Verbatim report of proceedings

Monday, 15 December 2008 - Strasbourg

22. The Misleading Directory Companies report (short presentation)

  President. − The next item is a brief presentation of the report (A6-0446/2008) by Mr Busuttil, on behalf of the Committee on Petitions, on the Misleading Directory Companies report (petitions 0045/2006, 1476/2006, 0079/2003, 0819/2003, 1010/2005, 0052/2007, 0306/2007, 0444/2007, 0562/2007 and others) (2008/2126(INI)).

  Simon Busuttil, rapporteur. − (MT) This report was drawn up because the European Parliament received over 400 petitions from its citizens, namely from small enterprises who have fallen prey to advertising scams by being inserted in a commercial directory without wanting to. The victims would receive a form such as this one and be asked to fill it in, whilst being tricked into thinking they were signing up for a free mention in the directory. However, they would subsequently receive a letter and realise that they had unknowingly entered into a contract that binds them to a payment of around 1 000 euros for three years. This is what is happening to victims of these directories that we consider to be fraudulent. I would like to add that the company that owns the European City Guide directory is the most commonly mentioned in these petitions. It is worth noting that this company has also put considerable pressure on the Members of this Parliament in an attempt to put a stop to or undermine the reports that we are presenting today. Fortunately however, it did not succeed, despite the fact that it did not always provide us with the correct information. What were the results of this report? We discovered that there exists a very real problem, that it is widespread, and that it can be traced all over the European Union. What has also emerged is that this affects numerous small businesses as well as professionals and other individuals that do not necessarily own a company. We found that this problem affects companies transnationally, and that it has not only a strong financial impact, but also a serious psychological one on the victims of this sham, who are conned into signing this form and then later hounded by the company to follow up payment. What are we proposing in this report? Firstly, we draw up a list of measures in order to increase the level of awareness and therefore reduce the number of victims who fall into the trap in the first place. Secondly, we need to ensure that existing European legislation is enforced as it should be. It should be noted here that every time this issue was brought up with the Commission, it replied by saying that it was up to the discretion of the Member States to implement European Union legislation on a national level. We are aware of this discretion, but I would like to remind the Commission that it is the duty of the European Commission to ensure that European Union laws be implemented effectively in the Member States. We are also proposing that European laws be amended in order to better address this particular problem. We found, for example, that the Austrian model is an exemplary one because Austria changed its national legislation so as to have it apply specifically to this issue of fraudulent commercial directories. My final point concerns the need to assist the victims by advising them not to make any payments to these commercial directory companies until they have sought out proper advice. Before concluding I would sincerely like to thank the Petitions Committee for lending this report its unanimous support and I would also like to thank all my staff. Moreover, heartfelt thanks go out the committee’s secretary – Mr David Lowe. If the report is adopted it will send out two clear messages – first of all to the victims, in showing them that we understand their situation and are fully behind them, and, secondly, to these fraudulent commercial directory companies, where we would be warning them ‘put an end to your swindling practices at once, because Parliament is trailing you closely’.

  Vladimír Špidla, Member of the Commission. – (FR) Mr President, the Commission commends the efforts made by the European Parliament in drafting this report, and will actively examine its conclusions.

I should like to point out, as the report itself clearly indicates, that, insofar as the problem in question concerns business-to-business relationships, a large part of the Community legislation on consumer protection, including Directive 2005/29 concerning unfair business-to-consumer commercial practices and Regulation (EC) 2006/2004 on cooperation in the field of consumer protection, does not apply.

A certain form of protection is, however, provided by Directive 2006/114/EC on comparative and misleading advertising. In accordance with these directives, it is incumbent on the public authorities responsible for monitoring the application of legislation and/or on the competent courts of the Member State from which these businesses carry out their activities to decide, on a case-by-case basis, whether a commercial communication is misleading and to take the appropriate coercive action.

I should also like to stress that several authorities and competent courts in Spain and in Belgium, for example, have already taken coercive measures against practices and obtained a number of positive results.

The Unfair Commercial Practices Directive does not cover business-to-business commercial practices since there is no argument in favour of fully harmonising national laws relating to unfair competition. A fully harmonised directive on unfair business-to-consumer practices was already a very ambitious proposal that would have failed had its scope been extended to unfair business-to-business competitive practices.

The consultation that resulted in the proposal and the work within the Council have shown that there was hardly any support for extending the scope of the directive to unfair business-to-business commercial practices. While certain Member States were in favour of extending the scope of the directive and to unfair competition, others voiced their support for consumer protection but opposed the introduction, at EU level, of an additional harmonised system of rules on unfair competition.

Although the Commission cannot take action against the businesses involved in such practices, it has endeavoured to make businesses aware of this problem by presenting it to various European professional organisations. The subject has specifically been raised within the Business Support Network and, at the same time, the Small Business Act calls on the Member States to protect their small and medium-sized enterprises from unfair practices. The Commission will continue to examine other methods of raising businesses’ awareness, if it deems this appropriate.

Furthermore, the Commission has written to the competent authorities of the Member States concerned – Spain, Austria and Germany – to draw their attention to the fact that the situation is ongoing and to ask them for additional information. The responses received make it quite clear that the national authorities are aware of the problem and have legislation with which to tackle it; where necessary, they have already used the measures provided for.

  President. − The debate is closed.

The vote will take place on Tuesday 16 December 2008.

Written statements (Rule 142)

  Richard Corbett (PSE), in writing. – Having campaigned against these scamming organisations for years, I am delighted to support this report.

This is a problem that crosses borders. Each year, thousands of businesses, charities and voluntary groups across Europe are tricked into signing what looks like a perfectly innocent entry for a directory. In reality they are tricked into a complex contract and then face aggressive demands for money, with no offer to cancel the contract.

It is vital to close the legal loopholes that allow these fraudulent businesses to operate.

In particular, I urge the Commission to follow the key recommendation of this report and to put before Parliament an extension of the scope of the Unfair Commercial Practices Directive to specifically prohibit advertising entries in such directories unless prospective clients are clearly informed in the advert that they are being offered a contract against payment.

These recommendations are legally straightforward – Austria has already ‘gold plated’ its transposition of the UCPD to include this very provision – but they would greatly improve the protection of businesses and other organisations that fall victim to these scams and send a clear signal to directory scams that their days are numbered.