1. 11 Emil ALEXIEV Bulgaria Council Directive 2009/22/EC on injunctions for the protection of consumers’ interests: what does it require? Belgrade – 24 October 2013 1

2. Directive 2009/22/EC on the protection of collective interests of consumers Summary of Directive 2009/22/EC Scope of Directive 2009/22/EC; Possible extension of the scope of the directive; Actions for injunctions; Availability of a summary procedure; Order for publication of the cease and desist order; Applicable law; Qualified entities; Intra-community infringements; Recognizing qualified entities from another EU Member State; List of qualified entities published in the official journal; Use of options of the Directive; 2Belgrade - 24 October 2013

3. Directive 2009/22/EC on the protection of collective interests of consumers The European Parliament and the Council of the European Union have adopted Directive 2009/22/EC on 23 April 2009 in the interest of clarity and rationality; The former Injunctions Directive 98/27/EC has been substantially modified several times and this Directive has been codified by Directive 2009/22/EC. Directive 98/27/EC was repealed on 29 December 2009 by Directive 2009/22/EC; The latter codifies the successive amendments to Directive 98/27/EC 3Belgrade - 24 October 2013

4. Summary of Directive 2009/22/EC (1) Provisions of Directive 2009/22/EC recognize the right to protect the collective interests of consumers by bringing actions for injunctions before administrative bodies or before courts against illegal commercial practices; They also recognize the right of consumer organizations to bring legal actions; The Directive 2009/22/EC on injunctions for the protection of consumers’ interests requires that all Member States make it possible for qualified entities to take action before domestic courts to protect the various specific rights given to consumers under the measures implementing the EC directives on consumer law into the domestic legal system; Such action may be taken for purely domestic infringements of national legislation, i.e. an entity from one Member State can take action before the courts in that state to prevent infringements of the relevant legislation by a trader from that state; In addition, Directive 2009/22/EC introduces specific provisions on the cross-border enforcement of such rights by allowing qualified entities from one Member State to take action against a trader from another Member State in the courts of that trader’s jurisdiction. 4Belgrade - 24 October 2013

5. Summary of Directive 2009/22/EC (2) The Directive 2009/22/EC does not confer any specific rights on individual consumers. It is concerned with the enforcement of consumer law by “qualified entities”; Such entities are empowered to seek an injunction to protect the “collective interests” of consumers. It is not dealing with group actions by consumers against traders; The implementation of the directive requires from Member States to introduce into national legislation a procedure for bringing injunctions to protect the collective interests of consumers; The collective actions under Directive 2009/22/EC are not to be considered as representative actions; Representative actions are open only to a number of specially authorized bodies (consumer associations); The main aim of the procedure set up by Directive 2009/22/EC is to secure the cessation of acts which infringe consumer rights; However, the “qualified entities” may not bring a claim for compensation on behalf of affected consumers. 5Belgrade - 24 October 2013

6. Summary of Directive 2009/22/EC (3) The Injunctions Directive ensures the defense of the collective interests of consumers in the internal market by providing means to bring action for the cessation of infringements of consumer rights. The Directive is only focusing on cross-border situations, but obliges Member States to introduce the injunction as a new procedure into their legal system. One very important result of the Directive is the introduction of an injunction procedure to protect the collective interests of consumers in every Member State. Injunctions aim at terminating or prohibiting infringements which are contrary to the collective interests of consumers. The approximation of legislation performed by this Directive allows the effectiveness of these injunctions to be increased and the internal market to function more smoothly. 6Belgrade - 24 October 2013

7. Summary of Directive 2009/22/EC (4) Recourse to injunctions may result in: enjoining the cessation or prohibition of an infringement, where appropriate by way of summary procedure; eliminating the continuing effects of an infringement, particularly through the publication of the decision; sentencing defendants to comply with a decision by constraining them to pay a fine. Without prejudice to the rules of private international law, the applicable law is normally either that of the Member State where the infringement was committed, or the State in which it produces its effects. 7Belgrade - 24 October 2013

