Common Market Law Review 40: 1107–1135, 2003. c 2003 Kluwer Law International. Printed in the Netherlands.


MINIMUM HARMONIZATION FOR THE COMPLETION OF THE INTERNAL MARKET? THE EXAMPLE OF CONSUMER SALES LAW PETER ROTT ∗

1. Introduction EC consumer law, and to some extent EC health law, face a dilemma. The EC Treaty does not give full competence to the EC for the regulation of consumer law or health law. Therefore, almost all consumer law Directives have been adopted as internal market measures under Article 95 EC and its predecessors.1 Article 95 EC has also been used for regulating health-related issues.2 The introduction of Articles 152 and 153 EC has not changed the relevance of Article 95 EC in this respect.3 Consequently, directives in these areas (have to) claim to serve the functioning of the internal market. Recital 4 of Directive 1999/44/EC on consumer sales and guarantees even talks of the “completion” of the internal market. At the same time, most EC consumer law directives follow the concept of minimum harmonization,4 and so do some health law direc∗

Junior Professor for Private Law, in particular European Private Law, University of Bremen. 1. The only exception is Directive 98/6/EC on the indication of prices, O.J. 1998, L 80/27. 2. This is different in environmental law where market-related Directives are based on Art. 95 EC whilst Directives primarily aimed at the protection of the environment are based on Art. 175 EC. See e.g. Case C-300/89, Commission v. Council, [1991] ECR I-2867; Case C-155/91, Commission v. Council, [1993] ECR I-939; Case C-187/93, European Parliament v. Council, [1994] ECR I-2857. 3. See e.g. Case C-183/00, Maria Victoria Gonz´alez S´anchez v. Medicina Asturiana SA, [2002] ECR I-3901 para 24. See also infra, at 4. 4. See e.g. Art. 7(1) of Directive 84/450/EEC on misleading advertising, O.J. 1984, L 250/17, as amended by Directive 97/55/EC on comparative advertising, O.J. 1997, L 290/18; Art. 8 of Directive 85/577/EEC on contracts negotiated away from business premises, O.J. 1985, L 372/31; Art. 8 of Directive 93/13/EEC on unfair terms in consumer contracts, O.J. 1993, L 95/29; Art. 14(1) of Directive 97/7/EC on distance contracts, O.J. 1997, L 144/19. The Product Liability Directive 85/374/EEC, O.J. 1985, L 210/29, forms an exception amongst the earlier Directives. According to ECJ judgments of April 2002, this Directive fully defines the balance of interests between producers and consumers, from which Member States are only permitted to deviate inasmuch the Directive expressly permits so. See Case C-52/00, Commission v. France, [2002] ECR I-3827, para 24, and Case C-154/00, Commission v. Greece, [2002] ECR I-3879, para 20.

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tives.5 For example, Article 8(2) of Directive 1999/44/EC on consumer sales and guarantees6 reads: “Member States may adopt or maintain in force more stringent provisions, compatible with the Treaty in the field covered by this Directive, to ensure a higher level of consumer protection”. The main reason for the concept of minimum harmonization is, of course, that the various EC Member States have great difficulties in finding agreement on the appropriate level of protection to be afforded to consumers. Even though the EC Treaty seeks a high level of consumer protection, it does not oblige the EC legislature to adopt the highest level of consumer protection that can be found in any particular Member State.7 The final text of a consumer law directive always represents a compromise between Member States, some of whom have more protective attitudes whereas others have less. Consequently, those who follow a more protective approach wish to reserve their legislative freedom to adopt or maintain a higher level of protection. In this respect, the inclusion of minimum harmonization clauses was needed to allow the EC legislature to secure the adoption of EC consumer law measures.8 However, the situation is changing. More recent Directives, such as Directives 2000/31/EC on electronic commerce9 and 2002/65/EC on distance marketing of financial products10 have expressly been adopted as total harmonization Directives.11 The aim of a “high common level of consumer protection” has also been expressed in the Community consumer policy strategy for 2002 to 2006,12 with further detail in the related Communication by the

5. See, in particular, Art. 5 of the annulled Directive 98/43/EC on advertising and sponsorship of tobacco products, O.J. 1998, L 213/9, and Art. 13 (2) of Directive 2001/37/EC concerning the manufacture, presentation and sale of tobacco products, O.J. 2001, L 194/26. Environmental law Directives based on Art. 95 EC, in contrast, are all total harmonization Directives. See infra, at 4. 6. Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees, O.J. 1999, L 171/12. 7. See Case C-233/94, Germany v. European Parliament and Council, [1997] ECR I-4205, para 48. See also Case C-52/00, Commission v. France, [2002] ECR I-3827, Opinion of A.G. Geelhoed, para 55, note 10. 8. See e.g. Micklitz, “Zur Notwendigkeit eines neuen Konzepts f¨ur die Fortentwicklung des Verbraucherrechts in der EU”, (2003) Verbraucher und Recht, 2 at 7. 9. Directive 2000/31/EC on electronic commerce, O.J. 2000, L 178/1. 10. Directive 2002/65/EC on the distance marketing of consumer financial services, O.J. 2002, L 271/16. 11. See also Art. 30(1) of the proposal for a new Directive on credit for consumers, O.J. 2002, C 331 E/200. The new Directive 2003/33/EC on advertising and sponsorship of tobacco products, O.J. 2003, L 152/16, does not provide for a minimum harmonization clause either. Instead, Art. 8 guarantees the free movement of goods and services that comply with the Directive. 12. Council Resolution on Community consumer policy strategy 2002–2006, O.J. 2003, C 11/1, at I. Emphasis added.

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Commission.13 The reason given for this recent approach is that total harmonization serves the purposes of the internal market better than minimum harmonization since the latter still allows for different sets of rules in the Member States. This leads us back to the old question: to what extent does the internal market approach allow for the adoption of minimum harmonization directives and the existence of related incoherence of national rules even after their implementation. Unlike other EC competences, such as Article 137(2)(b) EC on the protection of workers, Article 95(1) EC does not explicitly mention the adoption of minimum requirements. In contrast, the availability of special rules in Article 95(4) and (5) EC may indicate that, generally speaking, total harmonization should be the way towards the establishment and functioning of the internal market. Related to this is the fact that the diversity of private law rules has been identified, by the Commission, as an obstacle to trade,14 which triggers the question as to whether Article 28 EC limits the Member States’ freedom to make use of minimum harmonization clauses. In light of the above, this article explores how much freedom minimum harmonization clauses give or are able to give to the Member States to afford consumers a higher level of protection than is actually required. With an eye on recent ECJ case law, this article argues that the Member States’ right to adopt or maintain more stringent legislation in favour of the protection of the consumer does not extend to the core provisions of internal market directives, such as Article 2 and 3 of Directive 1999/44/EC on the conformity of goods with the contract and on remedies.15 Building on these considerations, the author offers some reflections on the future balance between harmonization for the completion of the internal market and diverging national protection concepts in EC consumer law.

2. Limitations by the EC Treaty As Article 8(2) of Directive 1999/44/EC explicitly states, Member States may only adopt or maintain more stringent provisions where they are “compatible 13. Commission’s Communication on Consumer Policy Strategy 2002–2006, O.J. 2002, C 137/2, at 3.1. 14. Proposal for a Directive on the sale of consumer goods and associated guarantees, COM(95)520 final, 25 and 27. See also Micklitz, “Ein einheitliches Kaufrecht f¨ur Verbraucher in der EG?”, (1997) EuZW, 229 at 237. 15. It should be mentioned at the outset that these two aspects of Directive 1999/44/EC, the conformity test and the remedies, pose different harmonization questions: in the case of the “conformity” of goods, the issue of a harmonized interpretation of the ground for legal action is addressed, whereas in the case of the set of remedies, the Member States’ freedom of affording a higher level of consumer protection concerning the legal consequences is at stake.

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with the Treaty”. Such a reference to compatibility with the Treaty, whilst self-evident,16 has been introduced into some of the more recent consumer law Directives whereas it was not part of earlier minimum harmonization clauses.17 Limitations to the adoption or maintenance of more stringent provisions can, in particular, result from the free movement of goods, Article 28 EC,18 but possibly also from the competence rule of Article 95 EC. 2.1. The free movement of goods, Article 28 EC Since consumer sales law regulates cross-border trade in goods, rules that go beyond the level of consumer protection as required by Directive 1999/44/EC may have to be tested against Article 28 EC. 2.1.1. ECJ case law on minimum harmonization and the four freedoms The fundamental freedoms, and especially the free movement of goods, have received a great deal of attention in the context of ECJ case law on misleading advertising. Like Directive 1999/44/EC, Directive 84/450/EEC on misleading advertising includes a minimum harmonization clause, in Article 7(1). In a number of cases – most of them from Germany, which probably used to have the most protective system of advertising law – the question arose how much protection Member States were allowed to afford to consumers. Disputes centred around the consumer image towards which Member States should direct their protective measures. In a number of cases, national courts had regarded advertising, often in the form of packaging or labelling, as having the potential to mislead consumers and had therefore prohibited such advertising. The ECJ took a more restrictive view and interpreted “misleading” as meaning misleading to the “average consumer”, whom the ECJ described as being reasonably well informed and reasonably observant and circumspect.19 This 16. See e.g. Pfeiffer, “Richtlinie 93/13/EWG des Rates u¨ ber missbr¨auchliche Klauseln in Verbrauchervertr¨agen”, in Grabitz and Hilf (Eds.), Das Recht der Europ¨aischen Union, vol. III, A 5, Art. 8, at 20. 17. See also Klauer, “General clauses in European Private Law and ‘stricter’ national standards: The Unfair Terms Directive”, (2001) European Review of Private Law (hereafter: ERPL), 187 at 202. 18. See Case C-322/01, Deutscher Apothekerverband e.V. v. 0800 DocMorris NV and Jacques Waterval, Opinion of A.G. Stix-Hackl of 11 March 2003, nyr, para 51, with respect to Art. 14 of Directive 97/7/EC. See also Staudenmayer, “The Directive on the Sale of Consumer Goods and Associated Guarantees – a Milestone in the European Consumer and Private Law”, (2000) ERPL, 547 at 562; Grundmann, in Grundmann and Bianca (Eds.), EUKaufrechtsrichtlinie (Dr. Otto Schmidt, 2002), Art. 8, para 12; Oughton and Willett, “Quality Regulation in European Private Law”, 25 Journal of Consumer Policy (2002), 299 at 301. 19. Case C-112/99, Toshiba Europe GmbH v. Katun Germany GmbH, [2001] ECR I-7945, para 52; Case C-44/01, Pippig Augenoptik GmbH & Co. KG v. Hartlauer Handelsgesellschaft

