Common Market Law Review 37: 367–400, 2000. c 2000 Kluwer Law International. Printed in the Netherlands.

EUROPEAN CONSUMER LAW AFTER THE TREATY OF AMSTERDAM: CONSUMER POLICY IN OR BEYOND THE INTERNAL MARKET? JULES STUYCK ∗

1. Introduction The concept of consumer law is somewhat problematic. Consumer law is generally seen as an instrument to improve consumer protection. This raises the fundamental question whether the consumer’s interest is best served by protective measures. This question touches upon the very foundations of private law in particular (freedom of contract and the binding force of contractual obligations). Consumer law is also seen as an instrument of consumer policy. This raises another important question at the Community level. What is the relationship between EC consumer policy on the one hand and the completion of the internal market and competition policy on the other? Consumer policy tends to be seen as the “little sister” (kleine Schwester) of environmental policy, but why is this so?1 (And is the proposition correct in the first place?) And why should it be applauded that consumer policy finally seems to have outgrown its “Schneewittchenrolle”?2 The very question whether consumer law is a separate branch of the law has also been heavily debated. These are some of the fundamental questions which I shall address in the following, while analysing the main characteristics and achievements of EC consumer law. In section 2, I shall briefly discuss the notion of consumer and consumer law in general and the evolution of European consumer law in particular. In the first part I shall inter alia analyse the changes brought along by the latest constitutional amendment in the EC consumer field, i.e. Article 153 (ex 129a) EC, as amended by the Treaty of Amsterdam. In section 3, I shall discuss the relationship between specific consumer policy at the Community level and the internal market objective. According to the new second paragraph of Article 153 EC, consumer protection shall be taken ∗

Professor at the K.U. Leuven and advocaat in Brussels. 1. Reich, “Verbraucherpolitik und Verbraucherschutz im Vertrag von Amsterdam”, (1999) Verbraucher und Recht, 3–10, 4. 2. I.e. its role as “Snow White”, cf. ibid., at 5.

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into account in defining and implementing other Community policies and activities. I shall conclude that a vigorous internal market and competition policy are and should remain the cornerstones of EC consumer policy and that where specific measures of consumer protection are desirable in addition, voluntary agreements may be a good alternative for mandatory rules.

2. The notion of consumer law and the evolution of European consumer law 2.1. The notion of consumer law and the concept of “consumer” 2.1.1. Consumer Law Laws protecting the public against fraud concerning merchandise are at least as old as the French revolution.3 In France, comprehensive (penal) legislation in that respect exists since 1905.4 Consumer protection as a systematic policy goal however is a phenomenon which started some forty years ago. One of the first comparative books on consumer law was entitled “Verbraucherschutz” (“Consumer Protection”).5 The author referred to the general weakness of consumers vis-`a-vis producers, exemplified in the phenomenon of general contract terms which are often drafted in the sole interest of their authors, the producers. Consumer protection as a legal issue is described as the result of the rising consumer movement, in what has been called the consumption society,6 and the ensuing consumer protection programmes, first 3. See Bihl, Consommateur d´efend toi (Paris, 1975); rules on weights and measures existed even long before (see Howells and Wilhelmsson, “EC Consumer Law” in Howells (Ed.), European Business Law (Aldershot, Dartmouth, 1996), p. 274; Harvey, The Law of Consumer Protection and Fair Trading (London, Butterworths, 1982), pp. 1–3. 4. loi du 1e aoˆut 1905 sur la r´epression des fraudes, now part of the Code de la Consommation (see hereinafter). 5. Von Hippel, Verbraucherschutz, 1st ed. (JCB Mohr, T¨ubingen, 1974). 6. Popular early books on the consumer society include Galbraith, The Affluent Society, 1958 (published in Pelican pocket in 1962) (creation of artificial needs by high-pressure advertising; cf. this author in his later work The Good Society (Boston, New York, 1996), p. 15: “The sovereignty of the consumer is one of the most cherished ideas in orthodox economics; that this sovereignty has, in a substantial degree, been surrendered to those who serve it is the most resisted. Yet nothing is more apparent than modern advertising and merchandising effort. Economists committed to the more rigorous levels of accepted thought do not watch television.”); Packard, The Hidden Pursuaders, 1958 (on e.g. “subliminal” advertising); see also the structuralistic approach of Baudrillard on the philosphical/sociological bases of the consumption society in his La soci´ete de consommation (Paris, 1970) (and his semiotic study Pour une critique de l’´economie politique du signe: criticizing economic thought (including marxism) which assumes a “system of needs”, the false premise that goods have a concrete destination, a finality of their own; for Baudrillard consumption is the systematic manipulation of signs, i.e. not a “rational activity”; therefore the “rational consumer” is an illusion).

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in Great Britain, with the “Molony Report”7 and in the USA, namely with President Kennedy’s famous Message to the Congress of 15 March 1962 spelling out the fundamental consumer rights (the right to safety, the right to information, the right to choose and the right to be heard)8 and later in (the rest of) Europe, Sweden being a pioneer country in the field of consumer law.9 Consumer law prospered in the late 1970s and the 1980s.10 Many authors advocated improvement of the legal position of consumers by the adoption of specific consumer laws or even a consumer code.11 Some emphasized the importance for consumers of improving consumer information and strengthening competition. Others contended that a balance of power between producers and consumers could only be established by mandatory rules and the building of a countervailing power (collective consumer contracts, class actions and recognition of collective consumer interests). A good example of this tendency is the Belgian scholar Bourgoignie. Bourgoignie defended a ph.d. thesis12 in which he argued that consumer law is a specific branch of the law. Consumer law, according to Bourgoignie, designates the body of norms, rules, structures and tools, which are the juridical elaboration of different private or public, voluntary or mandatory initiatives, and which contribute to the improvement of the legal protection of consumers in the economic market. In Bourgoignie’s view, consumer law is not neutral: its role is to restore an equilibrium between powerful business and weak consumers. 7. Final Report of the Committee on Consumer Protection, 1962; the Molony Report was a government Committee charged in 1959 with examining whether measures to improve consumer protection were desirable and, if so, which reform proposals could be made. 8. Printed in the annex to Von Hippel’s book mentioned supra note 5 (see 3rd. ed., JCB Mohr, T¨ubingen, 1986, at p. 280). 9. With its Market Practices Act 1970; see Bernitz, Scandinavion Studies in Law, 1976, p. 21. 10. See e.g. Goyens, Bibliography of Consumer Law within the European Community (Cabay, Louvain-la-Neuve, 1983); In 1979 Reich and Micklitz completed their comparative analysis of consumer legislation in the then nine EC Member States, a report presented to the European Commission and based on national reports (all the reports are published in the series Consumer Legislation in the EC Countries (Van Nostrand, New York, 1980) and later, all volumes in English and some also in the language of the country). 11. In France a “Commission de refonte du droit de la Consommation” was set up in the early 1980s. This Committee presented its report in 1985, containing a proposal for a Consumer Code: Caulais-Auloy, Propositions pour un nouveau droit de la consommation (Paris, Documentation franc¸aise, Collection rapports officiels). The Code was a source of inspiration for several reforms, but it did not lead to a Code in the proper sense. The loi no 93949 relative au Code la Consommation of 26 July 1993 (J.O., 27 July 1993) is only a technical compilation of different laws concerning consumer protection. More or less comprehensive consumer laws were adopted in several European countries (Spain, Portugal, Luxembourg, Austria) and elsewhere (Israel) (see annexes in Von Hippel, 3rd ed., 1986). 12. At the Universit´e Catholique de Louvain: Bourgoignie, El´ements pour une th´eorie du droit de la consommation (E. Story-Scientia, Brussels, Centre de droit de la Consommation, No. 16, 1988).

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The tools to achieve this aim are of a protective nature. The market itself, or even competition policy, will not yield the equilibrium. The State has to take care of consumer interests, not only be improving market transparency (by imposing information duties on undertakings) but also, and primarily, by regulating market behaviour (through strict regulation of advertising, marketing practices and contract terms). Norbert Reich, who has written many fundamental books and articles on European consumer law and consumer policy, has stressed the diffuse character of consumer interests and hence the difficulty to cope adequately with these interests through competition policy. Competition policy aims primarily at freedom and efficiency; consumer law relates to the quality of life.13 Bourgoignie’s thesis has been criticized by Gert Straetmans in his ph.d. thesis.14 According to this author, an analysis of Belgian rules on consumer protection does not reveal a specificity allowing the recognition of a separate branch of the law called “consumer law”. Straetmans defends what he calls an integrated view on consumer protection in the market. The only right which a consumer can claim is the right to choose freely as a market player. A better level of consumer protection can be achieved by information duties. An analysis of European consumer law, especially in the field of misleading advertising, confirms that the interests of business and consumers often go together. This author further claims that legal analysis shows that the market has self-regulatory forces leading to market stability which benefits all market players. Straetmans questions the autonomy of consumer law defended by Bourgoignie and advocates a market-oriented approach in contrast to what he qualifies as a paternalistic approach.15 Bourgoignie’s approach could be qualified as “French”. French consumer law is indeed strongly imbued with the idea that the general interest is best taken care of by the State.16 Hondius, the leading expert on consumer law in the Netherlands, has shown that it is a typical French approach to take consumer law as a separate branch of the law. The German attitude has been to incorporate consumer law in civil law. Hondius argues that consumer law may best be regarded as part of private law, viz. part of public law. He recognizes that consumer law has its own characteristics, but these characteristics do not 13. Reich, Europ¨aisches Verbraucherschutzrecht, 3rd ed. (Nomos, Baden-baden, 1996). 14. Defended at the Katholieke Universiteit Leuven in 1998: Straetmans, Consument en markt: onderzoek naar de rechtspositie van de consument op de Europese interne markt (Kluwer, Studiecentrum voor Consumentenrecht, Deurne, 1998). 15. On paternalism, see Trebilcock, The Limits of Freedom of Contract (Harvard University Press, Cambridge, Massachusetts, 1993), chapt. 7, p. 147 et seq. 16. It was only in 1986 that France adopted a competition act in the proper sense and relaxed the existing strict regulation of prices (ordonance no 86-1243 of 1 Dec. 1986); on the relationship between competition law and consumer law in a French perspective, see Serra and Calais-Auloy (Eds.), Concurrence et consommation (Paris, Dalloz, 1994).

