Wednesday, 1 December 2010

UK: No harmonization of consumer protection at EU level

The UK has indicated it will oppose a strict harmonization of consumer protection legislation in Member States, the Department for Business, Innovation and Skills (BIS) said on 19 October.

"Minimum harmonization...would enable Member States to apply their own rules. The UK would be free to regulate this matter internally in domestic law", the BIS said in the 'Negotiating Line for the Consumer Rights Directive' Report.

The Response Report - the outcome of a consultation launched in July - makes clear the UK is not in favor of a stringent Consumer Rights Directive, which is currently being negotiated and will replace four existing Directives.

“The current EU legislative patchwork on consumer protection is overly complex and has its flaws", said Rohan Massey, Partner at McDermott, Will & Emery. "But in trying to harmonize, the EU runs the risk of removing protection currently given to consumers in certain jurisdictions. This is one of the UK's key concerns, which currently has one of the more robust regimes."

Jill Johnstone, of Consumer Focus, said: "UK consumers risk losing out if maximum, not minimum harmonization is adopted".

The European Commission (EC) believes strict harmonized legislation is necessary to increase cross-border online retail - last year, less than 2% of the total European retail trade. In August, when the EC launched a consultation about the future of e-commerce in the EU, it said 'a lack of confidence was holding back the development of the e-commerce market'.

“To increase cross-border trade in e-commerce, there needs to be greater standardization of legislation", agrees Massey. "But any attempt by the EU that results in a reduction of mandatory consumer protection will be met with strong political resistance locally."

Ben Allgrove, Partner at Baker & McKenzie, thinks the UK should not go its own way: "For online businesses, national regulation is actually a barrier. You need to consider and comply with 27 Member States' consumer protection regimes, which is costly to do".

Stephen Groom, of Osborne Clarke, believes enforcement should be on top of the agenda. "Enforcement is virtually ignored. There are still enormous disparities across the EU in how laws are policed and enforced." Groom continues: "How about a halt on any new laws at UK and EU levels until enforcement of existing consumer protection laws is given proper attention?"

Published previously in E-Commerce Law & Policy Magazine, London. Michiel Willems 2010. Copyrights apply.