8. Summary of Directive 2009/22/EC (5) Entities qualified to bring an action have a legitimate interest in ensuring that the collective interests of consumers and the smooth running of the internal market are complied with. This is the case for: independent public bodies, specifically responsible for protecting the collective interests of consumers, or consumer protection organisations. A list of the qualified authorities that may bring action in the event of intra-Community infringements is established by the Commission and published in the Official Journal of the European Union once per year. In this case, the qualified entities included in the list should have the capacity to bring an action before the legal or administrative authorities of the Member State where the infringement took place. 8Belgrade - 24 October 2013

9. Scope of Directive 2009/22/EC Article 1 – Purpose of Directive 2009/22/EC “(1) The purpose of this Directive is to approximate the laws, regulations and administrative provisions of the Member States relating to actions for an injunction referred to in Article 2 aimed at the protection of the collective interests of consumers included in the Directives listed in Annex I, with a view to ensuring the smooth functioning of the internal market” ; Article 1 – Scope of Directive 2009/22/EC “(2) For the purposes of this Directive, an infringement means any act contrary to the Directives listed in Annex I as transposed into the internal legal order of the Member States which harms the collective interests referred to in paragraph 1”. 9Belgrade - 24 October 2013

10. Definitions: What are collective interests of consumers? “Collective interests means interests which do not include the cumulation of interests of individuals who have been harmed by an infringement.” whereas 3 of the Directive 2009/22/EC: Current mechanisms available for ensuring compliance with those Directives, both at national and at Community level, do not always allow infringements harmful to the collective interests of consumers to be terminated in good time. Collective interests means interests which do not include the cumulation of interests of individuals who have been harmed by an infringement. This is without prejudice to individual actions brought by individuals who have been harmed by an infringement. 10Belgrade - 24 October 2013

11. Definitions: What is an “injunction” and what is the aim of injunctions for the protection of consumers‘? An “injunction” is an order granted by a court whereby someone is required to perform or to refrain from performing a specific action. Negative injunction: an order not to do something; Positive injunction: an order to do something (to disclose information); Injunction allows consumer protection authorities to: issue an order for the cessation of infringements of consumer protection legislation; Injunction allows consumer protection authorities and consumer organizations to bring a court action for the cessation of infringements of consumer legislation; Injunctions should be effective enough to terminate infringements which are harmful to the collective interests of consumers. 11Belgrade - 24 October 2013

12. Protection of the collective interests of consumers (1) The provision of Article 1 (2) of the Directive 2009/22/EC sets out the definition of the term “infringement” for the purposes of the Directive; There has to be an “act contrary to the Directives listed in the Annex as transposed in the internal legal order of the Member States”, and this act has to harm the “collective interests of consumers”; Such “collective interests” do not, however, include the culmination of the interests of individual consumers harmed by an infringement; An action for an injunction to protect the collective interests of consumers is therefore not the same as a “group action”, representing a group of consumers harmed by an infringement.; The “collective interests” of consumers are not merely the sum of the individual interests of consumers. In addition, the conduct that harms these collective interests must be illegal; In Bulgaria, the breach of collective interests does not only have to harm such interests, but in addition, has to contravene, the legislation related to consumer protection. 12Belgrade - 24 October 2013