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is a consumer image that the ECJ applied to Article 28 EC20 as well as to a number of pieces of secondary legislation which all prohibit actions that may mislead a consumer.21 In this context, it is noteworthy that most of these measures have been held to be total harmonization measures.22 Therefore, the ECJ merely had to interpret the relevant provisions of EC law prohibiting actions which may mislead a consumer. In contrast, one might have expected that the minimum harmonization clause of Article 7(1) of Directive 84/450/EEC would make a difference. However, notwithstanding the minimum harmonization character of Directive 84/450/EEC, the ECJ did not hesitate to apply the usual test under Article 28 EC (ex 30) and to argue that a more protective national interpretation of “misleading”, or similar notions, constitutes an obstacle to the free movement of goods which cannot be justified on the grounds of consumer protection.23 In summary, one could refer to the Opinion of A.G. Jacobs in Warsteiner. He first established that the geographical indication “Warsteiner”, which refers to a small town in Germany, was not misleading to the consumer, even though the beer in question was not brewed in Warstein. Thus, the prohibition of using the indication “Warsteiner” could not be justified as a measure that was necessary for the protection of consumers, under Article 28 EC. Nor could this notion “mismbH, judgment of 8 Apr. 2003, nyr, para 55. Usually, national courts should be able to assess any misleading effect without ordering an expert’s report or commissioning a consumer research poll, see Case C-210/96, Gut Springenheide GmbH and Rudolf Tusky v. Oberkreisdirektor des Kreises Steinfurt, [1998] ECR I-4657, para 30. Only in exceptional cases does the ECJ not require a purely normative approach but allows Member States’ courts to base their decisions on empirical data where a case is particularly difficult to decide. See e.g. Case C-373/90, Criminal proceedings against X, [1992] ECR I-131, para 15; Gut Springenheide, para 37; Case C-220/98, Est´ee Lauder Cosmetics GmbH & Co. OHG v. Lancaster Group GmbH, [2000] ECR I-117, para 31. See also Roth, “Zur Tragweite der Harmonisierung im Recht des unlauteren Wettbewerbs”, in Immenga, M¨oschel and Reuter (Eds.), Festschrift f¨ur Ernst-Joachim Mestm¨acker (Nomos, 1996), p. 725 at 726 et seq.; Weatherill, “Recent case law concerning the free movement of goods: Mapping the frontiers of market deregulation”, 36 CML Rev., 51 at 56 et seq.; Stuyck, “European consumer law after the Treaty of Amsterdam: Consumer policy in or beyond the Internal Market?”, 37 CML Rev., 367 at 391–2; Westermann, “Bek¨ampfung irref¨uhrender Werbung ohne demoskopische Gutachten”, (2002) Gewerblicher Rechtsschutz und Urheberrecht, 403 et seq. 20. See Case C-470/93, Verein gegen Unwesen in Handel und Gewerbe K¨oln e.V. v. Mars GmbH, [1995] ECR I-1923, para 24. 21. See Gut Springenheide, supra note 19, para 31, concerning Regulation (EC) No. 1907/90 on certain marketing standards for eggs; Est´ee Lauder, supra note 19, para 30, concerning Directive 76/768/EEC on cosmetic products. See also Case C-218/01, Henkel KGaA v. Deutsches Patent- und Markenamt, Opinion of A.G. Ruiz-Jarabo Colomer of 14 Jan. 2003, nyr, para 19 et seq., on trademark law, and Case C-303/97, Verbraucherschutzverein e.V. v. Sektkellerei G.C. Kessler GmbH & Co. KG, [1999] ECR I-513, Opinion of A.G. Fennelly, para 33, concerning Regulation (EEC) No 2333/92 on the description and presentation of sparkling wines. 22. This applies to Directive 76/768/EEC, see Est´ee Lauder, supra note 19, para 23, with further references. 23. See e.g. Mars, supra note 20. See also Klauer, supra note 17, 187 at 208 et seq.

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lead” the consumer in the terms of Article 2(1)(a) of Directive 79/112/EEC on labelling, presentation and advertising of foodstuffs,24 a total harmonization measure.25 Then he turned to Directive 84/450/EEC, stressing that this Directive explicitly permitted a higher level of consumer protection.26 He argued that, therefore, the Directive did not in itself prevent Member States from adopting more stringent rules. However, those rules have to be tested against Article 28 EC. As a result, the outcome is just the same as under Directive 79/112/EEC.27 Thus, the minimum harmonization clause does not appear to make a difference where the ground for action “misleading advertising” is concerned.28 2.1.2. Contract law and the free movement of goods Essentially, this case law aims at harmonizing market access rules. Some authors have argued that such an approach should also be applied to EC consumer contract law. With respect to the unfair contract terms Directive 93/13/EEC, it was argued that the standard of fairness to be observed under Article 3 should be interpreted with regard to a reasonable average consumer,29 and Article 28 EC could also play a role in consumer sales law. Whether or not contract law rules are capable of violating Article 28 EC has been subject to controversial discussion.30 The ECJ has merely touched 24. Directive 79/112/EEC on labelling, presentation and advertising of foodstuffs for sale to the ultimate consumer, O.J. 1979, L 33/1. 25. See Case C-312/98, Schutzverband gegen Unwesen in der Wirtschaft e.V. v. Warsteiner Brauerei Haus Cramer GmbH & Co. KG, [2000] ECR I-9187, Opinion of A.G. Jacobs, para 59, 63, 64. 26. Ibid., para 65. The ECJ did not even mention Directive 84/450/EEC in its judgment. See also Pippig Augenoptik, supra note 19, Opinion of A.G. Tizzano of 12 Sept. 2002, nyr, para 47, who emphasizes that Member States have the right to use a more restrictive notion of misleading advertising than the Directive does, without offering an idea as to how such a notion could be more restrictive and still in line with Art. 28 EC. An example may be German case law on § 3 of the Unfair Competition Act (Gesetz gegen den unlauteren Wettbewerb, UWG) according to which a reasonably well-informed and reasonably observant and circumspect consumer may not always focus his awareness on advertising and may therefore be a fleeting consumer in certain situations. See e.g. judgment of 20 Dec. 2001, Bundesgerichtshof, (2002) Gewerblicher Rechtsschutz und Urheberrecht, 715. For an analysis of recent German case law see Michel, “Ungleichgewicht einzelner Angaben bei der Blickfangwerbung am Beispiel der Entscheidungen ‘Einzelteil-R¨aumung’, ‘Orient-Teppichmuster’ kontra ‘Computerwerbung’ – Auswirkungen des europ¨aischen Verbraucherbildes auf die Grunds¨atze der Blickfangwerbung”, (2002) Wettbewerb in Recht und Praxis, 389 et seq. 27. Ibid., para 65. 28. See also Micklitz, in Reich and Micklitz, Europ¨aisches Verbraucherrecht, 4th ed. (Nomos, 2003), 312 et seq., with further references. See, in contrast, the analysis by Roth, supra note 19, 725 at 736 et seq. ¨ 29. See Heinrichs, “Das Gesetz zur Anderung des AGB-Gesetzes”, (1996) NJW, 2190 at 2197; Klauer, supra note 1, 187 at 200 et seq. 30. See e.g. Roth, “Die Freiheiten des EG-Vertrages und das nationale Privatrecht”, (1994) Zeitschrift f¨ur Europ¨aisches Privatrecht, 5 et seq.; Remien, “Grenzen der gericht-

