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DE GRUYTER ERCL 2017;13(3): 239-254

Articles

Esther van Schagen*

Better Regulation and the Principle of
Consumer Protection in EU Contract Law

https://do.org/10.1515/ercl-2017-0011

1 Introduction
The adoption of the Better Regulation Agenda coincides with a new impetus for
the further development of EU contract law. The European Commission has
evaluated key Directives in EU consumer law under the Regulatory Fitness and
Performance Programme to help the EU legislator in determining whether to
revise EU consumer law.2 In addition, the Commission has proposed revisions and
further harmonisation. 3 Any future proposals will be accompanied by impact
assessments, in line with the Better Regulation Guidelines (hereafter: the Guide-
lines). 4 Impact assessments should ensure that the EU legislator has been fully
informed about the need for EU intervention and possible options to revise or
further develop the law. According to the Court, this is crucial for developing EU
law in accordance with the principle of proportionality. 5 The 2015 Better Regula-

1 COM(2015) 215.
2 Under the Evaluation and Fitness Check (FC) Roadmap, December 2015, available at http://ec.
europa.eu/smart-regulation/roadmaps/docs/2016_just_023_evaluation-consumerlaw-en.pdf
the Commission has evaluated Directive 2005/29 on unfair commercial practices, Directive 93/13
on unfair contract terms, Directive 1999/44 on consumer sales, Directive 2006/114 on misleading
and comparative advertising, Directive 98/6 on price indications and Directive 2009/22 on injunc-
tions.
3 For example Regulation 531/2012 on roaming, COM(2016) 399, as well as Regulation 2006/2004
on consumer protection cooperation, COM(2016) 283, and the proposal on contracts for the supply
digital content, COM(2015) 634.
4 SWD(2015) 111.
5 CJEU 8 July 2010 (Afton Chemical Limited v Secretary of State for Transport) 343/09 [2010] ECR
I-7027, para 34.

*Corresponding author: Esther van Schagen, Newton International Fellow at the Institute of Euro-
pean and Comparative Law at the University of Oxford, E-Mail: [email protected]
or [email protected]
240 - Esther van Schagen DE G UYTER

tion Guidelines underline the importance of describing, assessing and comparing

various options to develop EU law.6 The Guidelines reiterate that such policy
analysis is a key feature of impact assessments: 'When well done, this is perhaps
the impact assessment component most appreciated by external stakeholders.
When badly done, it tends to be the most criticised and significantly undermines
the credibility of the whole exercise'. At first sight, the evaluation and revision of
EU contract law should be welcomed, especially in light of criticism of EU
contract law as contradictory and unpredictable. 7 In addition, the revision of the
Impact Assessment Guidelines8 seems to have resulted in some important im-
provements, for example in the form of more independent revision.
However, on closer inspection, the revision of EU contract law in line with
the Guidelines may result in an approach that will eventually reduce consumer
protection. Despite the reassurance in the Better Regulation Agenda9 that better
regulation is not about deprioritising social protection or fundamental rights, the
Guidelines have been criticised for their lack of priority given to health, safety
and environmental concerns. This criticism eventually led to the establishment
of a 'Better Regulation Watchdog" 0 that warns against a tendency towards
quantification," at the expense of aims such as consumer protection that are not
as easily quantifiable." Accordingly, the Guidelines place more emphasis on
quantitative analysis than the 2009 Impact Assessment Guidelines." The criti-
cism of Better Regulation coincides with a preference for maximum harmonisa-
tion in EU contract law that may undercut consumer protection. Green Papers
and policy analysis in impact assessments in EU contract law have also been
criticised.14 After analysing the extent of this tendency in EU contract law

6 SWD(2015)111, 22.
7 See for example Ch. Schmid, 'The "three lives" of European private law', in L. Anatoniolli and
F. Fiorentini (eds), A factual assessment of the DraftCommon Frame of Reference (Munich: Sellier,
2010) 304-307; J.M. Smits, 'European private law: A plea for a spontaneous legal order', in
D.M. Curtin et al, Europeanintegrationand law (Antwerp: Intersentia, 2006) 55.
8 SEC(2009) 92.
9 COM(2015) 215, 4.
10 See http://www.betterregwatch.eu/. See on this development A. Renda, 'Too good to be true?
A quick assessment of the Commission's Better Regulation package' CEPS Special Report, May
2015, https://www.ceps.eu/system/files/SR108ARBetterRegulation.pdf, 2.
11 Comp S. Jacobs, 'Towards a simpler and practical approach', in C. Dunlop and C. Radaelli
(eds), Handbook of regulatoryImpact Assessment (Cheltenham: Elgar, 2016) 79.
12 Comp A. Renda, Law and economics in the RIA world (Antwerp: Intersentia, 2011) 42.
13 SEC(2009) 92, 38 and SWD(2015) 111, 27.
14 J.W. Rutgers and R. Sefton-Green, 'Revising the consumer acquis: (Half) opening the doors for
the Trojan horse' European Review of PrivateLaw 2008, 427 For example W.H. van Boom, 'The
Draft Directive on Consumer Rights: Choices Made and Arguments Used' Journal of Contemporary
DE GRUYTER Better Regulation and the Principle of Consumer Protection - 241

