Update of current legislative and other initiatives of DG SANCO
The Commission listed the priority legislative files in consumer policy expected to be concluded before the end of the current EP’s mandate, more precisely by March 2014.
PRODUCT SAFETY AND MARKET SURVEILLANCE PACKAGE – STATE OF PLAY
The Commission reported on the progress achieved on the proposed Regulations on Consumer Product Safety and on Market Surveillance during the past months. The 1st reading in the Council were finalised in September. The EP IMCO Committee voted on its Report with its final views in mid-October, and is expected to vote on the mandate in November to enter into Trilogue negotiations.
There are a number of stumbling blocks that need further discussions with the EP and the Council: The first one is the Commission’s proposal to include the mandatory requirement of origin marking on all consumer products adding to other traceability requirements. Some MS support this idea, some do not, there is a real split on this issue. The second stumbling block is the idea of the EP suggesting the inclusion of a new safety mark in addition to the CE mark “EU safety tested mark”, indicating that the product has been tested by an independent and accredited body for safety. The idea was not yet discussed with MS, it would require the introduction of new procedures and the Commission is still uncertain how it would be put in practice.
The third very important stumbling block requested by a number of MS, is to reduce the application on the RAPEX by using it only for serious risks, thereby reducing the number of notifications to only dangerous products. RAPEX is one of the exemplary cooperation tools and it is not clear why such a system should be now limited in scope.
The Commission emphasized that product safety was one of the important areas for consumer benefit, where citizens feel an added value.
As regards prospects for adoption, the Commission said it remains hopeful that the two Regulations by spring 2014 will be ready for adoption.
PAYMENT ACCOUNTS PACKAGE
The Commission recalled the background of the proposal for a Directive, which has a real added value for consumer policy. This proposal will enable consumers – including the approximately 60 million who have no access to bank accounts – to benefit from having access to a basic account, better bank offers and lower costs thanks to the improvements on the transparency and comparability of fees, and easier switching. The Commission reminded that these provisions will apply to cross border banking services as well. At the same time, the financial services industry will benefit from increased mobility of clients, with reduced barriers to entry, including cross-border.
The Council and the EP took up the work quickly on this piece of legislation, and the Commission remains hopeful to have a mandate in December for the trilogue and finalise negotiations within the current legislature.
The Commission underlined that it attaches great importance to a single market for bank accounts, and competitive services.
MEDICAL DEVICES PROPOSAL
The Commission informed that state of play of this very important legislative file. The proposal on medical devices is currently being discussed in Council and Parliament. As it is a very technical file the process is less advanced in the Council. The EP ENVI Committee adopted its report in October and also voted on the mandate to start negotiations.
There are a number of issues for further discussion such as the Commission’s proposal of pre- market scrutiny of certain devices to which the EP added useful elements. Another issue is the appointment of those notified bodies that provide certification for high risk medical devices. The EP has created the notion of special notified body where high risk medical devices would need to go under the assessment of special notified bodies assigned by the EU Medicines Agency. This is the first time the Agency is given a role in medical devices.
The negotiations will take some time, but the Commission remains hopeful to finalise negotiations before the end of the current legislature.
Beyond the legislative files, the Commission stressed that enforcement of current or adopted legislation remains a priority. In this context the Commission recalled that not only the enforcement of existing legislation but future legislation is given special attention, such as the UCPD transposition or the review of the CPC regulation. The Commission launched on 11 October the online consultation of the CPC review (the enforcement of 18 legislative acts) and invited ECCG members to participate in this review and promote this consultation tool among national consumer organisation to attain the best possible outcome.
REPORT ON THE CONSUMER AGENDA
The second (non – legislative) priority is the Report on the Consumer Agenda, the Commission had committed to issue this Report in the form of a Staff Working Document in early 2014. It will not only feed into the political process to help shape and guide policy planning forward, but will take stock of the activities undertaken in the framework of the Consumer Agenda. .
CONSUMER PROGRAMME 2014-2020
The third priority is the adoption of the Consumer Programme 2014-2020 and the work on the Annual Work Programme, which is technically challenging. Negotiations have been completed with the legislative arms on the MFF, and a solution was found on the main stumbling block regarding implementing and delegated acts. This entails when the Commission decides to withdraw an action listed in the Annex of the Programme, it has to do so via an implementing act which gives the right of scrutiny for the EP.
Regarding the timing of adoption of both the Consumer Programme 2014-2020 and the Annual Work Programme 2014 the Commission reported that the final adoption of the legal base is expected in February 2014 entering into force after publication in the OJ, in March next year. Following the adoption, the Commission has to establish a new advisory committee which gives its opinion on the Annual Work Programmes. To accelerate the process, the Commission is already working on the Annual Work Programme 2014 in order to have it adopted as soon as possible early next year allowing for publishing calls for proposal with the caveat that money can be committed once the legal base is adopted.
