The Images of the Consumer in EU Law

Legislation, Free Movement and Competition Law

Dorota Leczykiewicz, Stephen Weatherill, Dorota Leczykiewicz, Stephen Weatherill

• Publisher: Hart Publishing
• Year: 2016
• ISBN:
  9781509900367
• Edition: 1
• Topic: Law
• Subtopic: Consumer Law
• Index: Law

This book consists of contributions exploring from different perspectives the 'images' of the consumer in EU law. The images of the consumer form the foundation for various EU policies, more or less directly oriented towards the goal of consumer protection. The purpose of the volume is to establish what visions of the consumer there are in different contexts of EU law, whether they are consistent, and whether EU law's engagement with consumer-related considerations is sincere or merely instrumental to the achievement of other goals. The chapters discuss how consumers should be protected in EU contract, competition, free movement and trade mark law. They reflect on the limits of the consumer empowerment rationale as the basis for EU consumer policy. The chapters look also at the variety of concerns consumers might have, including the cost of goods and services, access to credit, ethical questions of consumption, the challenges of excessive choice and the possibility to influence the content of regulatory measures, and explore the significance of these issues for the EU's legislative and judicial process.

1

The Images of the Consumer in EU Law

DOROTA LECZYKIEWICZ AND STEPHEN WEATHERILL

This book is about EU law and areas of law influenced by EU regulation. It is not limited to consumer law. The conceptual focus of the book is on the ‘images’ of the consumer who is understood, on the one hand, as an actual person whom EU institutions have in mind when they devise regulation and, on the other, as a projected person who will emerge as a result of the regulatory and deregulatory efforts of these same institutions. Exploring the images of the consumer in EU law in their duality enables us to understand both who is actually protected by the regulation and in what situations, and what kind of individual EU law is creating by providing regulatory incentives or disincentives. The transformative effect of EU law on consumers raises questions about the sincerity of the ambitions pursued by the EU in fields which are overtly presented as aimed at a high level of consumer protection. Could it be the case that the goals of EU law, even the goals of EU consumer law, if such can be identified, at the residual level serve goals other than consumer protection?

However, even within the areas where consumer protection is clearly and sincerely the primary objective, it is still valuable to ask about the images of the consumer constituting the basis of the adopted policies. Protecting consumers may mean different things, depending on whose needs, preferences, characteristics and relations are taken as the point of reference. What is at stake is not only the level of protection but also the contexts in which protection is offered, and much depends on choices made by institutions responsible for creating and enforcing regulation.

I.Consumers in EU Law

Consumers are a central component of the European integration project. EU consumers are those who buy goods and services domestically and from other Member States. It is for their financial resources that companies on the EU market are competing and it is their choices which trigger many other transactions. Of course, we are thinking here primarily of ultimate consumers, a category largely indistinguishable from EU citizens. In the current-day rhetoric the internal market operates for consumers. But if that is the case the law needs to take account also of other values which citizens hold dear. Otherwise EU citizens are reduced to only one aspect of their lives—consumption.

Yet this is where EU law faces a problem, because it is not like national law. It cannot aspire to the systematic coverage achievable by national law. The EU is confined by the principle of conferral, according to which the EU’s competences and powers are limited to those granted by its Member States pursuant to the founding Treaties. Article 5(2) TEU declares that ‘competences not conferred upon the Union in the Treaties remain with the Member States’. Because there is no general regulatory competence, there can be no general regulation of all matters important for EU citizens. The programme has to be limited and has to respect the limits of Treaty competences. Even the broad authorisation to harmonise laws, Article 114 TFEU, applies only ‘for the achievement of the objectives set out in Article 26’, that is for the creation of ‘an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties’. Article 169(1)(a) TFEU, which is aimed at promoting the interests of consumers and ensuring a high level of consumer protection, refers to Article 114 TFEU as the provision on which EU regulatory action is actually based. Article 169(2)(b) TFEU envisages only EU ‘measures which support, supplement and monitor the policy pursued by the Member States’. This is very limited. The negative competence of the EU—free movement and competition law, most conspicuously—is allegedly broader in the sense that it also encompasses acts not covered by the EU’s legislative competence (exercised or not yet exercised). But the negative competence is even more directly focussed on internal market objectives than EU legislative initiatives.

One should, however, be careful. Focussing on the internal market does not mean that consumer interests are neglected. There are obvious ways in which the internal market helps consumers—broadens their choice, makes products and services available at more competitive prices, or enables technical innovation, which brings consumers new products. Yet it also exposes consumers to potentially unfamiliar dangers stemming not only from unknown features of products and services but also from the foreign legal environment under which the transactions are often concluded. This is not to say that the internal market is inherently more dangerous than the domestic market. Equally, national law due to its unlimited competence is not by definition more successful in ensuring consumer protection. The law of consumer protection at the national level is also typically fragmented and sometimes idiosyncratic, an amalgamation of material stretching across public and private law that is relevant to the consumer but not created with the consumer specifically in mind. It also tends to be tied to more recent material which has a particular perception of the consumer as a category that requires a degree of protection, with a wider concern to achieve substantive equality or otherwise to compensate for the failings or the inequities of loosened markets. So EU consumer law is relatively less systematic than national consumer law but national consumer law, too, is not typically steered by a single image of the consumer.