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warrant a separation.17 In the United Kingdom scholarly interest in consumer law was activated by the accession of this country to the EC. Before that time, the discussion there was rather political (see e.g. the Molony Report) or practice oriented (or both).18 German literature on consumer law, or on consumer protection (law) as it is still usually called, is particularly abundant. A recent survey of the dogmatics of private consumer law and the different schools of thought on the relationship between consumer and the law can be found in Josef Drexl’s 1996 M¨unich thesis.19 Drexl defends a theory of consumer protection through the law which is strongly influenced by the “ordoliberal” model of the social market economy (“Soziale Marktwirtschaft”)20 and German constitutional law. Drexl criticizes Chicago School economics, which are exclusively efficiency oriented, as well as the theories which are based on the assumption that the consumer is unable to freely choose on a market where needs are (artificially) created by producers.21 Drexl shows convincingly that the idea of consumer protection is compatible with a free and social market. His point of departure is a judgment by the German Constitutional Court on an issue which gave rise to the Dietzinger judgment of the ECJ.22 Mr Dietzinger’s father ran a building firm in respect of which the plaintiff bank granted a current account overdraft facility. Mr Dietzinger’s father and mother were visited by an employee of the bank. During that visit Mr Dietzinger, who was obviously not acting in the course of a trade or profession, gave a written guarantee of up to DM 100 000 of his parents’ obligations to the bank. The bank subsequently called in loans granted to Mr Dietzinger’s parents and claimed DM 50 000 from Mr Dietzinger under the 17. Hondius, “Consumer law and private law: Where the twins shall meet”, in Law and Diffuse Interests in the European Legal Order, Liber Amicorum Norbert Reich (Nomos, BadenBaden, 1997), p. 311 et seq. 18. Borrie and Diamand, The Consumer Society and the Law (Penguin, Harmondsworth, 1981); for a short and interesting discussion of the historical, economic and philosophical background of consumer protection, with an emphasis on the Anglo-American world, see Harvey op. cit. supra note 3, at p. 1–27. 19. Habilitationschrift, published with the title Die wirtschaftliche Selbstbestimmung des Verbrauchers (T¨ubingen, J.C.B. Mohr, 1998). 20. See in particular Eucken, “Das ordnungspolitische Problem” ORDO 1 (1948). 21. For a critique on the theory of “artificial” product differentiation (“same” good, different get-up) and doubts on the feasibility and desirability of regulating this phenomenon, see Stuyck, Product Differentiation (Kluwer Law and Taxation, Antwerp etc., 1983): product differentiation can only be “artificial” if the product is solely seen from the angle of its “utility value”, but goods are not necessarily purchased for their intrinsic “utlity”, e.g. when they are bought as presents; the author is indebted to Baudrillard, Pour une critique de l’´economie politique du signe, supra note 6); for an economic analysis of consumer law, see Van den Bergh, “Economische analyse van het consumentenrecht”, (1990) Ars Aequi, 787 et seq. 22. Case C-45/96, Bayerische Hypotheken- und Wechselbank AG v. Edgar Dietzinger, [1998] ECR I-1201.

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guarantee. Mr Dietzinger sought to renounce the guarantee in accordance with the German Haust¨urwiderrufsgesetz (HwiG), implementing Directive 85/577 to protect consumers in respect of contracts negotiated away from business premises. Under the Directive and the German HwiG, in case of a contract under which a trader supplies goods or services to consumers and which is concluded during a visit of the trader to the consumer’s home, the trader is required to give the consumer written notice of his right of cancellation of the contract within a specified period (cooling off period). During national proceedings, the question arose whether Mr Dietzinger was a “consumer” within the meaning of Article 2, first indent of the directive (“a natural person who, in transactions covered by this Directive, is acting for purposes which can be regarded as outside his trade or profession”). The Bundesgerichtshof referred the question on the interpretation of the Directive to the ECJ, which ruled that a contract of guarantee concluded by a natural person who is not acting in the course of his trade or profession does not come within the scope of the Directive where it guarantees repayment of a debt contracted by another person who, for his part, is acting within the course of his trade or profession.23 According to the Court, the Directive covers only a guarantee ancillary to a contract whereby, in the context of “doorstep selling”, a consumer assumes obligations towards the trader with a view to obtaining goods or services from him and where the guarantor has entered into a commitment for a purpose, which can be regarded as unconnected with his trade or profession.24 Similar cases to Dietzinger, where children, parents or other relatives of the debtor gave guarantees, had already led to a famous judgment of the Bundesverfassungsgericht,25 based on the German Constitution (GG)26 and to a number of judgments of the Bundesgerichtshof, based on the Civil Code (BGB) and the Law on Unfair Contracts Terms (ABGB). The most important constitutional fundamental right for consumers is the right of economic self-determination which can be deduced from Article 2(1) GG, guaranteeing the fundamental freedom for a person to develop his own personality (“Freie Entfaltung der Pers¨onlichkeit”) or private autonomy (“Privatautonomie”). Having in mind the restrictive approach of the ECJ 23. In the view of A.G. Jacobs the protection of the Directive does not extend to the protection of a guarantor even if the guarantee was given (away from business premises) for a consumer debt. 24. Recital 22. 25. Judgment of 19 Oct. 1993, BverfGE 89, 214, 231. 26. The fundamental rights and freedoms of the German Basic Law (GG) do not as such impose obligations on private individuals. Nevertheless, the legislature when enacting private law, and the courts when applying private law, have to balance in an appropriate way (in the sense of “practical concordance”) the fundamental rights of individuals. Fundamental rights therefore have indirect horizontal effect (“mittelbare Drittwirkung”) (Drexl, p. 330–231 and 236).

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regarding the concept of consumer in the doorstep selling Directive, it is interesting to note that, in its personal guarantee judgment, the Bundesverfassungsgericht considered that it was not decisive whether the guarantee had been given to secure a claim in respect of a professional or a private credit. Since family guarantees are normally given for private reasons, a consumer protection approach is appropriate.27 More fundamentally, the Bundesverfassungsgericht ruled that the constitutional right of private autonomy, laid down in Article 2(1) of the GG, has to be understood not in a purely formal way but in a substantive way: contract law has to guarantee the self-determination of the individual in his contractual relations. In a situation where the personal freedom of different parties collides, there is no right of the strongest. In Drexl’s view the Bundesverfassungsgericht has not limited personal freedom, but protects it in cases of equal ranking claims. Therefore it is only exceptionally that the substantiation of private autonomy leads to intervention in contractual relations. As a matter of principle, formal freedom (of contract) suffices to secure substantive freedom. Drexl defends a situation-bound theory of consumer protection. The point of departure is not a presumed social inferiority of the consumer in general, but the identification of specific situations where the consumer’s selfdetermination is affected (e.g. where the consumer is misled or taken by surprise). Drexl distinguishes two parts in consumer law: a constitutive part and a compensatory part. Private autonomy and competition are the basic principles of the constitutive part of consumer law; they are the foundations of the consumer’s self-determination. Competition law is an element of this part of consumer law. In the compensatory part of consumer law, which finds its justification in the failure of the basic principles of freedom and competition to guarantee the consumer’s self-determination and where therefore specific protective measures can be contemplated (e.g. the protection against unfair contract terms), the principle of proportionality is of capital importance. Consumer measures should not be more restrictive of personal freedom than is necessary to achieve the required level of consumer protection, e.g. the legislature shall not impose a control on the content of contracts where information duties suffice. Drexl distinguishes three stages in compensatory consumer law. Compensatory measures, i.e. specific measures of consumer protection, should only be contemplated where private autonomy and competition in themselves fail and social ordination through law, e.g. rules on restrictive practices or general principles of proper marketing practices (i.e. constitutive measures) do not suffice. At the first stage of compensatory consumer law, information duties should be considered, both positive and negative information duties. A pos27. See Drexl, p. 275–276.

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itive information duty is e.g. paragraph 2 AGBG (law on standard contract terms), pursuant to which standard contract terms are only binding on the consumer where the other party has expressly drawn the consumer’s attention to these standard contract terms and given him a reasonable opportunity to be aware of the content of those terms, and on condition that the consumer has agreed with their application. An example of a negative information duty is the prohibition of misleading advertising (and its sanction: the consumer’s right to cancel the contract where he has been induced to buy by an advertisement which was untrue and misleading). Only where information duties are inappropriate can a time for reflection or a cooling-off period be envisaged. Where a consumer has concluded a contract on the doorstep he will generally need some time to think it over once the seller has left. Taken by surprise, he is not in a position to take a free decision. However, the fact that the contract is canvassed is insufficient in itself to justify legal control of the content of the contract. In contrast, in a complex field like consumer credit a time for reflection may in itself be insufficient, as it cannot deter the consumer from entering into unbearable obligations. According to the principle of proportionality, content control is only eligible as a measure of consumer protection where the failure of the principle of freedom and self-determination cannot be compensated by less far-reaching compensatory measures, such as information duties and cooling-off periods. This presupposes the identification of a specific situation, e.g. lack of experience (e.g. where a private individual without any business experience is induced to give a guarantee for a relative) or a situation where an obligation is entered into out of a moral obligation (same example). This also means that the existence of standard contract terms does not necessarily justify content control, in addition to the control on whether the standard contract term is part of the contract.28 Drexl also analyses the recent personal guarantee judgments of the BGH. This is not the place to go into a discussion of this case law. It is however interesting to note that Drexl qualifies the situation were a private individual is induced to sign an unbearable guarantee for a close member of his family as a situation characterized by a lack of consumer self-determination and by the absence of a free decision, putting into question the validity of the contract. Drexl’s theory also transcends the traditional approach of the “rational consumer”. The consumer does not make choices on the basis of purely economic considerations, and his freedom to choose should be fully recognized. His right of self-determination means inter alia that “social marketing” and advertising with environmental arguments are legitimate (provided they are not misleading). In this sense recent (German) court decisions diverting from