13. Protection of the collective interests of consumers (2) The scope of application of actions for an injunction is defined in Article 1 by reference to the directives mentioned in the Annex to the Directive, as transposed into the national legal orders of the Member States; The Annex to the Directive originally contained 9 EU Directives, but now includes 13; Directives 99/44/EC on certain aspects of the sale of consumer goods and associated guarantees, 200/31/EC on electronic commerce, 2002/65/EC on the distance marketing of consumer financial services, 2005/29/EC on unfair commercial practices and 2006/123/EC on services have been added to the Annex. The Annex to the Directive now includes a large proportion of EU consumer protection legislation. Article 7 of the Directive also provides for the possibility of Member States to extend the scope of its application at national level. For example, in some EU Member States, injunctions can be sought against any practice harming the collective interests of consumers. Portugal and Italy have extended the scope to include any practices detrimental to the safety of products. In Germany and Austria, it is possible to seek an injunction against any anti-competitive practice harming the collective interests of consumers; Unfortunately, Directives which relate directly to consumer protection, such as the Directive on general product safety or that on the labelling, presentation and advertising of foodstuffs, are not included in the list of Directives covered. 13Belgrade - 24 October 2013

14. Extension of the scope of Directive 2009/22/EC on injunctions Some Members States have extended the scope of the directive by not making reference to the “collective interests” of consumers as threshold which permit a broader range of actions; Some Member States permit action for injunction even where an individual consumer has been harmed; Some Member States have extended the right of qualified entities to ask not only for an injunction, but also, in appropriate cases, to bring a claim for compensation on behalf of affected consumers 14Belgrade - 24 October 2013

15. Actions for injunction (1) Article 2 - Actions for injunction: “ (1) Member States shall designate the courts or administrative authorities competent to rule on proceedings commenced by qualified entities within the meaning of Article 3 seeking: i. an order with all due expediency, where appropriate by way of summary procedure requiring the cessation or prohibition of any infringement; ii. where appropriate, measures such as the publication of the decision, in full or in part, in such form as deemed adequate and/or the publication of a corrective statement with a view to eliminating the continuing effects of the infringement; iii. in so far as the legal system of the Member State concerned so permits, an order against the losing defendant for payments into the public purse or to any beneficiary designated in or under national legislation, in the event of failure to comply with the decision within a time limit specified by the courts or administrative authorities, of a fixed amount for each day’s delay or any other amount provided for in national legislation, with a view to ensuring compliance with the decisions.” 15Belgrade - 24 October 2013

16. Actions for injunction (2) Provisions of Article 2 of Directive 2009/22/EC require that the Member States designate a court or administrative authority which has the competence to deal with applications for injunction: The powers of the court/administrative concerned must include: to issue am order to stop the continuation, or prohibit, an infringement; to initiate the publication of the decision in an appropriate format and/or of a corrective statement to deal with the continuing effects of the infringement; to make an order for penalty payment for non-compliance, but only if the domestic legal system of the Member State would already permit this; Action for an order for the cessation or prohibition of an infringement: Article 2 (1) let. “a” of Directive 2009/22/EC requires that it must be possible for qualified entities to seek an order which requires the cessation of, or prohibits an infringement. 16Belgrade - 24 October 2013

17. Actions for injunction - Summary procedure (3) Availability of summary procedure: Under Article 2 of the directive, each national procedure includes an emergency procedure, the possibility of having a decision or a corrective declaration published and the payment of an amount to guarantee execution of the decision. Article 2 (1), let. “a” of the Directive also refers to the availability of a “summary procedure”. It is to be decided by national law whether or not to prove the urgency of the order at the time it is issued; Some Member States do not require the “qualified entities” to prove the urgency. Others, require to have justified grounds of urgency, namely: to be shown that the claimant has a valid right which are being infringed by the trader; the matter is urgent because there is a danger of damage from the defendant’s wrongful activity. The qualified entity may request that court to issue an interim order if he considers that it is necessary to do so in the public interest, pending the final outcome of the proceeding. Order for publication of decision: Article 2 (1) let. “b” of Directive 2009/22/EC provides that an order may be sought for the publication of the decision to grant an injunction, and of a corrective statement. For example, a court may order that a decision is published in one or more national newspapers, or in regional/local newspapers, where this would help in dealing with the consequences of the infringement. 17Belgrade - 24 October 2013

