Better Regulation in EU Contract Law

The Fitness Check and the New Deal for Consumers

Esther van Schagen, Stephen Weatherill, Esther van Schagen, Stephen Weatherill

• Publisher: Hart Publishing
• Year: 2019
• ISBN:
  9781509928361
• Edition: 1
• Topic: Diritto
• Subtopic: Diritto comparato

This book is the first to provide a critical investigation of EU better regulation from the perspective of EU contract law. The Commission's 'New Deal for EU Consumers' is one of the first EU contract law initiatives to implement both the newly revised Better Regulation Guidelines and the newly introduced combined evaluation of multiple Directives in the form of a 'fitness check'. This offers an opportunity to explore difficulties and best practices at a national level, as demonstrated by experience with the EU's Unfair Terms Directive. Both the fitness check and the impact assessment accompanying the New Deal should facilitate critical reflection on the design of EU contract law. This book addresses key questions. Do impact assessments favour business interests at the expense of a high level of consumer protection? Is the evaluation of EU contract law and the analysis in impact assessments in line with scientific standards? Has the fitness check revealed difficulties and success stories with EU measures at national level, and thereby facilitated an in-depth scrutiny of the design of EU contract law? Ultimately, is the potential of better regulation being realised?

1

Impact Assessments in EU Contract Law

ESTHER VAN SCHAGEN AND STEPHEN WEATHERILL^*

I.Introduction

This book is the result of two Expert Round Tables dedicated to investigation of impact assessments in European contract law which were held in Oxford in 2017. Impact assessments form an essential part of the European’s Commission’s Better Regulation Agenda.¹ Better regulation has been a central preoccupation of the Commission of late: it has revised the Impact Assessment Guidelines,² reformed the Impact Assessment Board,³ negotiated a new Interinstitutional Agreement on Better Lawmaking,⁴ and established the REFIT platform. Thus, the Better Regulation Agenda has continued to function as a major initiative to improve the EU’s impact as a regulator. Within this agenda, the European Commission has attached special importance to ex ante impact assessments. With the newly revised Better Regulation Guidelines,⁵ the European Commission has created standards for consultations and ex post evaluations, while also extending the use of combined ex-post evaluations of multiple measures in the form of ‘fitness checks’. Evaluations and fitness checks provide an ‘evidence-based’ judgment of the effectiveness, efficiency, relevance, and coherence of EU measures, as well as their EU added value. The combination of multiple measures should render fitness checks especially suited to ‘identify excessive regulatory burdens, overlaps, gaps, and inconsistencies’ in EU consumer law.⁶ These ambitions echo the criticisms of European contract law presented in previous Green and White Papers and Communications released by the Commission since it first insisted on the need to review and reform the state of EU contract law in 2001,⁷ but typically, and in a manner which is different from usual national private law initiatives, the evidence supporting fitness checks is procured from Eurobarometer surveys, commissioned research in the form of expert advice, reports, and interviews, as well as consultations. In turn, this evidence should strengthen impact assessments, as drafters of these frequently have little insight in national practices.

II.The Fitness Check of EU Consumer Law

The significance of fitness checks and better regulation for EU contract law was demonstrated when the Commission announced that central EU contract law measures, including the Unfair Terms Directive⁸ and the Consumer Sales Directive,⁹ would be subjected to a fitness check, alongside the Consumer Rights Directive.¹⁰

