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SPEECH/03/454 David BYRNE European Commissioner for Health and Consumer Protection Building a Single Market for Commercial Communications EP Intergroup on Commercial Communications Brussels, 9 October 2003

European Commission - SPEECH/03/454   09/10/2003

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SPEECH/03/454

David BYRNE

European Commissioner for Health and Consumer Protection

Building a Single Market for Commercial Communications

EP Intergroup on Commercial Communications

Brussels, 9 October 2003

I am grateful for the opportunity to be with you here today.

We have come a long way since our first meeting in October 2001. At that time we were still very much in the studying phase of the proposals we will discuss today. Now after almost two years of in-depth analysis and consultation with stakeholders, Parliament and the Council, we have put forward a number of legislative proposals that address key challenges for consumer policy in the Single Market.

I will begin by focusing on Commission's proposal on unfair commercial practices. I will then address our proposal on enforcement co-operation. Finally I will say a few words on food claims.

This last proposal principally falls in the area of health and food safety. I fear, however, that in some quarters this has been demonised and misconstrued so it is important to dispel some of the mythology that has emerged.

Unfair commercial practices

Why the need for a Directive on unfair commercial practices?

Well a Commission analysis of the internal market has revealed little evidence of cross-border business to consumer marketing or selling.

So why should that be the case?

Our research highlighted fragmented national rules as an important barrier. They impose costs and create uncertainty for businesses that might otherwise market more of their products cross-border.

In our surveys, businesses rated these problems as more significant than language barriers.

For consumers, the uncertainty of not knowing what treatment they could expect in other Member States is even more off-putting than known or perceived lower standards of protection.

The objectives behind the unfair commercial practices proposal are therefore very clear.

  • First, we want to ensure that consumers are not treated unfairly by businesses. In particular, that they are not subjected to misleading or aggressive behaviour from traders or otherwise have their freedom to make an informed choice impaired.

  • Second, and just as important, we want to ensure that legitimate businesses can market cross-border and on a pan-EU basis without having to change their business strategies or incur undue costs as a result of diverging national rules.

Rigorous consultation and an Impact Assessment showed that the most effective way to tackle these problems was through a 'gap-filling' framework directive, based on full harmonisation and with an 'internal market clause' applying the law of the country of origin.

  • The proposal establishes a common EU-wide framework for the regulation of unfair commercial practices that harm the economic interests of consumers.In particular, this includes protection against misleading practices and against aggressive practices.

  • This framework will protect consumers directly, and indirectly protect firms who suffer when their competitors win business unfairly by breaking the rules.

The internal market clause and the general prohibition of unfair practices are central to achieving our two key objectives.

The general prohibition establishes a common set of criteria EU-wide, replacing the divergent general clauses and principles currently in place. This will ensure a high level of protection for all EU consumers. But crucially it will also significantly reduce the scope for divergent application and interpretation of unfairness.

The internal market clause in the Directive is also crucial. It ensures that a trader who wants to market cross-border has to comply only with the law of the Member State where he or she is established. Because the Directive provides a high, uniform level of protection, we can be confident that consumers will not lose out.

How will the general clause work in practice?

To be deemed unfair, a commercial practice must match 3 conditions.

  • First, such a practice would be contrary to the requirements of professional diligence. This means that it must be shown not to be in conformity with the level of skill and care commensurate with normal market practice in the trader's field of activity.Professional diligence is similar to the concept of good marketing practices, bones mores and the duty of care that we find in laws and voluntary codes across the EU.

  • Second, to be deemed unfair the practice would also have to materially distort or be likely to materially distort the economic behaviour of the consumer with regard to the product.

  • Third, the impact of the commercial practice is assessed in relation to the 'average consumer'. This consumer is expected to be 'reasonably well informed, observant and circumspect'. Member States will not be able to judge something unfair on the basis of factors that only an atypical consumer would take into account.

I am confident that, taken together, these tests provide a more rigorous framework than the existing national clauses. And of course, they would give us one common set of rules rather than 15 or, from May next year, 25.

Consumer Protection Enforcement Co-operation

Allow me now to turn to the proposal for a regulation on consumer protection co-operation, which the Commission adopted in July.

Such a regulation is necessary because, unless backed by effective enforcement, the freedom of the internal market could become freedom for rogue traders to harm consumers and legitimate competitors with impunity.

