4. NEW RULES AND NEW TECHNIQUES—AND NEW CHALLENGES

Introduction 7

For enforcement in particular, the Directive’s assumption of a common EU-wide standard of protection underpinned by a reliance on administration of the rules by national (and frequently regional or local) agencies presents challenges. Is the contrast between the reality of a European market and the absence of European consumer protection enforcement agencies a basis for anxiety that administrative diversity will generate practical neglect of effective enforcement of these rules? One may optimistically hope that a process of cross-border institution-building and practical co-operation will develop to underpin this Directive (and others), but one may reflect realistically on the height of the hurdles to such trends which are composed of cultural and institutional heterogeneity across Europe, coupled with the bare fact that most enforcement agencies are poorly resourced and cannot readily take on cases with a costly cross-border dimension.

Another novelty—though one that fits within general policy development in the consumer field—concerns the effect of the Directive on residual national competence in the field. The norm for EC Directives harmonising rules protecting the economic interest of consumers in the past has been minimum harmonisation.29 That means the EC sets a required floor of regulatory protection in a Directive but the Member States may exceed that level, should they so choose, and may set stricter rules of consumer protection in the relevant field up to the ceiling set by primary rules of EC law, most of all the Treaty rules governing free movement. So market integration is advanced (there is a common rule) but diverse standards of consumer protection persist (in so far as states choose stricter intervention above the common rule). The UCPD rejects this model. It is a measure of maximum harmonisation—or ‘maximal’ or ‘full’ harmonisation. It is, in short, a floor, and it is also a ceiling. Member States are locked into the standard required by the Directive—they must prohibit practices that fall below the standard expected by the Directive, but they must allow practices that comply with the Directive. The task of transposition at national level accordingly requires a good deal more attention to detail than in the case of a minimum harmonisation measure, where there is no call to review stricter national measures. Under a maximum measure, stricter rules must be conscientiously sliced away by the national lawmaker. More generally, this ‘maximum’ or ‘full’ approach to harmonisation has lately been promoted by the Commission as essential to the regeneration of EC consumer policy in the light of its contribution to the integration of markets in Europe.30

29Cf J Stuyck, ‘Patterns of Justice in the European Constitutional Charter: Minimum Harmonisation in the Field of Consumer Law’ in L Krämer, H Micklitz and K Tonner (eds),

Law and Diffuse Interests in the European Legal Order (Baden-Baden, Nomos, 1997); M Dougan, ‘Minimum Harmonisation and the Internal Market’ (2000) 37 CMLRev 853.

30The Commission’s Consumer Policy Programme for 2002–6 (COM(02)208, [2002] OJ C137/2) provided an important impetus.

8 Stephen Weatherill and Ulf Bernitz

Under this perspective, minimum harmonisation fails to eliminate costly regulatory fragmentation between the Member States. The UCPD is an important example of a new strong preference for a complete transfer of regulatory responsibility from Member States to the EC in matters of consumer protection in the service of the project of deeper market integration. This, of course, reinforces the point that fixing the standard of protection under the Directive has to be carefully negotiated, well understood and effectively applied. For if a Member State considers the Directive sets too low a standard, it has nowhere to go (other than to seek to induce legislative reform at EC level): the maximum model prevents it upgrading protection within its own territory. This, as the title of the book suggests, is indeed a challenge! Is maximum harmonisation viable? Is it desirable? Does it suppress choice and opportunities for regulatory learning to an extent that is troubling? Or should we rather celebrate the gains from a more efficiently functioning competitive European market, which is regulated to suppress unfairness prejudicing the consumer? The ‘maximum harmonisation’ model deserves the closest attention (and receives it in this book) for it is central to the choices about how best to balance the interests in free(d) markets and regulatory protection in the European Union.

The issues are of rich academic interest and they are central to understanding the evolution of European consumer law within the broader programme of European market regulation. But these issues carry intense practical significance too. Of course the advent of this new regime will provoke commercial operators to seek to exploit opportunities to pursue practices previously suppressed. How—to take the example of the United Kingdom—will the existing rules on, say, passing-off be affected by the new regime? Will brand-owners lose protection, to the advantage of marketers of copycat products? There is no overt intention on the part of the EC legislature that this will follow—but a legislative instrument is perfectly capable of acquiring an unforeseen momentum of its own as it is driven by ingenious litigants and imaginative jurists. This deserves attention, and receives it in this book.