ADDRESS BY MR NEVEN MIMICA, COMMISSIONER FOR CONSUMER POLICY AND DISCUSSION ON ENFORCEMENT PRIORITIES
Commissioner Mimica presented his priorities: the follow- up and possible completion of pending legislative and non-legislative files; effective implementation of existing and recently adopted legislation; enforcement of existing legislation. He asked ECCG’s input into the consultation linked to the CPC review. He stressed that strengthening the capacity building of consumer associations and promoting the issue of national funding of consumer organisations was also one of his priorities. He also highlighted that consumer policy is a cross cutting economic recovery policy and that the TTIP should not lead to weakening consumer protection.
The Commissioner invited ECCG members to expose their priorities and reflections on enforcement of consumer rights in the EU, along the questions sent prior to the meeting.
BEUC welcomed the commissioner’s words and in particular the assurance regarding his close monitoring of the TTIP. BEUC highlighted that the protection of consumer interest in the TTIP negotiations was important so that consumer legislation would not be watered down. It also stressed that SANCO support to the TACD was very important. BEUC views were echoed by DK regarding transparency of negotiations.
Commissioner Mimica replied that he was fully aware of the advantages of the TTIP, but also of the concerns to preserve existing consumer rights. He wanted to be engaged and monitor it from the consumer perspective.
ES welcomed the initiative on focussing enforcement in MS but wondered how much SANCO would tackle issues as enforcement (or lack of it) is a national problem. Regarding capacity building ES underlined the hurdles of lack of protection, support and collaborative spirit between consumer organisations and national authorities.
In DK the Consumer Council’s priorities focus on financial services. In this respect DK said that with the Commission’s payment account initiative, it was not clear what the cost would be for consumers. Regarding Commission level discussions on how to reduce administrative burdens, DK warned about the fact that often environmental or consumer issues are targeted. Finally, DK welcomed the focus on enforcement which is a vital issue, and stressed that top level involvement was key to obtain consumer benefit.
BE expressed the coordinated position of all BE consumer organisations for the creation of a possible full enforcement capacity at EU level to target cross border breaches. The market of tablets was taken as an example: making payments with them is too easy and thus easily abused. A market investigation would be important into this market to raise full cross border enforcement capacities with the Commission creating a level playing field, with also an eventual legislative proposal.
The Commissioner agreed that enforcement is indeed a national competence. The Commission’s aim and role is to enhance and strengthen the cooperation capacities between national enforcers, such as by contributing to the CPC review where ECCG members are invited to participate.
The Commissioner stressed the importance of capacity building and underlined that in some countries it was necessary to strengthen the role and functioning of consumer organisations. . Capacity building must be coupled with a contributions by national administrations to build the environment where consumer organisations can operate. Therefore, when meeting with competent ministers, the Commissioner explained he has, and will continue to send a clear message to national ministers on the need to properly support consumer organisations even in times of budgetary restrictions.
LUX intervention focused on implementation and enforcement, in particular suggesting that the Commission could help coordinate regional cross border cooperation for countries that share the same regulations and type of legal order ? He stressed the interest of regional ADR bodies for cross border cases, e.g. in the travel sector. In addition awareness raising should be strengthened.
UK gave a short overview focussing on enforcement and the most challenging areas in enforcing EU law. Enforcement loopholes linked to national differences in implementation and enforcement of EU legislation can annihilate the positive benefits of these legislations, especially in market with a lot of cross border trade. These concerned areas governed by the Consumer Rights Directive (e-shopping) and also the travel sector. It was therefore necessary to lobby governments to close such loopholes.
EL’s referred to poverty levels and how consumption is undermined in certain countries. The rights of those who have to consume the cheapest products as a result of their economic situation are already very low. Over -indebtedness is a major problem. The definition of vulnerable consumers should take this into account EL stressed that consumer organisations struggle to stay in business and therefore fail to represent the interests of consumers.
The Commissioner replied that GPD growth should also come from consumption. The Commission aims to assist vulnerable groups by mapping the causes and consequences of consumer vulnerability. There are various causes of consumer vulnerability e.g. age, health or social status. But at this point of time it is mostly linked to social and economic inability to participate in the market.
The Commissioner mentioned the recently launched study on consumer vulnerability in various markets, which will contribute to policy making in this regard. Over indebtedness is also a consequence of vulnerability and is clearly demonstrated in the Consumer Scoreboard. He underlined that some markets, such as energy, are more strongly affected than others. In some MS national measures are already formulated in support of protecting consumers from the adverse impacts of these markets.