28. Drexl, p. 490.

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the traditional concept of the hasty (casual) consumer and taking the (broader) information-seeking consumer as a reference is judged positively by Drexl. It is obvious that, for Drexl, consumer law is not a separate branch of the law. 2.1.2. Consumer protection? At this point the following proposition can be made. Some consumers (the very young, those not having enjoyed a sufficient degree of education to make informed choices, immigrants not speaking the language of the country, the poor consumers who are delivered to the male fide practices of credit sharks, etc.) as well as consumers in specific situations (such as relatives of a debtor called upon to sign a guarantee) may need special protection; but what is the point of “protecting” those who should take care of their own interests and who can always rely, like all other market players, on the general principles of law: principles of fairness, of good faith, liability for negligence, for deceit, and last but not least the principle that only obligations which are freely entered into are binding. The question is thus whether citizens in general, in their capacity as consumers, should be protected by specific measures which depart from the fundamental principles of (in particular) private law.29 A related question is whether consumer protection measures (e.g. in the field of unfair contract terms) should be extended to professionals who are in a situation of inferiority vis-`a-vis their suppliers or clients, e.g. small businessmen buying equipment they need for the exercise of their trade.30 29. Measures of public (criminal) law in the field of product safety and protection of health regarding foodstuffs are not measures of consumer protection in the strict sense; they protect the interests of the public at large. Likewise measures to prevent consumer over-indebtedness are not measures of consumer protection but can better be qualified as measures of social law (measures against poverty). 30. In case C-361/89, Di Pinto, [1991] ECR I-1189, the ECJ ruled that a trader canvassed with a view to the conclusion of an advertising contract concerning the sale of his business is not a consumer protected by Directive 85/577 on contracts negotiated away from business premises; see also Case C-45/96, Dietzinger, [1998] ECR I-119, discussed supra: the Directive applies to a guarantee (surety) by a person acting outside his trade or profession if it secures a credit agreement concluded with another consumer, both contracts to be concluded in the context of doorstep-selling; cf. the Second Non-Life Insurance Directive (88/357/EEC, O.J. 1988 L 172/1, now replaced by the Third Non-Life Insurance Directive, 92/49/EEC, O.J. 1992, L 228/1), which made a distinction between large risks (subject to exclusive home state control) and mass risks (for which the host Member State could maintain a licensing requirement). Large risks were defined inter alia by reference to the size (in terms of balance sheet, net turnover and average number of employees of the insured, as a result of which small undertakings benefited from the same protection (in terms of domestic licensing requirement imposed on the insured company) as consumers. See also the Directive 90/314 on package holidays (O.J. 1992, L 228/24) which protects all travellers (private and business travellers).

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2.1.3. The concept of “consumer” A central issue in consumer law literature is the notion of the consumer, although for many subjects of consumer law it doesn’t matter whether a broad or a restrictive concept is chosen. Rules on marketing, advertising, product safety31 etc. may apply irrespective of the potential addressees of the advertisement or marketing measure, or of the quality of the buyer of the product. The definition of consumer however does matter when rules govern contractual relations in order to protect the weaker “consuming” party against the supposedly more powerful (professional) “supplying” party. Should small businesses benefit from the same protection as private consumers? The “consumer” has been defined in the Brussels Convention on Jurisdiction and Enforcement of Judgments32 as the person who concludes a contract for a use which can be regarded as being outside his trade or profession. This definition was taken over in Article 5 of the Rome Convention on the Law Applicable to Contractual Obligations. The directives on contracts concluded away from business premises, consumer credit, unfair contract terms, timesharing and distant selling (all mentioned in the next section)33 correspond more or less to the definition in the Brussels and Rome Conventions (see e.g. Article 2, first indent of the first mentioned directive: “a natural person who, in transactions covered by this Directive, is acting for purposes which can be regarded as outside his trade or business”).34 In contrast to the Conventions, the directives however limit the notion of consumer to natural persons (the consumer in the Conventions can also be a legal person). The question what has to be viewed as “acting for purposes which can be regarded as outside trade or profession” has still to be answered. More particularly, it is unclear whether a businessman (who is a natural person) may be regarded as a consumer for transactions falling outside his business. In Di Pinto35 the Court did not answer that question. Mr Di Pinto did not benefit from the protection of the (door step selling) directive, but it was not disputed that, in addition to his being a merchant, the transaction concerned did relate to his trade. Likewise,

31. See also note 29 supra. 32. The Commission has made a proposal for a Council Regulation replacing the Convention: COM(1999) 348 final. The notion of consumer from the Convention is maintained in the draft Regulation. 33. For a detailed analysis see Stuyck, “Internationale Consumentenovereenkomsten” in Van Houtte and Pertegas-Sender, Europese IPR-Verdragen (Leuven, Acco, 1997), p. 265–269. 34. Cf. the recent Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees (O.J. L 171/12 of 7 July 1999), Art. 1(2)(a): “any natural person who, in the contracts covered by this Directive, is acting for purposes which are not related to his trade, business or profession.” In contrast, the Directive on package holiday tours (see note 30 supra), Art. 2(4) defines the consumer as the person who buys the package; the business traveller is thus a consumer for the application of this Directive. 35. See note 11 supra.

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in Dietzinger36 this question was not raised. Mr Dietzinger’s parents, whose debt he guaranteed, entered into a credit agreement for a purpose which could not be considered outside a trade or profession. 2.2. Short history of EC consumer law 2.2.1. Rome In the EC, consumer protection was originally seen as a by-product of the common market (later the internal market) programme. There was by no means unanimity as to whether the Community had the competence to take specific measures of consumer protection (as an aspect of the raising of the standard of living under Art. 2 EEC).37 In the mid-1980s, measures of consumer protection were taken through harmonization directives on the basis of Article 94 (ex 100) EC, which requires a direct link with the common market (and unanimity within the Council): Directive 84/450 on misleading advertising,38 Directive 85/374 on product liability,39 Directive 85/577 on contracts negotiated away from business premises40 and Directive 87/102 on consumer credit41 (all in the field of private law). Another and older directive adopted to facilitate the free movement of goods but which is of utmost importance for consumers is Directive 79/112 on the labelling of foodstuffs.42 Most of these directives were adopted within the framework of the resolutions of the Council and action plans of the Commission.43 The first resolution dates from 1975. It contains a “Preliminary programme” of the EC for a Consumer protection and information policy,44 which was influenced by President Kennedy’s message to the Congress of 15 March 1962.45 It states the following five basic consumer rights:46 (i) the right to protection of health and safety; 36. See note 30 supra. 37. See Kr¨amer, EEC Consumer Law (Story-Scientia, Brussels – Centre de droit de la Consommation, Louvain-la-Neuve, 1986), p. 7 et seq. 38. O.J. 1984, L 250/17, amended by Directive 97/55, O.J. 1997, L 290/18. 39. O.J. 1985, L 210/29. 40. O.J. 1985, L 372/31. 41. O.J. 1987, L 42/48, last amended by Directive 98/7, O.J., 1998, L 101/17. 42. O.J. 1979, L 33/1. 43. See in short: Weatherill, “The Evolution of European Consumer law and Policy: From Well Informed Consumer to confident consumer?” in Micklitz (Ed.), Rechtseinheit oder Rechtsvielfalt in Europa? (Nomos, Baden-Baden, 1996), p. 423 et seq., at pp. 447–448. 44. O.J. 1975, C 92/1. 45. See here above 2.1.1. The text is printed in full in Von Hippel, 3rd ed. cited supra note 8, p. 281–290. 46. See also the comments in 2.2.4 hereinafter.

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the right to protection of economic interests; the right of redress; the right to information and education; the right of representation.

The disappointing progress in Community legislation for securing consumer rights led the Council to adopt its Second Action Programme in 1981.47 The Second Programme reiterates the five fundamental consumer rights and adds that it should be seen that they are effectively exercised. A further Council Resolution of 23 June 198648 stresses the necessity of a high level of consumer protection (in particular with regard to quality and safety), but also the value of information and education of consumers in order to enable them to benefit as much as possible from the completion of the internal market. 2.2.2. The Single European Act, 1987 It is only in 1987 with the Single European Act that the Community recognized consumer protection as an autonomous policy aim, albeit within the internal market programme. According to the third paragraph of Article 95 (ex 100a) EC “The Commission, in its proposals envisaged in paragraph 1 [i.e. measures for the approximation of national provisions which have as their object the establishing and functioning of the internal market, which henceforth can be adopted by a qualified majority in the Council, in co-operation with the EP] concerning health, safety, environmental protection and consumer protection, will take as a base a high level of protection.” The SEA however did not provide for a specific legal basis for consumer legislation. After the entry into force of the SEA, further important consumer protection directives were adopted under Article 95 (ex 100a) on the basis of proposals in which, pursuant to Article 95(3) (ex 100a(3)), the Commission had to take as a base a high level of consumer protection: Directive 90/314 on package travel, package holidays and package tours,49 Directive 92/59 on general product safety,50 Directive 92/13 on unfair contract terms in consumer contracts,51 Directive 94/47 on time-sharing contracts,52 Directive 97/7 on distant contracts,53 Directive 98/27 on injunctions for the protection 47. 48. 49. 50. 51. 52. 53.

O.J. 1981, C 133/1. O.J. 1987, C 3/2. O.J. 1990, L 314/59. O.J. 1992, L 228/24. O.J. 1993, L 95/29. O.J. 1997, L 144/7. O.J. 1998, L 144/9.