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on this issue. In CMC Motorradcenter, the ECJ rejected the idea that precontractual information obligations imposed on the parties by German law obstructed the free movement of goods.31 However, according to established ECJ case law, any rule capable of hindering directly or indirectly, actually or potentially, intra-Community trade constitutes a measure having an effect equivalent to a quantitative restriction and therefore violates Article 28 EC.32 In this context, it must be remembered that Article 28 EC guarantees traders free access to the market in all Member States.33 Clearly, different national rules concerning the conformity of goods with the contract force foreign traders to adjust to different consumer expectations, and possibly to sell goods of different qualities throughout the EC.34 In Alsthom Atlantique, the ECJ mentioned in passing that traders could avoid such difficulties by including a choice of law clause for their own laws.35 This way is, however, seriously restricted in the field of consumer law where it is not possible to derogate from the mandatory provisions of the law of the consumer.36 Thus, national consumer sales law is, in principle, capable of violating Article 28 EC.37 However, since Keck, the ECJ has distinguished between product-related rules and selling arrangements. Only the first category of measures is held to come under Article 28 EC, whereas the second category of measures lichen Privatrechtsangleichung mittels der Grundfreiheiten des EG-Vertrages”, (1994) JuristenZeitung, 349 et seq.; M¨ulbert, “Privatrecht, die EG-Grundfreiheiten und der Binnenmarkt”, 159 Zeitschrift f¨ur das gesamte Handelsrecht (1995), 2 et seq.; von Wilmowsky, “EG-Freiheiten und Vertragsrecht”, (1996) Juristen-Zeitung, 590 et seq.; Herwig, Der Gestaltungsspielraum des nationalen Gesetzgebers bei der Umsetzung von europ¨aischen Richtlinien zum Verbrauchervertragsrecht (Peter Lang, 2002), pp. 104 et seq. 31. Case C-93/92, CMC Motorradcenter GmbH v. Pelin Baskiciogullari, [1993] ECR I5009, para 11. 32. See Case 8/74, Procureur du Roi v. Benoˆıt and Gustave Dassonville, [1974] ECR 837; CMC, supra note 31, para 9. 33. Opinion in DocMorris, supra note 18, para 74. See also Reich, in Reich and Micklitz, Europ¨aisches Verbraucherrecht, 4th ed. (Nomos, 2003), p. 52. 34. See also Pfeiffer, supra note 16, Art. 8, at 22; Langner, “Das Kaufrecht auf dem Pr¨ufstand der Warenverkehrsfreiheit des EG-Vertrages”, 65 Rabels Zeitschrift f¨ur ausl¨andisches und internationales Privatrecht (2001), 222 at 232. 35. Case C-384/93, Alsthom Atlantique SA v. Compagnie de construction m´ecanique Sulzer SA, [1991] ECR I-107, para 15. See also Grundmann, “Europ¨aisches Handelsrecht”, 163 Zeitschrift f¨ur das gesamte Handelsrecht (1999), 635 at 656 et seq. 36. See e.g. Art. 7(2) of Directive 1999/44/EG, and, more generally, Art. 5 of the Rome Convention on the law applicable to contractual obligations. See also Roth, “Der Einfluß des Europ¨aischen Gemeinschaftsrechts auf das Internationale Privatrecht”, 55 Rabels Zeitschrift f¨ur ausl¨andisches und internationales Privatrecht (1991), 623 at 652 et seq.; Grundmann, supra note 18, Einl., para 18. 37. This appears to be implied by, e.g., Staudenmayer, supra note 18, 546 at 562; Oughton and Willett, supra note 18, 299 at 301. See also von Wilmowsky, supra note 30, 590 at 592. More cautious is Remien, supra note 30, 349 at 351.

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does not constitute an obstacle to trade as long as it applies to all traders without discrimination.38 The existence of a “third category” of measures39 has recently been rejected by A.G. Stix-Hackl, who also clarified the distinction between product-related rules and selling arrangements.40 Productrelated rules are rules that lay down requirements to be met by goods, such as those relating to designation, form, size, weight, composition, presentation, labelling, packaging. Generally speaking, national rules that impose additional costs on imported goods cannot be excluded from the scope of application of Article 28 EC.41 This applies primarily but not exclusively to national rules that require the adjustment of the properties of goods or their appearance.42 Furthermore, differing national contract law rules induce information costs that may disadvantage foreign traders.43 In fact, the Commission argued in the first proposal for a Consumer Sales Directive that a harmonized system should reduce the traders’ expenses for investigating the relevant national laws, in order to adjust their marketing strategies accordingly.44 This argument is now being reiterated for justifying the need for a European contract law.45 Information obligations that are not physically attached to goods, as in CMC Motorradcenter, would not appear to be product-related. In contrast, national laws on the quality that is required of goods with a view to their conformity with the contract are certainly product-related since they determine the primary obligations of the seller.46 Under the Keck test, they therefore qualify for the application of Article 28 EC. National rules on contractual liability do not sit easily in either category. In Alsthom Atlantique, it was discussed whether the strict French liability rules (action directe) violated Article 29 EC because they disadvantaged French exporters as compared with traders from other Member States. The ECJ has not answered the question.47 Different liability rules may have an 38. Joined Cases C-266 & 267/91, Criminal proceedings against Bernard Keck and Daniel Mithouard, [1993] ECR I-6097, with a case note by Roth, 31 CML Rev. (1994), 845 et seq. For a summary see Opinion in DocMorris, supra note 18, paras. 58 et seq. 39. See e.g. M¨ulbert, supra note 30, at 18. 40. See Opinion in DocMorris, supra note 18, para 60. 41. See Opinion in DocMorris, supra note 18, para 63. See also M¨ulbert, supra note 30, at 21. 42. Opinion in DocMorris, supra note 18, para 63. 43. See, however, the scepticism expressed by Roth, supra note 30, at 28. 44. First proposal, COM(95)520 final, 25 and 27. See also Micklitz, supra note 14, at 237. 45. See the Communication on European Contract Law, COM(2001)398 final, 9, and the Communication “A More Coherent European Contract Law”, COM(2003)68 final, 11 et seq. See also Staudenmayer, “The Commission Communication on European Contract Law: What future for European Contract Law?”, (2002) ERPL, 249 at 254–5. 46. The primary obligations appear to be attributed some relevance by M¨ulbert, supra note 30, at 24. 47. Case C-384/93, Alpine Investments BV v. Minister van Financi¨en, [1995] ECR I-1141.

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impact on intra-Community cross-border trade, not least because they may cause different insurance premiums.48 Nevertheless, they do not relate to the quality of the product, and thus do not appear to be product-related, under the Keck test.49 Article 28 EC therefore catches rules that relate to product quality, whereas rules on liability will usually fall outside its scope. 2.1.3. More stringent provisions or different provisions? Article 8(2) of Directive 1999/44/EC allows for more stringent national legislation “in the field covered by this Directive”. This expression refers to the scope of application of Directive 1999/44/EC. The relationship between minimum harmonization clauses and the scope of application of EC secondary legislation has not yet been elaborated very clearly in ECJ case law. The leading case seems to be di Pinto which was decided under the Doorstep Selling Directive 85/577/EEC. In di Pinto, the French Cour de Cassation had referred the question to the ECJ as to whether French law could protect a trader who was canvassed for the purpose of concluding an advertising contract concerning the sale of his business. The ECJ held that such a businessman was not to be considered a consumer even though this particular contract was not his usual business. Therefore, Directive 85/577/EEC did not protect him. Nevertheless, the ECJ held that the Directive did not prevent Member States from protecting traders from doorstep selling if they wished to do so. This, however, was not a question of the minimum harmonization clause of Article 8 of Directive 85/577/EEC. Rather, the Directive did not apply at all to the instant case since the French scenario fell outside the scope of application of the Directive.50 Conversely, one might question whether the Misleading Advertising Directive 84/450/EEC does apply at all to advertising that is not misleading, under the definition of Article 2(2) of the Directive as interpreted by the ECJ. In other words, one could consider advertising that does not mislead the average consumer but merely consumers who are more easily deceived than the average consumer (sometimes referred to as “vulnerable consumers”) as falling outside the scope of application of Directive 84/450/EEC.51 Consequently, Article 7(1) of Directive 84/450/EEC would not apply. This view 48. See Reich, supra note 33, 62. 49. See also Reich, supra note 33, 62, and the contrasting opinion of Langner, supra note 34, at 232. 50. Case C-361/89, Criminal proceedings against Patrice di Pinto, [1991] ECR I-1189, paras. 15 et seq. 51. This interpretation may find support in Case C-373/90, Criminal proceedings against X, [1992] ECR I-131, Opinion of A.G. Tesauro, para 10, where he stated: “It is not a question of specific measures aimed at consumer protection, but of the interpretation of the general definitions given by the directive . . . ”. See also Case C-71/02, Herbert Karner IndustrieAuktionen GmbH v. Troostwijk GesmbH, Opinion of A.G. Alber of 8 Apr. 2003, nyr, para 36,