SL agreed that consumer policy should be an economic recovery policy and stressed the importance of enforcement. Consumer representatives nevertheless are regarded as trouble makers in SL. The CESEE report demonstrated that the government officials need training on basic consumer protection rules: they lacked the capacity to understand that consumer protection is an important market tool for improving competition and consumer market capacities. The small investment necessary to support consumer representation is not balanced by the potential benefits. In SL there is no proper ADR in place. Therefore enforcement is very important.
PT also welcomed the Commissioner’s priorities, in particular the focus on enforcement. In PT challenges are mounting in e-commerce, telecom and energy sectors due to the rise of unfair commercial practises, confusing tariffs and charges. These are all regulated sectors, with a public authority for each sector to regulate the sector. But regulators support business interests not the consumer. Implementation of EU legislations at national level is a big concern.
MT echoed its support for capacity building and enforcement, and claimed that, after 10 years of EU enlargement, consumer rights and standards weakened. Sometimes the COM is absent when checking implementation of EU legislation, eg: bankruptcy of local travel agents. In the MTs transposition of the Package Travel Directive, the provision on bankruptcy/insolvency was never put into force. Civil litigation is the only possible way to receive compensation, no collective action is possible. Another example is the interpretation of requirements for unit pricing which leads to nearly no such prices being displayed in MT shops.. Regarding capacity building, in MT, the consumer association needs to be beefed up. The national administration should be sent a signal to support consumer organisations.
SE raised the high level drop in confidence in the quality of some of the big EU markets such as financial services (banks), telecom and broadband. This indicates where the fundamental problems are for consumers.
Another issue is digital content: right holders‘ position is very strong, and huge price divergences can be made according to makers, so consumers can’t reap the benefits on cross border trade. There is also a huge worry about marketing practices based on consumer behaviour for example with IP tracking possibilities. This is one of the most challenging areas; the Commission could look into cases where marketing practices are problematic, especially for vulnerable consumers.
CY shared the views of previous speakers, but stressed that the reality was different after the bailout of banks.. CY reported that redress mechanisms were not in place in CY; there is no ADR, and participation is voluntary for business therefore they do not take part. CY inquired whether the new directive would be binding for business. CY also added that that it took too long to come out with a proposal.
In relation to one of the questions under the structured dialogue on how to report breaches of law CY suggested that the Commission/ SANCO create a reporting mechanism.
Commissioner Mimica reassured that consumer policy, in particular safety of products and consumer right, should be perceived neither as a burden nor as a luxury. ECCG input is needed to consolidate the legislative framework and enforce rights. The Commission would like to act so as to broaden the recognition of consumer rights at national level.
Regarding capacity building the Commissioner took note of the need of capacity building of government authorities as well. He emphasized that besides the two pillars – safety of products and consumer rights – there is the need to develop the 3rd pillar, the consumer economics. Consumer organisations should participate in reaching out to economic policy makers. As a result of the new developments in global markets, there is a need for a more focused consumer policy especially in the banking sector where everyone can be regarded as vulnerable consumers given the complexity of these services. In this respect, he highlighted the important awareness raising efforts made through the Consumer Credit Campaign in Spain and Cyprus. He also stressed that consumer expectations in terms of protection and access to better deals should be improved especially in the digital world (data protection, IPR) and in service markets.
Regarding the recommendation on Collective Redress, the Commissioner explained that that after 10 years of difficult political discussions the expectations were higher. He as added that there was no appetite for an obligatory scheme across MS. Commissioner Mimica strongly encouraged MS to endorse legislative initiatives to promote effective redress channels for consumers.
STUDY ON CONSUMER VULNERABILITY ACROSS KEY MARKETS IN THE EUROPEAN UNION
The Commission reported about the recently launched study on mapping vulnerability patterns across key consumer markets: energy, financial services and digital services (including electronic communications). It will focus on factors generating consumer vulnerability in these sectors, marketing practices that negatively influence consumers, and – through behavioural experiments – test policy responses. Its aim is to identify the measures that are most effective in mitigating consumer vulnerability. The study will conclude with concrete recommendations on how to refine the Commission’s evidence gathering and analysis to better reflect and report on the issue of consumer vulnerability in the Single Market. It shall also provide wider policy recommendations to the Commission’s work on addressing consumer vulnerability, either under the horizontal consumer legislation like the Unfair Commercial Practices Directive, or sector specific initiatives.
Intermediate results are expected by autumn 2014 while the final report from the study is expected for the spring 2015.
STUDY ON MARKETING TO CHILDREN THROUGH SOCIAL MEDIA, ONLINE GAMES AND MOBILE APPLICATIONS
Under the same frame of research on consumer vulnerability DG SANCO will launch a study that will explore the awareness and understanding by children and adolescents of marketing content directed at them through social media, online games and mobile applications. The study will conduct behavioural experiments to assess the awareness and understanding by children in various age brackets of sophisticated online marketing techniques directed at them. The study will provide evidence to support the Commission’s efforts in assessing the need for self-regulation or further regulation aimed at guaranteeing an appropriate level of protection of children acting as consumers in the online sector.