The findings from the fitness check were published in May 2017.¹¹ The fitness check convincingly highlighted persistent problems of non-compliance with rights conferred upon consumers, as well as overlaps between the transparency obligations in the Consumer Rights Directive and the Unfair Commercial Practices Directive,¹² abuse of the right of withdrawal under the Consumer Rights Directive, and gaps in the Injunctions Directive.¹³ Overall, however, the fitness check concluded that the measures were generally fit for purpose. In October 2017, inception impact assessments were published for the revision of the Unfair Commercial Practices Directive and the Consumer Rights Directive, as well as the separate revision of the Injunctions Directive and the Misleading and Comparative Advertising Directive.¹⁴ In April 2018, the Commission launched the ‘New Deal for EU Consumers’.¹⁵ The New Deal is clearly and firmly presented in the context of the further development of the internal market, where the Commission has already adopted various initiatives which have been converted into legislative form: the Geoblocking Regulation,¹⁶ the revised Roaming Regulation,¹⁷ the digital single gateway,¹⁸ and the portability of online content.¹⁹ In the area of contract law, the Commission has adopted draft Directives on contracts for the supply of digital content²⁰ and contracts and online consumer sales,²¹ as well as the online platforms. The New Deal accordingly targets the modernisation of EU contract law, but it mainly underlines the need for ‘better enforcement’, in line with the findings of the fitness check. The impact assessment accompanying the draft Directives under the New Deal announces that all recommendations in the fitness checks have been adopted.²² This approach has resulted in the adoption of the draft Better Enforcement Directive²³ and the draft European Representative Action Directive.²⁴ The latter proposal aims to achieve a drastic revision of the Injunctions Directive, by giving designated organisations the possibility to bring collective claims, including claims for damages, injunctions, and other claims, in cross-border cases.

As such, even if there is room to describe the sweep of the proposed reforms as ‘not very exciting’,²⁵ the focus on better enforcement deserves to be and should be welcomed. The question arises whether this focus is also the result of the fitness check, as well as the public and targeted consultations surrounding the fitness check and the subsequent impact assessment and consultations for the proposals under the New Deal.²⁶ Potentially, fitness checks and impact assessments can provide EU decision makers with insight into problems with the implementation of directives at the national level. In the European multilevel legal order, instruments that strengthen legislative discourse and facilitate interaction between EU and national non-state actors are to be welcomed.²⁷ They should prevent the risk that actors undermine one another’s initiatives – for example, the extent to which national legislators can safeguard the predictability of the law on standard terms diminishes if the EU legislator adopts measures that are subsequently interpreted unpredictably by the Court of Justice for the European Union (CJEU). Conversely, as the quality of discourse among actors involved in developing EU contract law improves, opportunities for learning should arise. For example, best practices with self-regulation in one legal order may provide a source of inspiration for EU actors or market participants in other legal orders interested in encouraging or developing self-regulation. Fitness checks should help to uncover these experiences, and draw attention to overlaps, gaps, and, hopefully, problems that market participants face when they seek to enter into cross-border trade. Similarly, impact assessments could prompt EU regulators to reconsider their regulatory approach towards EU consumer law.²⁸ Thus, fitness checks and impact assessments have, albeit cautiously, been welcomed in EU consumer law.²⁹

On closer inspection, impact assessments have been criticised for their analysis of the need for full harmonisation,³⁰ regulatory burdens for consumers,³¹ and their reasoning towards a solution.³² Criticism is also visible in the few contributions on the fitness check. The position paper on the fitness check of EU consumer law criticised the quality of research supporting the fitness check, both for its methodology and its conclusions.³³ Similarly, the few contributions that have discussed the fitness check are critical. Loos³⁴ questions why the fitness check does not follow the recommendations in Civil Consulting’s main report on the fitness check and Micklitz³⁵ underlines the time pressure imposed on researchers involved in the fitness check, which is hardly conducive to ‘excellence’. Twigg-Flesner³⁶ signals an apparent unwillingness to learn from previous experiences, when the Commission sought to develop a fully harmonised horizontal measure for EU contract law.

