trust in their national consumer authorities and consumer organisations and the perceived effectiveness of handling consumer complaints.
The autumn edition 'Consumer Markets Scoreboard' screens 50 specific consumer markets across the EU to identify those which may be malfunctioning from a consumer point of view. In-depth market studies of the most problematic sectors are subsequently carried out.
II. NATIONAL CONDITIONS FOR CONSUMERS
What is the Consumer Conditions Index?
The Scoreboard measures the quality of consumer conditions in EU countries through the Consumer Conditions Index.
The objective is to create a long-term data set which can be used by national policy-makers and stakeholders to estimate the impact of their policies on consumer welfare and to compare national outcomes with those of other countries, thereby promoting best practices.
The key components of the Consumer Conditions Index are the quality of regulation concerning consumers and businesses, the effectiveness of resolving disputes and handling complaints, consumer trust in authorities, retailers, advertisers and consumer organisations, and the degree of trust in the safety of products on the market.
The key indicators used to calculate the Consumer Conditions Index are percentages of consumers (and/or retailers as relevant) who:
How have national conditions for consumers evolved since they were first measured in 2008?
The Consumer Conditions Index reveals that conditions have slightly improved in 2011 compared to the previous year, which continues the positive trend after the fall in 2009.
EU wide, there has been a slight increase in trust in consumer organisations (72% vs. 69% in 2010) and satisfaction with existing consumer protection measures (58% vs. 57% in 2010). Encouragingly, those who experienced problems were more likely to complain about them (82% compared to 77% in 2010), which can be interpreted as a sign of growing consumer empowerment. In addition, more EU consumers were satisfied with the way their complaints were handled (58% vs. 52% in 2010). The public perception of redress mechanisms improved further in 2011, continuing the upward trend since 2008. Slightly over half of EU consumers find it easy to resolve disputes with sellers/providers through alternative dispute resolution schemes (ADR); yet, actual use of ADR remains low.
On the negative side, unfair commercial practices are perceived to have become more prevalent since 2010 (see more details below). In addition, slightly fewer consumers (68% vs. 70% in 2010) have confidence in the safety of products.
The majority of Member States (19 out of 27 countries) increased their scores compared to 2010. Of these, 13 Member States have seen the index grow by more than 2 points (on a scale of up to 100). The biggest improvements (of around 6 points) were experienced by Bulgaria, Belgium, France and Denmark (see Figure 1). In the case of Bulgaria, this is due to a considerable increase (of 12, 9 and 7 points, respectively) in consumer trust in public authorities, consumer organisations and sellers/providers. In addition, more consumers find it easy to resolve disputes through ADR and the courts (+7 and +11 percentage points, respectively).
Figure 1: Consumer Conditions Index - evolution
The countries with the best conditions are Luxembourg, United Kingdom, Denmark, Austria, Ireland, Finland, the Netherlands, Belgium Germany, France and Sweden, all of which are above the EU average (see Figure 2).
Figure 2: Consumer Conditions Index - values
The full report contains detailed country-specific data.
What do consumers and retailers know about consumer rights?
The Scoreboard finds that consumers’ knowledge and understanding of fundamental consumer rights is fairly poor. Asked whether they have the right to return a product that has been ordered by post, phone or the Internet four days after its delivery, whether a broken item bought 18 months ago can be repaired or replaced free of charge and what to do if they receive DVDs they have not ordered together with an invoice, only 12% of respondents were able to answer all three questions correctly; this was less than the percentage of those who did not give a single correct answer (13%). These findings confirm the picture first captured by the Consumer Empowerment report of April 2011. On the business side, even though two-thirds of retailers (67%) declare that they know where to find or get information and advice about consumer legislation in their own country, the actual awareness of legal obligations towards consumers remains disappointingly low. Only 29% of distance retailers were able to correctly indicate the length of the cooling-off period for distance sales, and only 27% of retailers knew the correct length of the period during which consumers have the right to return defective products.
How widespread are unfair commercial practices?
