Consumer Protection and Competition in the EU Markus

Consumer Protection and Competition in the EU Markus Händelin Seminar held by Ulaanbaator, Mongolia 24. 3. 2015

Objective of the presentation • To give an overview of consumer protection and competition legislation in the European Union • How institutionss have applied and enforced consumer and competition law in the EU • Based on discussionsheld sofar what kind of problems might exist in Mongolia and what steps could be initiated

Consumer & Competition Agency (CCA) - responsibilities • • Create proposals and initiatives in order to promote competition, remove regulations and rules that eliminate competition and develop consumer policies and consumer protection Follow and assess the competitive environment and developments that affect the consumers’ position and plan rules and regulations associated with business and to provide statements on issues that may have an impact on competition and consumer policies Handle the responsibilities mandated in the Competition Act for the agency and to supervise that the decisions made based on the Competition Act are adhered to Participate in international co-operation with issues pertaining to competition and consumer policies and to be responsible for the international functions and obligations of the agency Supervise package tour businesses' securities and maintain a registry of the package tour companies in Finland Promote and implement consumer advocacy and education Conduct research, studies and comparisons in its area of responsibility and carry out publishing and communication activities in it Guide and educate Regional State Administrative Agencies, financial and credit advisory services and consumer advisory services for Local Register Offices.

The Consumer Ombudsman - responsibilities • • • to supervise that the Consumer Protection Act and other laws passed to protect consumers are observed. Particular attention is paid to ensuring that marketing activities, contractual terms, and collection activities conform to the laws. The goal is to have the company cease or alter its marketing activities or unreasonable contractual terms so that they conform to current legislation. The Consumer Ombudsman does not primarily resolve individual disputes where the consumer is seeking reimbursement for an error with a product or service. These cases are handled by consumer rights advisors and the Consumer Disputes Board. The Consumer Ombudsman may, however, aid the consumer as he or she sees necessary in resolving an individual dispute, if its resolution carries a significant impact on the interpretation of the law or the general well-being of consumers or in instances where the business is not compliant with the decision of the Consumer Disputes Board. The Consumer Ombudsman may also refer group complaints to the Consumer Disputes Board for resolution or initiate class actions.

Course of action • Receives annually thousands of claims and communications from consumers, companies, other officials and associations. • All processed and recorded in the Finnish Competition and Consumer Authority’s information system. • Uses the obtained information in selecting which issues to supervise. • The Consumer Ombudsman may also intervene on issues she has identified on her own. Identified problems are often handled as larger entities where several problems are addressed at once. • According to law, the Consumer Ombudsman must be particularly active in areas that are of substantial importance to consumers or where problems can be presumed common to consumers. The focuses of the supervisory activities are to vary between different industries. • The current Consumer Policy Programme also affects what areas the Consumer Ombudsman focuses on during a specific timeperiod.

Supervisory methods of the Consumer Ombudsman • The primary goal is to influence the business that is non-compliant with the law to cease such activities or alter them voluntarily. • If the company cannot be persuaded to cease the unlawful activities, the Consumer Ombudsman must take the necessary enforcement actions or refer the issue to the court for resolution. • In practise, these situations are subject to imposing a prohibition reinforced with a penalty payment. The prohibition is ordered by the Market Court, based on the application submitted by the Consumer Ombudsman. The Market Court may also order a temporary prohibition, where it is in force until the matter has been fully resolved. • The Consumer Ombudsman may order a prohibition in issues that are not significant for interpretation of the law or otherwise significant. The prohibition is voided if the company provides notification within the allowed time-period that it opposes the imposition of the prohibition.

• The Consumer Ombudsman may issue a temporary prohibition if the actions of the company need to be ceased urgently, due to the scope of the issue or its quick impact. A temporary prohibition becomes effective immediately, but the matter must be submitted to the Market Court within three days for validation. • The Market Court and the Consumer Ombudsman may each impose a penalty payment with the prohibition order. If the company continues its unlawful activities despite the prohibition order, the Consumer Ombudsman may file for the payment order of the penalty payment at the Market Court. • Market Court rulings can be appealed to the Finnish Supreme Court.