(section 2), the paper will argue that the principle of consumer protection, in
Article 38 Charter and Articles 12 and 114 para 3 TFEU, and as recognised by the
Court, stands in the way of recasting divergent protective measures solely as
impediments to the internal market (section 3). Rather, the principle of consumer
protection obliges the EU legislator to explore and prioritise policy options that
are beneficial rather than detrimental to consumer protection. However, the
Guidelines do not reflect the need to prioritise consumer protection. Instead, the
Guidelines do not refer to consumer protection, or more generally, the Charter
and potentially difficult topics. As a result, oversights in impact assessments are
not contrary to the Guidelines, but they are contrary to the principle of consumer
protection (section 4). The Guidelines should be adapted, alerting EU officials to
the need to consider alternative content, for example by amending Directives
while retaining minimum harmonisation, as well as extending the scope of
Directives, and better implementation and enforcement. The Guidelines already
offer starting points for such an approach (section 5). The paper will end with a
conclusion (section 6).

2 Consumers and the Internal Market in EU

Contract Law
EU contract law, predominantly adopted on the basis of Article 114 TFEU, pursues
an ambiguous aim: strengthening the internal market. The unclear definition of
the internal market implies considerable discretion for the EU legislator, and the
question how the internal market can best be strengthened is closely intertwined
with the EU legislator's view of the internal market and the participants therein.
In line with the emphasis on consumer empowerment and the role of consumers
and consumer law to strengthen the internal market, a procedural approach has
been adopted. Accordingly, withdrawal periods and information rights that have
been linked to market failure form a central part of EU contract law. 15 Also in line
with this perspective, the EU legislator has facilitated access to low-cost, easily

European Research 2009, 452 and more recently E.A.G. van Schagen, 'The Better Regulation
Guidelines and the Regulatory Scrutiny Board as a "support" for judicial review: a case study of
EU consumer law' Yearbook ofEuropeanLaw 2017, forthcoming.
15 This has been analysed in more detail prominently by S. Grundmann, 'Information, party
autonomy and economic agents in European contract law' Common Market Law Review 2002,
269.
242 - Esther van Schagen DE G UYTER

available redress mechanisms.16 Simultaneously, parts of EU contract law are

more substantive: for example, the Unfair Terms Directive forbids unfair terms,
the Roaming Regulation caps prices, and the Passenger Rights Regulations pro-
vide fixed sums for compensation. The protective approach has been reinforced
by CJEU case law obliging judges to evaluate unfair terms17 and the applicability
of Directive 1999/4418 of their own motion. These developments have led to
diverging assessments: Reich concludes that EU contract law consists of a mix-
ture of procedural rights and, to a more limited extent, substantive rights, while
Hesselink finds that information rights, because of the lack of clear remedies for
breach of information rights, are 'ornamental'.19 Despite these problems in enfor-
cing information rights, the emphasis on informing and empowering consumers
rather than mandatory rights is likely to continue. Accordingly, Article 10 draft
Directive online sales seeks to introduce the possibility for parties to agree that
sellers are not obliged to take back flawed goods at their own expense, after the
lack of conformity with the contract has been brought to the seller's attention by
the consumer. Article 6 para 1 draft digital content Directive similarly emphasises
the agreement between parties on the requirements that digital content should
meet, by stipulating that the conformity of digital content shall be determined by
the terms of the contract. The drafters have argued that the emphasis on the terms
of the contract provides businesses with more possibilities to develop and release
Beta versions. 20 Furthermore, Article 10 Consumer ADR Directive stipulates that
agreements for ADR between a trader and consumer may be binding, but only if a
consumer 'specifically' accepted the binding outcome of the procedure. Papacon-
stantinou points out that the Commission has also defended the view that MiFiD
II will further enhance consumer choice, although he doubts this will be the case
especially for weaker investors."