The final report from the study is expected by the beginning of 2015 in time for the new commission to use it for the future of consumer policy.
STUDY ON VEHICLE FUELS
The Commission informed that following the negative findings of the 6th Consumer Markets Scoreboard with regard to vehicle fuels, SANCO is currently carrying out an in-depth market study from a consumer perspective. The study assesses among others whether consumers know and understand the labels and different fuel types available at petrol stations and the compatibility with their car, including when buying fuels in another EU country. The study is currently being finalised.
Preliminary findings include:
− the factors influencing the choice are: price (67%), previous good experience with the type of fuel (27%), whether the fuel is good for the engine or vehicle performance (22%), and the quality of the fuel (18%);
− the most common method to compare fuel prices is looking at the petrol station billboards (79% of respondents), while 18% look at the motorway announcements;
− in consumers‘ assessment, information is either unavailable or ambiguous mainly with regard to the effects of particular fuel types on the environment (63%), engine or vehicle performance (62%) and fuel quality (62%);
− respondents prefer buying regular fuels, whether it is petrol or diesel (76%), as opposed to premium fuels; however, when buying abroad, premium fuels are preferred by respondents;
− it is easier to identify the right fuel for one’s vehicle in one’s own country rather than abroad (38% vs. 26%); such differences are also seen when looking at the provision of information concerning fuel types and fuel quality;
− different colour coding schemes for fuel types are available on the pump and/or on the nozzle, and these colours vary not only from an EU country to another but also within the same country.
THE STUDY ON THE FUNCTIONING OF THE MARKET FOR SECOND HAND CARS
The study on the functioning of the market for second hand cars from a consumer perspective began in July 2013, and is expected to be completed in the second half of 2014.
It covers purchases of second-hand cars by consumers from franchise dealers, independent dealers and auctions (car websites will also be looked at; particular emphasis will be given to cross-border aspects of this market too) and is looking into:
– practices at second-hand car dealerships and the extent to which dealers are complying with the existing regulatory framework for selling second hand cars;
– whether consumers are able to make informed choices when purchasing a second-hand car (information received by the consumer in terms of transparency, accuracy and level of understanding);
– the main consumer problems, the handling of complaints post-purchase, the quality of after sales customer care/service and redress
STUDY ON COMPARISON TOOLS AND RELATED THIRD-PARTY VERIFICATION SCHEMES:
The study will contain an extensive mapping exercise of existing comparison tools and related third party verification schemes in the EU. The study will provide an analysis of the various business models of comparison tools, a consumer survey and will also include a behavioural component to measure how comparison tools influence consumer choices as well as a mystery shopping exercise to test the accuracy of comparison tools.
The study is a direct follow-up to the Multi-Stakeholder Dialogue on comparison tools in which several of you were involved. The results from the study will feed into our decision on the way forward.
The Commission reminded about the bank accounts proposal, where we have put a specific provision on comparison tools, to have at least one accredited comparison website for financial services. MSs look interested, but we need your their voice in promoting the idea that comparison tools, as well as accreditation schemes are important for consumers.
INFORMATION CAMPAIGN ON CONSUMER CREDIT
DG SANCO launched a one-year information campaign on consumer credit in four EU Member States: Cyprus, Ireland, Malta and Spain. The aim of the campaign is to raise consumers‘ awareness of their rights when they take out credit. The main message is „Need credit? Don’t just sign. You have rights“.
In parallel, the DG SANCO have launched an evaluation exercise to measure the impact of the campaign in the selected 4 MS. Based on the results, we will decide whether to extend it to more Member States.
Furthermore DG SANCO and DG JUST will jointly work on the Consumer Rights Campaign in 2014 and will discuss how to cooperate with consumer organisations .
CAPACITY BUILDING OF CONSUMER ORGANISATIONS
Regarding capacity building the Commission reassured the group about t its importance and the involvement of public authorities as well.
The new Framework Contract in place since September 2013 will provide training aimed at building the capacity and effectiveness of consumer organisations (European, national, regional). It will offer tools to promote exchange of practices between their staff members. Particular focus will be on Member States, EEA and candidate countries where consumer organisations are not sufficiently developed or which demonstrate a relatively low level of consumer confidence and awareness (as evidenced by monitoring on consumer markets and the consumer environment in the Consumer Scoreboards).
