On 13 November 2020, the European Commission (Commission) launched its New Consumer Agenda (Agenda) intended to further empower European consumers to play an active role in the green and digital transition and to address misleading online practices seen during the COVID-19 pandemic and beyond.
The Agenda builds on the Commission’s 2018 New Deal for Consumers (New Deal) and sets out a bold long-term vision up to 2025, focusing on five priority areas: green transition, digital transition, enforcement of consumer rights, protecting vulnerable consumer groups, and international cooperation.
These priorities were the subject of an open public consultation and are consistent with, for example, the trend towards greater scrutiny of businesses’ approaches to sustainability around the world and EU regulators’ approaches to addressing the behavioural elements of online consumer harms.
However, the Agenda also reveals a more outward looking approach to EU consumer protection, emphasising the importance of strong international cooperation among regulatory authorities and actors in the supply chain and, in particular, intensifying product safety cooperation with China.
The Agenda will no doubt be viewed by the Commission and various EU regulators as a strategically opportune moment given the apparent challenges they faced responding to the pandemic, which resulted in various businesses around Europe offering voluntary commitments. Given this, and for those familiar with the New Deal (particularly the Directive on Representative Actions, which will be formally adopted in the coming weeks), it is not surprising that enforcement and redress is at the heart of the Agenda.
Sustainability and digitalisation are driving the current Commission’s mandate, and the Agenda is consistent with these areas of focus.
Building on previously announced initiatives regarding durability and recyclability of products, the Commission plans to legislate on sustainable corporate governance, including potentially human rights and environmental due diligence requirements in the supply chain. The Commission’s aim is to equip consumers with better information on the sustainability of products and to fight practices such as early obsolescence and ‘greenwashing’.
Initiatives to fight early obsolescence and promote more durable products are focussed on specific groups of goods and services, such as textiles, packaging and electronics. For example, they aim to ensure that electronic devices are designed for repair, reuse and recycling, and that consumers have a ‘right to repair’ them including software updates.
This follows an increase in recent enforcement against misleading consumers in the online space, including initiatives by the UK Competition and Markets and the Netherlands Consumer and Markets Authority to tackle misleading ‘sustainability claims’ (see earlier posts on the UK and Netherlands initiatives). It is notable that the Commission also intends immediately to start working with trade associations and businesses to encourage voluntary pledges to support sustainable consumption, beyond what is required by existing EU law.
In the digital sphere, the Commission aims to tackle online commercial practices, which, in its view, have the potential to affect informed consumer choice and decision-making processes. The Agenda notes that data collection and processing combined with analysis of consumers’ behaviour and their innate cognitive biases may limit the effectiveness of the current rules designed to protect consumers in the digital environment. The Commission intends to release additional guidance on how existing consumer law instruments can be used to tackle these issues and assess whether additional legislation is required in the medium-term. We expect this will see increased focus by EU regulators on the way economic operators present their websites (for example, accessibility of key terms, pre-ticked boxes for consent, product reviews, advertising, and the use of so-called ’dark’ patterns).
The Commission will also establish rules governing the digital economy, for example through the upcoming Digital Services Act, and requirements for Artificial Intelligence (AI) as a follow up to its White Paper on AI.
Effective enforcement of consumer rights
Enhanced enforcement action by regulators, stronger sanctions, and an effective mechanism for mass consumer claims feature prominently in the Commission’s plans.
Although regulatory enforcement is down to the Member States, the Commission has stated that it will make use of its powers under the Consumer Protection Cooperation (CPC) Regulation to trigger coordinated enforcement actions on EU-wide issues where necessary and assist Member States to implement the Directive on Better Enforcement and Modernisation of Consumer Law, which will come into application in May 2022. These measures are intended to ensure that potential breaches of the law by businesses in their dealings with consumers are investigated more effectively, and dissuasive enforcement action taken. Although coordination is raised in the Agenda, we have already seen multiple instances where the Commission acts as a coordinator to prompt national regulators to pursue certain cases and cooperate effectively.
Civil redress is also a key part of the Commission’s strategy. The forthcoming Directive on Representative Actions will allow consumer groups and other qualified entities to take action for breaches of consumer law on consumers’ behalf – and to obtain compensation.
The Agenda kickstarts a series of proposals and legislative processes which the Commission will present shortly, for example an initiative on sustainable corporate governance and proposal to empower consumers for the green transition. We expect to see further interest and scrutiny from EU and international regulators in the area of consumer protection, particularly given the green and digital transition issues discussed in this blog.