Anita Vegter, member of the board of the ACM, spoke in the round-table discussion on ‘CPC Regulation: possibilities and opportunities’ about the future of EU Cooperation for enforcement of consumer legislation.
The speech was held in Rome on 7 July 2014 during a conference in the context of the evaluation of Regulation (EC) No 2006/2004. This Regulation promotes the protection of consumers from intra-Community violations by creating a network of public enforcement authorities throughout the Community.
Anita Vegter, Netherlands Authority for Consumers and Markets:
Anita Vegter, Netherlands Authority for Consumers and Markets: The future of EU Cooperation for enforcement of consumer legislation
The future of EU Cooperation for enforcement of consumer legislation
Ladies and gentlemen, good afternoon. First, I would like to extend my warmest thanks to the Italian Presidency of the EU Council for this wonderful initiative to organize this conference. And, most of all, thank you so much for inviting the Netherlands Authority for Consumers and Markets (ACM) to speak in the round-table discussion on ‘CPC Regulation: possibilities and opportunities’.
My name is Anita Vegter, and I am a member of the board of ACM. I hold the Consumer portfolio and the Legal Affairs portfolio. I am also in charge of Corporate Services management (including HR and Finance). As you may know, ACM was created in April 2013 through the merger of three authorities in the Netherlands, the Consumer Authority, the Independent Post and Telecom Authority and the Competition Authority. As a result, consumer protection and market oversight are now housed in a single independent authority. This has laid the foundation for effective and efficient oversight, leading to well-functioning markets for the purpose of maximizing consumer welfare. Our mission is to create opportunities and options for business and consumers.
To very briefly introduce ACM, I would like to show you a short movie.
Ladies and gentlemen, today’s theme is the future of EU Cooperation for enforcement of consumer legislation. In particular, this concerns the functioning of Regulation (EC) No 2006/2004 of the European Parliament and of the council of 27 October 2004. This Regulation promotes the protection of consumers from intra-Community violations by creating a network of public enforcement authorities throughout the Community. These authorities require a minimum of common investigative and enforcement powers. The goal is to apply this Regulation effectively and to deter sellers or suppliers from committing intra-Community violations.
An evaluation of this Regulation is currently underway. This will be the starting point for further discussion about finding a future-proof way to cooperate in the public enforcement of consumer rights regulations within the EU. This is an opportunity that should not be passed up. My contribution today is based on our day-to-day work of the public enforcement of consumer rights regulations. I will briefly touch upon the following points:
- What has been the impact of the implementation of this Regulation on the Dutch situation?
- What have been our most important experiences so far with cross-border or EU-wide 2 situations?
- What trends are we currently seeing, and what recommendations can we offer for the future?
I will conclude my contribution with several final remarks.
What has been the impact of the implementation of Regulation (EC) 2006-2004 on the Dutch situation?
On 1 January 2007, the Netherlands Consumer Authority was created. Until 2007, the enforcement of consumer protection legislation in the Netherlands had had a predominantly private character. There was simply no public enforcement of private consumer protection law. The creation of the Consumer Authority in 2007 thus marked a change in the Dutch consumerprotection landscape. For the first time there was public enforcement of private consumer law.
The reasons for setting up the Consumer Authority were two-fold; a national reason, and a European reason.
First, there were calls at the national level for a strengthening of enforcement. The political climate called for strong government to balance strong markets. A 2004 report from the Ministry of Economic Affairs showed that, based on extensive market studies, the consumer protection system that was in place at that point had multiple blind spots. Consumers were simply taking their losses rather than taking advantage of private remedies. The power of consumers to discipline the market was seen as insufficient.
The second development was at the European level. The negotiations about the establishment of European Regulation (2006/2004) made clear that some form of public consumer protection - for cross-border cases - was going to be required by European law.
Both these developments thus culminated in the creation of the Consumer Authority on 1 January 2007 for cross-border as well as domestic cases. The Consumentenbond, the key private organization representing Dutch consumers, was fully supportive of the creation of a public consumer-enforcement agency.
My conclusion on this point is that the implementation of Regulation 2006/2004 has played an important role in the design of the current system of public enforcement of consumer rights in the Netherlands, both for cross-border cases as well as domestic cases.
What have been our most important experiences so far?
The Regulation establishes a number of cooperation mechanisms and common activities among Member State authorities and with the European Commission:
- mutual assistance requests (information or enforcement requests and alerts, via a dedicated IT tool);
- coordinated surveillance activities (mutual assistance requests that concern 3 or more Member States and so-called sweep actions in which Member State authorities simultaneously inspect e-commerce websites of a certain sector;
- common activities to foster a common approach to enforcement (EU co-funded projects among Member State enforcement authorities, exchange of officials, workshops; and
- general reporting and Committee meetings.