The new Framework Contract has been concluded for a maximum of 4 years with a budget of up to 3m€. It will include the development of an interactive web networking platform and hosting services, E-learning modules, class teaching, local training courses and expert courses. Standard class teaching courses will be held in Brussels and generally in English. Topics developed for these courses will be translated and adapted for the local training courses. The more specialised class teaching courses might for example be in the area of networking industries (e.g. energy, telecommunications and financial services). In the first instance, however, a branding exercise will be asked to come up with a name for the project.
Actions starting in the autumn 2013 (400, 000€, financed from the 2012 budget)
• Interactive web networking platform development and hosting services;
• Branding exercise: name for the capacity-building project;
• Development of one E-learning module to be integrated in the web networking platform, topic ‘consumer law’.
In reply to the UK about the study on over indebtedness, the Commission informed that it is expected to be finalised by the end of the year. It will also feed into the work on financial markets with DG MARKT.
ANEC recalled the importance they attach to the product safety package actively follows the file. ANEC asked about the state of play of the planned paper on safety of services. The Commission informed that it was preparing internally a paper that will be discussed with stakeholders. The challenge in this file is the need for a lot of data and information.
FOLLOW UP TO THE ANNUAL IDENTIFICATION OF ENFORCEMENT PRIORITIES – DEBRIEFING ON THE CONSULTATION PROCESS OF THE CPC REGULATION
At the 2013 Consumer Summit, DG SANCO agreed to establish structured dialogues on enforcement priorities with stakeholders at EU level, and to encourage similar discussions at national level. The input from consumer organisations will help to identify common enforcement priorities for joint actions carried out by the CPC Network, such as the theme for the 2014 sweep.
Linked to the CPC review, on 11 October, the Commission launched a public consultation on how to improve enforcement of consumer rights in the context of the review of the mechanisms for cooperation among enforcers, which is provided by the so-called CPC Regulation (2006/2004/EC). The consultation is available on-line in nearly all EU languages (Gaelic and Maltese excluded). It is open until 31 January 2014 and Commissioner Mimica is calling for a wide consultation, as all possible options are open for discussion.
Key issues on which authorities’ and stakeholders views are sought are:
- How to improve the enforcement tools available to national authorities and close existing gaps and differences which hamper cooperation.
- How to better tackle similar EU-level infringements done on several geographical markets at the same time, often by the same company or its branches.
- How to develop efficient rapid alert mechanisms, notably to be able to react fast to new on-line marketing practices that hurt consumers.
Mid 2014, Commissioner Mimica envisages publishing a report on the functioning of the CPC, which will include the feedback from the consultation.
Regarding enforcement priorities, the Commission reported that the CPC Committee would discuss in October (30/10) its work plan for 2014 (CPC joint enforcement activities) and identify, for the first time, 3-year high-level priorities.
The draft priorities are being established with the assistance of a Working Group of 9 Member States. It is using a wide basis of priorities and indicators provided over the summer by national CPC authorities, ECCs and EU level stakeholders (BEUC, Business Europe and Eurocommerce). Enforcement priorities cannot be disclosed to non – government organisations, however, it is not a problem to explain that the priorities concern sectors for which there are many complaints and reports from consumer associations across Europe: transport, telecom, financial services and bad on-line practices in general.
A certain level of scepticism was expressed by LU and UK on the real effectiveness of cooperation among authorities. The need to better coordinate actions with consumer associations was also stressed in order to avoid duplicating efforts and be mutually supportive. COM answered that since two years, it had increased its coordination role, that national authorities were cooperating well, with several joint enforcement projects on-going, with results expected for next spring.
REPORT ON THE CONSUMER CREDIT DIRECTIVE
The Commission reported on the on-going preparation of a report on the implementation of the Consumer Credit Directive. The Commission contracted two studies in this respect: One on the situation on consumer credit market and the general impact of the Directive on this market (from the point of view of fostering Internal Market and enhancing protection of the consumers). Another one focusing on the legal aspect of the transposition, namely how and with which results the Member States made use of regulatory choices available to them.
The preliminary results of the studies indicate that it was too early to fully assess the functioning of the CCD. The period after the introduction of the CCD (2008) has fallen in the period of financial crisis. However, it seems that creditors systematically do not respect their obligations vis-à-vis the borrowers. Borrowers seem unaware of their rights and even of the contents of their contracts
The Commission said that the situation on the consumer credit market calls for more effort on two fronts: correct enforcement of the Directive in the Member States and enhancing consumer financial education and empowerment.
LUX was looking forward to the full report when available and said that this legislation needed full harmonisation.
BE argued that the report should be available to ECCG members before it is ready.
The Commission emphasized that these were preliminary findings. At the next ECCG meeting the group could discuss the report findings in concrete terms as well as the studies available at this moment. Input from the ECCG was already solicited in 2012, the independent contractor contacted the ECCG members but only 7 replied.