It is worrisome if major instruments to improve EU law, and EU legislative discourse, are found to have recurring flaws. Some of these ‘flaws’ may well be inherent in fitness checks and impact assessments. Notably, fitness checks and impact assessment are not designed to provide an absolute answer to the question of whether divergences form an impediment to cross-border trade, nor should they exhaustively analyse all possible options for the further development of EU consumer law and policy. Impact assessments are specifically not intended to replace political debate – but they should strengthen it. This means, for example, that the Commission may choose to adopt a policy option that is, according to an impact assessment, the most optimal solution. Equally, the European Parliament and Council should conduct impact assessments for ‘substantial’ amendments – but this should not preclude these institutions from suggesting and supporting amendments. Thus, the potential of fitness checks and impact assessments does not come from their potential to curb the Commission’s discretion to choose how to proceed pursuant to Article 114 TFEU, but from the insights they provide to actors involved in EU legislative discourse. In addition, impact assessments require drafters to justify their choices, and consider the impact of future measures. Ideally, this requirement provides further insight into the reasoning and motivations involved in the adoption of EU measures. Transparency is a leitmotif in substantive EU consumer law and policy – impact assessment seeks to bring that thematic concern for transparency also into the preparation, making and application of EU consumer law and policy.

III.The Suitability of Fitness Checks

The justification for adopting EU measures is typically founded upon classic cost-benefit analysis, outlining the beneficial economic impact of future measures.³⁷ This emphasis on classic economic assumptions, as well as empirical research, asks awkward questions of continental European regimes, where the stable development of law should be ensured by Civil Codes, and frequently relies on doctrinal and comparative legal research, while not pursuing clearly defined policy aims. What is to be expected of better regulation? Riefa confirms that the focus on the reduction of regulatory burdens is not without significance for the political discussion on European contract law. She questions what ‘better regulation’, in itself a laudable initiative, is for consumers, and concludes that the initiative has so far been beneficial in favour of businesses, for it focuses on reducing regulatory burdens for these actors, and on giving them a prominent voice through the REFIT platform. The reasoning in the impact assessment for reducing the right to withdrawal under the Consumer Rights Directive can be taken as an example of one-sided reasoning that steers towards a business-friendly outcome.

Does the preoccupation with evidence-based law development then ensure that fitness checks evaluate EU contract law on the basis of scientifically sound criteria? How much room should there be for sociological and comparative legal research, and what does comparative legal research reveal about the interpretation of the Unfair Terms Directive? What standards are required for developing scientifically and politically sound behaviourally informed initiatives?

Micklitz and Villanueva critically analyse the fitness check for consumer law, based on external research, and the evaluation of the Audiovisual Media Services Directive, based on in-house research. They highlight striking similarities between the two evaluations, especially the construction of the policy agenda and methodology, steering towards conclusions in line with the policy agenda whilst leaving no room for a ‘rethink’ of EU regulation. More generally, Micklitz and Villanueva conclude that the use of evaluations in this limited manner is inherent to EU regulation.

Alternatively, if the added value of a fitness check should primarily be found in fostering coherence, and identifying inconsistencies and gaps, how is this safeguarded in the Better Regulation Guidelines? The Guidelines do not stipulate how these measures should be selected – not even how the selection of measures should be motivated. Possibly, the selection of measures could be motivated by their common legal basis – with the exception of the Price Indication Directive, which was based on Article 169 TFEU, it is what is today Article 114 TFEU that provides the common foundation stone of the legislative acquis. Alternatively, their common aim – protecting consumers to foster their confidence in the internal market – could form a reason, although one might still wonder why other measures that pursue similar aims did not also form part of the fitness check. Possibly, one’s view of which measures form or should form a coherent whole may depend on one’s perspective. In the EU, and contrary to national perspectives that typically emphasise the importance of the coherence of national private law, the functional market-making approach often followed by the European Commission is capable of leading to a different view of coherence.³⁸ It is plain that the fitness check has resulted in a diverse set of separate initiatives and revisions, and overall coherence is not visible. Remarkably, a key part of inconsistencies to be addressed concerned inconsistencies between the Unfair Commercial Practices Directive and the Consumer Rights Directive, which was evaluated separately. A major part of better enforcement should emanate from the revised Consumer Protection Cooperation Regulation, which was revised before the New Deal was launched. Despite the fitness check’s strong emphasis on better enforcement, any future measure on the civil procedural protection of consumers is likely to take place separately. In addition, better enforcement may also...