18. Actions for injunction (4) Order for payments into the public purse: Article 2 (1) let. “c” of Directive 2009/22/EC provides for an order, if permitted under national law, for payments into the public purse or any beneficiary designated under national legislation; This may include daily penalty payments. The court will set a deadline for compliance with the order. If the defendant fails to do so, the court can require the payment of a lump sum into the public purse, or impose a periodic penalty payment of a given sum per day for as long as the infringement continues. Article 2 (2) - Applicable law: “(2) This directive shall be without prejudice to the rules of private international law with respect to the applicable law, that is normally, either the law of the Member State where the infringement originated or the law of the Member State where the infringement has its effect”; Article 2 (2) of the Directive also requires that the rules of private international law regarding the law applicable to the situation, are not affected by the Directive. 18Belgrade - 24 October 2013

19. Private International Law The Directive 2009/22/EC is not containing provisions whether the applicable law will be the one where the infringement has its origin or the Member State where its impact is felt; However, many of the directives included in the Annex of the directive contain a clause allowing Member States to provide for or maintain laws which go further than the ones contained in the directives; The issue of determining the applicable law is governed by the provision of Article 6 (1) of Regulation 864/2007/EC (Rome II Regulation) on the law applicable to non-contractual obligations; Under this article “the law applicable to a non-contractual obligation arising out of an act of unfair competition shall be the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected.” It is important to note that a court ruling on the application for an injunction is mandatory only with respect to the case and the parties in question, i.e. the qualified entity which brought the action and the company which is subject of the injunction. This means that if a company commits an infringement identical to that for which another company has already been convicted, a new injunction must be sought to stop the new infringement. In the same way, the annulment of an unfair term in a contract proposed by a company does not prevent the same company from continuing to use this unfair term in a similar contract. 19Belgrade - 24 October 2013

20. Qualified entities (1) Article 3 - Qualified entities: “For the purposes of this Directive, a “qualified entity” means any body or organization which being properly constituted according to the law of a Member State, has a legitimate interest in ensuring that the provisions referred to in Article 1 are compiled with, in particular: one or more independent public bodies, specifically responsible for protecting the interests referred to in Article, in Member States in which such bodies exist; and /or organizations whose purpose is to protect the interests referred to in Article 1, in accordance with the criteria laid down by the national law”. Article 3 of the directive defines the qualified entities which can bring an injunction very broadly; The Directive retains the principle of mutual recognition of national entities which are entitled to bring proceedings in their own country (any «body or organisation which, according to national law, has a legitimate interest in ensuring that the provisions referred to in article 1 are complied with ); This article defines “qualified entity”, which is a body or organization with a legitimate interest ensuring that the collective interests of consumers, as provided for in the directives listed in the Annex, are complied with. 20Belgrade - 24 October 2013

21. Qualified entities (2) Right of qualified entities from another Member State to seize the court or administrative authority referred to in Art. 2 Art. 4 para 1 (Intra-Community Infringements): Each Member State shall take the measures necessary to ensure that, in the event of an infringement originating in that Member State, any qualified entity from another Member State where the interests protected by that qualified entity are affected by the infringement, may seize the court or administrative authority referred to in Article 2, on presentation of the list provided for in paragraph 3; The courts or administrative authorities shall accept this list as proof of the legal capacity of the qualified entity without prejudice to their right to examine whether the purpose of the qualified entity justifies its taking action in a specific case. 21Belgrade - 24 October 2013

22. Qualified entities (3) This should include both at least one independent public body, and/or other organizations whose purpose is to protect the collective interests of consumers in accordance with the criteria laid down by the “national law”; Member States have to set criteria to define which organizations are responsible for protecting the collective interests of consumers; In practice, the idea of a qualified entity includes consumer associations, public authorities responsible for consumer protection, medicine agencies, trade unions, chambers of commerce and industry. 22Belgrade - 24 October 2013