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finds support in the wording of Article 7(1) that refers to “more extensive protection, with a view to misleading advertising”.52 It is highly unlikely that the notion of “misleading advertising” in Article 7(1) should not be identical with the definition given in Article 2(2) of Directive 84/450/EEC. Thus, a case in which Member States protect consumers beyond what is adequate for the average consumer would come directly under the Treaty rules on the free movement of goods, Article 28 EC, and the free movement of services, Article 49 EC. Indeed, in Pall, the ECJ argued that Directive 84/450/EEC establishes minimum objective criteria for determining whether advertising is misleading and that the contested national measure found no justification in this Directive, without even mentioning the minimum harmonization clause of Article 7.53 Equally, one could argue that the Unfair Contract Terms Directive 93/13/EEC only applies to terms that are unfair, under Article 3. And the rules of Directive 1999/44/EC would only apply to goods that are not in conformity with the contract, under Article 2. Again, the minimum harmonization clauses of Article 8 of Directive 93/13/EEC and of Article 8(2) of Directive 1999/44/EC would be irrelevant as far as the grounds for action are concerned. This argument presupposes, of course, that the notion of unfairness and the notion of conformity with the contract have been harmonized by Directives 93/13/EEC and 1999/44/EC and are therefore not open to more protective interpretation by the Member States. For Directive 93/13/EEC, this can be inferred from Oc´eano, where the ECJ undertook to interpret Article 3 of Directive 93/13/EEC with reference to a jurisdiction clause.54 Generally speaking, the ECJ interprets general clauses autonomously unless a Directive explicitly refers to the Member States’ own interpretation.55 In the context of Directive 1999/44/EC, recitals 14, 15 and 18 deserve attention. According to these recitals, the Member States’ rules on the passing of the risk, on the effect on the reimbursement of the consumer’s use of the delivered goods, and on suspension or interruption of limitation periods remain unaffected by the Directive. From this, it can be deduced that the other terms used by Directive where he stated that the protection of consumers from abstract dangers was not subject of Directive 84/450/EEC. 52. Emphasis added. 53. Case C-238/89, Pall Corp. v. P.J. Dahlhausen & Co. [1990] ECR I-4827, para 22. 54. Case C-240/98 to C-244/98, Oc´eano Grupo v. Murciano Quintero and others, [2000] ECR I-4941. See also Remien, “Die Vorlagepflicht bei Auslegung unbestimmter Rechtsbegriffe”, 66 Rabels Zeitschrift f¨ur ausl¨andisches und internationales Privatrecht (2002), 503 at 519. 55. See e.g. Case 327/82, Ekro B.V. Vee- en Vleeshandel v. Produktschap voor Vee en Vlees, [1984] ECR 107, para 11; Case C-287/98, Luxembourg v. Berthe Linster, Aloyse Linster und Yvonne Linster, [2000] ECR I-6917, para 43; Case C-357/98, The Queen v. Secretary of State for the Home Department, ex parte Nana Yaa Konadu Yiadom, [2000] ECR I-9265, para 26.

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1999/44/EC, including those on the conformity of goods with the contract, are to be interpreted autonomously by the ECJ.56 This is despite the fact that the conformity test of Article 2 of Directive 1999/44/EC has a lot of flexibility since it, at least, provides for the criteria to be taken into account when selling goods. One may recall that the concept of misleading advertising is similarly flexible, and still the ECJ has found that the interpretation given to this by some national decisions went beyond the intentions of Directive 84/450/EEC and, therefore, constituted an obstacle to trade. In summary, national measures that do not deal with the sale of consumer goods and those that are not related to the conformity of goods with the contract under the test of Article 2 of Directive 1999/44/EC do not come under Article 8(2) of the Directive. This latter provision merely applies to national measures within the scope of Directive 1999/44/EC, such as the remedies system or time periods. 2.1.4. A wider scope of application and Article 28 EC The question would then be whether Member States can justify national provisions that protect the consumer from clauses that EC law does not consider to be unfair, and from goods that EC law regards as in conformity with the contract. In the light of ECJ case law on (not) misleading advertising, this appears to be unlikely.57 Thus, it would seem unlikely that absolute (rather than flexible) quality standards could be in compliance with Article 2 of Directive 1999/44/EC. Furthermore, some of the issues dealt with in Article 2 of Directive 1999/44/EC show a lot of similarity with the law on misleading advertising. According to Article 2(2)(d), goods have to “show the quality and performance which are normal in goods of the same type and which the consumer can reasonably expect, given the nature of the goods and taking into account public statements on the specific characteristics of the goods made about them by the seller, the producer or his representative, particularly in advertising or on labelling”.58 What the consumer may rely on may vary due to the circumstances of the contract but their relevance surely depends on the consumer image Directive 1999/44/EC is based on. Most probably, the ECJ would apply the same consumer image of a reasonably well-informed and reasonably observant and circumspect consumer to Directive 1999/44/EC 56. For an autonomous interpretation of the conformity test and the rules on remedies, see also Oughton & Willett, supra note 18, 299 at 304, and Weatherill, “Consumer Guarantees”, 110 Law Quarterly Review (1994), 545 at 547. 57. See also Case C-382/87, R. Buet and Educational Business Services (EBS) v. Minist`ere Public, [1989] ECR 1235. In this case, the ECJ held that the consumer protection mechanisms provided by the Doorstep Selling Directive 85/577/EEC were normally sufficient to protect the consumer, although in this particular case, consumer purchasers of educational material might have been particularly vulnerable since they might have been behind with their education. 58. Emphasis added.

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that appears in the ECJ judgments on misleading advertising.59 Equally, this consumer image may apply to Article 2(3) of Directive 1999/44/EC according to which there shall be deemed not to be a lack of conformity if, at the time the contract was concluded, the consumer was aware, “or could not reasonably be unaware”60 of, the lack of conformity. Transposing the ECJ’s reasoning in the advertising cases to Article 2 of Directive 1999/44/EC, one may conclude that it would run counter of Article 28 EC to grant further protection to consumers under Article 2(2)(d) and (3) of Directive 1999/44/EC because the EC legislature has decided not to protect consumers who have unreasonable expectations.61 Thus, consumer contract law Directives do not only set minimum standards for the protection of consumers but they also define the grounds in which action in favour of the consumer is justified. The Member States’ freedom under the minimum harmonization clauses of the relevant Directives is limited to regulating the legal consequences once action is justified, for example, because a term of a consumer contract is unfair or because goods are not in conformity with the contract. 2.1.5. More stringent rules and Article 28 EC In contrast, more stringent rules within the scope of application would come under the minimum harmonization clause of Article 8(2) of Directive 1999/44/EC. Still, such more stringent rules have to be tested against Article 28 EC, as Article 8(2) of the Directive clarifies. However, the mere existence of the minimum harmonization clause demonstrates that the Member States have some discretion in granting a higher level of protection to consumers, provided that there are no other restrictions in place.62 Thus, only excessive rules that make the importation of goods into the Member State in question overly burdensome, for example, because insurance premiums would be unaffordable, would probably exceed the boundaries set by Article 28 EC. 2.1.6. Conclusion As far as the free movement of goods is concerned, one has to distinguish between the grounds of action, and their legal consequences. Whilst Article 28 59. See also Bernreuther, “Sachmangelhaftung durch Werbung”, (2002) Wettbewerb in Recht und Praxis, 368 at 371–3; Weiler, “Haftung f¨ur Werbeaussagen nach neuem Kaufrecht”, (2002) Wertpapier-Mitteilungen, 1784 at 1790. 60. Emphasis added. 61. See also the deviating opinion of Augenhofer, “Bedeutung von Werbeaussagen – sowohl des Verk¨aufers als auch des Herstellers – f¨ur die Begr¨undung von Gew¨ahrleistungsrechten”, (2001) Juristische Bl¨atter, 82 at 85, who relies on Art. 8(2) of Directive 1999/44/EC, and, more generally, of Roth, supra note 30, at 32–33. 62. See infra, at 2.2.

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EC would seem to limit the Member States’ discretion in offering protection to consumers where EC secondary law does not recognize a ground for action, the minimum harmonization clauses, such as Article 8(2) of Directive 1999/44/EC, allow for more stringent provisions on the legal consequences, so long as the national rules are not excessive. 2.2. The internal market competence, Article 95 EC Restrictions to the Member States’ freedom to adopt more stringent provisions for the protection of consumers might also arise from the legal basis of the Directive concerned. The afore-mentioned EC Directives are all based on Article 95 EC and its predecessors, Article 100a EC and Article 100 EEC. Under Article 95 EC, the EC may adopt measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market. According to Article 95(3) EC, the Commission should take as a base a high level of consumer protection when proposing a measure, and Article 153 EC has extended this duty to the Community.63 The internal market is characterized, according to Article 3(1)(c) EC, by the abolition, as between Member States, of all obstacles to the free movement of goods, persons, services and capital. That market is to comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaty, Article 14 EC. Taking Article 3(1)(c) and Article 14 EC into account, it is obvious that measures taken under Article 95 EC must be intended to improve the establishment and functioning of the internal market.64 In recent ECJ case law, there is evidence that this implies a certain degree of harmonization, disallowing EC Directives that fail to reach such degree of harmonization. This became apparent in the tobacco advertising case, Germany v. European Parliament and Council. According to the ECJ, the measures referred to in (ex-)Article 100a EC must genuinely have that object, actually contributing to the elimination of obstacles to the free movement of goods or to the freedom to provide services, or to the removal of distortions of competition.65 Recently, 63. See Stuyck, supra note 19, at 379. 64. See Case C-376/98, Germany v. European Parliament and Council (tobacco advertising), [2000] ECR I-8419, para 82. 65. Tobacco advertising, cited supra note 64, paras. 84 and 95. See also Weatherill, “The European Commission’s Green Paper on European Contract Law: Context, content and constitutionality”, 24 Journal of Consumer Policy (2001), 339 at 363 et seq.; Howells, “Federalism in USA and EC – The scope for harmonised legislative activity compared”, (2002) ERPL, 601 et seq.

