Scope

Evaluation of Regulation (EC) N° 2006/2004 on the cooperation between national authorities responsible for the enforcement of consumer protection laws

Evaluation findings

The evaluation concluded that the Consumer Protection Cooperation (CPC) Regulation has strengthened the enforcement of consumer laws across the EU. However, it also showed that the Regulation was not adapted to respond to the challenges of the digital economy and the development of cross-border retail trade in the EU.

The main problems linked to the consumer protection cooperation as an enforcement instrument for the EU consumer legislation cross-border were: the insufficient mutual assistance mechanisms, no efficient response to widespread infringements across the EU, especially those occurring in the digital environment, as well as difficult detection of infringements and the lack of prioritisation of enforcement action.

The current rate of business non-compliance with EU consumer legislation showed that enforcement was suboptimal: 37% of e-commerce would breach consumer law. This generated a detriment for consumers estimated to be about EUR 770 million per year for consumers shopping online cross-border in travel, entertainment, clothing, electronic goods and financial services alone.

Estimated savings and benefits

Savings for authorities were achieved thanks to the possibility to reuse evidence, avoid duplication and ensure maximum consistency of enforcement actions. Pooling of resources to address widespread infringements was considered to be saving resources as one coordinated action replaces national actions, resulting in net savings varying from around EUR 180 000 (in case of successful coordinated action involving all Member States national authorities) to around EUR 815 000 (in case of failed action).

Due to the limited availability of data, regulatory costs and benefits of Regulation (EC)  2006/2004 could not be further quantified.

Which objectives did the Commission pursue?

The Commission proposal aimed to achieve the following general objectives:

• promote a high level of consumer protection in the EU through reduction of financial consumer detriment caused by cross-border and widespread infringements;

• Improve further the legal consistency of enforcement of EU consumer protection legislation across the EU and thus legal certainty for traders and consumers;

• Increase further the deterrence effect of the Consumer Protection Cooperation Regulation.

The proposal also pursued several specific objectives:

• Reduce the situations where important cross-border or widespread infringements were not addressed via the consumer protection cooperation framework;

• Reduce duplication of enforcement efforts of national authorities;

• Increase the detection rate of widespread infringements;

• Reduce delays in the consumer protection cooperation.

The proposal also aimed at ensuring a strengthened and more efficient enforcement cooperation framework by:

• Ensuring that authorities could act faster and save costs especially to jointly stop widespread online infringements thanks to additional cooperation powers (e.g. interim measures to block infringing websites);

• Providing for a single coordinated procedure where the Commission could play a strengthened assistance role;

• Offering businesses a one-stop-shop approach for the enforcement of EU consumer law.

The Commission proposal was expected to generate efficiency gains, such as reduction of administrative burden and costs for national authorities in cross-border enforcement of Union consumer law.

Businesses operating in all or a large majority of Member States would benefit from a one-stop-shop approach. A possibility to negotiate commitments at EU-level would make it simpler, faster and cheaper for the businesses to resolve consumer issues. More consistent enforcement of consumer legislation across Europe would increase legal certainty and reduce legal expertise costs when doing marketing cross-border.

The proposal did not impose any legal obligations on businesses. It streamlined administrative systems for the enforcement of existing consumer laws and simplified the business environment, especially in the EU's Digital Single Market.

Estimated savings and benefits

Consumers would benefit from better and safer market conditions when purchasing cross-border. It was estimated for the subset of five online markets that a decrease of 10 points in the non-compliance 24 rate of 37% could reduce consumer detriment from an estimated EUR770 million per year to about EUR539 million, i.e. by 30%.

Any new single CPC action against a widespread practice could also reduce consumer detriment across the EU (e.g. by an estimated EUR68 million in the case of the coordinated action against the misleading marketing of in-app offers in online games).

As verified during the evaluation study savings for authorities would be achieved thanks to the possibility to reuse evidence, avoid duplication and ensure maximum consistency of enforcement actions.

Outcome of Legislative Procedure

Regulation (EU) 2017/2394 of the European Parliament and of the Council of 12 December 2017 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) N° 2006/2004 was published in OJ L 345 of 27 December 2017, p. 1. The new Regulation  applies since 17 January 2020.

The new Regulation further strengthens the collaboration between national consumer enforcement authorities to ensure more rapid and consistent enforcement of consumer rules, especially in the digital environment. In this context, while national authorities remain competent for the enforcement of consumer rules, the Commission will play a stronger coordination role, especially for EU wide infringements. It will improve the current framework in particular by:

- Extending the scope of the current CPC Regulation to allow for cooperation in new areas: infringements of short duration; legislative areas not previously covered and infringements that have already ceased; and Article 20 of the Services Directive, which lays down the non-discrimination provision for services in the European Union

- Strengthening the minimum investigation and enforcement powers of the competent authorities by equipping them with a common toolbox they need to cooperate faster and more efficiently in the cross-border context or on widespread infringements.

- Empowering the authorities to accept commitments from traders to provide remedies to affected consumers in cases of widespread illegal commercial practices. The authorities will also be able to inform the affected consumers about how to seek compensation as provided for in national legislation.

- Strengthening existing coordination mechanisms to investigate and tackle widespread infringements;

- Reinforcing market surveillance and the current alert mechanisms.

As it was also underlined in the ‘A New Deal for Consumers’ communication of April 2018¹, ensuring the successful implementation of the new CPC Regulation is key. The Commission accordingly, is strongly committed to work together with Member States and stakeholders to ensure timely and proper implementation of the new Regulation.

The Commission in this context supports the Member States by assisting national authorities and by monitoring the adaptation of national legal systems. In particular:

• The Commission organised and continues to organise workshops, on the basis of the needs indicated by the Member States, and bilateral meetings with Member State experts to discuss implementation issues and to provide guidance if necessary.
• The Commission developed a new IT tool (electronic database) that authorities and other stakeholders under the Regulation need to cooperate efficiently and to exchange information and alerts and to work on coordinated action. This IT tool also facilitates Member States’ certain notification obligations. As the new IT tool is implemented via the Internal Market Information System (IMI), the Commission prepared an implementing measures to launch a pilot project for the IMI implementation². In addition the Commission also adopted an implementing measure³ on the practical and operational arrangements of the electronic database.
• The Commission adopted the implementing act, as provided by in Article 35 (4) of the new Regulation, concerning the practical and operational arrangements for the functioning of the electronic database (as mentioned above).
• The Commission continues engaging in capacity building activities for national authorities, in particular via workshops, a strong knowledge sharing base, and via action grants.

In December 2021, the Commission launched a study to prepare, in line with Article 40 of the Regulation, a report to the European Parliament and the Council on the application of the CPC Regulation by 17 January 2023. This report will also be accompanied by an evaluation. This will include an assessment of the effectiveness of enforcement under the Regulation, in particular with regard to the new powers as well as an examination on how compliance by traders with the Union laws protecting consumers’ interests has evolved in key consumer markets concerned by cross-border trade.

¹ Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee: A New Deal for Consumers (COM/2018/0183)

² Commission implementing decision (EU) 2019/2212.

³ Commission implementing decision (EU) 2019/2213.