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Ahead of the final scheduled trilogue on the Unfair Trading Practices Directive tomorrow, retailers and wholesalers warned negotiators not to forget fundamental principles laid down by EU law, or the implications of ignoring them EuroCommerce Director-General Christian Verschueren said:

“We all know that over 20 Member States already have specific legislation on the supply chain. In line with subsidiarity, it makes no sense to add a plethora of rules at EU level which will be appropriate for some Member States and not for others.  That is what subsidiarity is meant for.  We therefore ask negotiators to stand back and ask what arbitrary turnover thresholds for the scope of the directive or a long list of practices prohibited at EU level will achieve, when Member States are already able to go further themselves. Political gesturing, just to be seen to do something, is bad law, especially when there has been no time to assess the impact of what is being proposed. That is why we believe that everyone would be best served by keeping to the Commission proposal.”

Negotiators are now looking at the scope of the directive, with figures being floated anywhere between 100 million and 2.5 billion euros turnover as the definition of a supplier who is so weak that it has to be protected against buyers. This argument forgets that the legal base of the proposal is aimed at helping farmers, not powerful national (and multinational) manufacturers, and extending it in this way risks the directive being challenged in court. The SME threshold of 250 employees and 50 million euros turnover covers almost any farmer in Europe – those arguing for more need to explain whom they are seeking to protect.  Any threshold fixed at EU level above the SME definition will be too high for small countries – how many suppliers in Luxembourg have a turnover of 2.5 billion euros? This is why the Commission opted for a minimum harmonisation directive which allows Member States, over 20 of whom already have legislation, to decide where to add further measures.  This is spelled out explicitly in the directive. In an EU made up of very diverse Member States, this subsidiarity approach makes absolute sense. On top of this, the shortcomings of some other amendments are becoming apparent, such as what happens where buyer and seller are the same size.

Verschueren added:

“The discussion on the scope of the directive has moved far away from what it was meant to be about – helping farmers – to a political discussion about how large a company should be to be “protected” from a buyer. Any threshold above the SME definition proposed by the Commission will be arbitrary, and risks covering all manufacturers in smaller Member States.  It is surely time for negotiators to remember some fundamental EU principles: subsidiarity, proportionality, proper assessment of the impact of legislation; and respect of the Treaty”.

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Contact:

Kinga Timaru-Kast - +32 2 894 64 83 - timaru@eurocommerce.eu   
Neil McMillan - +32 2 737 05 99 - mcmillan@eurocommerce.eu   

Retailers today voiced their disappointment at the general approach adopted by the Council on the proposal on contracts for the sale of goods and consumer guarantees. Christian Verschueren, Director-General of EuroCommerce said:

“The Council has missed an important opportunity in discarding the fully harmonised approach proposed by the Commission, and opting for minimum harmonisation. Instead of modernising consumer protection, the Council approach maintains major national differences. This will do nothing to reduce existing barriers to cross-border ecommerce, holding back the development of a properly-functioning digital market in Europe and denying consumers and businesses its massive potential benefits.” 

We have repeatedly reiterated our support for full harmonisation at a proportionate level and we regret that the Council has stepped back from following this path. Full harmonisation would ensure trust for both consumers and businesses, including equal treatment of all consumers irrespective of their country, and simple and predictable rules for business. If rules remain different across the EU, cross-border online shopping will never fully take off as fragmented rules will always be confusing for both consumers and traders. The differences in national law and a reluctance to change rules on jurisdiction mean that the Geoblocking Regulation requires traders to sell to anyone, but not to deliver, which renders it largely useless for consumers and traders. Full harmonisation would have resolves much of this problem.

The agreement raises many other issues, such as a longer period of the reversal of burden of proof on the retailer, sellers needing to provide a guarantee of the durability of goods, and provide security updates on smart goods they sell. This will all come with a cost to sellers, making it even more difficult for them to compete with the flood of cheap, unsafe and non-conforming products sold direct to consumers from China. This threatens the survival of many retailers, but no one has come up with any effective policy solution to the issue.

Verschueren added:

“Europe is still way behind China and the US in what is already a global digital market. Holding back the digital single market in this way is an ‘own goal’ for Europe, and the wrong policy turn for building up our economic competitiveness.”

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Contact:

Kinga Timaru-Kast - +32 2 894 64 83 - timaru@eurocommerce.eu   
Neil McMillan - +32 2 737 05 99 - mcmillan@eurocommerce.eu   

Speaking today after the vote of the European Parliament JURI Committee report on collective redress, EuroCommerce Director-General Christian Verschueren warned of the risk that the proposal as amended will spark a wave of vexatious litigation: “We fully support fair and balanced civil justice systems with effective enforcement of consumers’ rights. We have, however, concerns whether this proposal can deliver on these goals. The proposal should not provide incentives to competitors, third-party investors and law firms to litigate against companies at the expense of consumers.”