23. Qualified entities (4) The implementation of this provision has taken different forms. In many Member states, the relevant “qualified entities” are listed expressly in the legislation transposing the Directive 2009/22/EC; Some Member States have included a general provision setting out the criteria to be applied in determining whether a particular body might satisfy the requirements for being recognized as a “qualified entity”; Member States maintain lists of domestic “qualified entities”, and a domestic associations needs to be on such a list to have legal standing before the courts. In Hungary, there are a number of criteria which an organization seeking to become a “qualified entity” must satisfy: it must be a social organization founded on the appropriate legal basis, have consumer protection as one of its declared goals, must have been active for at least two years, and must have a membership of at least 50 persons; It must then apply to be included on the register of qualified entities. 23Belgrade - 24 October 2013

24. Intra Community infringements Article 4 - Intra Community infringements “(1) Each Member State shall take the measures necessary to ensure that, in the event of an infringement originating in that Member Sates, any qualified entity from another Member State where the interests protected by that qualified entity are affected by the infringement, may apply to the court or administrative authority referred to in Article 2, on presentation of the list provided for in paragraph 3 of this Article. The courts or administrative authorities shall accept this list as proof of the legal capacity of the qualified entity without prejudice to their right to examine whether the purpose of the qualified entity justifies its taking action in a specific case; (2) For the purposes of intra-community infringements and without prejudice to the rights granted to other entities under national legislation, the Member States shall, at the request of their qualified entities, communicate to the Commission that these entities are qualified to bring an action under Article 2. The Member States shall inform the Commission of the name and purpose of these qualified entities; (3) The Commission shall draw up a list of the qualified entities referred to in paragraph 2, with the specification of their purpose. This list shall be published in the Official Journal of the European Union. Changes to this list shall be published without delay and the updated list shall be published every six months”. 24Belgrade - 24 October 2013

25. Recognizing qualified entities from another EU Member State Article 4 (1) of the Directive 2009/22/EC requires that each Member State where an infringement originates must permit any qualified entity form another Member State where the collective interests of consumers are affected by the infringement, to bring an action for an injunction; The legal standing of a qualified entity to launch proceedings may not be questioned if it is included in the list compiled and publish by the EU Commission; To that end, Member States are obliged by Article 4 (2) of the Directive to notify the Commission of the qualified entities authorized to seek an injunction with their jurisdiction and in another Member State List of qualified entities published in the Official Journal By virtue of Article 4 (2) of the Directive, the European Commission is required to publish a list of all the qualified entities notified to it, in the Official Journal.; The last list was published in March 2013 (2013) OJ C 84/01) ; The list in the Official Journal enables entities included on it to prove their legal capacity to act before the courts or administrative authorities of other Member States. 25Belgrade - 24 October 2013

26. Use of options of the Directive (1) Article 5 – Prior consultation: “(1) Member States may introduce or maintain in force provisions whereby the party that intends to seek an injunction can only start this procedure after it has tried to achieve the cessation of the infringement in consultation either with the defendant or with both the defendant and a qualified entity within the meaning of Article 3 (a) of the Member State in which the injunction is sought; It shall be for the Member State to decide whether the party seeking the injunction must consult the qualified entity; If the cessation of the infringement is not achieved within two weeks after the request for consultation is received, the party concerned may bring an action for injunction without any further delay; (2) The rules governing prior consultation adopted by Member States shall be notified to the Commission and shall be published in the Official Journal of the European Union“. 26Belgrade - 24 October 2013

27. Use of options of the Directive (2) Party that intends to seek an injunction may try to achieve the cessation of the infringement in consultation with either the defendant or with both the defendant and a qualified entity; Article 5 of the directive allows Member States to introduce, or not introduce, an obligatory prior consultation procedure between the party seeking the injunction and the defendant before applying for an injunction; Member States may require such consultation to be with both the defendant and the independent public body who is a qualified entity; It shall be for the Member State to decide whether the party seeking the injunction must consult the qualified entity. If the cessation of the infringement is not achieved within two weeks after the request for consultation is received, the party concerned may bring an action for an injunction without any further delay; Where such a requirement is introduced, it is limited to a two-week period, after which an action may be brought if there has been no response; However, most of the Member States of the EU have not made such a prior consultation mandatory. 27Belgrade - 24 October 2013