There is much more! The Directive does not land on an empty field. The sector-specific Directives prevail over the more general Unfair Commercial Practices Directive where their material scope overlaps.31 Here is another challenge: does this contribute to damaging persisting fragmentation of the EU’s regulatory landscape, and what does this imply for review of the legislative acquis in this area? The search for coherence does not stop at the existing legislative acquis—the inter-relation with the Treaty freedoms demands attention too. The famous rulings in Keck and Mithouard32 and

31Art 3(4).

32Cases C–267 & C–268/91 Keck and Mithouard [1993] ECR I–6097.

Introduction 9

in Cassis de Dijon33 cannot be ignored. In fact, in many areas the Directive seeks to carve out its own niche in a densely populated legal environment. The Directive is stated to apply ‘without prejudice to contract law’.34 EC consumer policy has long been a patchwork, and one of its features has been that it laps on the shores of not only private law but also public or administrative law. Yet the UCPD asserts a division between these waters in its claim to apply ‘without prejudice to contract law’. Is this sustainable or even intellectually coherent? Commercial practices are so very close to contract law—commonly they induce entry into contracts. One may readily imagine that the Directive is capable at least of influencing patterns of thinking in the field of contract law, albeit that its impact is contingent on a number of factors including national legislative and judicial attitudes. Here too the impression is that this Directive—like all Directives but this one likely more than most—will have intended and unintended effects that will not be capable of satisfactory measurement for many years to come. EC Directives can ‘irritate’ national legal orders.35

Remember too that the field of business-to-consumer commercial practices, to which this Directive is devoted, is connected to other important fields of law, albeit certainly in different ways in different Member States. Unfair competition law generally . . . competition law . . . a further challenge for the UCPD is to demonstrate a coherent and operational relationship with these rules. Moreover, Member States remain free to take action against commercial practices where matters of ‘taste and decency’ are at stake.36 Precisely where this limit to the scope of the Directive falls promises to provoke debate and litigation. The ‘shock tactics’ of some advertisers are notorious. Where lies the margin between a decision on a campaign’s unfairness, which must correspond to the requirements of the Directive on Unfair Commercial Practices, and a decision directed at preserving national notions of decency and dignity in the face of a lurid advertising campaign, where compliance with primary Community law, in particular the free movement rules, is the principal issue at stake?37

The EU’s enlargement in 2005 from 15 to 25 Member States adds another rich vein of inquiry. Indeed one justification for the adoption of the Directive on Unfair Commercial Practices was precisely the need to strengthen the regulatory framework underpinning the internal market in the light of the challenge of enlargement. And yet how can this measure be absorbed into the legal and institutional culture of the states of Central and

33Case 120/78 Rewe-Zentrale AG v Bundesmonopolverwaltung für Branntwein [1979] ECR 649.

34Art 3(2).

35Cf G Teubner, ‘Legal Irritants: Good Faith in British Law or How Unifying Law Ends Up in New Divergences’ (1998) 61 Modern Law Review 11.

36Recital 7.

37Cf Case C–36/02 Omega Spielhallen [2004] ECR I–9609.

10 Stephen Weatherill and Ulf Bernitz

Eastern Europe which have bounced and been bounced so rapidly from the command economy to the market economy and which are now called on to absorb a regime of the complexity and ambition of the Directive on Unfair Commercial Practices? What can consumer protection really mean in such circumstances, beyond the emphasis on checking compliance with the EC acquis by ticking boxes on Commission-prepared questionnaires?

These, then, constitute the formidably awkward and formidably interesting challenges presented by Directive 2005/29 on unfair commercial practices between business and consumers in the internal market. They are the meat on which this book feasts. One academic speaker at our conference in Oxford in March 2006 admitted to having begun with a sceptical attitude to the Directive, but had finished up rather liking the Directive as a new and interesting development in the promotion of a true internal market. The reader is now invited to form his or her own value judgement.