16 S. Wrbka, Consumer access to justice revisited (Cambridge: Cambridge University Press, 2015);
N. Reich, 'A "Trojan Horse" in the access to justice - Party autonomy and consumer arbitration in
conflict in the ADR-Directive 2013/11/EU?' EuropeanReview of ContractLaw 2014, 272.
17 Established in CJEU 27 June 2000 (Oceano Grupo EditorialSA v Roci6 Murciano Quintero and
others) joined cases 240/98 to 244/98 [000] ECR I-4941.
18 CJEU 4 June 2015 (Faberv Autobedrijf Hazet Ochten BV) 497/13, CJEU 3 October 2013 (Duarte
Hueros vAutociba SA and Autom6viles Citroen EspanaSA) 32/12.
19 N. Reich, Generalprinciples of EU civil law (Cambridge: Intersentia, 2014) 48, 51; M.W. Hesse-
link, 'Private law, regulation, and justice' EuropeanLaw Journal 2016, 685.
20 D. Staudenmayer, 'Vertrage fber digitalen Inhalt. Der Richtlinienvorschlag der Europsischen
Kommission' Neue JuristischeWochenschrift 2016, 2719.
21 G.A. Papaconstantinou, 'Investment bankers in conflict: The regime of inducements in MiFiD
II and the member States' struggle for fairness' EuropeanReview of ContractLaw 2016, 379.
DE GRUYTER Better Regulation and the Principle of Consumer Protection - 243

Debatably, these developments, in line with the procedural approach, risk

undermining the substantive protection of consumers, especially as the mini-
mum harmonisation approach is replaced by full harmonisation Directives,
which, if they contain substantive rights, stand in the way of more protective
substantive rights. For example, it may be doubted that maximum harmonisa-
tion approach in the Package Travel Directives leaves room for remedies for
non-conformity under national law beyond the specific remedies in the Direc-
tive. More drastically, the Product Liability Directive does not leave room for a
general national system of product liability, depriving a consumer of a claim
against the hospital rather than the producer of infected blood.2 2 Even if Direc-
tives focus on procedural rights, the full harmonisation pursued in the Third Life
Insurance Directive has blocked Member States' possibility of requiring that
insurers make clear that the early reduction, cancellation or surrender of a life
insurance policy is detrimental to the consumer, although this statement is quite
simple and, possibly, more comprehensible to consumers than the extensive
information obligations under the Directive." This procedural, maximum harmo-
nisation approach may lead to clashes with national protection of weaker
parties, in line with the general trend towards 'materialisation' in German law. 24
In comparison, Dutch law has also developed protective rules such as Arti-
cle 7:931 BW which excludes the possibility for insurers to avoid contracts for
mistake, duress, threats or fraud, and limits the possibility for the insurer to
terminate for non-payment. Equally, for protective reasons, the Hoge Raad
recognised special duties of care of banks towards consumer-sureties under
which banks should ensure that sureties do not enter into a contract for surety
lightly, which may even necessitate refusing to enter into a contract with a
would-be surety.2 5
The development of EU contract law in this manner is undesirable because it
leaves behind vulnerable consumers, who may have trouble understanding in-

22 CJEU 25 April 2002 (GonzdlezSdnchezvMedicinaAsturianaSA)183/00 [2002] ECRI-3901.

23 For example, similarly, CJEU 5 March 2002 (Axa Royale Belge SA v Georges Ochoaand Strategie
FinanceSPRL) 386/00 [2002] ECR I-2209.
24 C.-W. Canaris, 'Wandlungen des Schuldvertragsrechts - Tendenzen zu seiner "Materialisier-
ung"' Archiv fur die civilistische Praxis 2000, 276; H. Risler, 'Protection of the weaker party in
European contract law: Standardized and individual inferiority in multi-level private law' Eur-
opean Review of PrivateLaw 2010, 729, comp S. Grundmann, 'European contract law(s) of what
colour?' EuropeanReview of ContractLaw 2005, 184.
25 HR 1 June 1990, ECL:NL:HR:1990:AB7632, NJ 1991, 759 (Van Lanschot/Bink); HR 1 April 2016,
ECLI:NL:HR:2016:543, NJ2016, 190.
244 - Esther van Schagen DE G UYTER

formation provided to them, in line with traders' obligations. 26 Not only do these
consumers fail to benefit from protection afforded to them in the form of informa-
tion obligations and withdrawal rights; it may even leave them worse off, for
example when they have limited room to claim they entered into a contract on the
basis of mistake.2 7 Waddington signals a general unwillingness on the part of the
Court to permit national protection for vulnerable consumers, in addition to full
harmonisation procedural protection.2 8
The Better Regulation Guidelines do not discourage the emphasis on consu-
mer empowerment at the expense of substantive protection - in line with criticism
on better regulation. 29 The Guidelines do not specifically refer to consumer protec-
tion. Instead, they refer to the impact on consumers. 30 The Toolbox, at first sight,
refers more clearly to 'consumer protection', but this first impression is deceptive:
it focusses on the 'empowerment' of consumers and is based on a strong con-
fidence in the internal market, and the benefits that consumers can derive from
the internal market in the form of lower prices and more choice. The Toolbox does
not link welfare to the level of legal protection afforded to consumers. Rather, it
considers three 'dimensions' for measuring consumer welfare: knowledge, aware-
ness and trust 'with respect to consumer legislation' rather than consumers' legal
position.31 Accordingly, the impact assessments on consumer rights, timeshare
and package travel reiterate the reduction of regulatory fragmentation and pre-
sent the transformation of minimum into full harmonisation as a simplification. 32
Similarly, impact assessments reiterate the need to foster the internal market,
even if they are prompted by consumers' problems. 33 This association between