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of consumers’ interests54 and Directive 1999/44 on certain aspects of the sale of consumer goods and guarantees.55 A few proposals for directives are still under examination: distant contracts in the field of financial services56 and electronic commerce.57 Weatherill58 has shown that the efforts to complete the internal market (by the end of 1992 and after) also generated a new concept in consumer protection: the consumer needs the confidence of a minimum set of Communitywide protective rules in order to be willing to shop across borders in the Community. Weatherill refers to the Unfair Contract Terms Directive and the Green Paper on Guarantees as examples of this approach. The rationale of the Green paper (“cross-border shopping can only flourish if the consumer knows he will enjoy the same guarantee and after-sales service conditions no matter where the supplier is located.”) has indeed inspired the recent Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees.59 2.2.3. Maastricht The Treaty of Maastricht inserted a new chapter XI on Consumer Protection in the EC Treaty60 and added “a contribution to the strengthening of consumer protection” to the list of the activities of the Community in Article 3 ((s), now (t)). According to Article 129a(1) EC, before amendment (and renumbering as Art. 153) by the Treaty of Amsterdam (see hereinafter), the Community (and not just the Commission in its proposals) shall contribute to the attainment of a high level of consumer protection, through (i) measures adopted pursuant to Article 95 (ex 100a) in the context of the completion of the internal market; (ii) specific action which supports and supplements the policy pursued by the Member States to protect the health, safety and economic interests of consumers and to provide adequate information to consumers. Both types of measures are adopted according to the new co-decision procedure introduced by the Maastricht Treaty. Specific action adopted within the meaning of Article 129a(1)(b) may not prevent any Member State from maintaining or introducing more stringent protective measures. Such meas54. O.J. 1998, L 166/51. 55. O.J. 1999, L 171/12. 56. See Common Position of the Council of 24 Sept. 1998, O.J. 1998, C 333/48. 57. See amended proposal COM(1999) 427 final. 58. See note 21 supra, at p. 462 et seq. 59. O.J. 1999, L 171/12., recital 5; see also the amended proposal for an e-commerce directive, note 57 supra, recital 5a. 60. See Micklitz and Reich, “Verbraucherschutz im Vertrag u¨ ber die Europ¨aische Union – Perspektiven f¨ur 1993”, (1992) EuZW, 593.

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ures must be compatible with the Treaty. The Commission must be notified of them (Article 129a(3)). Practice revealed the relatively low significance of the new legal basis for the development of consumer law.61 Up to now only one directive has been based on the basis of Article 153 (ex 129a): Directive 98/6 on consumer protection with regard to the indication of prices of products.62 Several other directives (those on timesharing, distant selling, guarantees, courts actions) were eventually adopted on the basis of Article 95 (ex 100a) although the Commission had initially based its proposal on Article 153 (ex 129a).63 Micklitz and Weatherill64 have however argued that the availability of Article 153 (ex 129a) as a legal basis may have removed legal obstacles to Community competence in this field. According to Weatherill,65 besides cooperation between enforcement agencies, access to justice seemed an ideal candidate for elaboration under Article 153 (ex 129a). On the other hand the Court of Justice has, very predictably, confirmed that Article 153 (ex 129a) merely assigns an objective to the Community, and confers power on it to that end without at the same time laying down any obligations for Member States or individuals. Therefore this Article cannot confer horizontal direct effect on directives,66 something which from a consumer policy point of view is regrettable, but in view of the nature of a directive (which can only impose obligations on Member States, not on private undertakings) is inevitable. The adoption of regulations may therefore be preferable.67 In the case concerning Directive 94/19/EC on deposit-guarantee schemes68 the ECJ had the occasion to address two questions relating to the interpretation of Article 153 (ex 129a). The German Government challenged the legality of this Directive and contended inter alia that it was based on the wrong Treaty provision. The legal basis of this Directive was Article 47(2) (ex 57(2)) EC (co-ordination directives to guarantee the right of establishment and/or the 61. Reich, “Verbraucherpolitik und Verbraucherschutz im Vertrag von Amsterdam”, (1999) VuR, 3 et seq., at 3. 62. O.J. 1998, L 80/27. 63. Bourgoignie, “European Community consumer law and policy: from Rome to Amsterdam”, (1998) Consumer Law Journal, 443–462, at 447. 64. Micklitz and Weatherill, “Consumer Policy in the European Community: Before and After Maastricht”, (1993) Journal of Consumer Policy, 285–321, at 298. 65. Weatherill, “Consumer Policy” in Craig and De B´urca (Eds.), The Evolution of EU Law (Oxford, Clarendon, 1999), pp. 693 et seq, at p. 719. 66. Case C-192/94, El Corte Ingl´es, [1996] ECR I-1281, at para 20 (see also comment by Stuyck in 33 CML Rev., 1261–1272, at 1263–1264). 67. See the unique Regulation 295/91 of 4 Feb. 1991 on denied boarding in air transport, O.J. 1991, L 36/5. 68. Case C-233/94, Germany v. Parliament and Council, [1997] ECR I-2405; see comment by Roth, 35 CML Rev., 459–479.

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freedom to provide services). Since the primary aim of the Directive was to increase the protection of depositors, according to the German government, Article 47(2) (ex 57(2)) was not the proper legal basis: Article 153 (ex 129a), mentioning consumer protection, only refers to Article 95 (ex 100a) and not to Article 47(2) (ex 57(2)). The Court rejected this plea, considering that, although the Directive deals with consumer protection, its main purpose is to contribute to the abolition of obstacles to the right of establishment and the freedom to provide services. The German Government also claimed that the provision laying down that the cover provided for depositors at branches set up by credit institutions in Member States other than those in which they are authorized, may not exceed the cover offered by the corresponding guarantee of the host Member State (the so-called “export prohibition”), was in violation of the objective of a high level of consumer protection as set forth in Article 153 (ex 129a) and Article 3(t) (ex 3(s)). To this plea, the Court answered that “although consumer protection is one of the objectives of the Community, it is clearly not the sole objective. As has already been stated, the Directive aims to promote the right of establishment and the freedom to provide services in the banking sector. Admittedly, there must be a high level of consumer protection concomitantly with those freedoms; however, no provision of the Treaty obliges the Community legislature to adopt the highest level of consumer protection which can be found in a particular Member State. The reduction in the level of protection which may therefore result in certain cases through the application of the second subparagraph of Article 4(1) of the Directive does not call into question the general result which the Directive seeks to achieve, namely a considerable improvement in the protection of depositors within the Community.” (para 48)

The third paragraph of Article 129a (renumbered 153(6) post Amsterdam) constitutionalizes the minimum harmonization approach which is typical in consumer law.69 However, the rule it contains is the expression of a general principle: where Community rules only establish minimum or partial harmonization, Member States retain the possibility to adopt stricter rules and to apply them to goods and services originating in other Member States, within the limits set by the directive for such application (e.g. a “general good” clause), and in the absence of such limits within the limits of the general

69. See Micklitz and Weatherill, op. cit. supra note 64, at p. 300; Stuyck, “Patterns of justice in the European Constitutional Charter: Minimum harmonization in the field of consumer law”, in Kr¨amer, Micklitz and Tonner (Eds.), Law and Diffuse Interests in the European Legal Order, Liber Amicorum Norbert Reich (Nomos, Baden-Baden, 1997), p. 279 et seq.

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Treaty provisions, in particular Articles 28–30 (ex 30–36) on free movement of goods, and Article 49 (ex 59) on free provision of services.70 The Treaty of Maastricht also introduced the principle of “subsidiarity” (Art. 5(2) (ex 3b(2))). The principle applies to consumer policy, a policy which obviously is not an exclusive Community power. Subsidiarity led to the withdrawal or the amendment of a certain number of proposals from the Commission in the field of consumer protection.71 Micklitz and Weatherill illustrate this point by referring to the fate of Directive 92/59 on General Product Safety.72 The issue of the powers of the Commission was very controversial. Eventually, the Commission was given the power to act when a product seriously endangers the health and safety of consumers in various Member States and subject to four conditions being fulfilled: existence of prior action against the product by at least one Member State, divergence between Member States on the adoption of measures, inability to deal with the risk under other procedures, and evidence that the risk can be eliminated only by the adoption of appropriate measures at the Community level. In addition, the Commission has to follow a regulatory Committee procedure (with the Committee on Product Safety Emergencies). In general however, the influence of the subsidiarity principle on EC consumer policy has been limited, in particular in view of the express powers conferred on the Community by Article 153 (ex 129a). 2.2.4. Amsterdam The latest development in the constitutional framework of EC consumer policy is the amendment of the consumer protection provisions of what was Article 129a, now renumbered 153, by the Treaty of Amsterdam. The Treaty of Amsterdam has not altered the principle of subsidiarity. A Protocol fleshing out the application of the principles of subsidiarity and proportionality, largely in line with an existing Inter-institutional Agreement and European Council Guidelines drawn up in 1992, was adopted and annexed to the EC Treaty and introduces the possibility of a differentiated integration in areas where there is no exclusive Community competence (Article 11).73 The provision on consumer protection (Article 153 (ex 129a)) was amended in various respects and now reads:

70. J. Stuyck, Liber Amicorum Norbert Reich, at p. 285; on the possibility for Member States to apply general rules (of fairness etc..) in a field which has been harmonized, see J. Stuyck, comments on joint cases C-34/95, C-35/95 and C-36/95, Konsumentombudsmannen v. De Agostini,, Common Market law Review, 1998, 1445 et seq. 71. Micklitz and Weatherill, note 64 supra, at 306–307. 72. O.J. 1992, L 228/24. 73. Craig and De B´urca, EU Law, 2nd ed. (Oxford, 1998), p. 37.