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the ECJ confirmed the boundaries of Article 95 EC in the new tobacco case of British American Tobacco and Imperial Tobacco.66 Thus, a measure taken under Article 95 EC must be designed to prevent actual or future obstacles to trade. In Germany v. European Parliament and Council, the ECJ found a number of reasons why Directive 98/43/EC did not sufficiently contribute to the establishment and the functioning of the internal market. One of them was the minimum harmonization clause in Article 5 of Directive 98/43/EC. Related to this was the problem that the Directive did not guarantee the free movement of goods conforming to its provisions.67 This may indicate that the Maastricht Treaty with its focus on the internal market has changed the competence system of the EC Treaty in emphasizing the harmonization of the Member States’ laws,68 and that a directive which provides for too low a degree of harmonization does not sufficiently contribute to the establishment and functioning of the internal market and cannot therefore be based on Article 95 EC.69 Further evidence can be found in the package travel case of Leitner. The question at stake was whether the traveller’s right to damages in Article 5 of Directive 90/314/EEC included the right to claim damages for non-material losses. Whilst some Member States argued that the vagueness of Article 5 indicated that the answer should be left within the competence of the Member States, the ECJ opted for a harmonized interpretation of Article 5 that included damages for immaterial losses. One of the reasons for this conclusion was that the Directive was based on Article 100a EEC (now 95 EC) and that it was therefore aimed at eliminating the disparities between the national laws and practices of the various Member States in the area of package holidays. The ECJ stated: “It is not in dispute that, in the field of package holidays, the existence in some Member States but not in others of an obligation to provide compensation for non-material damage would cause significant distortions of competition, given that, as the Commission has pointed out, non-material damage is a frequent occurrence in that field.”70 Again, one might ask whether 66. Case C-491/01, The Queen v. Secretary of State, ex parte British American Tobacco (Investments) Limited and Imperial Tobacco Limited, [2002] ECR I-11453, para 60. 67. Tobacco advertising, cited supra note 64, paras. 103, 104. 68. See, however, Roth, supra note 19, at 740, who claims that even a minimum harmonization measure narrows the gaps between the Member States’ laws and therefore contributes to the establishment and the functioning of the internal market. 69. Subsequently, it was suggested that the Doorstep Selling Directive 85/577/EEC was another candidate for invalidity, see Roth, “Europ¨aischer Verbraucherschutz und BGB”, (2001) Juristen-Zeitung, 475 at 477; Weatherill, supra note 6, at 369. Indeed, this Directive has achieved very little harmonization of the Member States’ doorstep selling laws, see Rott, Die Umsetzung der Haust¨urwiderrufsrichtlinie in den Mitgliedstaaten (Nomos, 2000). 70. Case C-168/00, Simone Leitner v. TUI Deutschland GmbH & Co. KG, [ECR] 2002 I-2631, para 21. Annotated by Roth in 40 CML Rev., 937–951. See also the critical comment by Remien, supra note 54, at 528.

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a Directive that made no attempt to harmonize the core issue of damages for defective holidays could have been based on the internal market provision of Article 100a EEC (now Art. 95 EC). In EC consumer law, two mechanisms for making the internal market work are present: reducing transaction costs for traders,71 and increasing the consumers’ confidence.72 With a view to recitals 2, 4, 5 and 6, it becomes clear that Directive 1999/44/EC on consumer sales and guarantees predominantly emphasizes the creation or increase of the consumers’ confidence in buying abroad.73 The EC legislature relied on studies that had identified the lack of consumers’ confidence as one major obstacle to cross-border trade.74 However, another goal named in Directive 1999/44/EC is facilitating competition between sellers.75 The Commission’s Green Paper referred to a poll of 1991 according to which 53% of the consumers questioned mentioned difficulties in having goods replaced or repaired as obstacles to shopping abroad, and concluded that harmonization of consumer sales law would remove an obstacle to the completion of the free market so that the EC had the competence, under what is now Article 95 EC, to adopt a Directive on consumer sales law.76 Most authors agree to this approach.77 Others have raised doubts as to whether Directive 1999/44/EC could be based on Article 95 EC.78 Some authors argue that the stated purpose of the Directive – to increase the consumers’ confidence in shopping abroad – is unrealistic since there are further barriers such as language barriers or difficulties in the settlement of disputes that will still prevent cross-border shopping,79 and indeed the assumption that minimum harmonization of consumer law will lead to an increase in consumer cross-border shopping does not seem to have been based on scientific evidence.80 The consumer poll the Commission quoted apparently did 71. See Wagner, “The economics of harmonization: The case of contract law”, 39 CML Rev., 995, at 1014. 72. See Tenreiro, “Guarantees and After-Sales Service: Brief Analysis of the Green Paper Presented by the European Commission”, (1995) Consumer Law Journal, 79 at 81. 73. See Oughton and Willett, supra note 18, at 302 et seq. 74. See the Commission’s Green Paper “Consumer Guarantees and After-Sales Services”, COM(93)509 final, 11. 75. See recital 3. 76. Green Paper, supra note 74, 11. See also Tenreiro, supra note 72, at 81 et seq.; Staudenmayer, supra note 18, at 548. 77. See Grundmann, supra note 18, Einl., para 28, with further references. 78. See Honsell, “Die EU-Richtlinie u¨ ber den Verbrauchsg¨uterkauf und ihre Umsetzung ins BGB”, (2001) Juristen-Zeitung, 278; Roth, supra note 69, at 478. 79. In contrast, the currency exchange problem has been solved for most Member States, with the introduction of the Euro; see the Commission’s Communication on Consumer Policy Strategy 2002–2006, supra note 13, at 2.3.1. 80. See e.g. Nietzer and Stein, “Richtlinie zum Verbrauchsg¨uterkauf – Auswirkungen in Deutschland und Frankreich”, 99 Zeitschrift f¨ur vergleichende Rechtswissenschaft (2000), 41 at 50; Wagner, supra note 71, at 1011, 1016–7. See also Beale and Howells, “EC harmonization

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not distinguish between practical difficulties in having goods replaced and repaired in general and difficulties due to different consumer sales laws. One could even go further and turn the reasoning of the EC legislature against them. It seems realistic that the consumer will at best be informed about the national implementation of EC law, as Article 9 of Directive 1999/44/EC requires. Therefore, the consumer may expect to find the same rules abroad. With a minimum harmonization Directive this may not be the case if the consumer’s resident State has adopted a higher level of consumer protection than required.81 Thus, the consumer may end up as disappointed or insecure as before.82 With such weak evidence for the establishment of the internal market through increasing consumer confidence, compliance with Article 95 EC may call at least for additional improvement for cross-border trade in a different form: by facilitating trade for traders through harmonizing national legislation and diminishing information costs.83 The ECJ has consistently held that in interpreting a provision of secondary Community law, preference should as far as possible be given to the interpretation which renders the provision consistent with the Treaty.84 Thus, Article 95 EC may require an interpretation of Directive 1999/44/EC that facilitates trade for traders. Assuming that unlimited discretion under Article 8(2) of Directive 1999/44/EC might lead to different sets of rules in all the Member States, and therefore to insufficient facilitation of trade for traders whose information costs would not be reduced, Article 8(2) may have to be interpreted in such a way that makes it a real contribution to the completion of the internal market, i.e. in a way that delimits the Member States’ regulative freedom. Facilitating cross-border trade for traders would, in particular, require ensuring that traders can sell goods that are in conformity with the conof consumer sales law – A missed opportunity?”, 12 Journal of Contract Law (1997), 21 at 23. Other authors argue at least that the traders are more important for the creation of a market than the consumers. See e.g. Grundmann, “Verbraucherrecht, Unternehmensrecht, Privatrecht – warum sind sich UN-Kaufrecht und EU-Kaufrechts-Richtlinie so a¨ hnlich?”, 202 Archiv f¨ur civilistische Praxis (2002), 41 at 43. 81. A particular problem in this context is Art. 5(2) on optional notification periods, see infra, at 3.2. 82. See Roth, supra note 69, at 479. 83. This appears to be confirmed by the recent Commission’s Communication on Consumer Policy Strategy 2002–2006, supra note 13, at 2.3.3. 84. See e.g. Case C-314/89, Siegfried Rauh v. Hauptzollamt N¨urnberg-F¨urth, [1991] ECR I-1647, para 17; Case C-181/96, Georg Wilkens v. Landwirtschaftskammer Hannover, [1999] ECR I-399, para 19. See also Case C-236/01, Monsanto Agricultura Italia SpA and others v. Presidenza del Consiglio dei ministri and others, Opinion of A.G. Alber of 13 March 2003, para 112 nyr. See also Mortelmans, “The relationship between the Treaty rules and Community measures for the establishment and functioning of the Internal Market – Towards a concordance rule”, 39 CML Rev., 1303 at 1324–5.