26 M. Bartl, 'Internal market rationality, private law, and the direction of the Union: Resuscitat-
ing the market as the object of the political' EuropeanLaw Journal 2015, 584; N. Reich, Principlesof
EUcivil law (Cambridge: Intersentia, 2014) 55.
27 0. Bar-Gill, O. Ben-Shahar, 'Regulatory techniques in consumer protection: A critique of
European consumer contract law' Common MarketLaw Review 2013, 118.
28 L. Waddington, 'Vulnerable and confused: The protection of vulnerable consumers under EU
law' EuropeanLaw Review 2013, 766.
29 For example the dissenting opinion on the Final Report of the High Level group on Adminis-
trative Burdens, Cutting red tape in Europe, Legacy and outlook, Brussels, 24 July 2014, available
at http://ec.europa.eu/smart-regulation/refit/admin-burden/docs/annex_12_en-hlg-ab-dissen
ting-opinion.pdf.
30 SWD(2015)111, 26-27.
31 Toolbox, 206.
32 Respectively SEC(2008) 2544, 3; SEC(2007) 745, 33; SWD(2013) 263, 127.
33 See for example the impact assessment accompanying the draft revised timeshare Directive,
SEC(2007) 743, the impact assessment accompanying the draft consumer ADR Directive, SEC
(2011) 1408, and the impact assessment accompanying the draft mortgage credit Directive, SEC
(2011) 356.
DE GRUYTER Better Regulation and the Principle of Consumer Protection - 245

full harmonisation and simpler - and therefore easier to understand, and there-
fore better - laws has also been noted by Wrbka.34
In short, a tendency towards consumer confidence and empowerment rather
than consumer protection has been detected and, rightly so, criticised in Eur-
opean contract law. This tendency coincides with the Better Regulation Agenda
that promotes, among other aims, quantification and simplification, as well as
the benefits of the free market.

3 The Principle of Consumer Protection and its

Consequences for EU Contract Law
The tendency to empower consumers while overlooking consumer protection
concerns is not only undesirable, but also difficult to reconcile with article 38
Charter that prescribes that 'Union policies shall ensure a high level of consumer
protection'. Article 2 TEU reiterates that the Union is founded upon respect for
fundamental rights, and Article 6 TEU that makes clear that the Charter has the
same legal status as the Treaties. Furthermore, Article 12 TFEU and Article 114
para 3 TFEU underline the interest of consumer protection in developing EU
policy in general and positive harmonisation to foster the internal market in
particular. This does not mean that the European legislator must pursue the
highest level of consumer protection, or that proposed EU measures should
primarily pursue consumer protection. 35 Instead, the principle of consumer pro-
tection stands in the way of measures that lower the level of consumer protection
without considering the impact of proposed measures on consumer protection.
The principle of consumer protection further entails an obligation to assess
proposed measures for their suitability to protect consumers, especially if those
measures reiterate the importance of achieving a high level of protection to
bolster consumer confidence and empowerment. Consequently, in the selection
of policy options, EU drafters should demonstrate they have considered a mea-
sure's suitability to protect consumers, for example through minimum harmoni-
sation. Similarly, if the EU legislator explores the revision of protective measures,
and problems of non-compliance have become prominently visible, the EU legis-
lator should help to ensure consumer protection, for example by better enforcing

34 Wrbka, n 16 above, 171-172.

35 CJEU 13 May 1997 (Germany v EuropeanParliamentand Council of the European Union) 233/94
[1997] ECR I-2405, para 48.
246 - Esther van Schagen DE GRUYTER