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“(1) In order to promote the interests of consumers and to ensure a high level of consumer protection, the Community shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organize themselves in order to safeguard their interests. (2) Consumer protection requirements shall be taken into account in defining and implementing other Community policies and activities. (3) The Community shall contribute to the attainment of the objectives referred to in paragraph 1 through: (a) measures adopted pursuant to Article 95 in the context of the completion of the internal market; (b) measures which support, supplement and monitor the policy pursued by the Member States. (4) The Council, acting in accordance with the procedure referred to in Article 25174 and after consulting the Economic and Social Committee, shall adopt the measures referred to in paragraph 3(b). (5) Measures adopted pursuant to paragraph 4 shall not prevent any Member State from maintaining or introducing more stringent protective measures. Such measures must be compatible with this Treaty. The Commission shall be notified of them.” Little is known about the genesis of the amendments, which seem to be a hardly debated compromise between Scandinavian proposals for broader Community powers and, in particular, German and British opposition.75 The differences between the Amsterdam text (Art. 153) and the preAmsterdam version (Art. 129a) are: (i) the recognition of consumer rights, i.e. the right to information, the right to education and the right for consumers to organize themselves in order to safeguard their interests (ii) the list of consumer (rights and) interests has been moved from the subparagraph on non-internal market action (Art. 129a(1)(b)) to paragraph 1 (thus applying to both internal market and non-internal market measures); (iii) a new provision has been added to the effect that consumer protection requirements shall be taken into account in defining and implementing other Community policies and activities (new paragraph 2); (iv) besides measures adopted within the framework of the internal market objective, the Community is no longer required merely to take specific action which supports and supplements the policy pursued by the Member States, but measures to that effect (this is in addition to measures which monitor the policy of the Member States, see (v) hereinafter);

74. Ex Art. 189b (co-decision procedure). 75. Reich, supra note 1, at p. 3.

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(v) the Community can also adopt measures which monitor the policy pursued by the Member States. 2.3. Analysis of the changes brought by Amsterdam 2.3.1. Consumer rights The Community shall henceforth contribute to promoting the right of consumers to information, education and to organize themselves in order to safeguard their interests. These three consumer rights were not mentioned in the EC Treaty before amendment by the Treaty of Amsterdam. In the Maastricht version (Art. 129a) “proper information” of consumers was merely mentioned, together with health, safety and economic interests of consumers as objectives of consumer policy of the Member States to be supported and supplemented by special action of the Community. Information was not then recognized as a (subjective) right, but merely as an interest to be taken care of. Health, safety and economic interests of consumers still have the status of interests and objectives of consumer policy, without being recognized as “rights” under Article 153(1) EC (as amended by Amsterdam). It may be recalled that health, and safety as derived therefrom, are grounds of justification for restrictions to free movement recognized by the Treaty in Articles 30 and 46 (ex 36 and 56) and that the protection of the economic interests of consumers has a prominent place in the list of grounds of general interest which under the “rule of reason”, developed by the Court with respect to the free movement of goods and services (Arts. 28 and 49 (ex 30 and 59)) may justify non-discriminatory obstacles to these freedoms.76 (a) The right to information. Consumer information was already mentioned in the pre-Amsterdam provision (the former Art. 129a), but then merely as an interest to be taken care of (in Art. 129a(1)(b)). The right to information is undoubtedly the most fundamental specific consumer right, i.e. a right vested in all citizens in their capacity as consumers. This right has been recognized by the ECJ in its GB Inno BM v. CCL judgment.77 This judgment has shown that the right of consumers to be informed also limits the regulatory powers of the Member Sates. A provision of the Luxembourg Trade Practices Act according to which sales offers involving a temporary price reduction may not state the duration of the offer or refer to previous prices and allegedly intended to protect consumers against confusion was not found to be justified in the 76. See Kapteyn and VerLoren van Themaat (Ed. Gormley), Introduction of the Law of The European Communities, 3rd ed. (London/The Hague/Boston, Kluwer, 1998), p. 674–679 and 758–760. 77. Case C-362/88, [1990] ECR I-667.

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general interest, i.e. the protection of the economic interests of consumers. The provision was therefore contrary to Article 28 (ex 30) EC (prohibition of quantitative import restrictions and measures having equivalent effect). The Court considered that: “... under Community law concerning consumer protection the provision of information to the consumer is considered one of the principal requirements. Thus Article [28 (ex 30)] cannot be interpreted as meaning that national legislation which denies the consumer access to certain kinds of information may be justified by mandatory requirements concerning consumer protection.”78 The authorization of comparative advertising by Directive 97/5579 may be seen as the legislative consequence of this doctrine. (b) The right to education. The right to education is closely linked to the right to be informed: consumer education in school is certainly an important element in the process of arming consumers against undue influence which may be exercised by advertisers and sellers and to help them to make wellconsidered consumption decisions. The Community was given powers in the field of education by the Treaty of Maastricht (Art. 149 (ex 126)), as chapter 3 “Education, vocational training and youth” within Title XI on Social Policy, Education, Vocational Training and Youth. These powers do not include harmonization measures, but are limited to non-decisional initiatives, namely encouraging, supporting and supplementing Member States action “while fully respecting the responsibility of the Member States for the content of teaching and the organization of education systems and their cultural and linguistic diversity”. However, in the field on consumer protection it would seem that the Community has the power (derived from Article 153 (ex 129a)) to take measures for the education of consumers, supporting, supplementing and monitoring the policy pursued by the Member States in this respect. (c) The right of consumers to “organize themselves in order to safeguard their interests”. The freedom of association is a fundamental right recognized by the Community.80 This fundamental right is now expressly recognized in the Treaty as far as consumers are concerned. Secondary legislation has however gone beyond the simple recognition of this fundamental right. There is Directive 98/27 on (cross-border) injunctions for the protection of consumers’ interests.81 The right for consumer organizations to bring actions for a cease and desist order in the collective interest of consumers exists in several Mem78. 79. 80. 81.

Legal ground 19. See note 38 supra. Case C-415/93, Bosman, [1995] I- 4921, at paras. 79 and 80. O.J. 1998, L 166/51.

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ber States, amongst which France, the Netherlands, Germany and Belgium, in particular in the field of trade practices and misleading advertising law.82 2.3.2. Moving the list of consumer rights and interests to the first paragraph of Article 153 Through this amendment, the Treaty recognizes expressly that consumer measures taken in the context of the completion of the internal market (Art. 153(3)(a)) can also have as their objective the protection of these interests and rights. Conversely, measures which support, supplement and monitor the policy pursued by the Member States (and are therefore based on Art. 153(3)(b)) may have ancillary effects on the establishment and functioning of the internal market, the more so since the procedure for both type of measures is the same (Art. 153(2)).83 2.3.3. The obligation to take consumer protection requirements into account in other policies The obligation to take into account consumer protection requirements in the definition and implementation of consumer policy (e.g. competition policy, the Common Agricultural Policy, regional policy or environmental policy) rests on all Community institutions. This obligation seems less fundamental than the obligation on the institutions, spelled out in the “principles” of the Community, in Article 6 (ex 3c)84 to integrate environmental protection requirements into the definition and implementation of Community policies and activities. Reich85 has rightly pointed out that the obligation contained in Article 153(2) is merely formal. It amounts to a duty to state the reasons (why and how, or why not, the interests of consumers were taken into account). I see a more fundamental problem: how to determine the acts of the Community in which the consumer interest should be considered. The point of view of consumers can be taken into account in respect of virtually every policy. I already mentioned the CAP (which is obvious, think of the mad cow disease and genetically modified organisms) and competition policy (which is also 82. France: Art. L 421-7 Code de la Consommation; Germany: § 13 UWG (Unfair Competition Act) and § 13 AGBG (Unfair Contract Terms Act); the Netherlands: Art. 3:305a (general right of action) and Art. 6:240 Civil Code (unfair contract terms); Belgium: Art. 98 Trade Practices Act 1991 (every infringement of this Act: notably in the field of advertising and sales methods); see Morin, “Les actions collectives transfronti`eres” in Vers un Code europ´een de la Consommation, (Bruylant, Brussels, 1998), p. 305 et seq. (see book review in this issue). 83. This follows a fortiori from Case C-156/93, Parliament v. Commission, [1995] I-2019, para 32, and Case C-84/94, UK v. Council, [1996] ECR I-5793, para 22. 84. The impact of this provision seems to have been limited, see Kr¨amer, EC Treaty and Environmental Law, 3rd ed. (1998), p. 32 et seq. 85. See note 1 supra, at p. 9.

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obvious because the ultimate beneficiaries of this policy are and can only be consumers).86 But let’s take a less obvious example. Shouldn’t the consumers’ point of view be taken into account in proposed tax measures at the Community level? Take the harmonization of withholding tax. Could one not argue that the citizen in his capacity as saver or investor is a “consumer” within the meaning of the Treaty? And what about measures in the field of direct (income) taxation. If Community measures favour or discourage the imposition of direct taxes, this will have an influence on the level of indirect taxes, such as VAT (part of which makes up for the Community budget), which are paid by consumers? Who will determine the relevance of the consumer interest in another policy of the Community. Would it suffice that the Consumer Consultative Committee or the representative consumer movement at the EC level say so? 2.3.4. The adoption of measures to support and supplement the policy pursued by the Member States The word “measures” in Article 153(3)(b), as opposed to the words “specific action” in pre-Amsterdam Article 129a(1)(b), clarifies, if need be, that Community initiatives in the consumer field whose primary aim is not the completion of the internal market can nevertheless be of a legislative nature. In view of the possibility for the Community to take any kind of consumer protective measure “in the context of the completion of the internal market” and the close link between most consumer matters and the internal market, it can be expected that the real impact of Article 153(3)(b) will remain low. This does not prevent the Community from choosing this legal basis in cases where, politically speaking, the Community institution deems it proper to emphasize the consumer protection objective of the measure, even though in reality the primary objective is the completion of the internal market and Article 153(3)(a) is therefore not only a sufficient but also the most appropriate legal basis. The application of the Article 153(3)(b) however presupposes that in the field where a Community initiative is taken there already exists a policy in “the” Member States (albeit not all the Member States, so it would seem). Since the measure at the Community level can also “supplement” the policy pursued by the Member States, this means that the actual subject matter of the Community measure may differ from anything already existing in the Member States, so long as it supplements existing goals of consumer policy in (some of) the Member States. To give one, presently probably not very realistic, example: if the Community were to adopt a general system of insurance for damage caused by consumer goods or even provide for compensation of such 86. See hereinafter section 3.4.