The EU’s connection to the consumer is arguably stronger precisely because of its limited character and the central importance of the project of completing the internal market. So while EU competences are not limited by reference to consumer interest—that is to say, the EU is not generally empowered to act for consumers—consumer interest, in particular the desire to achieve a high level of consumer protection, is what drives regulation. Article 38 of the Charter of Fundamental Rights now directs that ‘Union policies shall ensure a high level of consumer protection’ but this lacks precision and in any event the Charter applies only within the scope of EU competence. The same applies to Article 12 TFEU, which states that ‘[c]onsumer protection requirements shall be taken into account in defining and implementing other Union policies and activities’.

A.Free Movement Law and Competition Law

So why do many believe that the relationship between EU law and consumers is weak, that consumer protection is subsidiary to the internal market project? Part of it is presentational and part of it is substantive. The perception that the EU is not directly engaged with consumers arises because the relevant provisions governing the internal market make no immediate connection to the consumer. This is definitely true of free movement law and competition law.

Free movement law serves to eliminate national measures that partition product and service markets. Removal of barriers to cross-border trade performs the centrally important role of stimulating competition—that is ultimately a matter of consumer policy even if the Treaty avoids spelling it out in those precise terms. Free movement law is supposed to open up space for contractual autonomy, it is supposed to promote consumer choice. It is accordingly broadly interpreted. Moreover, assumptions about the capacity of consumers to absorb information (for example, from labels on packaging) have frequently served to lead to condemnation of more rigid composition rules as unjustified barriers to trade in differently constituted products. There is here an assumption about the capacity of the consumer to process and respond to such disclosed information. Cassis de Dijon, decided by the Court of Justice (now the Court of Justice of the European Union—‘CJEU’) in 1979, is the shining beacon of EU law’s image of the consumer even two generations later.¹ It shows how Article 34 TFEU, the Treaty provision governing the free movement of goods, controls local regulatory autonomy in setting technical standards insofar as such rulemaking may cause impediments to the development of an internal market stretching across the territory of the EU. There is a vigorous deregulatory impetus in this case law. It is thematically propelled by a preference for the private autonomy of traders and, only in consequence, of consumers in the market over public regulation.

Competition law, as an element in the Treaty system designed to achieve and maintain undistorted competition in the internal market, is supposed to serve the consumer interest, although here too the Treaty does not spell out a precise image of the consumer and there is certainly room for different understandings of how and why the interest of the consumer should inform the shaping of competition law and policy. ‘Consumer welfare’ is used frequently as a lodestone but without precisely agreed definitions. In particular—and this is where EU law has a flavour that is conspicuously distinct from US law—the concern for integration may promote a higher level of scepticism of deals that impede cross-border trade even in the absence of demonstrated damage to inter-brand competition—in fact even where inter-brand competition would be enhanced.

In both instances, free movement and competition law, some assessment of the limits of this project are needed. Free movement law does not always disable national competence to act to protect the consumer. It is open to Member States to show an interest of sufficient importance to override the principle of free movement and since one recognised justification for obstructive national rules is the protection of the consumer. There has arisen a heap of cases in which the consumer interest in integration, expressed through condemnation of national laws as unlawful restrictions to inter-State trade, confronts the consumer interest in protection, which in turn finds expression in the readiness to treat national regulations as justified. Courts must decide which interest—which image of the consumer—prevails and why. This is a context-specific inquiry, dependent on the quality of the justifications advanced, but the linking theme is clear: it asks what image of the consumer should drive the internal market. The more one trusts the consumer to enjoy the advantages of choice in an integrated market, the more sceptical one is of national intervention in the market. Conversely an attachment to the virtue of national rules as protective of vulnerable consumers tends to lead to an approach that restrains integration through law, by finding national measures to be justified. And some national measures subjected to scrutiny are nuanced while others are not. In Buet v Ministère Public,² a ruling that is a candidate as the first and transformative identification of the ‘vulnerable’ consumer as an image recognised by EU law, the Court approved of French rules designed to protect less educated consumers and wishing to improve it by including explicit reference to the harm shown to have been inflicted on such consumers in the unregulated market.