these measures. Accordingly, Purnhagen and Feindt 36 argue that because of the
emphasis on consumer protection in the Charter and Article 114 para 3 TFEU,
impact assessments for measures adopted on this basis should particularly collect
evidence on consumer protection.
Arguably, this is in line with the Court's recognition of selected harmonized
consumer protection provisions as provisions of equivalent standing with na-
tional provisions on public policy. 37 The prioritisation of consumer protection is
also in line with consumer protection as a justification for measures of equivalent
effect. A well-known example of CJEU decisions upholding such measures is
Buet,38 where the Court upheld restrictions on door-to-door canvassing of educa-
tional materials.
It becomes apparent from CJEU case law that private law is not often a
measure of equivalent effect. 39 Nevertheless, impact assessments frequently im-
ply that divergences in contract law permitted by minimum harmonisation should
be characterised as such, as they pose major barriers to the internal market. For
instance, the impact assessment accompanying the draft consumer rights Direc-
tive claims: 'A significant regulatory barrier is that created by the fragmentation
of the national laws regulating consumer transactions (...) The main cause of the
fragmentation is the minimum harmonisation clauses contained in the consumer
directives'.40 Equally, the impact assessment accompanying the draft revised
package travel Directive claims that '[t]he current Directive is based on minimum
harmonisation, and this has resulted in legal discrepancies between Member
States. This fragmentation generates additional compliance costs for businesses
wishing to trade cross-border'.41
Debatably, however, if divergent national protective measures are justified by
consumer protection, they cannot be set aside by the Court. Instead, justified
measures of equivalent effect have to be harmonized through the intervention of

36 K.P. Purnhagen and P. Feindt, 'Better Regulatory Impact Assessment - Making behavioural
insights work for the Commission's new Better Regulation strategy' EuropeanJournal of Risk
Regulation2015, 9.
37 See recently, with references to further case law, CJEU 26 January 2017 (Banco Primus SA v
GutiarrezGarcia)421/14, para 42, 47, 52.
38 CJEU 16 May 1989 (Buet and EducationalBusiness Services (EBS) v Ministerepublic) case 382/
87.
39 Prominently O. Remien, Zwingendes Vertragsrecht und Grundfreiheiten des EG-Vertrages
(Hamburg: Universitt Hamburg, 2003).
40 SEC(2008) 2544, 2.
41 SWD(2013) 263, 17. Similar claims can be found in the impact assessment accompanying the
draft Directives on digital content and online sales, SWD(2015) 274, 10, and, more cautiously, the
impact assessment accompanying the draft mortgage credit Directive, SEC(2011) 356.
DE GRUYTER Better Regulation and the Principle of Consumer Protection - 247

the EU legislator under Article 114 TFEU. The justification of divergences by

consumer protection in CJEU case law, in line with the principle of consumer
protection, stands in the way of recasting such protective measures solely as
barriers to the internal market. After all, if national measures with equivalent
effect are justified, they have survived close scrutiny from the Court. If the EU
legislator nevertheless wishes to foster the internal market, positive rather than
negative harmonization becomes necessary. In these cases, the protection of
consumers is based on justified concerns that cannot be replaced by the Court, as
this requires the creation of rules touching upon national social justice concerns.
The development of EU consumer contract law should also be seen in this light.
Scharpf has remarked that the Court has accepted the legitimacy of consumer
protection as an aim, and the only possibility for the Commission to address
remaining impediments to the internal market is through legislative harmonisa-
tion.42 Harmonising divergent measures that are justified, necessary and appro-
priate to protect consumers must be supported by a majority of Member States
and necessitates deliberation between the Commission, Parliament and Council.
Harmonisation achieved through this procedure should moreover ensure a high
level of consumer protection under Article 114 para 3 TFEU. The potential difficul-
ties in further harmonising EU contract law in such as manner is in line with
Scharpf's general finding that political agreement on the level of consumer
protection between the Commission and Member States with diverging protective
standards is problematic.
Therefore, the principle of consumer protection requires that impact assess-
ments prioritise consumer protection. This also follows from the justification of
divergences by consumer protection, as implied by impact assessments that
characterise divergent contract law as measures of equivalent effect. The need for
positive rather than negative harmonisation entails that the European Commis-
sion, the European Parliament and Council should determine which level of
protection should be achieved, strengthened by impact assessments that outline
measures' impact on consumer protection.

4 Gaps in the Guidelines

The obligation to explore the impact of measures on consumer protection there-
fore follows from the Treaties and the Charter, and should also be reflected by the

42 F.W. Scharpf, 'The asymmetry of European integration, or why the EU cannot be a "social
market economy"' Socio-Economic Review 2010, 227.
248 - Esther van Schagen DE GRUYTER

