9. Fair Trading Principle - The Starting Point for Online Consumer Law in Europe?
| Pages | 260-304 |
Chapter 9
Fair Trading Principle – The Starting Point for Online
Consumer Law in Europe?
INTRODUCTION
In the electronic marketplace, cross-border dimensions change the old
boundaries between national, European and international law. We are facing
a new trend of globalisation: international and national law merge in one
unified framework; our conceptions of consumer law are also changing.
The premise of globalisation, either at the traditional or online market level,
claims for a reliable framework able to deter unfair commercial practices.
Recomposing a new legal landscape able to dismantle unfair commercial
practices in cyberspace is a daunting task. As remarked by Reich:
[e]verybody will agree that commercial practices should be ‘fair’ towards
the consumer (and the competitor), but what exactly does ‘fairness’ mean
in a specific setting? Are unsolicited Tele- or internet-marketing activities
(spams) fair only if the consumer has consented beforehand (so-called
‘opt-in’ approach), or does ‘fairness’ merely require an effective
procedure to oppose this type of marketing (so-called ‘opt-out’
approach), or should there be no state regulation at all, leaving the
standard setting to self-regulation and the broad principles of civil and
criminal law?1
Based on the study conducted by Hans W. Micklitz,2 the European
Commission Green Paper on Consumer Protection3 has proposed a
Framework Directive including a general clause which prohibits engaging
in unfair commercial practices. Following the consultation process4 on the
Green Paper and based on ‘Extended Impact Assessment’,5 the European
Commission considered that a Directive harmonising EU Member States’
rules on unfair commercial practices will change the landscape of consumer
protection. On June 18, 2003 the Commission of the European
Communities adopted a proposal for a Directive concerning unfair business
to consumer commercial practices in the internal market. The proposed
Directive on unfair commercial practices provides one set of common rules
with the aim of replacing the widely diverging national rules and
regulations. As such, consumers should be guaranteed the same protection
against unfair business practices and wherever they make a purchase in the
European Union. The Directive as proposed by the European Commission
advances the ‘principle of country of origin’ according to which compliance
with the law in their EU country of establishment would have automatically
guaranteed traders, the freedom of providing services without worrying
about breaking the rules. The Council6 agreed on its common position on
the basis of a presidency compromise text. The text issued after the
Council’s common position proposes the removal of the principle of
country of origin. The Irish Presidency considered that since the proposal
harmonised member states rules on unfair commercial practices, there was
no need for the principle of country of origin.
The proposed Directive outlines a general clause in order to determine
whether a commercial practice is unfair. Outside the lists of misleading and
aggressive practices, the unfairness of a practice can be determined by
performing a simple assessment, determining firstly whether a trader has
acted with professional diligence, and then whether the practice materially
distorted or was likely to materially distort the economic behaviour of an
average consumer. The proposed text lists unfair practices which it
categorises as being either misleading or aggressive. A positive list of ‘best
practices’ would have been appropriate for encouraging positive action to
promote a fair business environment and to establish a high level of
harmonisation.
The aim of this chapter is to provide a brief overview of the evolutionary
aspects of the fair trading principle within the context of the international
and global European context. This overview is necessary for exploring
whether the European concept of ‘fair trading’ as imagined by the European
Commission can apply to the global electronic market. In comparison with
the traditional market, the application of fair trading to the electronic
marketplace poses many new challenges regarding its philosophy, its
classical conceptual basis and its enforcement.
9.1 General Overview of the Fair Trading Principle in the International
and Global European Context
In order to provide a general overview of the fair trading principle, the
chapter outlines some of its evolutionary aspects in the international
context. The chapter starts first by identifying the origin of fair trading at
the international level. Second, it continues by analysing how European law
have borrowed from the area of international law, the rationale of the fair
trading principle.
9.1.1 The inception of the principle of fair trading
At the origin, the principle of fair trading was related to the requirement of
competition laws that firms can compete on a level playing field. As the
study by the Institut für Europaisches Wirtschafts und Verbraucherrecht
e.V7 suggests, the common concepts of Fair Trading – usually symbolised
by the notion of ‘unfair competition’ – are much more oriented to protect
competitors from each other rather than to secure the autonomy of the
decision-making of private consumers and the workability of competition as
a whole. The role of fair competition is to keep markets open and
competitive in order to achieve lower prices, increase choice, and improve
product quality for the benefit of the consumer. For example, it can be
inferred from European competition rules8 that the consumer is assumed to
receive a fair share of those benefits that flow from the particular type of
agreement that may obtain an exemption under Article 81(3). In a general
context, this means that the consumer should obtain a fair share of the
market’s benefits so long as the market remains competitive.
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