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damage by the social security system, and this would replace the existing systems of product liability in the Member States (based on the liability of the producer),87 such a directive could be based on Article 153(3)(b), since it would “supplement” the policy of the Member States aiming at providing for compensation of consumers who are the victims of unsafe consumer goods, although the remedy chosen (compulsory insurance or even social security) would be completely different from the one existing in the Member States (strict liability of producers). 2.3.5. Measures which “monitor” the policy pursued by the Member States It is unclear what the addition of the possibility of “monitoring” the policy pursued by the Member States means. The French (“contrˆoler”), the Dutch (“controleren”) and the German (“Uberwachung”) versions of the Treaty seem to be more restrictive. It should be remembered that the Commission already has the power to “ensure that the provisions of the Treaty and the measures taken by the institutions pursuant thereto are applied” (Art. 211 (ex 155), first indent). What does the new “monitoring” provision of Article 153 add? Reich88 has suggested that the Community legislature could specify this monitoring power by e.g. introducing new procedures besides the existing infringement procedure of Article 226 (ex 169). Reich does not elaborate on this point, but it is submitted that such procedural rules could certainly not derogate from the rules of Article 226. It should also be recalled that in the context of an infringement procedure the Commission can also demand interim measures through the ECJ (Art. 243 (ex 186)). An example of a provision of secondary Community law which merely facilitates the exercise of the procedures provided for by the Treaty, without derogating from it, can be found in the area of public procurement.89

87. See Directive 85/374 (but which was largely based on existing rules in major Member States such as France and Germany). 88. Note 1 supra, at p. 10. 89. See Art. 3 of Directive 89/665/EEC on the co-ordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts, O.J. 1989, L 395/33 (when the Commission notifies to a Member State that it has found that a clear and manifest infringement has been committed and requests its correction, the Member State shall, within 21 days, communicate to the Commission the measures it has taken to redress the situation; failure to make such a communication is a manifest violation of secondary Community law and can be the basis for an infringement procedure in its own right).

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3. The relationship between consumer policy and the internal market (and competition policy) 3.1. General Originally, literature in the field of EC consumer law stressed the tension between the objective of establishing a single market with free movement and free competition on the one hand and the protection of consumers on the other. The application of the free movement provisions of the Treaty to national consumer laws could lead to a “race to the bottom”, where the level of protection in the Community would coincide with that of the Member State with the lowest level. Harmonization of laws would contain the same danger. The case law of the Court of Justice, the history of constitutional changes in the EC Treaty and Community legislation in the field of consumer protection have shown that the antagonism between the internal market and consumer policy was exaggerated. Indeed, where the national measure under scrutiny was shown to serve a genuine goal of consumer protection (especially in the field of health and safety protection and the protection of vulnerable consumers against undue influence), the Court of Justice has generally found it to be in conformity with the free movement provisions of the Treaty. On the other hand, as indicated here above, the vast majority of specific consumer law directives were adopted on the basis of the Treaty provisions (such as Art. 95 (ex 100a)) whose primary object is the completion of the internal market. Later, in particular in the consumer sales and guarantee Directive,90 the Community legislature stressed the necessity of a “confident” (well-protected) consumer” for the proper functioning of the common market.91 3.2. The case law on free movement: proportionality of the measure and the reasonably circumspect consumer Consumer protection is undoubtedly the most relevant ground of justification under the “mandatory requirements” test (or “rule of reason”) which the Court of Justice has developed since its famous Cassis de Dijon92 case law. National measures which restrict the marketing of goods originating in another Member State are contrary to Article 28 (ex 30) EC unless they are justified by mandatory requirements in the general interest, such as consumer protection. Only those consumer laws and regulations are justified (and hence 90. See hereinafter under 3.3.3. 91. See Weatherill, supra note 43, at p. 462 et seq. 92. Case 12/78, Rewe Zentral v. Bundesmonopolverwaltung f¨ur Branntwein, [1979] ECR 649.

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not contrary to the principle of free movement where applied to goods originating in other Member States) which are appropriate and proportionate in the light of the objective of consumer protection pursued. The case law of the ECJ gives numerous examples of “consumer laws” which were either unmasked as being purely protectionist measures,93 measures protecting other (special) interests,94 or measures which were not appropriate95 or at least were disproportionate96 for the attainment of the (real or at least defendable) objective of consumer protection. On the other hand, in its case law on free movement of goods and services,97 the Court has regularly accepted that national measures of consumer protection were justified, because they were adequate and proportionate to the objective of consumer protection pursued. With respect to the proportionality test, the Buet98 case is particularly interesting. It may be recalled that Directive 85/577 on contracts negotiated away from business premises99 requires the Member States to provide that con93. Case 261/81, Rau v. De Smedt, [1982] ECR 3961: the provision in a Belgian Royal Decree that margarine could only be marketed in cubical form (packages) was found not to be necessary to protect consumers against the risk of confusion with butter (and therefore the measure was surely not proportionate to the alleged objective of consumer protection); in reality this old rule (which was justified at the beginning of the 20th century when butter and margarine were sold unpacked and unlabelled) was maintained in order to accommodate Belgian manufacturers who regularly brought court actions against importers importing margarine in other forms than cubes from the neighbouring countries; through the years the provision had lost its meaning as a measure of consumer protection. 94. See e.g. Case C-362/88, GB-Inno-BM v. Conf´ed´eration du Commerce Luxembourgeois, [1990] ECR 667: a provision of the Luxembourg law on unfair competition prohibiting special sales offers with reference to the previous higher price was found by the Court not to serve the interests of consumers (because consumer information being the primary goal of EC consumer policy, a rule preventing consumers from receiving information which is not misleading could not be considered in the consumer’s interest); in reality the provision was designed to protect local small shopkeepers against competition (from large supermarkets); see also Case C126/91, Schutzverband gegen Unwesen in der Wirtschaft v. Yves Rocher, [1993] ECR I-2361. 95. Case 178/84, Commission v. Germany (purity requirement for beer), [1987] ECR 1227: the protection of the health of consumers could not justify the prohibition of additives in beer, because the same additives were tolerated in other foodstuffs. 96. Case 178/84, see preceding note: the rule that only beer brewed according to the purity law could be named “beer” was disproportionate to the objective of correct consumer information, since that objective could be attained by a less restrictive means, namely adequate labelling requirements. 97. The mandatory requirements case law or “rule of reason” is well established with regard to the free provision of services since at least C-76/90, S¨ager v. Dennemeyer, [1991] ECR I-4221; the gist of it is already contained in Case 33/73, Van Binsbergen, [1974] ECR 1299 (at para 12); see also, before S¨ager, inter alia Case 205/84, Commission v. Germany (insurance case), [1986] ECR 3755; on consumer protection as a ground of justification for measures which restrict the free provision of services, see in particular Case 205/84 and Joined Cases C-34/95, C-35 & 36/95, Konsumentombudsmannen v. De Agostini and TV Shop, [1997] ECR I-3893. 98. Case 382/87, Buet v. Minist`ere Public, [1989] ECR 1248. 99. See note 40 supra and see the discussion of the Dietzinger case in section 2.1.1.

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sumers have the right to cancel a contract of sale concluded at their home. The Directive allows Member States to adopt or maintain more favourable provisions to protect consumers. The French Law No. 72-1137 on the protection of consumers with respect to canvassing and to selling at private dwellings prohibits canvassing for the purpose of selling educational material. Mr Buet was prosecuted because he canvassed for English language courses imported from England. The Court of Justice considered that to guard the consumer against the risk of ill-considered purchases at the doorstep a right to cancel the contract, as provided for by the directive, is normally sufficient. However the Court accepted that there is a greater risk of an ill-considered purchase when the canvassing is for the enrolment for a course of instruction or the sale of educational material. The potential purchasers often belong to a category of people who are behind with their education. That makes them particularly vulnerable when faced with salesmen of educational material who attempt to persuade them that if they use that material they will have better employment perspectives. The Court notes that the prohibition had been enacted as a result of complaints, such as the sale of out-of-date courses. Finally, since teaching is not a consumer product of daily use, an ill-considered purchase could cause the purchaser harm other than mere financial loss. The purchase of unsuitable or low-quality material could compromise the consumer’s chances of obtaining further training and thus consolidating his position on the labour market.100 It should also be noted that in particularly “sensitive areas”, such as gambling,101 where Member States enjoy a “broad margin of discretion” (and where the Court is less courageous in denouncing national hypocrisy) the Court seems to apply a less strict proportionality test. In general the Court reasons on the basis of a reasonably circumspect consumer.102 In a constant line of judgments, including Pall Corp,103

100. At paras. 12–14. 101. See e.g. Case C-275/92, Schindler, [1994] ECR I-1039 (on this judgment see Stuyck, “Gambling and Sales Promotion in the EU”, in Micklitz, op. cit. supra note 43, pp. 331–340); see the recent judgments confirming this approach: Case C-124/97, Markku Juhani La¨ a¨ r¨a, Judgment of 21 Sept. 1999, nyr, and Case C-67/98, Questore di Verona v. Diego Zenatti, Judgment of 21 Oct. 1999, nyr. 102. See also Weatherill, op. cit. supra note 65, at p. 699–702, and for a thorough analysis of the ECJ’s case law in this respect, its nuances and the respective roles of the ECJ and the referring judge in appraising whether the consumer is misled or not, see the same author, “Recent case law concerning the free movement of goods: Mapping out the frontiers of market deregulation”, 36 CML Rev., 51 et seq., at 60–68. 103. Case C-238/89, [1990] ECR I-4827.