Guidelines. Accordingly, the Better Regulation agenda states that the Guidelines
should help to ensure that the Commission's analytical work in preparation of
policy initiatives 'considers' social impacts as well as fundamental rights. 43 Yet
the 2015 Guidelines only refer to the Charter once - as a last check to ensure that
final proposals are in line with the Charter. 44 Compliance with the Charter has
largely been moved to the Toolbox. 45 Removal from the Guidelines to the Toolbox
gives the impression that the Charter concerns a rule of unclear legal status,
compliance with which should only be scrutinised 'if relevant'. Importantly, and
different from the Guidelines, the Toolbox is not separately mentioned as a source
of evaluation of impact assessments in the decision to establish the Regulatory
Scrutiny Board (hereafter: 'RSB') that refers to the Guidelines and 'other relevant
instructions to the services on agreed standards for impact assessment' - which
does not include, presumably, the Charter. 46 In this respect, the 2015 Guidelines
diverge strikingly from the 2009 Guidelines that reiterated compliance with the
Charter. 47
This omission in the Guidelines increases the chance that impact assessments
fail to explore the effects of policy options on fundamental rights and consumer
protection, contrary to Article 38 Charter and Article 114 para 3 TFEU. Despite this
omission, there are examples of impact assessments that have considered their
impact on fundamental rights and consumer protection. For example, the impact
assessment accompanying the draft consumer ADR Directive considered the
influence of the draft measure on the rights of EU citizens under the Charter,
including, superficially, consumer protection. 48 Further, the impact assessment
accompanying the draft CESL considers the impact of key provisions, as indicated
by stakeholders, distinguishing between the negative, neutral or positive impact
on consumer protection in a sample of Member States, compliance costs, and the
likely success of the Common European Sales Law. 49
Moreover, the shift of consumer protection and fundamental rights and
principles from the Guidelines to the Toolbox has not stopped the RSB from
considering these principles and the Charter. The approach of the RSB is in line
with its task to contribute to better regulation by evaluating impact assessments
that are not subject to further, consistent evaluations. The RSB has recommended

43 COM(2015) 215, 6.
44 SWD(2015)111, 32.
45 The Toolbox, 176.
46 C(2015)3263.
47 SEC(2009) 92, 22, 32, 39.
48 SEC(2011)1408.
49 SEC(2011) 1165, 25-26, 39 and Annex VIII.
DE GRUYTER Better Regulation and the Principle of Consumer Protection - 249

that impact assessments clarify the need for intervention considering national
consumer protection50 and asked that impact assessments clarify their impact on
consumer protection.51 However, non-compliance with fundamental principles
does not necessarily lead to a negative opinion, and once the RSB has approved
an impact assessment, it does not seem to have a clear way to ensure that all its
recommendations are reflected in the impact assessment. Further, the RSB does
not screen whether impact assessments, which are after all non-binding, consider
the impact of proposals on fundamental rights.
The lack of attention to consumer protection and the Charter in the 2015
Guidelines is a clear deterioration in comparison to the 2009 Guidelines. The
Guidelines should make clearer that in the drafting of proposed measures, their
impact on fundamental rights and principles, including consumer protection,
must be assessed. As impact assessments have become a mandatory preparatory
instrument, they should provide insight into the impact of proposed measures on
fundamental rights and principles, beyond merely stating that proposed mea-
sures comply with the Charter and fundamental principles. In addition, in accor-
dance with the principle of consumer protection, the Guidelines should outline
that impact assessments should particularly explore policy options that do not
have detrimental consequences for existing consumer protection, in line with
Article 114 para 3 TFEU. The non-binding nature of impact assessments means
that the EU legislator may still choose to pursue a policy option that is detrimental
to consumer protection, but this choice should be an informed choice, based on
knowledge about existing consumer protection. Impact assessments that portray
the problems consumers experience because of outdated provisions should also
consider the possibility of adapting those provisions while maintaining minimum
harmonisation. This did not take place in the revision of minimum harmonisation
Directives in the area of timeshare, package travel and consumer rights. 2 Impact
assessments on digital and online sales and package travel have also not consid-

50 For example the opinion on the impact assessment accompanying the draft mortgage credit
Directive, SEC(2011) 354 and in its first (negative) opinion on the impact assessment accompanying
the draft ADR Directive, draft version of 20 June 2011, date stamp of 22 July 2011, available at http://
ec.europa.eu/smart-regulation/impact/ia_carriedout/docs/ia_2011/consumer_disputes.pdf.
51 For example the first opinion on the RIA for the draft Directives on digital content and online
sales, D(2015), dated 21 September 2015, available at http://ec.europa.eu/smart-regulation/im
pact/iacarriedout/docs/ia_2015/sec_2015_485_O.pdf.
52 See the impact assessments accompanying the draft package travel Directive, SWD(2013) 263,
the draft revised timeshare Directive, SEC(2007) 743, and the draft consumer rights Directive, SEC
(2008) 2544.
250 - Esther van Schagen DE GRUYTER

ered, for example, extending the scope of draft Directives on the basis of mini-
mum harmonisation. 53

