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Review of the consumer protection co-operation (CPC) regulation

In “Internal Market and Consumer Protection - IMCO”

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To build consumer trust in the European digital single market, EU-wide enforcement of consumer protection rules is crucial. The 2006 Consumer Protection Co-operation (CPC) Regulation set up a network of national enforcement authorities to ensure enforcement of the main EU consumer laws consistently across borders. After the assessment of the regulation showed that the existing rules need to be revised to respond to the challenges of the digital economy and the development of cross-border retail trade in the EU, a legislative proposal for revision was submitted on 25 May 2016 as part of the Commission’s e-commerce package.

The Commission proposal defined procedures for cooperation between Member States to ensure more rapid and consistent enforcement of consumer rules, especially on the online markets. The proposal included additional powers for enforcement authorities in the Member States, such as the power to carry out mystery shopping, take down an infringing website or request information from banks to identify the responsible trader. It also introduced a five-year limitation period for imposing penalties; a new surveillance mechanism to replace the current CPC system of alerts; biannual national enforcement plans submitted by the Member States to the Commission; and monitoring of implementation of those plans by the Commission.

While the 2006 regulation refered only to ongoing intra-Union infringements (those that affect consumers in one Member State but have a cross-border dimension), the Commission proposal extended the application of the regulation to past intra-Union infringements as well. In addition, it introduced new infringement categories: widespread infringements (which harm or are likely to harm consumers in at least two Member States), and widespread infringements with a Union dimension (which harm or are likely to harm consumers in at least three-quarters of Members States with three-quarters of EU population). In case of a widespread infringement, Member States would be required to launch a ‘coordinated action’, while in case of a widespread infringement with a Union dimension, the Commission would take the leading role and be required to launch and coordinate a ‘common action’.

The opinion of the European Economic and Social Committee (EESC) was adopted on 19 October 2016. The EESC supported the proposal, considering it to be timely and well developed.

In the European Parliament, the Committee on Internal Market and Consumer Protection (IMCO) was responsible for the file. On 30 November 2016, the rapporteur Olga Sehnalová (S&D, Czech Republic) presented her draft report. The Committee adopted the report on 21 March 2017 and voted to open negotiations with the Council.

The IMCO report considered that Commission should be required to coordinate a response if a widespread infringement affects at least a majority of Member States with at least a majority of the population of the EU. The Committee also suggested that not all competent authorities in a Member State need to have all the powers, but that all powers should exist in each Member State. It further clarified these powers and sought to strengthen the role of consumer and trader organisations. While in favour of the proposal that Member States should submit their enforcement plans to the Commission, the Committee was against Commission's monitoring of implementation of these plans.

The examination of the text in the Council preparatory bodies started in June 2016 in the Consumer Protection and Information Working Party under the Dutch Presidency and continued under the Slovak and Maltese Presidency. The Competitiveness Council adopted a general approach on 10 February 2017. According to this compromise, the threshold for the widespread infringement would be increased, while the notion of the widespread infringement with a Union dimension would be deleted. Still, if a widespread infringement affected three quarters of Member States with three quarters of EU population, the Commission would be required to launch and coordinate a coordinated action. In addition, the Council was against the introduction of a surveillance mechanism and national enforcement plans.

Three rounds of trilogues took place from April to June 2017 and ended with a provisional agreement announced by the Maltese Presidency on 21 June 2017. The Parliament Plenary adopted the agreed text on 14 November 2017, while the Council adopted it on 30 November. The final act was signed on 12 December 2017. Regulation (EU) 2017/2394 was published in the Official Journal on 27 December 2017.

At the insistence of Parliament, the new regulation keeps the distinction between the widespread infringement and the widespread infringement with a Union dimension. For a widespread infringement to be considered to have a Union dimension, it has to harm the interests of consumers in at least two-thirds of Member States with two-thirds of EU population - a compromise between the Commission's proposal and Parliament's demands.

The new ‘surveillance mechanism’ proposed by the Commission is not included in the new regulation. If a coordinated action to protect the interests of consumers in multiple Member States is needed, it is launched by an agreement between the national authorities of the Member States affected. The Commission is required to coordinate it if the national authorities are unable to agree on the coordinator among themselves or in case of a widespread infringement with a Union dimension. The limitation periods for infringements that have already stopped depend on the limitation periods in the individual Member States.

The regulation entered into force on 16 January 2018 and applies from 17 January 2020.

References:

Further reading:

Author: Nikolina Šajn, Members' Research Service, legislative-train@europarl.europa.eu

As of 20/11/2019.