GREEK PRESIDENCY PRIORITIES
The EL member gave an overview of the upcoming Greek presidency priorities.
The legislative files in the consumer filed under the EL Presidency are: The Product Safety and Market Surveillance Package, the Payment Accounts, and Package travel & assisted travel arrangements.
UPDATE ON CURRENT LEGISLATIVE INITIATIVES FROM DG JUST
The Commission (DG JUST) informed about the on-going work in consumer law and related areas – revision of the small claims procedure, transposition of the Consumer Rights Directive (CRD), implementation of the Unfair Commercial Practices Directive (UCPD), revision of Package Travel Directive and Misleading and Comparative Advertising Directive (MCAD) as well as the awareness raising campaign. Participants were also informed about the establishment of a cloud computing expert group by DG JUST that will convene for the first time on 19-20 November and about the „Assises de la justice“ event of 21-22 November to discuss the future of Justice in the European Union. The Commission reassured that it continues to work closely with enforcement authorities and with Member States to address weaknesses in the transposition and implementation of the consumer law instruments.
Regarding the UCDP the Commission will support its correct implementation by revising, in 2014, the existing guidance on the Directive. The Commission also organises a series of workshops with MS and industry in 2013 and 2014 to address specific issues in areas such as online commerce and transport.
In the context of the REFIT exercise the Commission will assess the relevant parts of the consumer acquis in 2016. The CRD application report is also due in 2016. At present, the Commission is preparing guidance on the CRD to be issued in early 2014, before the directive enters into application in June 2014.
PT and EL commented on the proposal for the revision of the Package Travel Directive. EL highlighted that for consumers it is the entity with which they enter into contract at the point of sale that should be liable. PT inquired why the Commission does not support the notion of joint liability, which is the best solution as seen by PT.
In this regard, the Commission indicated that it hopes to achieve the adoption of the Proposal under the Greek Presidency. The overarching aim is the modernisation of the directive providing for high level consumer protection. There is room for fine-tuning the proposal during the current negotiations, including on issues such as liability and insolvency protection.
In reply to MT about the price indication directive, the Commission informed that it continues exchanging formal correspondence with MT authorities as the reply from the Maltese authorities to the earlier questions of the Commission about the implementation of the directive were not fully satisfactory.
INIATIVE ON SINGLE TELECOM MARKET
The Commission (DG CNECT – Anthony Whelan acting Director- Electronic Communications, Networks and Services) gave an overview about the legislative proposal to reform the telecom market.
The legislative proposal adopted by the Commission in September called the „Connected Continent package“, is a draft regulation on steps towards an internal market in electronic communications. It includes a number of significant pillars with some having direct impact on consumers. One pillar is the wholesale market the telecom companies use, another major pillar is developed for authorization of companies active in more than one MS , and some of the regulatory consequences; the role of the Commission and of BEREC with some institutional changes proposed for BEREC.
There are three major elements with direct interest to consumer: the first one is the provisions in the area of net neutrality, the second is provisions proposed in respect of roaming and some new steps in international calls. The third is a broad body of provisions for existing sector specific end user protection in the USD which would be replaced by provisions in the Regulation which are fully harmonised at a high level of protection
Regarding net neutrality the Commission explained that in most MS telecom operators, and in particular, mobile operators, contractually reserve the right to block or slow down certain traffic. Companies do use it extensively to block applications that deprive them from revenues. Instead of addressing the demands of the traffic, they introduce extra costs and push it down to end users.
In this area the aim is to weigh the policy tools, to preserve net neutrality without impeding innovation.
Regarding specialized services, such as e-health services, or certain cloud computing services, it is important to discuss an enhanced quality of services. The condition is that the quality of these specialised services should not impair the internet. Specialised services should not be advertised as substitutes for open internet. The Commission would like to achieve a balanced outcome, where national regulators have the right and obligation to check the quality of open internet. Open internet has primacy in cases where there might be a conflict for available capacity.
Regarding roaming the Commission referred to the legislative initiative of March 2012, entitled „Roaming 3“ which launched a new cycle of lowering the wholesale, and retail caps. This regulation will come into effect in July 2014 and it introduces the idea of decoupling whereby operators would be obliged to provide their clients the opportunity to buy roaming from another provider if they choose so, decupled from the domestic provider.
The Commission in the new telecom package proposed an additional element, an alternative regime by offering companies the opportunity to step out of the decoupling regime if they commit to offering „roam like at home“ services. By this roaming prices that are determined by the domestic prices, subject to reasonable use limits, become an extension of the domestic package.
Operators would need to find partners that sell each other wholesale roaming capacity at prices which allow them to separately offer „roam like at home“ to their domestic customers. In the new proposal the Commission suggests that if operators are able to reach such roaming deals, it will give them incentives to pass on the benefits of their wholesale roaming arrangements to their own client base. However, the aim is not to weaken competition.
