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Adapting consumer law to economic and social changes

As we have just seen, the consumer landscape has undergone important changes in the last decades. How has the legal system responded?

The previous chapters have shown that the current consumer law model in the EU is still ill-equipped to respond fully to these developments. Important steps have been the adoption of the Charter, now with binding force. However, as already discussed in Chapter 3, the Charter is abstract and includes consumer protection as a policy goal, rather than as a set of enforceable rights. At the same time, the EU’s full-harmonization approach is based on market efficiency rationales, which generally limit broader consumer protection initiatives unless they have a clear market integration focus.

The recent policy approach reflected in the European Commission 2012 Consumer Agenda identifies a number of new societal and consumer challenges such as unsustainable consumption, social exclusion, and vulnerable consumers, as described in previous sections. This indicates that the EU recognizes these challenges and part of this Agenda will be briefly discussed later. However, at the same time, the Agenda mainly refers to market rationales, describing the consumer as the ‘engine of growth’, and focusing on cross-border market participation, with the objective of increasing choice.[1] Consumer welfare is mentioned only marginally, and is referred to as something which needs to be achieved again, by ensuring broader choice (e.g. by promoting online shopping).

An efficient market, leading among other things to a more ample choice, is an important precondition to ensure consumer welfare. However the promotion of efficiency is only one dimension of consumer protection, which also touches upon social objectives and considerations of fairness and justice. The EU approach is still struggling to incorporate these broader dimensions.[2] This is all the more surprising considering, for example, the benchmark offered by the UN’s international consumer model, and the protective approaches developed by some Member States.

The UN has issued a set of Consumer Guidelines providing directions on how to build consumer protection systems which also promote social objectives, such as sustainable consumption and access to essential services. Furthermore, the complementary UNCTAD Manual on Consumer Protection includes an extensive list of consumer protection rationales. Besides economic efficiency, a key objective is the protection of the individual consumer’s right to dignity, regarded as part of a ‘new range of social rights that individuals are entitled to claim in a modern society’. Other purposes of consumer law mentioned by the UNCTAD Manual are distributive justice, participatory decision-making, and communal values.[3] Although the UN Guidelines are not binding, they have been adopted as a common denominator at the international level, and have had a considerable impact on consumer protection systems in several countries across the globe.[4]

Furthermore, as we have seen previously, some European Member States have adopted higher levels of consumer protection than the one provided by EU law. These countries may have to lower their standards if full- harmonization EU measures are adopted, as described in Chapter 2.

The EU remains thus anchored to a rather restrictive model of consumer law, relying on the notion of the reasonably well-informed and observant ‘average market participant’.[5] As discussed previously, this market consumer approach and full-harmonization strategy has come under increasing criticism, as a number of scholars have argued in favour of a model based on justice and other values.[6] Undermined by the new ‘behavioural economics’ (showing that consumers may struggle to take rational decisions and can be easily manipulated by marketing strategies), the ‘informed and rational’ consumer hypothesis has been challenged by the ‘irrational and uneducated’ consumer who, as such, is also a ‘vulnerable’ consumer.[7]

On the other hand, according to some, interference with free markets may lead to paternalistic regulation, which ultimately has a negative impact on consumers.[8] Overprotection might lead to less diligent behaviour on the part of consumers, and impose extra costs which will eventually be passed on to them.[9]

Given that both views contain some truth, the question is how to strike a compromise between apparently competing objectives. In particular, what is the role and competence of the EU in ensuring consumer autonomy and protecting vulnerable groups, without imposing a solution that restricts freedoms and interferes unnecessarily with the market and with Member States’ policies? How can consumers be enabled to take decisions that benefit their welfare and are sustainable in the long term?

The next section will discuss different theories, some of which might help to answer these questions, by providing the foundations for a legal framework that reconciles efficiency, freedom, protection, and welfare.

  • [1] Communication from the European Commission, A European Consumer Agenda—Boostingconfidence and growth (n 18).
  • [2] For the legal debate on the EU consumer concept see ch. 2.
  • [3] United Nations, UNCTAD Manual on Consumer Protection (New York and Geneva, 2004), pp. 7-9.
  • [4] Secretary-General of the United Nations, Consumer Protection Report , (1993) 16(1) J.Consumer Policy, 1 pp. 97-121.
  • [5] See chs 2 and 3 of this book.
  • [6] M. Hesselink, ‘European Contract Law: A Matter of Consumer Protection, Citizenship orJustice’, (2007) 15 Eur. Rev. Private Law, pp. 323-48. For a good overview of the general debateand challenges in EU consumer law, see: N. Reich, ‘Crises or Future of European Consumer Law’,(2009) Ybk Eur. Consumer Law, pp. 3 et seq.
  • [7] H.-W. Micklitz, L. Reisch, & K. Hagen, ‘An Introduction to the Special Issue on BehaviouralEconomics, Consumer Policy and Consumer Law’ , (2011) 34 J. Consumer Policy, pp. 271-6; M.Lissowska, ‘Overview of Behavioural Economics Elements in the OECD Consumer PolicyToolkit’, (2011) 34 J. Consumer Policy, pp. 393-8.
  • [8] T. Hartlief, ‘Freedom and Protection in Contemporary Contract Law’ , (2004) 27(3) J.Consumer Policy (2004), pp. 253-67.
  • [9] See; e.g. H. Kotz & A. Flessner, European Contract Law, Vol. 1: Formation, Validity, and Contentof Contracts; Contract and Third Parties (Oxford: Clarendon Press, 1998), p. 129.
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