5 Considering Consumer Protection under the

Guidelines
The Guidelines offer few starting points for considering policy options that are
less detrimental for consumer protection, and recommend considering the 'widest
possible range of policy options, both in terms of content and instruments'. 54
Possibly, the lack of a mandatory standard list may help to avoid the development
of a 'checklist mentality' rather than a meaningful analysis of a wide range of
policy options. Yet the emphasis on a range of policy options that should be
considered in the design of impact assessments is too noncommittal. The impor-
tance of policy analysis and the principle of consumer protection justify further
recommendations - in the Guidelines, not the Toolbox - for adopting clearer
rules, compliance with which should be more consistently evaluated by the RSB.
The Guidelines should make clear that in cases where rules developed under
Article 114 TFEU harmonise protective rules that are justified under Article 36
TFEU, impact assessments should also address a measure's suitability for protect-
ing consumers and the impact of policy options on consumer protection. Consu-
mer protection concerns justify express attention in impact assessments to policy
options that will strengthen or at least not diminish consumers' legal position. In
contrast, impact assessments and measures should not be based on the assump-
tion that the 'free market' will necessarily result in consumer welfare. Instead,
market or other failures at the national level have resulted in the need to protect
consumer rights, resulting in either procedural or substantive protection of con-
sumers. Not sufficiently prioritising consumer protection and too much emphasis
on fully harmonised consumers' procedural rights leaves the possibility open that
harmonisation would result in limiting the room for additional substantive,
mandatory protection, thereby breaching especially weaker parties' materialcon-
tractual freedom. A clear example is the Unfair Terms Directive, harmonising laws
protecting consumers against unfair terms. Rather than only promoting the inter-
nal market, this measure clearly aims also to protect consumers against unfair

53 See the impact assessment accompanying the draft Directives on digital content and online
sales, SWD(2015) 274, and the impact assessment accompanying the draft revised travel package
Directive, SWD(2013) 263.
54 SWD(2015)111, 22.
DE GRUYTER Better Regulation and the Principle of Consumer Protection - 251

terms. Theoretically, if fully harmonised protection against unfair terms was

limited to informing consumers about the terms in their contracts, or providing
consumers with withdrawal rights if contracts contain unfair clauses, this would
render the protection against such terms largely ineffective. If such a Directive
moreover stands in the way of additional protection at the national level, this
would severely undermine more effective ways of achieving consumer protection.
The need to ensure that measures are well-suited to protect consumers further
justifies more attention in impact assessments to problems in compliance with
consumer rights, for example if such problems become visible in the Regulatory
Fitness Check of EU Consumer Law. This approach would also be in accordance
with the Guidelines' emphasis on the policy cycle and the outcome of Fitness
Checks as 'key input' for impact assessments.55 Additionally, impact assessments
should consider complaints of non-compliance with consumer rights. 56 If there
are sufficient indications that compliance with consumer rights is problematic,
impact assessments should consider better enforcement. Impact assessments
only rarely separately consider better enforcement - it was not considered in the
drafting of the Consumer Rights Directive, or in the draft Online Sales Directive. 57
If impact assessments have considered better enforcement, they rarely consider
possible forms of enforcement: the legislator briefly considered the introduction
of Guidance in the revision of the Package Travel Directive, and in the revision of
the Timeshare Directive the EU legislator claimed that better enforcement would
be developed under other measures, including the Unfair Commercial Practices
Directive, without exploring this option in depth.58
More focus on consumer protection also justifies more attention to proposed
content, also in line with the Guidelines. 59 Impact assessments should outline
differences between the content of proposed measures and existing law, and
consider alternatives to the hierarchy of remedies, as proposed in Article 9 draft
Online Sales Directive and in line with the Consumer Sales Directive. Further-
more, impact assessments should clarify the reasoning in preceding discussions
with experts and stakeholders. In EU contract law, this means that impact assess-
ments could consider key decisions in the Feasibility Study and subsequent

55 SWD(2015)111, 20.
56 Gf( Belgium, Identifying the main cross-borderobstacles to the DigitalSingle Market and where
they mattermost, FinalReport, September 2015, available at
http://ec.europa.eu/consumers/consumer-evidence/market-studies/obstaclesdsm/docs/21.09
_dsmfinalreport.pdf.
57 See SEC(2008) 2544 and SWD(2015) 274.
58 See SWD(2013) 263 and SEC(2007) 743.
59 SWD(2015)111, 23.
252 - Esther van Schagen DE G UYTER