Another aspect of roaming is linked to the abolition of surcharges for incoming calls. This is possible thanks to the successful lowering of mobile termination rates to cost based prices across the Union.
Concerning international calls, the Commission’s‘ approach is somewhat different. This market is competitive but with pockets of very significantly higher prices. Even if competition is working for the vast body of consumers, in some areas it does not work. The Commission set up a benchmarking exercise whereby if international calls on a mobile network exceed the roaming Euro tariff or fixed network call exceed the domestic long distance tariffs then the operator has to justify the costs and inform the client about possibilities about lower costs services.
The third area for a very detailed provision is the general area of end user protection. The Commission takes the existing provisions of the USD on e.g. contractual, termination, contract lengths, switching, and portability. The approach is to aiming at the highest level of protection, and adding a number of relatively new provisions. The most significant ones are linked to internet (provisions of connectivity). The Commission sought to bring the rules in respect to the broadband age, including provisions for contract termination if broadband is not what it is advertised.
Several MS commented. The UK supported the Commission proposal but cautioned about loopholes especially linked to the obligation to inform about international calls, and also referred to weakened positions of small operators. The UK also asked if the Commission would select parts of the package should it not be adopted as a whole.
In reply to the UK on specific points on call charges, the Commission has recognised that it is different from the regulation of roaming. There is a competitive market, but where certain end users do not reap the full benefits. Therefore the Commission have chosen a lighter intervention that brings benefits to the end users but it does require that national regulators remain vigilant about the providers‘ practices.
On the issue on roaming, and smaller operators the Commission stressed that the telecom business in some respects is a business that awards scale and economic of scale efficiencies. the aim of roaming agreements within the new initiative is to give companies an incentive to push down their wholesale costs and pass those benefits to clients in the shape of prices at the same time. There is no intention “ to shock the system”, thus the regulation foresees different glide paths for smaller operations to help them get the same territorial coverage. The proposed approach would therefore not undermine the competitiveness of smaller providers.
EL commented on roaming and that with this proposal great expectations were created. The new initiative comes before the implementation of the previous Roaming package without evaluation. EL stressed that cross-border charges should be equal to national ones, which is problematic especially in bordering areas, and that there is a risk that domestic charges will be raised to compensate for lowered roaming prices. The Commission highlighted that roaming is not a competitive market, the roaming element of a contract is not the main determinant for choosing a provider, and it is sheltered from competition. Price increases for domestic services will be difficult due to competition in this area which is decisive for consumers‘ choice. The „Roam like at home“ concept is about to extend the effects of domestic competition to the roaming retail price.
Regarding involuntary roaming the Commission suggested that it should to be dealt by national regulators, bilaterally.
The PL member mentioned that the Polish consumer federation receives over 10.000 complaints about telecom services in particular about contract duration. In Poland the directives are transposed, yet providers can lock consumers in a 2 year service contract and in a 4 year hand set contract. PL inquired if this was general practice in other MS, as this limits choice and competition. As the EU telecom policy is not properly enforced in national markets the Commission should take a closer look.
As regards contract lengths the Commission said that it proposes in the draft legislation a 2 year maximum and the 12 month period as foreseen in the USD, as well as the possibility of contract termination after 6 months. It is proposed that if 6 months contact termination includes a handset subsidy, the residual value is owed under such a contact needs to be paid back.
About the ambition and the timeline of the new proposal the Commission recalled the EU Council’s encouraging words and the urgency attached to not only to the telecom but to digital single market. The Council welcomed the Telecom package and made two specific remarks: one about the need of a more coordinated spectrum policy, the other of end user protection where a more harmonised approach was to be welcomed while ensuring to ensure national level to address new issues. As regards the timetable and timely adoption, the Commission would not consider splitting and prioritising certain elements of the package, all elements were important.
BE welcomed the 6 months contract termination provision and the provision to repay the residual price of incurred subsidies. This proposal looks like as the BE solution but should take on board all the elements of the BE legal act if the ambition of the Commission was to go for full harmonisation.
BE drew attention to the signs which suggest that there is an on-going trend to consolidate the telecom sector. The risk is that proposals on roaming and cross-border calls may reinforce this trend and may lead to a less competitive market. The Commission should ensure that there is a healthy competitive market with sufficient number of players.
Regarding net neutrality, BE suggested keeping it simple. The current proposal seems very complex.
DE shared BE’s opinion. In particular in regard to net neutrality DE sees no improvement on the EU side. Regarding specialised services, DE would like to see that operators can’t block the internet for economic reasons. If the regulation is applied and if there would be a need to somehow limit the traffic, the starting point for doing so could be the home gateway of the end user, rather than having another layer of discrimination.
