Business environment in the EU Prepared by Dr. Endre Domonkos (PhD) 1st Semester, Academic Year 2016/2017

I. The evolution of Community consumer policy I. The Treaty of Rome didn’t enshrine consumer protection as community policy in its own right when setting objectives of the common market. It was not until the Paris summit in 1972 that the Heads of State or Government first called for the development of a Community- level policy of consumer protection. In 1975, the Commission adopted the first action programme on consumer policy in compliance with the Council’s decision. The programme set out the five fundamental principles, which became the basis for Community legislation in this area.

I. The evolution of Community consumer policy II. The five principles were the followings: - The right to the protection of health and safety; - The right to the protection of economic interests; - The right to damages; - The right to information and education; - The right to representation; The Committee, which was set up in 1973 and since has been called the European Consumer Consultative Group.

I. The evolution of Community consumer policy III. It was not until the Single European Act that Community legislation on consumer protection really got under way. Consumer policy became a fundamental instrument for completing the single market. Legislation gathered new momentum in the areas of general product safety, cross-border payments, unfair contract terms, contracts between distant parties and distance selling. The real breakthrough in institutionalising consumer protection policy came with the Treaty of Maastricht.

I. The evolution of Community consumer policy IV. The Treaty of Maastricht introduced a separate Title on consumer protection (Part three Title XV of the TFEU) and thus enshrined consumer protection as a fully-fledged EU policy establishing the concrete legal basis for EU action. The focal importance of consumer policy is demonstrated by the fact that, in 1995, the Commission set up an autonomous Directorate-General for Consumer Protection. Accordingly, the action programme for the period 1996-1998 focused on three priorities.

I. The evolution of Community consumer policy V. However in the middle of the ‘90s, the BSE crisis (mad cow disease) had significant effects on consumer policy. It put the above priorities on the back burner and placed food safety on the political agenda as the number one priority. The Treaty of Amsterdam gave fresh impetus to EU consumer policy. In the area of consumer protection, the Council and the European Parliament adopt the necessary measures through the ordinary legislative procedure.

I. The evolution of Community consumer policy VI. In certain cases, in the interests of consumer protection, the Member States have the right to restrict the free movement of goods in the single market. Article 36 of the Treaty states that, on the grounds of protecting the health of humans, animals or plants, the Member States may adopt protective provisions against the trade of certain products. Mandatory requirements set by the Court are not valid forever but only until EU legislation covers the relevant field.

II. Consumer information Consumer information seeks to ensure that consumers are able to compare the prices for the same product within a country and are as well informed as possible on price differences between the Member States. The indication of the prices of the products represents an important means of information and protection of consumers. Labelling of products is also an important way of achieving better information and transparency for the consumer and ensuring the smooth operation of the internal market.

III. Protection of health and physical safety I. In the 1980s the Community placed the wellbeing of its citizens high on its list of priorities by adopting general legislation guaranteeing the safety individuals in their capacity as users of products, regardless of the origin of the latter. This is the aim of a Directive on the approximation of the laws of the Member States concerning products which, appearing to be other than they are, endanger the health or safety of consumers. A major Directive (Directive 88/378) in the context of single market was adopted in 1988 dealing with the toy safety.

III. Protection of health and physical safety II. Since it is difficult to adopt EU legislation for every product, it is necessary to establish at EU level a general safety requirement. This general legal instrument is provided by a Directive (Directive 2001/95) on general product safety. Producers are obliged to place only safe products on the market. Distributors are required to act with due care to help to ensure compliance with the applicable safety requirements. Member States must ensure that producers and distributors comply with their obligations.

III. Protection of health and physical safety III. The Commission must promote and take part in the operation in a European network of the authorities of the Member States competent for product safety. This network must be coordinated with other European procedures, in particular the Community Rapid Information System (RAPEX). Regulation 178/2002 lays down the general principles and procedures in matters of food law and food safety and establishes the European Food Safety Authority. The European Food Safety Authority: scientific advice, independent information + scientific and technical support for EU legislation related to matters of food safety.

III. Protection of health and physical safety IV. A key point of the new legislation is that every operator involved in the food chain will bear primary responsibility for food safety, with a single, transparent hygiene policy being applicable to all foodstuffs and all operators. The food safety policy of the EU is based on the precautionary principle. In accordance with the precautionary principle, a Directive aims (Directive 1830/2003) at monitoring the deliberate release into the environment and on the placing on the market of genetically modified organisms (GMOs) as or in products.

III. Protection of health and physical safety V. Products containing GMOs must be clearly labelled and the public must be informed and consulted prior to the release and placing on the market of GMOs and products containing GMOs. Genetically modified micro-organisms may be used solely under conditions of contained use. Regulation 1829/2003: EU procedures for the authorisation and supervision of genetically modified food and feed. The Commission set up a Scientific Steering Committee. The Community system of information and monitoring of accidents in the home and during leisure (EHLASS).

