Epilogue: Recommendations
© Springer International Publishing Switzerland 2015
Bram B. DuivenvoordeThe Consumer Benchmarks in the Unfair Commercial Practices DirectiveStudies in European Economic Law and Regulation510.1007/978-3-319-13924-1_1212. Epilogue: Recommendations
(1)
Hoogenraad & Haak advertising + IP advocaten / University of Amsterdam, Amsterdam, The Netherlands
Abstract
The four recommendations presented in this chapter are intended to provide a basis for further discussion, e.g., on possible solutions in relation to the shortcomings identified in the assessment in the previous chapter. Firstly, it is recommended to adopt an alternative framework to assess the unfairness of commercial practices. In the proposed unfairness test, all factors should be taken into account that are relevant to the Directive’s goals , such as the number of consumers that is likely to be affected by the practice, but also the degree to which other consumers are likely to benefit from the same practice and the possibility and cost for traders to prevent consumers from being deceived. Secondly, it is suggested to clarify the goals of the Directive and to provide better guidance as to the Directive’s application. Clarification of the goals and better guidance are required in order for the general clauses to be applied uniformly, be it under the current or under the proposed unfairness test. Thirdly, it is recommended to reconsider the degree of harmonisation . Taking into consideration the application of the consumer benchmarks at the national level, the Directive currently struggles to achieve uniform application. Moreover, full harmonisation comes at a cost and it is questionable to what extent full harmonisation can really be beneficial for cross-border trade. Fourthly and finally, this book provides a compelling argument against extending the scope of application of the consumer benchmarks to EU consumer law in general. It is questionable whether extending the scope of application of the consumer benchmarks would really improve consistent application of European consumer law. Yet most importantly, the extension of the scope of application of the Directive’s consumer benchmarks to EU consumer law in general would create the same problems as identified in the assessment in relation to the Unfair Commercial Practices Directive. This in and of itself is already sufficient reason to argue against such a development.
Keywords
RecommendationsAlternative frameworkFlexibilityBalancing of interestsClarification of goalsDegree of harmonisationEU consumer law12.1 Adopt an Alternative Framework to Assess Unfairness
The introduction of this book (see paragraph 1.1) commenced with the issue that underlies the legal concept of the consumer benchmark, i.e., the question what type of consumer a court or enforcement authority should bear into mind when assessing whether a commercial practice is unfair. This question was the basis for the discussion on the consumer benchmarks, and for the preliminary reference to the CJEU that led to the introduction of the average consumer benchmark in Gut Springenheide.1 The question is highly relevant, taking into consideration that the answer determines to a large extent the outcome of a particular case and can thus also cause significant differences in the application of the unfair commercial practices laws in the Member States. European law has addressed this question in two different ways; firstly, through the introduction of the average consumer benchmark in the case law of the CJEU, and, secondly, by the introduction of the target group and vulnerable group benchmarks in the Unfair Commercial Practices Directive.
The question has thus been addressed in European law by adopting consumer benchmarks that function as requirements in the unfairness test; in order for a practice to be unfair, one of the benchmarks in the Directive has to be satisfied. The question can be raised, however, whether this is the best way to determine which practices should be deemed as unfair. The previous chapter has concluded that the regime of consumer benchmarks poses significant limitations for each of the goals of the Directive, and that these limitations cannot be explained as being the result of a logical trade-off between the goals. In particular, the lack of consumer protection is not evidently justified by the objective to improve competition, whilst the internal market objective also does not seem to provide a satisfactory explanation.
What the regime of benchmarks seems to lack—and this in principle applies in relation to all of the goals mentioned—is flexibility . Since the benchmarks function as requirements in the Directive’s unfairness test, insufficient room is granted in the unfairness test to balance the relevant factors with respect to the Directive’s goals. In order to allow for more flexible balancing of the interests at hand, a more general fairness test could be adopted—either by re-interpreting the Directive or by modifying it. Accordingly, this test should take into account and balance the relevant factors related to the goals of the Directive, such as the number of consumers that is likely to be deceived, but also, for example, the number of consumers that is likely to benefit from the practice (see more details below). In this way, an unfairness test could be adopted that functions without consumer benchmarks as requirements. This test would in fact come closer to the current practice in Member States, in which flexibility is sought to intervene where and when it is thought it is needed.2
An argument against this solution would be that it could be detrimental to legal certainty. Legal certainty is important in relation to the goals of the Directive, in terms of consumer protection (consumers knowing whether they are protected) and in terms of the smooth functioning of the internal market . Uncertainty as to different application between Member States can function as a barrier to cross-border trade, both for traders and for consumers. Also from the point of view of competition, it is important to ascertain the boundary of what is allowed, so that infringements can be dealt with effectively and efficiently.
However, it should be noted that the current regime of consumer benchmarks does not seem apt to provide legal certainty, despite the rigid nature of the benchmarks. As has been pointed out in the previous chapter, many uncertainties exist as to the application of the benchmarks at the European level, and the application at the national level demonstrates non-conformity with European law, as well as differences between the Member States. In addition, some degree of uncertainty is inevitable in order to provide the necessary flexibility to deal with new types of unfair commercial practices. Unfair commercial practices typically evolve quickly, making rigid legislation unsuitable to effectively deal with unfair practices.3 Rather than having rigid, but ineffective rules, a flexible test still, therefore, seems preferable. Having said that, in order to achieve sufficient legal certainty it is important for the European Commission and the CJEU to provide proper guidance on the application of the Directive, in order to make clear how the balancing of interests within the general unfairness test should take place.4
So how would this more flexible unfairness test work? What factors would be relevant, and what would be the role of the expected behaviour of the consumer? Based on the goals of the Directive, the following factors should be taken into account:
1.
