1. 1 Activities of Directorate General for Health and Consumer Protection Evidence based policy of consumer protection University of Zurich, 24 November 2007 Maria Lissowska, Taskforce on Consumer Markets, DG SANCO

2. 2 Mission of DG SANCO Art.153 of the Treaty establishing the European Community In order to promote the interests of consumers and to ensure a high level of consumer protection, the Community shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organise themselves in order to safeguard their interests. Mission: to meet the expectations of European citizens to live safe, healthy and full lives and to have their health and safety rights protected througtout Europe at the same level.

3. 3 Structure of SANCO Human health Food safety Health and human treatment of animals Rights of citizens in their role of consumers

4. 4 Consumer Strategy 2007-2013 Empowering consumers, enhancing their welfare, effectively protecting them Principal goal: to enhance consumer welfare, but: In what conditions? How to distinguish where welfare – detriment is? By what means?

5. 5 Conditions for consumers Fragmentation of consumer market, partly counter-balanced by: import e-commerce - still limited to national markets (if 27% of consumers made an on- line purchase over a year, only 6% made it cross-border) Advertising increasingly sophisticated, too much information Domination of providers

6. 6 Measures to enhance consumer welfare To empower consumers by enabling choice, assuring accurate information, provide effective protection and respect of rights To protect them against serious risks that they cannot tackle as individuals.

7. 7 Measures to empower consumers Legislation Enforcement and redress Education Support for consumer organisations

8. 8 Principal Directives protecting consumers On unfair commercial practices On contracts negotiated away from business premises On package travel On unfair terms in consumer contracts On timeshare On distance contracts On indication of prices On injunctions for the protection of consumers’ interests On sale and guarantees On consumer credit On electronic commerce On distance marketing of consumer financial services On compensations to air passengers

9. 9 Role of legislation Binding for providers Regulating relations between providers and consumers Empowering consumers and not replacing them in their choices Legislation is transposed and enforced by national administrations, not by the Commission

10. 10 Consumer protection and other policies Supply-side of economy has an impact on consumers – market failures (abuse of dominant position) But: even competitive markets may not perform for consumers, due to: Information asymmetry, misleading advertising Common actions of suppliers (e.g. bundling, market partitioning, unfair commercial practices) Behavioural deficiencies of consumers (exploited by suppliers).

11. 11 Competition and consumer policy Competition necessary, but insufficient to empower consumer Empowered consumers enhance supply by making pressure on providers by activating innovation

12. 12 Knowledge necessary for consumer policy Which markets are failing? Who is concerned? What is the reason (market failure, behaviour)? What remedies may be applied? What the consumers really wish? What may be the effectiveness and cost of remedies?

13. 13 Knowledge on the outcomes of past policies Rationale: consumers are subject to influence of different measures (of national bodies, of other EU policies), necessity to check effectiveness of competition and consumer protection measures Tools: monitoring (now Consumer Markets Scoreboard being developed); indicators: Price divergences Consumer satisfaction Consumer complaints Safety Switching

14. 14 Knowledge on consumers Satisfaction methodology and surveys Eurobarometers on consumer protection and on business attitudes with respect to cross-border sales Eurobarometer and focus groups on services of general interest Consumer detriment (in progress).

15. 15 Satisfaction surveys Completed in 2007 on services of general interest: Electricity supply Gas supply Water distribution Fixed telephony Mobile telephony Urban Transport Extra-urban transport Air transport Postal services Retail banking Insurance services

16. 16 Satisfaction surveys cont. Distinguishing 25 Member States Socio-economic groups (gender, age, education, occupation)

17. 17 Satisfaction survey - methodology Definition of satisfaction – to what extent consumer requirements are met Satisfaction drivers: Price (transparency, payment process, affordability, accuracy) Quality (reliability, safety, information, technical support, availability, points of sale) Image (reputation, relationship with customer, flexibility, consumer mindedness)

18. 18 Satisfaction survey - methodology Primary indicators – satisfaction measures (1..10) Contribution of drivers to overall satisfaction (by regression analysis) – to distinguish essential drivers Two-dimension visualisation (degree of satisfaction with a driver – degree of expectations for a driver) – to distinguish priority actions (high expectations – low satisfaction)

19. 19 Satisfaction survey – outcomes High satisfaction: air transport, insurance, mobile telephony – low satisfaction:urban and extra-urban transport (but indices fairly similar) The most important driver: price, but the most satisfactory - quality For some services (insurance, water, fixed telephony, urban transport) new MS less satisfied The most satisfied are elder consumers (especially retired), with secondary education. Students and self- employed are the least satisfied

20. 20 Eurobarometer on consumer protection in the Internal Market Objectives: To detect facts on cross-border shopping: level and principal areas problems it may generate (unfair practices, respect of rights, delivery, complaints) To measure level of consumer confidence in cross-border shopping, reasons of its lack To find out what is the level of satisfaction with consumer protection, role of authorities.

21. 21 Eurobarometer on consumer protection in the Internal Market Findings: Cross-border shopping is occasional (holidays), more frequent for package holiday E-commerce increasingly popular, but mostly for domestic purchases Problems in cross-border delivery, information Low knowledge and confidence in cross-bordeer shopping – higher for educated consumers High (but not general) satisfaction with national protection systems, price transparency as favourite tool

22. 22 Eurobarometer on business attitudes Target group: SME (97% of the sample) Problems focused on: cross-border sales and consumer protection Role of different sales channels Preparedness for cross-border sales Barriers for cross-border sales (risk of non-payments, costs of compliance with national regulations, delivery, language, after-sale and complaints connected difficulty) Measures to facilitate cross-border trade (harmonised regulations, better information, Alternative Dispute Resolution)

23. 23 Eurobarometer on business attitudes Principal findings: 29% of retailers carry out cross-border trade (mostly by Internet), but only to a few countries 48% of retailers declare to be prepared to sell cross- border The most important obstacle: insecurity of transactions, national fiscal regulations and consumer laws, complaints and after-sale handling Not cross-border trading companies perceive barriers as more harmful Harmonization of laws perceived as promising

24. 24 Eurobarometer and focus groups on SGI Services: Communications Mobile telephony Fixed telephony Internet Postal services Banking Water and energy Transport Aspects: Access Use Affordability Importance in daily life Comparing offers Switching providers Fair terms and conditions Making complaints Protection of consumer interests

25. 25 Eurobarometer on SGI Main findings: Some sections of society excluded because of inaffordability of services (electricity, mobile telephony) Better educated consumers make more complaints and their handling is poor Comparison of offers is difficult and terms of contracts are often unknown Consumers feel in general well protected with respect to SGI.

26. 26 Focus groups on SGI Services: fixed and mobile telephony, postal services, bank account, Internet access Objectives – to detect: usage satisfaction (ease of access, prcie, quality) attitudes with regard to choice of supplier Scope of study: average consumers vulnerable consumers (with insufficient resources, elder, retired, living in remote areas)

27. 27 Insights from behavioural economics On needs and objectives of consumers To what degree new commercial practices may be beneficial/harmful Which consumer behaviour is due to conscious choice and which is an anomaly (where to intervene?) On potential empowering measures and their effectiveness