IV. Protection of economic and legal interests I. With the opening up of the markets, the economic interests of the consumers had to be protected uniformly in the single market. Thus, the Directive on liability for defective products (Directive 85/374 and Directive 1999/34) was adopted. It established the principle of objective liability or liability without fault of the producer in cases of damage caused by a defective product. After the „mad cow” crisis, its scope was extended to primary agricultural products and game products.

IV. Protection of economic and legal interests II. Directive 1999/44 on certain aspects of the sale of consumer goods and associated guarantees introduced the principle of the conformity of the product with the contract. This Directive is concerned both with commercial guarantees and with legal guarantee. Directive 84/450 seeks to protect consumers, traders and the public in general against misleading advertising and its unfair consequences.

IV. Protection of economic and legal interests III. The Directive, which was amended in 1997 on misleading advertising introduced a uniform regulatory framework on comparative advertising. Directive 2005/29 approximates the laws of the Member States on unfair commercial practices. It covers those practices (actions or omissions) which by deceiving the consumer prevent him from making an informed and thus efficient choice. Directive 2005/29: minimum consumer protection rules concerning distance contracts regardless of the technology used + regardless of the product or service marketed.

IV. Protection of economic and legal interests IV. A special Directive (Directive 2005/29) concerning the distance marketing of consumer financial services provides for common rules for selling contracts by phone, fax or Internet. Another Directive (Directive 93/13) concerns unfair terms in contracts concluded between a consumer and a professional. The Directive on credit agreements for consumers: obligation of the Member States to apply common rules to all forms of credit. Directive 2011/83 on consumer rights: to achieve a high level of consumer protection in the fields of distance contracts and contracts negotiated away from business premises.

IV. Protection of economic and legal interests V. A Council Directive (Directive 90/314) on package travel, including package holidays and package tours, protects millions of tourists against possible corrupt practices by the organisers of these popular holidays. Contract clauses must be recorded in writing and the consumer must receive a copy of them. The consumer also has the right to compensation if the organiser does not supply a large part of the service agreed upon.

IV. Protection of economic and legal interests VI. Directive 2008/122, which protects the consumer in respect of certain aspects of timeshare, long-term holiday products, resale and exchange of rights, which derive from timeshare contracts. Encouragement of inter-operability of all payment cards throughout the EU by the harmonisation of electronic payment systems. Directives, which protect consumers while also help to remove obstacles to trade in goods and services. The Directive 2009/22 on injunctions for the consumers' interests.

V. Current trends in EU consumer policy I. The main elements of the 1999-2001 action programme on consumer protection: - consumer representation and education; - consumer health and safety; - the economic interests of consumers. In January, 1999, the joint decision of the Council and the Parliament established the General framework for Community activities in favour of consumers until 31 December 2003.

V. Current trends in EU consumer policy II. Following this general framework, the consumer policy strategy for 2000-2006 set three key objectives: Ensuring a high common level of consumer protection; Effective enforcement of consumer protection rules; Involvement of consumer organisations in EU policies; The Parliament and the Council adopted a new general framework for implementing the strategy. Within this framework, four areas of action were set, which are practically the same as those defined in the previous general framework.

V. Current trends in EU consumer policy III. In April, 2005 the European Commission submitted its proposal for an EU action programme for health and consumer policy in the next financial perspectives. The proposal, bearing the title „Healthier, safer and more confident citizens – health and consumer protection programme 2007-2013”, indicates the new approach of combining health and consumer policy. The programme is based on the following two objectives.

V. Current trends in EU consumer policy IV. Following the adoption of the Action Programme, in March 2007 the Commission published a Consumer Policy Strategy for 2007- 2013, which was endorsed by the Council. The Strategy outlined three main objectives: Adoption of the new Health for Growth and Consumer Programmes by the Commission on 9 November 2011. Main aims: to foster a Europe of healthy, active , informed + empowered citizens to contribute to economic growth.

VI. Consumer policy under TFEU In compliance of the TFEU, consumer policy is an area of shared competence Article 4 (2) (f) TFEU. Incorporation the relevant provisions of the EC Treaty without any significant modifications. Horizontal provision: consumer protection requirements have to be taken into account in all other Union policies is not contained in Article 169. More emphasis to consumer protection.

VII. Conclusion The European Union shows a growing interest in the protection of the physical safety and of the economic interests of its citizens. Consumer protection is not only a necessary complement of other common policies, such as agriculture and fisheries, but also an important factor contributing to the affection or disaffection of European citizens towards the Union. Consumer protection is currently faced with a fragmented set of regulations and a fragmented system of enforcement.

Literature - Europa, European Commission, DG Health and Consumers, Consumer Affairs. In:http://europa.eu/rapid/pressReleasesAction.do? - Nicholas Moussis (2013): Access to the European Union. Intersentia, 20th edition, Chapter 11, pp. 269-283. - Zoltán Horváth (2011): Handbook on the European Union, Hungarian National Assembly, Fourth Edition, Chapter 18, Hvgorac, pp. 471-477. - Zoltán Horváth – Bálint Ódor (2010): The Union after Lisbon. The Treaty Reform of the EU, p. 256-257.