Assisting in court – individual and group complaint • • • In individual disputes that set a precedent or are otherwise important in terms of consumers' best interests overall. Similar disputes can be considered as a single matter by the Consumer Complaint Board. A group complaint is a suitable option in cases where consumers doing business with a particular company purchase a product with the same design or manufacturing defect or a service that does not deliver what was agreed upon. A group complaint can also be made when a business has entered into an agreement with several consumers that includes an unfair contract term. A group complaint is instituted by the Consumer Ombudsman, who submits an application concerning the selected case to the Consumer Complaint Board. A request from a consumer is not necessary; the Consumer Ombudsman may submit the application on her own initiative. In the application, the Consumer Ombudsman defines the group of consumers concerned. It is not necessary to identify specific members of the consumer group by mentioning their names, however. Once the Consumer Complaint Board has made its recommendation, the Consumer Ombudsman assists members of the group to act on it.

Assisting in court - class action • • • Class action is possible in disputes concerning a defective consumer good or the interpretation of contract terms, for example. The Act also applies to disputes between consumers and entrepreneurs concerning the selling and marketing of investment products and insurance, Consumer disputes involving share issues are not covered by the Act on Class Actions, however, because matters that concern issuing of securities and public bidding procedures are excluded. Only the Consumer Ombudsman can file for class action and represent the plaintiffs. This serves to prevent malicious lawsuits from being filed. Class actions give more weight to the new group complaint procedure for the Consumer Complaint Board. If a recommendation in response to a group complaint is not complied with, the Consumer Ombudsman has the option to take the matter to court as a class action. For a matter to be handled as a class action, several persons must have a claim against the same defendant based on the same, or similar, grounds. In addition, class action should be an expedient means to proceed, and the class should be exactly defined. Members must opt in to participate in a class action.

Consumer Ombudsman´s theses • Consumers must be allowed to move around freely on the market • Essential services to consumers must be guaranteed. • Companies must put customer service into shape • Collaboration against fraud must be made to work • Consumers must be allowed to move around freely on the market • Essential services to consumers must be guaranteed.

The Consumer Ombudsman´s guidelines • • The Consumer Ombudsman's guidelines contain information and practical advice regarding the application of the provisions. The guidelines take account of the special characteristics and problems related to the subject matter or sector concerned. The Consumer Ombudsman's guidelines include: – sector- or subject matter-specific reminders of rules, drawn up from the perspective of the sector or subject matter concerned – statements concerning the future application of new provisions – guidelines based on collaboration and negotiations with trade and industry associations or other partners. • • • Regardless of the context in which the guidelines were issued, they constitute the supervisory authority's statement regarding the application of provisions. Are based on provisions and the decisions of the Market Court and various supervisory authorities. Do not impose requirements on companies that exceed statutory requirements, but clarify how the supervisory authority applies the law. By observing the guidelines, companies can ensure the legality of their operations while retaining the trust of consumers.

By subject • Changes in Contract Terms (2004) • Cooperation between schools and businesses including marketing and sponsorship (2004) • Marketing of flights (2011) • Price expressions as a marketing method (2003) • Promotional Games (2011) • Recognisability of advertising in blogs (2013) • Sponsorship and other marketing at schools (1997) • The use of environmentally oriented claims in marketing (2002)

by industry • • Children and Foodstuffs Marketing (2004) Good practice in consumer debt collection (2014) Loyalty marketing and loyalty programmes (2007) Marketing Error Situations (2004) Minors marketing and purchases (2004) Photography in Schools and Kindergartens (2006) Statutory liability for lack of conformity and guarantee in the sale of consumer goods (2011) • Sales and Marketing of Mobile Content Services (2008) • Use of environmental claims in the marketing of cars (2009)

Instructions for consumers : complaint with the company • • • Start by contacting the company with which you made the purchase agreement. File your complaint as soon as possible after noticing the problem. We recommend filing complaints in writing. Our website provides information that may help you in resolving consumer issues. We have created complaint templates for your convenience. Please also check the latest information bulletins to see whethere is anything pertinent to your issue. Instructions and forms for filing complaints related to various consumer issues: Defective goods Defective services Delays in delivery Mistakes in debt collection or billing Vehicles Telephone and internet connections Flights Package holidays Property and real estate sales Scams

Contact the consumer advisors at a Register Office • To assist and mediate in disputes between consumers and businesses • To provide consumers and businesses with information on consumers’ rights and responsibilities • To advise on matters related to property and real estate sales • Consumer advisors work at local Register Offices and report to the Finnish Competition and Consumer Authority.