The continuing high level of illegal business practices is still a cause for concern 7 years after the adoption of the Unfair Commercial Practices Directive. Based on the experience of consumers and retailers, misleading and deceptive advertisements and offers have been on the increase since 2010. Almost half (46%) of EU consumers and nearly a third (31%) of retailers stated that they had encountered such practices. This is equivalent to increases of 4 and 6 percentage points, respectively, since 2010. Likewise, more consumers (69%) said that they had come across unsolicited commercial advertisements, statements or offers (+8 percentage points since 2010). Fraudulent advertisements and offers are apparently less common, but they were still spotted by 29% of consumers (same as in 2010) and 23% of retailers (vs. 21% in 2010). Moreover, 18% of consumers who had come across either misleading or fraudulent advertisements responded to such offers.
II. INTEGRATION OF THE RETAIL SINGLE MARKET
How is cross-border commerce doing in the EU?
The Scoreboard findings confirm that the EU retail internal market is still far from being fully integrated. EU consumers still prefer to buy goods and services in their own country even though the past five years have seen a steady, if slow, increase in the level of cross-border shopping. Almost a third of EU consumers made at least one purchase in another EU country in 2011. This represents an increase of 5 percentage points since 2006 and an increase of 1 percentage point since 2010 (see Figure 3). Likewise, most retailers sell only to domestic consumers. The proportion of businesses selling cross-border has remained relatively stable since 2006, with slightly over a quarter of retailers having made distance sales to at least one other EU country in 2011.
Figure 3 Cross-border purchases in the EU, evolution 2006-2011
On the business side, 27% of European retailers made cross-border distance sales to consumers in at least one other EU country in 2011. This is a significant growth (+5 percentage points) since 2010. However, the level of cross-border activities remains relatively unchanged compared to the results in 2006 and 2009, when 29% and 25% of retailers respectively reported that they had made cross-border sales in other countries (see Figure 4).
Figure 4: Cross-border sales in the EU, evolution 2006-2011
How is e-commerce doing in the EU?
Overall, slightly more EU consumers bought goods and services over the Internet in 2011 (43% compared to 40% in 2010). But there are significant national differences across the EU: the share varies from 6% in Romania to 71% in the UK (see Figure 5).
Figure 5: Percentage of individuals who ordered goods or services, over the internet, for private use (2011)
Online shopping remains largely domestic. Consumers are significantly more likely to buy online from domestic sellers (39% vs. 36% in 2010) than from those located in other EU countries (10% vs. 9% in 2010).
While the current trend appears on track to meet the Digital Agenda target of 50% of citizens buying online by 2015, the target of 20% consumers shopping online across borders seems less likely to be achieved.
Figure 6: Gap between domestic and cross-border online purchases
At the same time, the experience of some smaller economies - where over one in five consumers already buys online from elsewhere in the EU - demonstrates about the potential of cross-border online shopping.
How can EU consumers benefit from e-commerce?
There is a lot to gain. Consumers can benefit from a wider range of goods and services and lower prices, thanks in particular to online price and quality comparisons.
A study into e-commerce in goods showed that there are savings to be made in 13 out of 15 product categories for which prices were collected. In a typical “shopping trip”, consumers have at least double the choice when shopping domestically online rather than offline. If they shop online across the EU, they have up to 16 times more products to choose from. Consumers already gain about €11.7 billion a year (an amount equivalent to 0.12% of EU GDP) from e-commerce in goods alone. If e-commerce were to grow to 15% of the total retail sector and Single Market barriers were eliminated, total consumer welfare gains would reach around €204 billion, equivalent to 1.7% of EU GDP. This is four times higher than a situation where - with a similar share of Internet retailing - the market fragmentation along national borders continued to exist. Two-thirds of consumer welfare gains are due to increased online choice, which is considerably larger across borders.
But successful e-commerce can also benefit those who shop offline. If e-commerce works well, it also puts pressure on offline retailers – i.e. what they sell and how much they charge. Many offline consumers also use the Internet to inform their purchase decisions.
What are the main barriers to cross-border commerce?
While consumer concerns appear to be an important obstacle to cross-border commerce, many of these concerns are not substantiated by actual consumer experience. Only a third of all consumers are equally confident in cross-border and domestic online transactions. However, the levels of confidence are almost double among those who have made at least one cross-border online purchase. Likewise, the intentions to engage in cross-border shopping (whether when travelling abroad or through distance sales channels) are higher among those who have tried it. Seven out of ten respondents with prior experience of cross-border shopping say they are interested in making cross-border purchases in the next year, compared to half of those who do not have such experience. This suggests that the volume of cross-border shopping would increase if consumers are persuaded to try it at least once.