In reply to NO question about the institutional changes for BEREC, the Commission said that it proposed changes in the governance of BEREC, instead of an annual chair, a 3 year professional chair, to give it a bigger professional stability.
On net neutrality, the Commission tried to keep it simple and principle based with a certain number of freedoms and number protection within. On DE question the Commission reassured that it did not see its proposal of specialised services as encoding discrimination. As long as we can keep the open internet functioning with well growing capacity, only service providers who want to provide specialised services will want to do that. It is a matter of different needs; but in any best effort network occasionally there will be congestion traffic problems and operators have to make temporary choices which traffic has priority. Thus, specialised needs that rely on specialised services need to rely on added capacity to the network. The Commission agreed that blocking should not be done for economic reasons.
Regarding sector consolidation the Commission underlined that the vision of the new proposal would drive market entry rather than limit it. Scale can bring advantages; this proposal will not affect the merger control power at EU or national levels, the markets must change before the merges analysis changes.
DG SANCO offered DG CONNECT to consult the ECCG on parts of the proposal, if needed.
ENERGY
The Commission recalled that one of the priority areas of the State of the Union 2014 address was empowering consumers in energy markets.
The Commission (DG SANCO) highlighted the activities in the area of energy with both direct and indirect impact on consumers such as the Energy and Climate Framework for 2030; the Communication on Energy Prices and competitiveness and social cohesion; the Review of the Energy and Environment State Aid Guidelines; the on-going implementation of the Energy Efficiency Directive; the compliance check of the MSs notification of the implementation of the Third Energy Package.
The Commission mentioned the report on electronic billing and how to improve the management of energy consumption at home; the preparation of the review of the 2010 retail electricity market study, which will assess the impact of market competition and recent legislation on consumers and the preparation of this year’s Citizens‘ Energy Forum.
As all these activities can yield both benefits and costs for consumers‘ advocacy by consumer representatives is much needed.
The Commission recalled the importance of the ECCG sub-group on Energy for a strong voice to the Citizens‘ Energy Forum. It is important that MS are represented, therefore ECCG members were asked to nominate the right people with good levels of knowledge to represent consumer interests in London and beyond.
The Commission (DG ENER) gave an update on the work of the energy retail market, where DG ENER and DG SANCO work closely on consumer issues pertaining to retail electricity and gas energy markets.
As regards the CEF preparations, the Commission informed that the two – day meeting on 16-17/12 will bring together representatives of industry, consumers, regulators and ministries. The Commission prepares the agenda and will co-chair the meeting.
The purpose of the CEF is to further deepen the dialogue between industry consumers and ministries. This year’s meeting will be interactive with panel discussions and break-out sessions and will be used for reporting on the work done in between 2012-2013, such as on e-billing and the work on vulnerable consumers.
The forum will focus on consumer empowerment and engagement in the retail market and on how to make the subject of energy interesting for consumers and engage active consumers.
There will be a session on effective governance, collaborative enforcement in enforcing the exerting provisions of EU legislation provisions for consumer protection in energy legislation.
The ECOSOSC will also present their new initiative the European energy dialogue, which aims to involve citizens into policy discussion of energy policy. THE ECOSOSC will run a session on the Europa energy dialogue.
Regarding vulnerable consumers Working Group, which is a parallel group under the CEF, a report is being finalised and will be presented at the CEF in London.
The Commission reported that the report on energy prices will be discussed during the Greek presidency.
To follow up a study on the Electricity markets in 2010, the Commission will look at it again, how competition in this market affects consumers and analyse the legislation under the framework of the 3rd Energy Package. The study will examine not only market conditions but the ways how to engage consumers to act as active market agents; finally it will also examine innovative approaches such as collective switching, cooperatives.
The TOR is being discussed internally, and the Commission welcome to receive ECCG feedback and the nomination of experts into the Energy sub-group.
The UK mentioned how controversial the energy issue became in domestic politics such as the recent trend with energy pricing. There has been a 9% raise in the retail price for consumers, yet the wholesale price only raised by a fragment Therefore the UK suggested discussing the wholesale prices at the CEF if feasible.
HOUSEKEEPING RULES
The Commission briefly informed about some important rules during the term office as ECCG members. In particular the Commission referred to the Rules of Procedure, Agenda setting, the obligation of consulting national consumer organisation and reporting. Finally the Commission also mentioned the importance of ECCG Opinions as a tool for formulating views on policy initiatives.
AOB: REGULATORY FITNESS CHECK OF THE FOOD CHAIN
The Commission informed members on the REFIT exercise- follow up to the fitness check of food chain in terms of timing, content and procedures, notably their possibility to provide input.
Next meeting: February 12 -13, 2014