Matters not handled by consumer advisors • Disputes related to transactions between private individuals • Disputes between businesses • Disputes between housing companies and residents • Transactions related to financial instruments and shares • Matters related to state or municipal services

Transactions between private individuals • Transactions between two private individuals are not covered by the Consumer Protection Act, so the buyer cannot consult consumer advisors or complain to the Consumer Disputes Board. • The exceptions to this rule are disputes related to property and real estate sales and rentals. Sales and purchases conducted between private individuals in Finland are subject to the Sale of Goods Act, which defines what is meant by defects in products and services. • If a dispute cannot be resolved through negotiation, the matter can be referred to a District Court. • If the dispute cannot be solved through mediation, it can be referred to the Consumer Disputes Board.

Consumer Dispute Board • • • Neutral and independent expert body whose members represent consumers and business in a balanced way. Lead by by a full-time chairman and other Board's members work part-time, appointed by the Ministry of Justice for a five-year term. Cases are decided by sections or by plenary sessions if they are especially significant and prepared by staff with legal and product expertise. Decisions are recommendations and cannot be enforced by coercive measures. Businesses comply with decisions in over 80% of cases The Board handles cases free of charge. Activities are funded through the state budget. As a rule parties are responsible for covering any costs they may incur These costs are generally much smaller than in legal proceedings typically arising from telephone calls, mailing letters and copying documents such as bills. In recent years the handling of cases has taken from six to fourteen months, depending on the nature of the case.

Making a complaint • • • • Report the defect to opposing party and make sure that a settlement cannot be reached. If a settlement cannot be reached between the parties, ask a consumer advisor for help Consumer Disputes Board handles written complaints demanding redress from the other party. The Consumer Disputes Board is not a monitoring authority. The Finnish Consumer Agency and Consumer Ombudsman monitor companies' marketing and the fairness of contract terms, among other things. The Consumer Disputes Board cannot reprimand businesses or issue guidelines on customer service or injunctions. A decision reached by the Board is a recommendation concerning the resolution of a dispute. The Board's decision is not binding in the same way as a court ruling. About 80% of businesses comply with the Board's decision, however. The handling of a matter by the Consumer Disputes Board is free of charge for both parties. The parties are responsible for their own costs, such as mailing costs. If a party has had to pay for an expert statement, the Board can recommend compensation to cover the costs of the statement if the Board recommends that compensation be paid for a defect. You can file a complaint to the Consumer Disputes Board yourself. You do not need a lawyer. You can also have another person represent you. This person can be anyone you choose who agrees to perform the task. In this case you should complete the appropriate item on the form. If you have another person represent you, you should give him or her power of attorney. An open letter of attorney is not enough. Compensation is not provided for the use of an attorney.

Organisation • • • The Consumer Disputes Board has thirteen sections. Each section comprises a chairman and four members. A plenary session comprises the chairman, the deputy chairman and seven members. Plenary sessions handle cases of special significance. The composition of a plenary session changes according to what matters are being discussed. Cases are handled by different sections according to the product involved. Sections are presently divided as follows: 1. Textiles, clothing, sewing, laundry 2. Footwear, shoe repair, furs, leather 3. Furniture, home appliances, home electronics 4 a and 4 b. Motor vehicle and parts 5. Motor vehicle maintenance, repair and rentals 6. Travel, holiday cottages, restaurants, hotels 7. Barbers and hairdressers, opticians, jewellery, watches, animals, newspapers and magazines, toys, sports equipment and other goods 8. Construction, building repairs and prefabricated houses 9. Insurance and health-care services 10. Other services such as banks, post, telephone, legal services, credit cards, electricity and water 11. Real-estate and housing transactions in which the opposing party is a business 12. Housing transactions between private persons 13. Rented housing and the assignment of occupancy rights.