ACM has so far actively participated within all of these mechanisms. For instance, approximately 137 enforcement requests (received and sent requests) and 148 information requests ACM was involved in were sent via the dedicated IT tool. Within an EU context, those numbers represent over 18 percent of total enforcement requests, and more than 20 percent of total information requests. Every year, the Netherlands also takes part in the Sweep. We are active in most of the common activities. Additional key benefits of such cooperation include sharing best practices and the development of standards and guidelines for the industry.
Our experiences so far have been absolutely positive. The network helps in solving crossborder and/or EU-wide collective consumer problems more effectively and more efficiently. The cooperation between the public enforcement agencies also helps promote the level playing field for businesses within the EU. It has a disciplinary effect on the market. It unmistakably sends the right signal: consumer rights are taken very seriously within the EU.
On the other hand, from our everyday experience, we have also identified several factors that do not contribute to effective cooperation. These include the following four factors:
- What has not been regulated, is what applicable substantive law applies in mutual assistance requests. A mutual assistance request is motivated on the grounds of a violation of consumer protection rules laid down in national laws transposing a directive in the habitat of the consumers. The authority receiving the request could be entitled to apply either the law of the applicant or the law of the requested Member State. This creates discussions among authorities and creates uncertainty in the market;
- For the same violation, national legal systems have different sanctions, different types of authority or proceedings like administrative, criminal or civil proceedings. Also, there are differences in the availability of investigative powers. As a result, the results of enforcement actions for similar violations vary among Member States, both in terms of duration of the procedures, and in severity of the sanctions;
- It is not immediately clear whether European cooperation in the public enforcement of consumer rights, in addition to cross-border violations, also applies to the commercial practices of large EU traders with local subsidiaries in their main markets, and applies the same practices across these markets. Discussions about the scope of the Regulation do not contribute to the solution of EU-wide felt consumer problems;
- The current system of cooperation places a heavy responsibility for the execution of enforcement on the authorities of the Member States themselves. In effect, the Commission’s role has been reduced to coordination and support. That makes the system heavily dependent on the cooperation of individual Member States. This could easily lead to undesirable situations in case of individual problems such as budgetary constraints.
What trends are we currently seeing, and what recommendations can we offer for the future?
Ladies and gentlemen, the latest figures of Statistics Netherlands revealed that online shopping is still growing. In 2013, 83 percent of the population between the ages of 12 and 75 did so regularly. The share of frequent e-shoppers also increased. At the same time, a greater retail trade internationalization in the EU led to large traders establishing local subsidiaries in their main markets. Often they apply the same practices in different Member States. So emerging consumer problems are occurring simultaneously in a number of Member States, but not necessarily cross-border. Although such figures for EU countries may vary, the trend of further ‘Europeanization’ of consumer markets will, in my opinion, undeniably continue.
I just discussed a number of factors that do not contribute to effective cooperation. The main point here is that it is crucial to have unity in the application of EU rules. We should prevent that companies may move to those countries where the level of consumer protection is the lowest. Indeed, we don’t want them to be easily able to infect consumers in other countries.
Other factors will undoubtedly be revealed in further studies that the Commission is having carried out as part of the evaluation. For some of these factors, legal and more technical solutions are required such as the question of applicable law.
More coherent legal systems can be realized within the EU with regard to sanctions, proceedings and investigative powers. This could be done through the adoption of a higher minimum of common investigative and enforcement powers. Clarification of the scope of cooperation is needed. In our view, the scope should not be limited to cross-border violations, but also stretch to EU-wide consumer problems occurring in more than 2 Member States at the same time. When several Member States seek enforcement actions against the same trader, it is more efficient and effective to coordinate actions.
A greater role for the Commission would facilitate the efficiency and effectiveness of the network. This could include more varied possibilities to exert pressure on Member States to secure compliance with the CPC Regulation. Also the Commission could play a stronger role in removing legal uncertainty about legal issues. More possibilities for the Commission to monitor the handling of individual cases is needed. Also it should be possible for the Commission to act more pro-actively in order to initiate discussions about how to solve EU-wide collective consumer problems and to promote enforcement actions if necessary.
Ladies and gentlemen, I have to conclude my speech. The evaluation of Regulation (EC) 2006/2004 is a wonderful opportunity to think about a future-proof way to cooperate in the public enforcement of consumer rights within the EU. It is a question which we will continue to talk about often in the foreseeable future. Our position in this debate will be that EU-wide problems require an EU-wide approach.
I hope that my contribution today will positively contribute to the debate.
Thank you very much for your attention.