Whether and how many consumers are likely to be deceived
The more people are likely to be deceived, the more reason there is to determine that a given practice is unfair. This is relevant from the point of view of achieving a high level of consumer protection and thus also from the point of view of consumer confidence ,5 but it is also relevant in the assessment of the impact of the practice on competition; the more consumers are affected, the higher the distortion of competition. As mentioned in the previous chapter, unfair commercial practices harm the competitive functioning of the market, as unfair traders remove market share from fair traders offering better products to consumers.6
2.
The degree to which consumers are deceived
The more significant the distortion of the economic behaviour of the consumers that are affected by the practice, the more reason there is to determine that a given practice is unfair. A deception may lead to a slightly different decision with very limited economic consequences for the consumer, but the deception may also lead to greater damages, e.g., if a consumer is deceptively persuaded to buy an expensive product that is in fact worthless to him. Like the previous factor, this factor is relevant for achieving a high level of consumer protection and improving consumer confidence, as well as the impact on competition.
3.
How many consumers benefit from the practice
The more consumers benefit from the practice (e.g., because they derive useful information from an advertisement), the less reason there is to determine that a given practice is unfair. This is not important within the context of consumer protection (if understood broadly, in the sense that the better the position of the consumer vis-à-vis the seller, the higher the level of protection), but it is certainly relevant for the competitiveness of the market, from which consumers also benefit.
4.
The degree to which consumers benefit from the practice
Similar to the degree to which consumers are deceived, it is relevant to what extent (other) consumers benefit from the practice. To what extent would consumers be deprived if the practice would be prohibited? This is in particular relevant for the objective to improve competition.
5.
The possibility and cost for the trader to prevent consumers from being deceived
This factor takes into account whether and at what cost the trader could have prevented consumers from being deceived. The easier and cheaper it is (or could have been) for the trader to prevent consumers from being deceived, the more reason there is to assess the practice as unfair. In many cases it is more efficient for a trader to change his commercial practice than for all consumers concerned to change their behaviour (e.g., by carefully reading the small-print or by gathering additional information).7 At the same time, it is important from the point of view of the competitive functioning of the market that the costs of providing information to consumers is low, so that traders have the possibility to effectively inform consumers, leading to better competition.8
6.
The possibility and cost for consumers to prevent being deceived
To assess the impact on the market it is also relevant whether consumers could have prevented being deceived, and how difficult and costly this would have been. In this context it seems relevant whether consumers have actual difficulty in making a decision (e.g., because of biases) or whether they simply do not invest time into making a purchasing decision, despite the fact that the decision concerns a high value good. Relevant in this context is thus also the likelihood and ability for consumers to learn from their mistakes. In this way also the responsibility of the consumer is emphasised and the issue of moral hazard can be dealt with (i.e., the effect that people take risks if they are not confronted with the consequences of such risks, in this case consumers not taking care of their own interests because they are protected).
7.
The likelihood and ease of the market to take care of the practice itself
Certain practices are better dealt with by the corrective forces of the market than others. If the market is likely to easily take care of deceptive practices itself, there is less need for intervention in the market.9 The distortion of competition is more significant if the market itself does not deal with the unfair practice. The same applies to the degree to which consumers are affected. Here it can be taken into account that the market is more likely to correct deception related to repeat purchase products, and that it is, for example, less likely to effectively deal with scam operators.10
8.
The degree to which vulnerable consumers are affected
If the protection of certain vulnerable groups (such as children) is one of the objectives of the Directive, this should also be taken into account. This may, for example, lead to the conclusion that despite the fact that many consumers benefit from a practice and the costs for the trader to make the practice less deceptive are relatively high, the practice is still assessed as being unfair due to its impact on a vulnerable group. This thus gives a possibility to take into account a more socially oriented consumer protection when deemed necessary.
Depending upon the goals of the Directive (and how these goals are interpreted), other factors could also be taken into account. For example, the creation of the internal market could be taken into account, as this necessarily requires learning (and thus initially, to some extent, misunderstanding) on the side of the consumer in order to become acquainted with ‘foreign’ products.11
In determining the unfairness of a practice all listed factors would appear to be relevant, but none of these factors should function as requirements in the sense that, for example, the costs of preventing deception (see number 5 above) should necessarily be low, or that the degree of deception (see number 2 above) should necessarily be high.
Balancing the various relevant factors at hand enables courts and enforcement authorities to challenge, for example, practices that are designed to mislead consumers (and that benefit very few consumers), while also allowing room for taking into account the beneficial effects of commercial practices. Hence, this test enables courts to allow a name such as ‘Danish pastry’ as it can benefit many consumers despite that some may misinterpret it, while at the same time provides room to challenge practices, such as those in the English Purely Creative case, that are clearly designed to deceive, despite the fact that they are only likely to affect a minority of consumers.12