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tract as described in Article 2 of Directive 1999/44/EC in all Member States without facing the risk of contractual liability, which implies that Member States should not be allowed to introduce stricter requirements for conformity. Furthermore, the presumption of conformity should be left untouched by legislatures. Unlike other Directives that leave questions on the burden of proof explicitly in the discretion of the national legislature,85 Directive 1999/44/EC does not provide for such a reference. In fact, the presumption of Article 2 of Directive 1999/44/EC was included by the EC legislature in order to facilitate cross-border trading for traders and forms part of the market access conditions.86 Depending on the extent to which different remedies in the Member States would still distort the competition between traders from different Member States one could even go further and exempt Article 3 of Directive 1999/44/EC from the scope of application of Article 8(2), in order to make the Directive comply with Article 95 EC. In summary, Article 95 EC might require a restrictive interpretation of the minimum harmonization clause of Article 8(2) of Directive 1999/44/EC in such a way that in fact it only allows for more stringent provisions outside the core of the Directive.

3. Implicit limitations in the Directive itself? In addition to the limitations that are set by the EC Treaty, Directive 1999/44/EC itself may limit the freedom of the Member States to make use of the minimum harmonization clause in Article 8(2). Whilst the wording of Article 8(2) has already been dealt with, its context, the aims and objectives of the Directive and also the travaux pr´eparatoires might support this view. 3.1. Explicitly regulated issues In its judgments of April 2002 on the Product Liability Directive 85/374/EEC, the ECJ argued, inter alia, that this Directive provided for a fine-tuned balance of the interests of traders and consumers, which Member States should not be allowed to overrule.87 This argument may well apply to other private law Directives, and in particular to Directive 1999/44/EC. The primary concern 85. See e.g. Art. 15 of Directive 2002/65/EC on the distance marketing of financial products. 86. See also the different rule in German law where the presumption was deleted. See the reasons given by the German Government, Publications of the German Parliament (BT-DrS.) 14/6040, 212. 87. Case C-52/00, Commission v. France, [2002] ECR I-3827, para 24, and Case C-154/00, Commission v. Greece, [2002] ECR I-3879, para 20.

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of traders, other than the limitation periods, are the conformity test and the set of available remedies.88 3.1.1. The context With regard to the context, one could point to the options that have been incorporated into Directive 1999/44/EC. These options relate to the applicability of the Directive to second-hand goods sold at public auctions, Article 1(3), to notification periods, Article 5(2), to the time period for the liability for second-hand goods, Article 7(1), and to language requirements for guarantees, Article (4). In Commission v. France, A.G. Geelhoed raised the question why the EC legislature would include options to derogate from the rules of Directive 85/374/EEC and provide for specific assessment of the effect of those options if Member States were free to deviate from the provisions of the Directive anyway.89 The same question could be asked with regard to Directive 1999/44/EC. Indeed, under Article 5(2) the Commission is called upon to prepare a report on the use Member States make of the option to introduce a notification period.90 By this, the EC attempts to find out whether different national rules on notification periods pose an obstacle to the internal market for consumer goods, and whether the rules should therefore be harmonized in an amendment to Directive 1999/44/EC, as happened in the case of Directive 85/374/EEC with regard to agricultural products.91 One might suspect that deviations from the hierarchical remedies system in relation to which the Directive does not give any options would be even more relevant with a view to possible obstacles to the free movement of goods than differing notification periods. However, in this respect Directive 1999/44/EC does not require the Commission to prepare a specific report. This may indicate that the possibility for different national rules on the remedies system was simply not intended by the Directive, even though this issue could be picked up in the general report that the Commission has to prepare in 2006, according to Article 12 of the Directive. 3.1.2. The aims and objectives of the Directive Directive 1999/44/EC, having been adopted under Article 95 EC, aims at the completion of the internal market, recital 4. The main mechanism to achieve 88. See Wagner, supra note 71, at 1014. 89. See Case C-52/00, Commission v. France, [2002] ECR I-3827, Opinion of A.G. Geelhoed, paras. 47–8. 90. For the relevance of this report see Staudenmayer, supra note 18, at 558. The report was due in January 2003 but has not appeared yet – probably because a number of Member States have not yet implemented the Directive. 91. See Directive 1999/33/EC, O.J. 1999, L 141/20.

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this is, according to recital 2, to create or increase consumer confidence in buying abroad. According to recital 5, the creation of a common set of minimum rules of consumer law, valid no matter where goods are purchased within the Community, will strengthen consumer confidence and enable consumers to make the most of the internal market. However, as mentioned above, the Directive also aims at facilitating cross-border business for traders. Attention might be paid to the somewhat contradictory wording of recital 2. There, the EC legislature refers to the definition of “internal market” and explains that the free movement of goods concerns not only transactions by persons acting in the course of a business but also transactions by private individuals. Then it is stated that this implies that consumers resident in one Member State should be free to purchase goods in the territory of another Member State “on the basis of a uniform minimum set of fair rules governing the sale of consumer goods”.92 And according to Article 1 of Directive 1999/44/EC, the approximation of the Member States’ laws shall ensure a “uniform minimum level of consumer protection in the context of the internal market”.93 With a view to the similar wording of recital 10 of Directive 93/13/EEC, it was argued that the notion of uniformity demonstrated that Directive 93/13/EEC did not merely aim at approximation but at harmonization, at least to some extent.94 On the other hand, the notion of uniformity may also point at ensuring that the minimum level of consumer protection aimed at by the Directive is achieved with uniform mechanisms, i.e. by introducing certain remedies, certain time limits etc. Thus, the use of the term “uniform” is not in itself of major significance. 3.1.3. Travaux pr´eparatoires The legislative process, although not being of decisive importance in the light of the arguments based on Article 95 EC, supports the idea that some of the provisions of Directive 1999/44/EC are meant to be unchangeable by the Member States. In fact, the lengthy negotiations between the Commission, the European Parliament and the Council on the set of remedies95 seem to suggest that the final result should be the last word.96 It is also striking in how much detail Article 3 describes the hierarchy of the various remedies the Directive grants to consumers, namely repair, replacement, rescission and

92. Emphasis added. 93. Emphasis added. 94. See Klauer, supra note 17, at 191. 95. See Staudenmayer, supra note 18, at 554. 96. See also Case C-52/00, Commission v. France, [2002] ECR I-3827, Opinion of A.G. Geelhoed, para 35, for the potential relevance of a lengthy legislative process on the interpretation of the Product Liability Directive 85/374/EEC.

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reduction of price.97 Nevertheless, most authors argue that Member States are free to maintain or introduce a remedies system that is more favourable to the consumer.98 The search for the appropriate balance can be traced through the legislative process.99 From the very beginning, the EC Commission aimed at striking a balance between the obligations of sellers and consumers.100 Also, the proposal was, amongst other things, supposed to facilitate the traders’ crossborder activities by providing for a more accessible legal framework. This should reduce the traders’ expenses for investigating the relevant national laws, in order to adjust their marketing strategies accordingly.101 The first proposal suggested giving the consumer the free choice of all four remedies. This freedom of choice was balanced with a rule that limited the remedy of rescission to the first year after delivery, Article 3(4) of the first proposal. Moreover, Member States were allowed to limit the scope of the rights conferred in cases of minor lack of conformity. The system was changed when a hierarchy of remedies was introduced in the amended proposal. This hierarchy is clearly in the interest of traders who have a preference for the replacement or repair of the product.102 At the same time, the time limit for rescission and replacement was given up, as was the possible limitation of liability in the case of a minor lack of conformity. Another element of Article 3 that seems to be fixed is the exclusion of the right to rescission in cases of a minor lack of conformity. The Directive demonstrates, in Article 3(6), the aim of upholding the contract in cases of minor non-conformity. Apart from protecting the trader, this rule is also meant to accommodate common law countries where this rule is well-established.103

97. See Staudenmayer, supra note 18, at 554: “. . . the rather precise wording does not leave a lot of room of manoeuvre for implementation by Member States”. See also Grundmann, “European sales law – reform and adoption of international models in German sales law”, (2001) ERPL, 239 at 253: “subtle compromise”. 98. See e.g. Bruun Nielsen, “Directive 1999/44/EC of the European Parliament and the Council on certain aspects of the sale of consumer goods and associated guarantees and its influence on Danish law”, (2001) ERPL, 189 at 194; Watterson, “Consumer Sales Directive 1999/44/EC – The impact on English law”, (2001) ERPL 2001, 197 at 210; Hogg, “Scottish law and the European Consumer Sales Directive”, (2001) ERPL, 337 at 346–7; Gsell, “Kaufrechtsrichtlinie und Schuldrechtsmodernisierung”, (2001) JZ, 65 at 67; Jorden & Lehmann, “Verbrauchsg¨uterkauf und Schuldrechtsmodernisierung”, (2001) Juristen-Zeitung, 952 at 957. See also Hondius and Schelhaas, “In conformity with the Consumer Sales Directive – Some remarks on transposition into Dutch law”, (2001) ERPL, 327 at 335. 99. See Staudenmayer, supra note 18, at 557–8. 100. First proposal, COM(95) 520 final, 8. See also Tenreiro, supra note 72, at 86. 101. First proposal, COM(95)520 final, 25 and 27. See also Micklitz, supra note 14, at 237. 102. See Tenreiro, supra note 72, at 86. 103. See Br¨uggemeier, “Zur Reform des deutschen Kaufrecht – Herausforderungen durch die EG-Verbrauchsg¨uterkaufrichtlinie”, (2000) Juristen-Zeitung, 529 at 531.