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Clinique,104 Mars105 and Procureur de la R´epublique v. X,106 relating to misleading advertising, the Court refused to accept measures aimed at protecting the consumer whose intelligence and attention is less than average (as e.g. in certain German case law). The notion of the reasonably circumspect consumer which is the criterion for the risk of deception or confusion (e.g. between denominations of products) has been clarified in two recent judgments: Gut Springenheide and Tusky107 and Verbraucherschutzverein eV v. Sektkellerei G.C. Kessler GmbH und Co.108 The national court, in assessing whether a trade description or the name of a product misleads the consumer or creates confusion amongst consumers, must take account of “the presumed expectations of an average consumer who is reasonably well informed and reasonably observant and circumspect.” In other words, taken overall, the case law of the ECJ is based on a relatively strong belief in the consumer as an active and critical information-seeker.109 Finally it should be mentioned that in an abundant case law, on the basis of Article 30 (ex 36) EC, the ECJ has recognized the legitimacy of national measures to achieve or to maintain a higher level of health and safety protection.110 3.3. Harmonization of Laws: legitimate consumer expectations and the confident consumer 3.3.1. A “high level” of consumer protection and minimum harmonization If measures taken at the national level are legitimate, harmonization at the Community level becomes necessary for the proper functioning of the internal market. Since the Treaty of Amsterdam it is obvious that harmonization at the lowest level is out of question: harmonization based on the specific consumer provisions in the Treaty (Art. 153(3)(a) and (b)) shall take place “at a high level”. The requirement of a high level of protection and the recognition of the consumer’s right to information are the most important achievements of the Treaty of Amsterdam in the consumer field. However, a “high level” of protection does not necessarily mean the “highest” level of consumer welfare. In essence, the internal market and 104. Case C-315/92, Verband Sozialer Wettbewerb eV v. Clinique Laboratories SNC, [1994] ECR I-317. 105. Case C-470/93, Verein gegen Unwesen in Handel und Gewerbe K¨oln V v. Mars GmbH, [1995] ECR I-1923. 106. Case C-373/90, [1992] ECR I-131. 107. Case C-210/96, [1998] ECR I-4657, paras. 31–32. 108. Case C-303/97, Judgment of 28 Jan. 1999, nyr, at para 36. 109. Howells and Wilhelmsson, supra note 3, at p. 299. 110. See references in Kapteyn and VerLoren van Themaat, op. cit. supra note 76, p. 661–662.

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effective competition also (and even primarily) serve the consumer interest.111 Protective measures which limit free movement and free competition may be necessary where the market does not provide for a just equilibrium between the interests of producers and consumers. Every protection has its price. If the interest to be protected is high the price may also be high (e.g. safety, even of a minority). On the other hand, a protective measure, apart from the costs it may generate (and which will always have to be borne by consumers) may have effects which were neither intended nor foreseen. In particular every measure of protection contains a potential risk of irresponsible behaviour which may create new problems and the need for further protective measures. In its Resolution on Consumer Policy 1999 to 2001, adopted on 28 June 1999,112 the Council states: “the choice of measures to be taken at the Community level to safeguard the required high level of consumer protection should be based on the analysis of, in particular, the objectives to be achieved, the nature and scope of the issues to be covered, the potential costs and benefits of action or lack of action and the developments on the market in order to make the best choice between the different legislative and non-legislative solutions.” In other words, consumer legislation at the Community level shall be coherent, market-oriented, based on a cost-benefit analysis and sustainable in a long term perspective. Still, if the Community remains rather reserved in adopting measures of consumer protection, the Member States will most often have the possibility to maintain stricter rules, which are compatible with Community law (in particular the provisions on free movement) on their territory, viz. with regard to transactions governed by their law, since all major directives in the consumer field are of the minimum harmonization type.113 The Treaty of Maastricht has constitutionalized this power of the Member States with regard to measures taken pursuant to Article 153(3)(b), i.e. measures which support, supplement and monitor the policy pursued by the Member States. 3.3.2. Legitimate consumer expectations An issue which has recently received considerable attention in literature is that of “legitimate consumer expectations”.114 Some EC consumer directives 111. See Pelkmans, “Consumer Interests in the EC Competition Regime. An Economic Perspective”, in Goyens (Ed.), EC Competition Policy and the Consumer Interest (Cabay, Louvain-la-Neuve, 1985), p. 22–69. 112. O.J. 1999, C 206/1, recital 7. 113. See Stuyck, op. cit. supra note 69, at p. 282. 114. Wilhelmsson, “The principle of legitimate expectations as a basic principle of Community private Law”, in Paasivirta and Rissanen (Eds.), Principles of Justice and the Law of the European Union (Helsinki, 1995), p. 325 et seq.; Wilhelmsson and Micklitz, “Legitime Erwartungen als Gerechtigkeitsprinzip des Europ¨aischen Privaterchts”, in Kr¨amer et al. op. cit. supra note 69, p. 245 et seq.; Howells and Wilhelmsson, supra note 3, at p. 299 et

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refer expressly or implicitly to the legitimate expectations of consumers as a basis for obligations resting on the supplier. According to the product liability Directive,115 the producer has to provide “the safety which a person is entitled to expect” (Art. 6(1)). The general product safety Directive116 refers to the safety which the consumer may reasonably expect. The test in the product liability Directive seems to be the correct one, since safety is not a matter of consumer protection in the strict sense, but of protection of the public at large whose safety is endangered by the presence of dangerous products on the market. Several consumer directives (unfair contract terms, consumer credit, doorstep selling, distant selling) do not contain any reference to legitimate expectations of the consumer or the public at large. This seems logical, since these directives address problems of information, conclusion of contracts and the right of cancellation, and not contract performance.117 An implied reference to the consumer’s expectations can be read in the package holiday tours Directive and in the time sharing Directive, which provide that the information contained in the brochure is binding on the enterprise, thus creating the consumer’s legitimate expectation that what has been promised will be performed.118 While some authors see the concept of legitimate consumer expectations as a general principle of European private law, as a pattern of justice,119 Roth has defended the fact that secondary Community law does not use the principle of “legitimate expectations” as a specific consumer protection device (indeed only the product liability Directive expressly refers to the concept). An analysis of German and international sales law shows that “legitimate expectations” are a fundamental notion in commercial and civil law. Therefore this notion does not have a social dimension. In contrast, according to Roth, the notion is used as a device to justify the competence of the Community in consumer matters. Roth refers to the (then proposed) Directive on the sale of consumer goods and associated guarantees.120 According to the preamble of this Directive, the creation of a common set of minimum rules seq.; Roth, “Berechtigte Verbrauchererwartungen im Europ¨aischen Gemeinschaftsrecht”, in Schulte-N¨olke and Schulze (Eds.), Europ¨aische Rechtsangleichung und Nationale Privatrechte (Baden-Baden, 1999), p. 45 et seq. 115. See supra note 39. 116. See supra note 51. 117. Roth, supra note 114, at p. 50. 118. Ibid. at p. 53. 119. See in particular Wilhelmsson and Micklitz, supra note 114; see also Wilhelmsson, supra note 114, at p. 239: “the concept may be used for challenging the views of consumers into the decision making, thereby contributing to the procedural legitimacy of Community consumer law”. 120. See supra note 114.

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of consumer law, valid no matter where the goods are purchased within the Community, will strengthen consumer confidence and enable consumers to make the most of the internal market.121 In other words, the reference to the consumer’s expectations serves the purpose, especially in the light of the principle of subsidiarity, to found the Community’s competence in the field of consumer (contract) law. At the same time it serves as policy declaration: this competence has to be actively used to meet the consumer’s expectations in the internal market.122 3.3.3. The confident consumer – limits to harmonization of private law? Since the 1992 Sutherland Report on the operation of the Internal Market, the Commission has time and again expressed its concern to reinforce consumer confidence in the internal market.123 As mentioned here above the consumer sales and guarantee Directive is based on this policy goal. The Directive is solely based on Article 95 (internal market). The necessity of consumer confidence for the completion of the internal market raises the question how far regulation of consumer transactions at the EC level can and should go. Consumer directives so far have mainly been limited to creating transparency (information duties, prohibition of misleading advertising, authorization of comparative advertising) and a proper basis for the exercise of the consumer’s freedom of contract through “procedural rights (a cooling-off period and right of cancellation).124 The directives hardly touched upon the content of the contracts, with the exception of the unfair contract terms Directive, which imposes the very general obligation on the Member States to provide for adequate means to prevent the use of contract terms which have not been individually negotiated and which create a significant imbalance between the parties’ rights and obligations to the detriment of the consumer. In contrast, the new consumer sales and guarantee Directive defines rights and obligations of the parties in the performance of a consumer sales contract, in particular by regulating the liability of the seller for lack of conformity of the goods, By harmonizing the minimum content of the rights of consumers concerning the performance of the sales contract by the seller, the Directive aims at protecting the European consumer irrespective of the place where he makes a purchase (in the Member State of his residence or in another Member State). In contrast, the consumer contracts provision of the Rome Convention (Art. 5 thereof) is based on the assumption that an active consumer who is shopping around in the Community expects the applicability of the law of another the 121. Recital 5. 122. At p. 59. 123. Weatherill, op. cit. supra note 65, at p. 717. 124. Weatherill, id., p. 709–711; on the marginal incursions of some of these directives (such as the distant selling directive) in the content of transactions, see ibid.

