The EU New Deal for Consumers is coming. Some call it a game changer. Others call it old wine in new bottles. Fact of the matter is that Brussels is preparing some considerable developments in consumer protection rules across the EU.
The New Deal is divided in two parts:
- Making group actions for consumers ('collective redress') available in all EU member states, and
- Strengthening consumer protection rules, inter alia through harmonisation of fine levels, a ban on dual quality and strengthened online transparency
Consumer rights have always been at the core of the European Union, but in this case reference is often made to the weak position of consumers and consumer authorities in 'Dieselgate'.
In 2017, a fitness check was conducted to see whether instruments included in various EU directives were still fit for purpose. Subsequently, in 2018, the European Commission launched this New (Package) Deal for Consumers, which is said to be a reaction to modernisation, digitalisation and recent widespread cross-border infringements of EU consumer law.
If agreed upon, the collective redress part will make it possible that (non-profit) organisations can start collective actions on behalf of consumers against companies to seek redress. Various safeguards should distinguish these European representative actions from US-style class actions.
The consumer protection rules part changes four directives. It introduces amongst others:
- Maximum fine levels for consumer law infringements of at least 4% of the turnover of the company's yearly turnover in the relevant EU Member State(s) or € 2.000.000 in case of lacking turnover information. Individual Member States may choose to apply a higher cap.
- Right for consumers to bring individual remedies in case of harm through unfair commercial practices, e.g. termination of contract or compensation for damages.
- More transparency for consumers in online marketplaces, e.g. disclosure of ranking parameters relating to search query results and use of personalised pricing.
- Possible prohibition of dual quality of consumer goods, i.e. product marketing under same brand but differing in composition.
The proposal follows the EU ordinary legislative procedure. This means that the European Parliament and the EU Council of Ministers (the Council) have to agree and formally adopt. A provisional agreement on the consumer protection rules part was reached on 21 March 2019. Three weeks later, on 17 April 2019, the European Parliament formally adopted the draft text. Now, it is up for the Council to do the same.
For the consumer protection rules part, there is only one formal hurdle left: the Council has to approve the draft text. Afterwards, EU member states will have 2 years to transpose the changes into national law. Consumer product companies should in the meantime prepare themselves for the changes that lie ahead.
For the consumer protection rules part, there is only one formal hurdle left: the Council has to approve the draft text. This is likely to happen in autumn 2019. Afterwards, EU member states will have 2 years to transpose the changes into national law. Consumer product companies should in the meantime prepare themselves for the changes that lie ahead.
European Parliament and Council still have to agree on the collective redress part though. Although a new European Parliament has been chosen on 25 May 2019, the first plenary / voting session has not yet been held. Stay tuned!