changes after discussions with stakeholders. Consumer protection requires parti-

cular justification for the introduction of (limited) possibilities to diverge from
protective provisions. An example may be proposals in Article 10 para 1 draft
Online Sales Directive, which introduce the possibility to agree, after the lack of
conformity of goods has become apparent, that the seller is not obliged to take
back the flawed good at his own expense. The impact assessment accompanying
the draft Directive, however, did not consider the likely benefits and possible
detriments of this approach for especially vulnerable consumers. 60
More attention to the content and the compliance with consumer rights also
means that, despite the emphasis on consumer empowerment, the choice to
develop more information obligations, and, possibly, withdrawal rights, requires
strong justification in light of the likely ineffectiveness of traditional information
obligations more generally. 61 If the EU legislator nevertheless chooses to include
these obligations, drafters must consider the enforceability of these obligations
and provide clear sanctions for not complying with them. This is also in line with
the Guidelines 2 that recognise the need to consider the enforceability of draft
measures. Additionally, the assumption that widening the formal freedom of
contract will increase consumer choice should not be blindly accepted. For
example, Article 6 para 1 draft Digital Content Directive stipulates that the con-
formity of digital content should be determined by the terms of the contract.
Although this provides more formal freedom of contract for parties, it does not
follow that such freedom will necessarily lead to more consumer choice. Notably,
contractual terms for digital content are typically drafted unilaterally by suppliers
to the detriment of consumers.6 3 In these cases, professionals rather than consu-
mers have made use of contractual freedom.
The principle of consumer protection justifies an approach that is less or-
iented towards full harmonisation and procedural rights. Rather than subjecting
these options to an in-depth analysis, impact assessments should prioritise alter-
native content, based on minimum harmonisation, a wider scope and better
enforcement.

60 SWD(2015) 274.
61 Outlined in G. Helleringer and A.-L. Sibony, 'EU consumer protection through the behavioral
glass' ColumbiaJournal of EuropeanLaw 2017 (forthcoming).
62 SWD(2015)111, 9.
63 Outlined in M.B.M. Loos and J. Luzak, 'Wanted: A bigger stick. On unfair terms in consumer
contracts' Journalof ConsumerPolicy 2016, 63.
DE GRUYTER Better Regulation and the Principle of Consumer Protection - 253

6 Consumer Protection and Better Regulation

The Fitness Check seems a good opportunity to address the criticism of EU
contract law with a view to improving the consistency of the acquisand modernis-
ing outdated or unclear provisions. Any revision should be supported by a
thorough impact assessment, conducted in accordance with the Better Regulation
Guidelines. On closer inspection, the more general criticism of better regulation
and impact assessments seems justified, as impact assessments have underlined
the possible economic impact of proposed measures and overlooked the impact
of proposed measures on consumer protection. However, the lack of attention to
consumer protection and the gravitation towards full harmonisation in impact
assessments in this area of law is not contrary to the Guidelines, even though the
lack of attention to consumer protection is contrary to Article 38 Charter that
recognises consumer protection as a principle underlying Union policies, and
Articles 12 and 114 para 3 TFEU that oblige the EU legislator to ensure a high level
of consumer protection in measures adopted on the basis of Article 114 TFEU. The
CJEU has accordingly recognised the importance of consumer protection, as EU
consumer protection provisions should have equivalent standing with national
provisions on public policy. Consumer protection may also serve as a justification
to uphold national measures that cause obstacles to inter-State trade. Different
from the 2009 Guidelines, the 2015 Guidelines do not refer to the Charter and more
generally seem to circumvent possibly controversial topics. Instead, possibly
difficult questions seem to have been moved to the Toolbox. The Toolbox does
provide officials with guidance on how to analyse measures' impact on consumer
protection, but it does not consider consumers' legal position, and assumes the
beneficial effects of the free market - even though in areas where divergent laws
have led to barriers, intervention at the national level has already proven neces-
sary. Even so, the Toolbox and the Charter do not serve as a basis for evaluation
by the RSB. Thus, requirements for developing EU law, which should be uncon-
troversial, aiming for 'better' results, leave gaps and circumvent possibly contro-
versial topics, thereby allowing one-sided impact assessments geared towards
fully harmonised, market-based EU contract law. One may legitimately doubt
whether this is 'better' regulation.
The principle of consumer protection entails that proposed measures should
not put forward rules that lower the level of consumer protection, without at least
exploring the impact of those measures on consumer protection - not only
consumer confidence and empowerment. The Guidelines offer some starting
points for this course, but remain too noncommittal with regard to the selection of
policy options. Therefore, further adjustment is necessary. The Guidelines should
highlight the need to ensure a high level of consumer protection for measures
254 - Esther van Schagen DE GRUYTER

adopted on the basis of Article 114 TFEU, which, specifically, means that impact
assessments should not focus on less protective options, such as full harmonisa-
tion, or options such as information obligations, the effectiveness of which has
been subjected to serious doubts. Instead, they should actively explore policy
options that are likely to maintain or raise the level of consumer protection, such
as better enforcement and amendments on the basis of minimum harmonisation,
as well as alternative content and scope. Impact assessments should also alert
officials to the need to particularly justify the choice to introduce possibilities to
diverge from mandatory provisions.