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On the other hand, it is obvious that the EC legislature did not wish to totally harmonize the Member States’ limitation periods. This stems from recital 17 and can be traced through the legislative history.104 Stricter rules can also be introduced for guarantees where the level of regulation is rather low.105 And one further candidate for stricter national regulation is procedural law where the EC legislature has traditionally been reluctant to interfere with national competence.106 Except for the presumption of conformity in Article 2 of Directive 1999/44/EC,107 there may also be some freedom to regulate the burden of proof. 3.1.4. Conclusion As far as the regulation of the conformity of goods with the contract and the remedies system are concerned, Directive 1999/44/EC provides for a definite solution which Member States cannot alter. This does not mean that the minimum harmonization clause of Article 8(2) does not have any meaning at all. However, it should be used carefully. 3.2. Options and minimum requirements In four cases, Directive 1999/44/EC explicitly leaves options to the Member States: the applicability to second-hand goods sold at public auctions where consumers have the opportunity of attending the sale in person of Article 1(3), the notification period of Article 5(2),108 the limitation period for secondhand goods of Article 7(1), and the establishment of language requirements of Article 6(4). With regard to the topic of this article, the question arises as to how much flexibility these options offer to national legislatures. This question was at stake in the product liability case of Commission v. France. There, the ECJ held that although Article 15 of Directive 85/374/EEC enabled the Member States to remove the exemption from liability under the so-called development risk defence, it did not authorize them to alter the conditions under which that exemption is applied.109 This restrictive interpretation serves 104. See Tenreiro, “La proposition de la Directive sur la vente et les garanties des biens de consommation”, (1996) Revue Europ´eenne de Droit de la Consommation, 187 at 224. 105. See Tenreiro, supra note 104, at 224. 106. See also Klauer, supra note 17, at 205, in the context of Directive 93/13/EEC. For recent development of the EC’s influence on procedural law based on the principle of effectiveness see Rott, “Effektiver Rechtsschutz vor missbr¨auchlichen AGB – Zum Cofidis-Urteil des EuGH”, (2003) EuZW, 5 et seq. 107. See supra, at 2.2. 108. See the critical comments by Staudenmayer, supra note 18, at 557–8, and Kruisinga, “What do consumer and commercial sales law have in common? A comparison of the EC Directive on consumer sales law and the UN Convention on contracts for the international sale of goods”, (2001) ERPL, 177 at 182 et seq. 109. See Case C-52/00, Commission v. France, [2002] ECR I-3827, para 47.

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to reduce the variety of regulation in the Member States, thereby reducing information costs for traders and facilitating cross-border trade. As far as the notification period of Article 5(2) is concerned, the express wording clarifies that the notification period has to be “at least” two months so that longer notification periods are possible. Equally, a reduced time period for second-hand goods may, according to Article 7(1), not be “less than” one year; thus, it could also be 18 months. In contrast, Article 6(4) offers a choice of languages that the guarantee may be required to be drafted in. This choice appears to be exhaustive.

3.3. Non-regulated issues Directive 1999/44/EC merely addresses a selection of sales law issues. Damages have explicitly been excluded.110 Also, related contract law remedies such as misrepresentation, fraud and mistake have not been addressed. Nevertheless, Directive 1999/44/EC has an impact on its legal environment. According to established ECJ case law, the implementation of EC law requires more than the mere transposition into national law. Simultaneously, the legal environment must not be so framed as to make it virtually impossible111 or excessively difficult112 to enforce rights conferred on by EC law. This general “principle of effectiveness”113 applies, inter alia, to EC consumer law, as the ECJ has confirmed in Oc´eano and in Cofidis.114 Vice versa, rules in EC directives that are aimed at protecting the trader from further reaching claims must not be undermined under a different label. Are Member States, for example, allowed to grant consumers the immediate remedy of damages for the lack of conformity of consumer goods? Such a solution would circumvent the hierarchy of remedies sought by the Directive since it would, in fact, offer consumers the option to claim de facto reduction in price on the first hierarchy level. Therefore, damages for the lack of conformity of the goods as such have to be secondary to repair and replacement, lest the 110. See First proposal, COM(95)520 final, 7. 111. See Case 33/76, Rewe-Zentralfinanz eG and Rewe-Zentral AG v. Landwirtschaftskammer f¨ur das Saarland, [1976] ECR 1989, para 5, and Case 45/76 Comet BV v. Produktschap voor Siergewassen, [1976] ECR 2043, paras. 11–18. 112. Case C-312/93, Peterbroeck, Van Campenhout & Cie. SCS v. Belgium, [1995] ECR I-4599, para 12, and Cases C-430/93 and 431/93 Jeroen van Schijndel and Johannes Nicolaas Cornelis van Veen v. Stichting Pensioenfonds voor Fysiothearpeuten, [1995] ECR I-4705, para 17. 113. This notion was first used by the ECJ in Case C-261/95, Rosalba Palmisani v. Istituto nazionale della previdenza sociale (INPS), [1997] ECR I-4025, para 27. 114. See Rott, supra note 106.

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aims and objectives of Article 3 of Directive 1999/44/EC be frustrated.115 In contrast, damages that go beyond the effects of the remedies of Article 3 of Directive 1999/44/EC, such as damages for consequential loss, are not affected in any way by the Directive. Equally, the general rules on misrepresentation or mistake may not lead to a result that undermines the balance established by the Directive. Even though Article 8(1) of Directive 1999/44/EC confirms that the rights resulting from this Directive shall be exercised without prejudice to other rights which the consumer may invoke under the national rules governing contractual or non-contractual liability, this does not mean that Member States have total discretion. Conclusions can be drawn from ECJ case law on Article 13 of the Product Liability Directive 85/374/EEC. According to this latter provision, Directive 85/374/EEC does not affect any rights which an injured person may have according to the rules of the law of contractual or noncontractual liability. In Gonz´alez S´anchez, the ECJ interpreted this provision in a restrictive way, arguing that it only related to rights based on other grounds than those defined in Directive 85/374/EEC.116 A similar problem has arisen under the Vienna Convention on the International Sale of Goods (CISG). According to Article 4 CISG, this Convention only governs the rights and obligations of the seller and the buyer arising from a sales contract but not the validity of the contract. Nevertheless, according to the majority of scholars, Article 4 CISG implies that the CISG contains exhaustive rules on the legal consequences of the lack of conformity.117 This means that national rules on the validity of a contract can only apply where additional prerequisites are fulfilled.118 Equally, Article 8(1) of Directive 1999/44/EC implies that Member States may, of course, maintain their rules on mistake, fraud etc.119 However, they may not maintain rights based on, say, mistake under circumstances where the Directive regards the consumer as not deserving protection. In this respect, Article 2 of Directive 1999/44/EC may have a barring effect.

115. See also Jeloschek, “The Transposition of Directive 99/44/EC into Austrian Law”, (2001) ERPL, 163 at 171. The Austrian legislature explicitly disallowed seeking of damages for the lack of conformity of the goods themselves, see § 933a of the Austrian Civil Code. 116. See Case C-183/00, Mar´ıa Victoria Gonz´alez S´anchez v. Medicina Asturiana SA, [2002] ECR I-3901, para 31. 117. See Schlechtriem, Commentary on the UN Convention on the International Sale of Goods, 2nd ed. (Oxford, 1998), p. 288; Kruisinga, supra note 108, at 186. 118. See also Brors, “Zu den Konkurrenzen im neuen Kaufgew¨ahrleistungsrecht”, (2002) Wertpapier-Mitteilungen, 1780 at 1781 et seq., on the German implementation of Directive 1999/44/EC. For other potential conflicts between the CISG and apparently unregulated issues that are governed by national law, see Lookofsky, “Loose Ends and Contorts in International Sales: Problems in the Harmonization of Private Law Rules”, 39 AJCL (1991), 403 et seq. 119. See Tenreiro, supra note 104, at 223.

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4. Is there still room for minimum harmonization in EC private law? Given the current trend towards total harmonization in EC private law, one may wonder whether there are reasons for at least some residual freedom of Member States to be maintained. The following remarks are, of course, strictly based on the internal market approach of Article 95 EC. Once the EC embraces a more welfarist approach that allows separating consumer law issues from the completion of the internal market, the situation will be quite different.120 Under the current regime, Article 95(4) and (5) EC permits Member States to maintain or to adopt a higher level of protection once the EC has totally harmonized a certain field of law. However, Article 95(4) EC only mentions the grounds listed in Article 30 EC plus the protection of the environment and the working environment. Article 30 EC mentions health protection but not the protection of the consumer’s financial interests.121 Article 95(5) EC is even more restrictive in only referring to the protection of the environment and the working environment. Thus, Member States do not have the competence to maintain or adopt a higher level of protection of the consumer’s financial interests, once a total harmonization measure has been enacted. The introduction of Article 153(5) EC has not remedied the situation since this provision only relates to measures taken under Article 153(3)(b) and (4) EC but not to measures adopted pursuant to Article 153(3)(a) and 95 EC in the context of the completion of the internal market.122 The Treaty of Nice has left this untouched. This situation might prove unsatisfactory. Whilst there are good reasons to argue in favour of greater harmonization of national consumer laws, with a view to the completion of the internal market, there should still be safeguards in place. However, if one allows for a higher national level of consumer protection, under closely defined circumstances, one should consider how to compensate such national variation by increasing the transparency of the law. Environmental law might serve as a model that could be adjusted for the purposes of consumer law.