EU Consumer and Competition Law Legislation • Treaty Provision • Competence in consumer matters – Legislative powers: Regulations / Directives – Implementation – Remedies • Competence in competition matters – – Scope of application EU legislation vs. national legislation Treaty provisions and secondary legislation Inspections

• • • • The Charter of Fundamental Rights and the European treaties since the Single European Act guarantee a high level of consumer protection in the EU. It is also a general objective defined in Article 12 of the Treaty on the Functioning of the EU. European legislation guarantees consumers: fair treatment; products which meet acceptable standards; a right of redress if something goes wrong. EU legislation in other areas also has to take consumer protection into account. Generally, consumer protection is ensured by a diverse set of policies, such as food and product safety or data protection. Consumer and marketing legislation is aimed at protecting the economic interests of consumers. It mainly covers unfair commercial practices and consumer contract law, such as misleading advertising and unfair contract terms. European consumer and marketing law is based on the notion that the asymmetry of information, where the seller knows more about the product or service than the consumer, is open to abuse. Additionally there are provisions that protect vulnerable consumers, such as children. The current challenges for consumer protection entail fully opening up the potential of the internal market, including the online market, to all citizens by bringing down barriers and improving the confidence of consumers in cross-border shopping. European consumer legislation is crucial in order to overcome obstacles to the development of the internal market. Consumer protection is therefore an essential part of the European Commission's strategic planning, as signified by its role in these Communications While national authorities and organisations can provide specific advice on consumer issues in the different EU countries, the Commission ensures better harmonisation of consumer laws at EU level by introducing important legislative initiatives.

Directive on Consumer Sales and Guarantees • The 'Directive on certain aspects of the sale of consumer goods and associated guarantees' aims to harmonise those parts of consumer sales contract law that concern legal guarantees (warranties) and, to a lesser extent, commercial guarantees. • EU countries can require consumers to inform the seller of the lack of conformity within two months after its discovery. • A commercial guarantee must be clearly drafted and indicate what rights it gives on top of consumers' legal guarantees.

Directive on unfair terms in consumer contracts • The Directive on unfair terms in consumer contracts introduces a notion of "good faith" in order to prevent significant imbalances in the rights and obligations of consumers on the one hand sellers and suppliers on the other hand. • This general requirement is supplemented by a list of examples of terms that may be regarded as unfair. Terms that are found unfair under the Directive are not binding for consumers. • The Directive also requires contract terms to be drafted in plain and intelligible language and states that ambiguities will be interpreted in favour of consumers. • EU countries must make sure that effective means exist under national law to enforce these rights and that such terms are no longer used by businesses.

Package Travel Directive • Covers pre-arranged holiday packages which combine at least two of the following: transport; accommodation; other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the package. • Consumers are protected where: – at least two of the above elements are sold at an inclusive price; – the service covers a period longer than 24 hours or includes an overnight stay. • As a result of these developments, the number of consumers who are protected under the Package Travel Directive when going on holiday has been falling steadily.

Timeshare Directive • Regulates aspects of timeshare, long-term holiday products, resale and exchange contracts • Increases transparency in this market and provide significant protection for consumers against unwanted timeshare contracts – agreements of more than one year under which the consumer buys a right to use overnight accommodation, such as an apartment at a holiday resort, during certain periods.

• • Detailed information to consumers in good time before the consumer is bound by any contract, including information regarding the price to be paid, a description of the product and the exact period and length of stay that the consumer is entitled to under the contract. Withdrawal from a contract within a "cooling-off" period of 14 calendar days and that traders can never ask them for any form of advance payments or deposits during that period. – Before the conclusion of the contract, the trader is required to explicitly draw the consumer’s attention to the existence of the right of withdrawal, the length of the withdrawal period and the ban on advance payments during the withdrawal period. • Covers some new products for instance – timeshare contracts lasting less than three years and – to products where the consumer is allowed to use, for accommodation purposes, different kinds of movable property (such as cruise boats, caravans or canal boats). – Re-sale contracts and long-term holiday products are also covered. • • Member States are obliged to inform consumers of the national law transposing the Directive and provide for appropriate penalties against traders who fail to comply with these rules. Member State must also encourage the development of adequate and effective out-of -court complaints and redress procedures for the settlement of consumer disputes.

Unfair Commercial Practices Directive • Ensures that consumers are not misled or exposed to aggressive marketing and that any claim made by traders in the EU is clear, accurate and substantiated. • It seeks to enable consumers to make informed and meaningful choices. • Aims to ensure, promote and protect fair competition in the area of commercial practices. • Communication (333 k. B) on the application of Directive 2005/29/EC on Unfair Commercial Practices (COM(2013)138) on 14 March 2013.