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Member State, and may thus be bound by that law (on the basis of the choice of the parties or the closest connection with the country of the seller) even if it gives him less protection than the law of the Member State of his residence.125 Likewise, under the Brussels Convention on Jurisdiction and Enforcement of Judgments in Civil matters (Art. 13 thereof) only the “passive consumer”, i.e. the consumer who has not taken the initiative to enter into the contract, can bring a case before the courts of his country. A proposal from the Commission to derogate from the Brussels Convention for e-commerce by giving consumers the right to sue before the courts of the Member State of their residence126 has led to fierce opposition from Europe’s employers’ federation, but the Commission is backed by European consumer groups. For the Commission, the change is needed to encourage e-commerce and to give consumers the confidence that their rights will be respected if they purchase products online. With regard to the law applicable it should be stressed that pursuant to Article 20 of the Rome Convention, the rules of private international law contained in acts adopted by the Community as such have precedence over the rules contained in the Convention. The Directives on unfair contract terms (Art. 6(2)), timesharing (Art. 9), distant selling (Art. 12(2)) and consumer sales and guarantee (Art. 7(2)) contain a provision to the effect that the protection provided for by the directive (and which therefore has to be implemented in the law of all the Member States) cannot be frustrated by the choice for the law of third country.127 The more intrusive forms of harmonization, such as contract content control, may lead to a disruption of national contract law. This may sound very bold, but I believe I am in good company. The Editorial comments in this Review of October 1998128 mention “the creeping Europeanization of private law (by mostly consumer oriented) directives (doorstep selling; consumer credit; time sharing etc.).” In an even earlier issue129 of this Review, Editorial 125. On the question when a consumer surfing on the internet is active or passive, see Kronke, “Applicable Law in Torts and Contracts in Cyberspace”, in Boele-Woelki and Kessedjian (Eds.), Internet. Which court decides? Which Law applies? (The Hague, 1998), p. 82; see also Junker, “Internationales Vertragsrecht im Internet”, (1999) RIW, 809 et seq. 126. Proposal for a Council Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM(1999) 348 final, based on Art. 61(c) EC and meant to replace the Brussels Convention. 127. The wording of this clause in the different directives mentioned is not identical. Art. 7(2) of Directive 1999/44/EC (consumer sales and guarantees) reads: “Member States shall take the necessary measures to ensure that consumers are nor deprived of the protection afforded by this Directive as a result of opting for the law of a non-Member State as the law applicable to the contract where the contract has a close connection with the territory of a Member State.” 128. “Europeanization of private law – Part 2”; 35 CML Rev., 1013–1018 (a reaction to a guest editorial by Lando in 35 CML Rev., 821–831). 129. “On the way to a European consumer sales law?”, 34 CML Rev.(1997), 207–212.

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comments on the same theme (and more in particular on the then proposed Directive on the sale of consumer goods and associated guarantees) concluded with the following words: “It would appear that in recent years, when preparing legislation, the Commission has more or less ignored the fact that Community legislation in certain areas, such as the harmonization of consumer law, can have quite drastic consequences for the national systems of private law. At the very least, a Community wide discussion needs to be held, explicitely and openly addressing the issues. Harmonizing private law is not the same as harmonizing labelling or technical provisions – we should keep that in mind.” Apart from stressing rightly the dangers of tearing private law to pieces, these Editorial comments make an important distinction between two types of harmonization: harmonization of provisions of private law on the one hand, and harmonization of technical regulations on the other. If the latter can find a basis in the internal market programme, the former are less evidently necessary for completing the internal market and even, so it would seem, for the protection of the consumer in the internal market. And, to the extent that the need to protect consumers justifies the harmonization measure at hand the principles of proportionality and subsidiarity would seem to require the Community legislature to take into account the impact such measures may have on the consistency of the basic principles of private law in the Member States. 3.3.4. Proportionality: the basic test Apart from the importance which the principle of proportionality may have in national constitutional law,130 proportionality is a general principle of Community law (see Art. 5(3) EC). Even though consumer confidence may be a ground for Community competence to adopt far-reaching measures of consumer protection (like content control), such measures, in order to be compatible with the Community constitutional order, must be proportionate to attain the objective pursued. If the objective is the good functioning of the common market, the proportionality of the measure has to be weighed in the light of the basic tool for the completion of the internal market: free movement (Art. 3(1)(c) EC) and taking into account the basic principle of an open market with free competition (Art. 4(2) EC). The Council Resolution on Consumer Policy 1999 to 2001, quoted above,131 confirms this point by 130. See Drexl, supra note 19, p. 448 et seq., who for German law derives from this principle the necessity to envisage three gradual phases in consumer protection: first information duties, then an extension of the period of reflection and only as an ultimum remedium content control. 131. See note 113.

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stressing the need to base consumer protection measures on analysis of costs and benefits and the developments in the market. The principle of proportionality also applies to commercial communications. Therefore it is right that the Community has taken hardly any initiatives to harmonize the laws on commercial communications, except for rules which govern information to be provided or not to be provided.132 Article 6 of the proposed e-commerce Directive133 gives a good example of this approach. Member States shall lay down in their legislation that commercial communication must comply with the following conditions: (a) the commercial communication shall be clearly identifiable as such, (b) the natural or legal person on whose behalf the commercial communication is made shall be clearly identifiable,(c) personal offers, such as discounts, premiums and gifts, where authorized, shall be clearly identifiable as such, and the conditions which are to be met to qualify for them shall be accessible and be presented accurately and unequivocally, (d) promotional competitions or games, where authorized, shall be clearly identifiable as such, and the conditions for participation shall be accessible and be presented accurately and unequivocally. The 1999 Council Resolution further considers that under certain circumstances self-regulation by business or voluntary agreements between consumer organizations and business can be an appropriate complement or, in specific cases, an alternative to legislation in particular as they allow for faster reactions to market developments. In this respect, attention should be drawn to the provisions on dispute resolution in recent directives. Article 11 of the distant selling Directive134 allows Member States to provide for voluntary supervision by self-regulatory bodies of compliance with the provisions of the Directive and recourse for the settlement of disputes to be added to the means which the Member States must provide (judicial or administrative redress) to ensure compliance. Article 17 of the proposed e-commerce Directive135 goes further in that Member States have to ensure that, in the event of disagreement between an Information Society service provider and its recipient, their legislation allows the effective use of out-of-court schemes for dispute settlement, including appropriate electronic means.

132. The most far-reaching harmonization measures in the field of commercial communications are contained in the TV Without Frontiers Directive (rules on advertising and sponsoring), see Drijber, “The revised television without frontiers directive: is it fit for the next century?”, 36 CML Rev., 87 et seq. 133. Proposal for a European Parliament and Council Directive on certain legal aspects of electronic commerce in the internal market, O.J. 1999, C 30/4. 134. See note 53. 135. See note 57.

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3.3.5. Competition Law In the competition rules of the EC Treaty, the consumer is only mentioned in Article 81(3) (ex 85(3)):136 a restrictive agreement can be exempted from the application of Article 81(1) if it inter alia allows the consumer a fair share of the resulting benefit. However, it results inter alia from other language versions of the Treaty that the consumer in this provision is not specifically the ultimate consumer but the client of the undertakings concerned. Although the consumer is not specifically and technically speaking the beneficiary of the EC competition rules137 – these rules aim at guaranteeing workable competition rather than at the protection of individual freedom – the enforcement ultimately serves consumer welfare, directly e.g. by prohibiting abuses of monopoly power in inter alia consumer markets, and indirectly by safeguarding a certain level of effective competition (the control of concentrations pursuant to Regulation 4064/89, the liberalization process in the telecommunications sector on the basis of Art. 86(3) and the prohibition of cartels which limit consumer choice and lead to price increases).138 Insofar as the competition rules ensure a fair choice at a fair price of goods, or services of a good quality, they definitely belong to the very essence of any consumer policy in a market economy.

4. Some concluding remarks and outlook EC consumer law has come of age. Consumer protection was originally seen as a by-product of the common market. Later, with the rise of the consumer movement, the Community recognized the necessity of specific consumer action and both the European Court and the Community legislature have recognized the fundamental rights of consumers, in particular the right to information. The impact of the principle of subsidiarity (Treaty of Maastricht) on consumer policy (and probably on most policy areas) has been limited (the internal market needs a “confident consumer” and thus necessitates a certain number of consumer protective measures), but the principle of proportionality limits the scope of any Community action which restricts free movement. 136. See also Regulation 4064/89 on the control of concentrations between undertakings, Art. 2(1): when appraising the compatibility of a concentration with the common market the Commission shall inter alia take into account the interests of the intermediate and ultimate consumers, and the development of the technical and economic progress provided that it is to consumers’ advantage. 137. On the substantive and procedural aspects of consumer interests in the application of Art. 81 (ex 85) EC, see Reich, “Competition Law and the Consumer”, in Gormley (Ed.) Current and Future Perspectives on EC Consumer Law (London, 1997), p. 127–137. 138. Cf. Whish, Competition Law, 3rd ed. (London, 1993), p. 12–13.

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The integration of consumer policy in other policies, in particular the internal market programme, has been a matter of course: the internal market serves the consumer interest. As to competition policy, it is obvious that consumers are its primary beneficiaries, not only directly (e.g. the prohibition of abuse of dominant positions on consumer markets) but also indirectly (by safeguarding effective competition, i.e. a reasonable choice and fair prices). The conflict model which characterized the debate on consumer policy in the early years seems to be giving way to the acceptance that the consumer interest may be better served by a proper functioning of the market and by developing the dialogue between consumer organizations and business, inter alia with a view to the conclusion of voluntary agreements, inter alia in the field of dispute settlement. The adoption of the e-commerce Directive will be a good test for the latter approach. The acceptance of the proper functioning of the (internal) market and an effective competition policy as the very foundations of consumer policy does not mean that the consumer is reduced to the status of a benefit-maximizing creature. Consumer wants, no matter how frivolous (e.g. snob appeal) or serious (care for the environment, elimination of child labour, animal welfare, the level of wages in poor countries of production) these wants are, can be expressed in the market. Measures of consumer protection which (unlike precontractual information duties) restrict the functioning of the market (e.g. the control of the content of the transaction) should be specifically justified; that is to say, they must proportionate to the objective pursued, for instance (in case of content control) protection against dangers which, in view of the complexity of the good or the service, cannot be discovered on the basis of information to be disclosed in the pre-contractual phase. Protection of weak citizens and protection of the public at large against health and safety hazards should be appraised on their own merits, and are not an objective of “consumer” policy. The principle of proportionality also suggests a preference for general clauses (good faith, honest business practices, fairness, etc.) in order to protect consumers against misleading and unfair marketing practices. Specific regulations (such as per se prohibitions on sale at a loss, discounts, premium offers, joint offers, special sales offers, clearance sales, unsolicited offers) are likely to restrict competition between suppliers even in situations where the consumer at large is not in need of protection. The recent EC Directive allowing comparative advertising is consistent with this view. Finally, the development of new technologies, in particular the Internet, raises the question how the Community can protect its consumers against suppliers established outside the Community. International co-operation seems more than necessary.