Current enforcement systems in the Member States are not designed to deal with cross-border rogue traders. Some enforcement authorities cannot exchange information about rogue traders. Others are unable to take action against traders who target only foreign consumers. Some Member States have no consumer protection authority at all.

To tackle this, the regulation would establish a network of public enforcement authorities throughout the Community with effective investigation and enforcement powers and procedures for co-operating with each other.

It is worth recalling the case for a public role in this area and in particular why systems of private enforcement are no longer sufficient to remedy cross-border problems.

The rise of e-mail, e-commerce, direct-marketing from overseas and door-to-door sales have made the process of detection, investigation and evidence gathering more complicated.

Individual consumers or consumer associations cannot meet these challenges. The tools needed to tackle rogue traders include international co-operation and also the ability to detect, investigate and gather evidence and then take quick action in court, before consumers and competitors are harmed in great numbers.

Link between effective enforcement and country of origin approach

To ensure that mutual recognition and home country control work for consumer protection, we must offer guarantees that the country of origin of the trader will effectively enforce the rules and act against rogue traders.

Where there is no such enforcement, Member States will continue to insist on the possibility of imposing their own rules on traders from other Member States.

We have also pledged to extend these principles to existing EU consumer protection legislation.

This is an important policy development. It is one that has been advocated by this group and by MEPs for many years, but has been opposed by the majority of Member States.

This enforcement regulation, requiring an effective public authority in every Member State, will play an important role in persuading those Member States historically attached to minimum harmonisation and opposed to the country of origin approach to re-consider their views.

Food claims

Finally, I would like briefly mention the proposal for a Regulation on the use of health and nutrition claims on foods, also adopted by the Commission in July.

This proposal aims simply to ensure that information provided voluntarily as regards the nutritional or health benefits of a product is not misleading to consumers.

You might ask why this proposal is necessary if we are bringing forward a general proposal on unfair commercial practices. The answer is that this is a sector where particular problems have been identified.

Indeed, the demand for European legislation on food claims comes from right across the spectrum of interested parties: industry, retailers and consumers. And Parliament itself, in its response to the White Paper on Food Safety, identified this as a priority to be followed-up by the Commission.

The approach taken in this proposal is entirely consistent with the broader unfair commercial practices proposal.

Both proposals aim to make the market work more effectively. This brings benefits for legitimate business and the wider economy, as well as for consumers.

Consumers should be able to make choices based on clear and accurate information. In pursuit of this objective, we are proposing science-based validation of food claims to ensure that every claim can be properly justified.

At the moment, many claims are difficult to substantiate and some are misleading or even false.

The proposal covers nutrition claims, for example “rich in vitamin C” or “low in fat” and health claims that is, claims of a positive relationship between a specific food and improved health. It establishes the framework for making such claims. On the other hand, it also allows health claims, including “reduction of disease risk” claims, that were previously prohibited.

The Regulation will protect consumers, improve the free movement of goods, increase the legal security of operators and prevent abusive claims, thus ensuring fair competition.

As I said at the start of this address, in some quarters our proposal has been demonised and deliberately misconstrued.

I have heard suggestions that our plans would restrict the freedom of the advertising industry to inform the public, and also that the future of that industry might be somehow under threat.

I find these suggestions utterly incredible.

  • First, the proposal is designed to eliminate not information but misinformation either on food products or in their promotion. It is not a bar on creativity.

  • Second, I simply do not accept that the advertising industry, either now or in the future, needs to rely on deception or sophistry in order for it to be successful.

Conclusion

To conclude let me underline an important point.

The unfair commercial practices proposal aims to open up the internal market for consumers and legitimate businesses, whilst clamping down strongly on rogue traders.

The proposed Regulation on enforcement co-operation will help in ensuring that rogue traders cannot hide behind national borders to escape the rules. This proposal will also contribute to enhancing the confidence between Member States allowing them to abandon their attachment to minimum harmonisation and host country control.

Businesses that operate in a fair and honest manner have absolutely nothing to fear from the proposals and much to gain.

Similarly, those producers or advertisers who make justifiable food claims will be able to continue to do so.

The upshot of our initiatives will be:

  • good news for consumers through better protection and enhanced confidence;

  • good news for legitimate businesses as a result and by ensuring a regulatory environment that provides for legal certainty, fair competition and room for innovation;

  • good news for the functioning of the internal market.

I hope I can count on your support to ensure that the significant potential benefits of these proposals come to fruition.

Thank you.


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