Guidance on the Unfair Commercial Practices Directive • Commission and the national enforcers have cooperated regularly to ensure a common understanding of its provisions. This Guidance(242 k. B) aims at developing a convergence of practices while implementing the Directive. • Database on the Unfair Commercial Practices Directive • The Commission has developped a new tool to support national enforcers in achieving a common understanding and a uniform application of the Directive. • The legal database (https: //webgate. ec. europa. eu/ucp/) is a comprehensive and user friendly instrument which gathers and gives public access to national laws transposing the Directive, jurisprudence, administrative decisions, references to related legal literature and other relevant materials. • It makes it possible to compare decisions and national case-law of the Member States.

Directive on Misleading and Comparative Advertising • The purpose is to protect traders against misleading advertising and its consequences. It also aims to lay down the conditions under which comparative advertising is permitted. • The Directive provides for a minimum level of protection throughout Europe as concerns misleading advertising, and it fully harmonises the rules of the EU countries on comparative advertising. • Since the implementation of the Directive on Unfair Commercial Practices [139 KB] , the scope of application of the Misleading and Comparative Advertising Directive has been restricted to business-to -business (B 2 B) relations concerning misleading advertising. • Its provisions on comparative advertising also apply in the context of advertising directed at consumers.

Misleading Advertising • Is any advertising which, in any way, including in its presentation, is capable of: – deceiving the persons to whom it is addressed; – distorting their economic behaviour; or – as a consequence, harming the interests of competitors. • When determining whether advertising is misleading, several factors shall be taken into account. These are: – the characteristics of the goods or services concerned; – the price; – the conditions of delivery of the goods or provision of the services involved; – the nature, attributes and rights of the advertiser.

Comparative Advertising • The Directive lays down the conditions under which comparative advertising is permitted and, in particular, it requires traders to make sure that their advertisements: – are not misleading; – compare "like with like" - goods and services meeting same needs or intended for the same purpose; – objectively compare important features of the products or services concerned; – do not discredit other companies trademarks; – do not create confusion among traders. • Remedies – The enforcement of this legislation is the responsibility of the competent authorities and courts in the EU countries. – to set up adequate mechanisms that enable persons and organisations having a legitimate interest to bring an action to the competent courts or administrative authorities for the cessation and/or the prohibition of misleading or unlawful comparative advertising.

Price Indication Directive • Obliges traders to indicate the selling price and the price per unit of measurement (e. g. per 100 grams or per item) on the products which they offer to consumers. • Information must be: unambiguous; clearly legible; easily identifiable. • If advertising mentions the selling price it must also indicate the unit price. For products sold in bulk, only the unit price must be indicated. • However, for some small retail businesses and for certain forms of itinerant trade, the obligation to indicate the unit price may be an excessive burden. • In such cases the national authorities may stipulate that the obligation to indicate the unit price of products, other than those sold in bulk, shall not apply for a transitional period.

Өрсөлдөөний тухай хууль тогтоомж • Eвропын Холбооны болон Үндэсний хэмжээний өрсөлдөөний тухай хууль • Хориглох болон буруугаар ашигласантай холбоотой зарчмууд – Янз бүрийн хууль, гэхдээ ижил үр дүнтэй – Эрх зүйн тодорхой байдал, нөөц, эрх мэдэл • Хэвтээ болон босоо гэрээ хэлэлцээрүүд – EХ: 101(1) + 101(3)- мэдэгдэл байхгүй, хуультай – Гишүүн орнууд: барагцаалсан байх • Давамгай байдлаа буруугаар ашиглах • Аж ахуйн нэгжийг нэгтгэх, томруулахтай холбоотой хууль тогтоомж • Холбогдох зах зээл, зах зээлд нөлөөлөх байдал • Байцаагчийн эрх, үүрэг, тусламж • Монгол Улсын Өрсөлдөөний тухай хууль тогтоомж: юуг хориглох, онцгой тохиолдол, дахин худалдах үнийн асуудал, байцаагчийн эрх мэдэл, авах арга хэмжээ, жижиг аж ахуйн нэгжийн гэрээ