120. For a plea for fragmented Europeanization, see Wilhelmsson, “Private Law in the EU: Harmonized or Fragmented Europeanisation?”, (2002) ERPL, 77 et seq. 121. See also Pfeiffer, supra note 16, Art. 8, at 3. 122. See Case C-52/00, Commission v. France, [2002] ECR I-3827, Opinion of A.G. Geelhoed, para 42.

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4.1. Reasons for a higher level of consumer protection Two reasons for a higher level of consumer protection spring to mind: the diversity of consumer expectations throughout the EC, and new developments that have not been anticipated. 4.1.1. National diversity of consumers Minimum harmonization is still justified where consumer expectations, and consequently the vulnerability of consumers varies throughout the EC.123 The ECJ has recognized in a number of cases that consumer attitudes and expectations, for example with regard to advertising, may vary throughout the EC due to linguistic, cultural and social differences between Member States.124 The ECJ has also taken into account different legal cultures in its recent judgment in Commission v. Sweden. In this case, the Commission claimed that Sweden had not implemented Directive 93/13/EEC correctly. According to Article 3(3) of this Directive, the Annex shall contain an indicative and non-exhaustive list of the terms which may be regarded as unfair. Sweden has not included this annex into its implementing legislation but has copied the annex verbatim into the explanatory note to the implementing legislation. It is agreed that this annex is an important instrument for informing the consumers as well as authorities and courts that have to do with the application of the Directive, and that the Member States therefore have to bring the annex to the attention of consumers and authorities or courts, in order to ensure the full effect of the Directive. However, the Directive does not prescribe in what way Member States have to achieve this aim. The ECJ held that including the full wording of the annex in the explanatory note met the requirements of Directive 93/13/EEC since the explanatory note was of high importance in Sweden and since individuals who take an interest in legal issues were aware of explanatory notes.125 One may seriously doubt that the ECJ would have come to the same conclusion had the German legislature done the same. Such situations may be equated to situations in EC environmental law that have, in principle, undergone (almost) total harmonization. For example, Directive 67/548/EEC126 has introduced a totally harmonized regime for the classification, packaging and labelling of dangerous substances.127 Neverthe123. See e.g. Weatherill, supra note 19, at 54–5. 124. See Case C-313/94, F.lli Graffione SNC v. Ditta Fransa, [1996] ECR I-6039, para 22; Est´ee Lauder, supra note 19, para 29. See also Sektkellerei Kessler, supra note 21, Opinion of A.G. Fennelly, para 35. 125. Case C-478/99, Commission v. Sweden, [2002] ECR I-4147, para 22, 23. See also Rott, supra note 106, at 9. 126. Directive 67/548/EEC relating to the classification, packaging and labelling of dangerous substances, O.J. 1967, L 196/1, as amended. 127. See Case C-278/85, Commission v. Denmark, [1987] ECR 4069, para 12.

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less, a Member State is still entitled to make use of Article 95(4) or (5) EC in order to maintain or introduce a higher level of protection of the environment. The requirements established, in particular, in Article 95(5) EC are not a low barrier. However, this barrier should be surmountable under adequate circumstances. In a recent case, Germany had intended to introduce national provisions that were more stringent with regard to the classification and labelling of man-made mineral fibres than those provided for in Directive 97/69/EC,128 and had notified this intention to the Commission, under Article 95(5) EC. Germany had argued that the situation in Germany was different from the situation in other Member States: first, Germany had the highest consumption of man-made mineral fibres insulation materials, exposing a greater number of workers to fibre dust than other Member States. Second, Germany also had a different user group, which was to a significant percentage made up of private individuals to whom the relevant provisions on industrial safety did not apply and who were, therefore, at greater risk. Germany’s arguments were rejected by the Commission,129 and this rejection was upheld by the ECJ,130 but this was because this otherwise promising case was extremely badly handled by the German authorities, so that the ECJ did not need to assess the reasons for introducing a higher level of protection. In a number of cases in which Member States wished to go beyond the restrictions on the marketing and use of certain dangerous substances and preparations established by Directive 76/769/EEC,131 submissions under Article 95(5) EC were successful.132 Another interesting provision is Article 10 of Directive 91/414/EEC on plant protection products.133 Generally speaking, plant protection products that have been approved in one Member State have to be approved in the other Member States. This, however, only applies “to the extent that agricultural, plant health and environmental (including climatic) conditions relevant to the use of the product are comparable in the regions concerned”. Thus, Article 10 of Directive 91/414/EEC allows for the consideration of local, regional or even national specifics. 128. Directive 97/67/EC adapting to technical progress for the 23rd time Council Directive 67/548/EEC on the approximation of the laws, regulations and administrative provisions relating to the classification, packaging and labelling of dangerous substances, O.J. 1997, L 343/19. 129. Commission Decision 1999/836/EC, O.J. 1999, L 329/100. 130. See Case C-512/99, Germany v. Commission, [2003] ECR I-845. 131. Directive 76/769/EEC on restrictions on the marketing and use of certain dangerous substances and preparations, O.J. 1976, L 262/201. 132. See Glinski, “Chemicals and Biotechnology”, (2002) Yearbook of European Environmental Law, forthcoming. 133. Directive 91/414/EEC on the placing of plant protection products on the market, O.J. 1991, L 230/1.

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If one accepts that Article 95(4) and (5) EC should be amended such as to include consumer law measures, one should also demand that national consumer law measures that go beyond totally harmonized EC consumer law have to be based on scientific evidence, as measures for the protection of health or the environment have to. As the ECJ indicated in its case law on misleading advertising, such evidence can be gathered by consumer polls or by expert opinion. Certainly, a high standard for such evidence should be required in order to avoid the abuse of the alleged diversity in consumer attitudes.134 4.1.2. New developments Similarly, one might consider the need to enable Member States to deal, in their national legislation, with situations that were not anticipated at the time of the adoption of EC legislation. For example, it might turn out that certain mechanisms that are meant to protect consumers can be circumvented by the use of new technology. Or, societal changes may require state reaction.135 Sometimes, EC law may be designed in such a way that it is sufficiently open to include new developments. If this is not the case, national legislatures may be better suited to react speedily than the EC legislature. Thus, one may wish to leave some residual competence to the Member States to deal with such unexpected situations. Again, a comparison can be drawn with EC environmental law. Even though Directive 67/548/EEC has totally harmonized the classification, packaging and labelling of dangerous substances, Article 31 of this Directive allows for provisional national measures in cases where Member States avail of new information on risks for health or the environment. Such measures must be notified to the Commission who then makes a decision on adapting Directive 67/548/EEC in accordance with the new information. 4.2. Compensation by transparency? In situations where a higher national level of consumer protection is justified, the needs of the traders who want to do cross-border business should be taken into account. If they cannot rely on one harmonized set of rules, the least they would wish is information on the different laws. And indeed, there appears to be an ever-increasing emphasis on information where total harmonization cannot be achieved. The recent Directive 2002/65/EC on the distance marketing of consumer financial services has almost completely harmonized 134. For the relevance of sound social science in WTO law, see Rott, “Genetically Modified Products and Consumer Concerns under WTO Law”, 6 Journal of World Intellectual Property (2003), 571 et seq. 135. See Wilhelmsson, supra note 120, at 86.

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this area of law. However, Article 4 of Directive 2002/65/EC allows Member States to maintain or introduce additional information obligations beyond the ones required by Article 3 of said Directive. In return, Member States have to report such rules to the Commission, and the Commission shall ensure that information, on the national provisions communicated to it, is made available to consumers and suppliers. The technical difficulties of this approach are obvious: it places a heavy burden on the Commission. Not only would the Commission have to keep and update a register for each Directive, it would also have to translate the national provisions into all official languages in order to make the system efficient for all traders, including small and medium enterprises.136 This may indeed be a reason for not overstating the degree to which transparency could substitute harmonization.

5. Conclusion Consumer law is an important field of EC law. At the moment, the internal market approach for the adoption of EC consumer law implicitly requires a high level of harmonization, and therefore restricts the Member States’ freedom to maintain or adopt more stringent rules at the domestic level. The recent ECJ judgments in the fields of product liability law and tobacco regulation have certainly increased the awareness for these restrictions, and the new trend towards total harmonization measures is the inevitable consequence. At the same time, this development may have alarmed those Member States who prefer an even higher level of consumer protection. The need to find the one and only correct level of consumer protection might even stall the further development of EC consumer law. Thus, it might be beneficial to find a compromise between the establishment and functioning of the internal market and the principle of minimum harmonization which could be found in allowing a higher level of protection at the domestic level for important reasons that are supported by social science, such as a higher vulnerability of consumers. This would require amending Article 95(4) and (5) EC by introducing a respective escape clause. It would appear to be an open and transparent way to establish an EC wide high level of consumer protection, without forcing Member States to give up instruments for the protection of legitimate interests of their consumers. One caveat may be allowed: a solution that restricts the competences of the more protective Member States in such a way will only be acceptable for these Member States if regulation at a “high 136. For a distinction of the information needs of multinational enterprises and small and medium enterprises see Wagner, supra note 71, at 1014–5.

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level” of consumer protection, as required by Article 95(3) EC, is taken just as seriously as regulation for the establishment and the functioning of the internal market, i.e. if the ECJ is equally prepared to hold a Directive void if it does not achieve a high level of consumer protection.