28. Annex of the Directive 2009/22/EC (1) The annex to the Directive 2009/22/EC lists all the directives to which it applies. There is no obligation to ‘transpose’ the Annex. What is important is that ‘national law’ ensures that an action for injunction is available for all the infringements covered by the directive: Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises (OJ L 372, 31.12.1985, p. 31); Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ L 42, 12.2.1987, p. 48); Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities: Articles 10 to 21 (OJ L 298, 17.10.1989, p. 23).; Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours (OJ L 158, 23.6.1990, p. 59).; 28Belgrade - 24 October 2013

29. Annex of the Directive 2009/22/EC (2) Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L 95, 21.4.1993, p. 29); Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts (OJ L 144, 4.6.1997, p. 19); Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees (OJ L 171, 7.7.1999, p. 12).; Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects on information society services, in particular electronic commerce, in the internal market ("Directive on electronic commerce") (OJ L 178, 17.7.2000, p. 1).; Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human use: Articles 86 to 100 (OJ L 311, 28.11.2001, p. 67); 29Belgrade - 24 October 2013

30. Annex of the Directive 2009/22/EC (3) Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services (OJ L 271, 9.10.2002, p. 16).; Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market (OJ L 149, 11.6.2005, p. 22).; Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market (OJ L 376, 27.12.2006, p. 36).; Directive 2008/122/EC of the European Parliament and of the Council of 14 January 2009 on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts (OJ L 33, 3.2.2009, p. 10). 30Belgrade - 24 October 2013

31. Use of the minimum harmonization clause Level of harmonisation of legislation If a directive is described as minimum harmonisation, that means that it sets a threshold which national legislation must meet. However, national law may exceed the terms of the legislation; If a directive is described as maximum harmonisation, that means that national law may not exceed the terms of the legislation. In practice, this prohibits higher standards in the transposed national law. 31Belgrade - 24 October 2013

32. Use of the minimum harmonization clause Article 7 - Use of the minimum harmonization clause: “This Directive shall not prevent Member States from adopting or maintaining in force provisions designed to grant qualified entities and any other person concerned more extensive rights to bring action at national level”. Article 7 of the Directive 2009/22/EC permits the Member States to grant qualified entities, as well as other persons, more extensive rights to take action in their territory ; This way, this provision enables the Member States to broaden the scope of the injunction scheme by giving legal standing to a wider range of persons and to grant qualified entities a right to bring an action in circumstances not covered by the directive (such as for additional domestic consumer protection rules); Many countries have extended the provisions implementing Directive 2009/22/EC to domestic consumer legislation not transposing an EC directive; Some countries permit a wider range of orders such as correction to unfair contract terms; for other areas, order may specify measures to be taken; Some Member States include commercial practices (such as misleading advertising) into the scope of the injunction procedures at national level detrimental to the collective interests of companies (e.g. Germany, Slovenia, Sweden) to ensure compliance; 32Belgrade - 24 October 2013

33. Link between the representative action and the action for injunction (Directive 2009/22/EC) The action for injunction precedes the action for compensation and the representative action for compensation of a group of consumers; If the action for injunction is successful, the individual consumers or group of consumers can bring an action for compensation; In this (new) court action they will not have to prove the violation of legislation (illegal practice or unfair term); they will have to prove the amount of damage suffered; Before the court, individual consumers, consumer organizations, or qualified entities may invoke an enforceable court decision on an action for injunction;

34. 34 Emil ALEXIEV THANK YOU FOR YOUR ATTENTION! 34Belgrade - 24 October 2013