By contrast, the Court has sometimes been ruthlessly dismissive of detail and context. In Mars³ it famously adopted the irritated manner of a sunbather brushing away a buzzing fly as it rejected the claim that German intervention to protect consumers could be justified because of the risk of misunderstanding that a ‘+10%’ marking on chocolate bars did not promise a still greater increase in the size of the product because the flash containing the (accurate) ‘+10%’ marking covered more than 10% of the total surface of the wrapping. The Court simply observed that ‘[r]easonably circumspect consumers may be deemed to know that there is not necessarily a link between the size of publicity markings relating to an increase in a product’s quantity and the size of that increase’.⁴

Competition law protects the consumer from restrictive practices and abusive conduct by dominant firms, and here too there is a delicate balance to be struck. Too much intervention may harm business flexibility and innovation to the detriment of the consumer; too little intervention may open up the prospect of a market that operates in an anti-competitive manner to the disadvantage of consumers. Article 101(3) TFEU is one of the very few references to the consumer that was present in the original Treaty of Rome, and it locates the consumer as a threshold in that a condition of exemption holds that the consumer shall take a ‘fair share’ of the resulting benefit of the collaboration between undertakings. The Commission Guidelines on the application of Article 101(3) offer a fuller explanation,⁵ locating an image of the consumer in a broad context apt to accommodate all direct and indirect users of a product. But failure to meet the benchmark is fatal to the enforceability of the agreement. So too Article 102 takes an image of the consumer as a central element in deciding first, whether an undertaking holds a dominant position (where market analysis including the pattern of consumer preference is required), and second, whether it has abused it.

A particular manifestation of the importance of competition law arises where services previously supplied by public authorities are transferred into private hands or where regulation of the sector is loosened. The image of the consumer changes: the consumer is expected to use the market to their advantage. The idea is greater market competition in favour of the consumer: the risk is that the harm to the consumer which had previously prompted the intervention of the state in the first place will re-emerge with gusto and that orthodox competition law will lack the nuance required to address the failures and inequities that taint such markets. The consumer of a service provided under a natural monopoly is not the same as the consumer in a highly competitive and transparent market. The higher the velocity with which this trend moves, the heavier the demands placed on the consumer—from transport, energy, telecommunications, even to health care and education. EU law touches the sensitivities of the matter through recognition of the special case of services of general economic interest, addressed through ad hoc litigation prompting Commission amplification and the arrival of sector-specific and increasingly dense legislative initiatives.

B.Legislative Harmonisation

Where the choice falls in favour of protecting the consumer through national initiatives—that is, where national measures are justified—attention shifts from free movement to harmonisation. The shift is institutionally fundamental: away from courts to the legislative process. But the focus is not changed. Once again this is a project driven in the name of the internal market. Legislative harmonisation, on its most simple model, treats the justification of diverse national laws as an impediment to inter-State trade which is apt to cause fragmentation of the EU’s internal market. The antidote is to replace national diversity with regulatory homogeneity at the EU level. The EU reduces multiple sources of (national) rules to a single source, which is the EU’s chosen harmonised rule. This serves to promote the integration of markets. It is a different route to the internal market. Free movement law operates according to a radically decentralised model, for where national measures cannot be sustained for want of justification it simply causes them to be set aside, opening up trade in goods and services complying with the rules of their state of origin. Competition law, too, evacuates unjustified practices from the market—there is no question of replacing them with EU norms. By contrast legislative harmonisation is a centralising model, locating regulatory responsibility at the EU level. Moreover it does so exclusively under a model of maximum harmonisation. But EU legislative intervention in the name of harmonisation, of which Article 114 is the principal source, is still driven by the imperative of market-making and the assumption holds that the advancement of market integration consequent on the levelling of the playing field that is characteristic of harmonisation will itself serve the consumer interest by widening choice and accelerating market competition. But because harmonisation, in contrast to free movement law, is not apt to create a regulatory vacuum in the terrain in which it operates, it is more than an exercise in driving choice and competition in the market. Where what is being harmonised is national consumer law that obstructs trade, what emerges from the legislative process is EU consumer law. Harmonisation is about both integrating the market and about regulating it, in this instance in the name of consumer protection. So, in the development of legislative harmonisation, the EU is forced to develop its own understanding(s)—image(s)—of the consumer and of their need for protection.

Therefore the EU arrives at regulation of the internal market principally through harmonisation pursuant to Article 114 TFEU. At one level this suggests a market bias, and it is plainly true that Article 114 may be released as a basis for (harmonised) consumer law only providing that necessary connection to the market-making project is demonstrated. However, Article 114 is very broad in the sense that only a low threshold needs to be crossed to allow the legislature access to it, and, threshold crossed, it is then easily connected to the legitimate pursuit of wider regulatory values including consumer protection. So EU consumer law, shaped by legislative harmonisation, is in part guided by the choices to which the EU responds which have already been made (in diverse ways) at the national level, but it is also driven by constitutional commitments found in aforementioned Articles 12 and 169 TFEU and in Article 38 of the Charter.

II.The Consumer as a Distant Beneficiary

The view that the consumer is more likely to be a distant, rather than a direct beneficiary of many EU policies is confirmed by Albertina Albors-Llorens and Alison Jones in a chapter dedicated to competition law (Chapter 3). It discusses in detail how a policy ostensibly motivated by consumer interest incorporates consumer-related considerations only in a very limited way. Albors-Llorens and Jones explain that despite the presence of consumer welfare rhetoric in EU competitio...