In fact, cross-border transactions appear to be at least as reliable as domestic transactions.
The findings suggest a key role for more effective information about existing consumer advice, enforcement and redress mechanisms for cross-border consumers. These include:
Major obstacles on the supply side
One of the major barriers which hinders the integration of the single market from a consumer point of view is the lack of traders who are willing to sell to other countries. A recent mystery shopping study carried out by the European Consumer Centres Network found that 60% of websites initially selected for the check actually had problems (e.g. with delivery, payment and language options) which made them unsuitable for online shoppers from other EU countries (see IP/11/1154). The exercise confirms the findings of an earlier Commission study published in 2009 (see IP/09/1564 and MEMO/09/475). In addition, consumers have very little information about cross-border offers, since most information intermediaries do not list products sold in other countries.
The key obstacles to cross-border sales for European retailers are the additional costs linked to compliance with different consumer protection rules and contractual terms (34%), and potentially higher risks resulting from fraud and non-payment (32%). These are followed by additional costs of compliance with different national tax regulations (29%) and the costs of cross-border delivery (27%).
III. What is the EU doing to tackle the barriers to cross-border commerce?
As a follow-up to Commission flagship communications (on cross-border business-to-consumer e-commerce, Digital Agenda for Europe and the Single Market Act), several new initiatives aim to make the Single Market deliver better for consumers and businesses. They include:
The e-commerce Communication
Presented in January 2012, the Commission Communication sets out an action plan aimed at doubling the share of e-commerce in retail sales (currently 3.4%) and that of the Internet sector in European GDP (currently less than 3%) by 2015. The planned actions include e.g. better enforcement of consumer protection legislation and the development of transparent, cross-border price and quality comparison sites through dialogue with information intermediaries (see IP/12/10 and MEMO/12/5). Other initiatives aim to ensure more efficient and affordable delivery of products across Europe and easier payments online.
The Consumer Rights Directive
Adopted in October 2011, the Directive fully harmonises certain core consumer rules including for distance selling and off-premises selling. For instance, it eliminates hidden charges and costs on the Internet, increases price transparency and extends the period during which consumers can withdraw from a sales contract.
The proposal aims at simplifying cross-border purchases for consumers and encouraging traders to sell to other EU countries by creating a level playing field and reducing transaction costs in certain core areas of e-commerce (see MEMO/11/675).
Initiatives on Alternative Dispute Resolution and Online Dispute Resolution
To facilitate redress and thus boost confidence in the Single Market, the Commission proposed to bring in legislation on Alternative Dispute Resolution (ADR) and Online Dispute Resolution (ODR) in November 2011.
The aim of these proposals is to ensure easier, faster and cheaper out-of-court solutions to settle disputes between EU consumers and traders arising from the sale of goods or provision of services (both offline and online, domestic and cross-border) (see IP/11/1461 and MEMO/11/84).
The ADR-ODR legislative initiatives are included among the EU level priority proposals with substantial growth potential, which the EU institutions undertook to adopt in the course of 2012.
Proposal for Common European Sales Law
In October 2011, the Commission proposed an optional Common European Sales Law to help break down the barriers to cross-border trade and give consumers more choice of products at more competitive prices. When adopted by the Parliament and the Council, this law will facilitate trade and save costs, by offering the option to use a single set of rules and a single I.T. platform for cross-border contracts which will be identical in every Member State. The Common European Sales Law will contain a high level of consumer protection which will be better than or at least equal to EU consumer law. For the majority of European citizens, the overall level of consumer protection will be comparable or higher than their own national law. Such protection will give citizens the confidence to increase cross border shopping (see IP/11/1175 and MEMO/11/680).
The Single Market Act 2
As a follow-up to the Single Market Act adopted by the European Commission on 13 April 2011, which includes 12 key actions to revive the Single Market and unlock its potential for growth, jobs and citizen's confidence, the Commission will propose a new set of actions in 2012 aimed to further address internal market fragmentation and contribute to new growth and social progress.
III. MORE INFORMATION
The full Scoreboard report, including detailed country-specific data:
see also IP/12/510