We recognise the efforts made in the report to bring legal clarity to some of the elements of the proposal. This includes strengthening principles such as the loser pays rule, the prohibition of punitive damages, and the admissibility criteria for compensation claims, as well as rules on out-of-court settlements, and on evidence gathering to make discovery claims subject to a proportionality test subject to the opinion of a judge.

However, despite improvements, there is still a danger that the proposal could lead to vexatious litigation in Europe. The text contains no clearly-stated safeguards that need to apply to all claims, including a requirement for consumer opt-in, a prohibition of contingency fees, and the prevention of overlapping claims. We regret the absence of more transparency and stronger safeguards on the relationship between by third-party litigation funders and law firms. We also miss sufficiently robust criteria for a qualified entity, including proof of stability and seriousness, and a guarantee that awards are properly passed on to consumers.

Finally, there needs to be more clarity on how this Directive will interact with existing national collective redress systems, and a minimum level of procedural principles and safeguards at EU level to avoid the pitfalls of forum shopping and a race to the bottom between national jurisdictions.

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Contact:

Kinga Timaru-Kast - +32 2 894 64 83 - timaru@eurocommerce.eu   
Neil McMillan - +32 2 737 05 99 - mcmillan@eurocommerce.eu   

Retailers and wholesalers today welcomed the announcement that Visa and Mastercard have made commitments to bring transactions on cards issued outside the EU (non-EU visitors purchasing within the EU) broadly in line with those EU-issued cards.

Christian Verschueren, Director-General of EuroCommerce, said: "We have been pressing for some years for the removal of the often very large difference between what a merchant is charged for accepting a card issued in the EU and one from outside. These changes are a welcome step forward, and will help shops and others gain more transparency than hitherto, where they only knew exactly how much they would be charged when the bill arrived".

The agreement to cap fees on cards issued outside the EU to the same rates as for cards issued in the EU (maximum 0.2% for debit, 0.3% for credit cards) removes a difference which caused merchants real difficulties, and uncertainty about the fees they would be charged. We have argued consistently that these differences were not justified.

The tightening of the Non-Circumvention clause to include programs or the introduction of new rules or fee increases (including scheme or other fees) charged to acquirers is also a valuable step forward, but it would have been useful if this had gone further than just applying in the EEA to non-EEA issuers. This is a point which we hope that the Commission will look at in reviewing the MIF Regulation.

Where the commitments fall short is the distinction they make between a transaction where the cardholder is present and where the card is used online or over the telephone. The substantial difference in rates (1.15% for debit, and 1.5% for credit cards) for these transactions is not easy to justify. No such distinction is made for cards issued in the EU. This is important in supporting the growth of online sales and e-commerce. We therefore cannot understand why merchants should be charged more for a perceived risk which can only arise in the by the card issuers' failure to implement adequate fraud prevention measures.

These commitments last five years and six months. Verschueren added: "The commitments given will be helpful, and we are glad that the Commission and card schemes have reached this agreement. But it is only a first step away from a situation where fees for non-EU cards were totally non-transparent and far too high. We ask that, as part of the review of the Regulation currently underway, the Commission to propose a full alignment of these fees with those for cards issued in the EU, and whether purchases are made in a store or online. We also ask to include commercial cards in the scope of the Regulation."

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Contact:

Kinga Timaru-Kast - +32 2 894 64 83 - timaru@eurocommerce.eu   
Neil McMillan - +32 2 737 05 99 - mcmillan@eurocommerce.eu   

As the Council, Parliament and Commission enter the final stages of negotiation in trilogue on the Unfair Trading Practices Directive, retailers and wholesalers warned legislators against adopting rushed and ill-conceived compromises. The ideas being floated have undergone no impact assessment, and will act against the interests of farmers, SMEs and consumers. Speaking ahead of further consideration of the proposal in the EP Agriculture Committee and in trilogue next week, EuroCommerce Director-General Christian Verschueren said:

“We are the sector who will be very directly affected by a measure which gives wide-ranging rights to suppliers, and none to buyers. The only way to avoid the unforeseen consequences of these ideas creating massive damage to the supply chain is either to stick closely to the Commission proposal, particularly on scope, or submit these new ideas to a proper assessment of their impact. All EU institutions have signed up to this principle under the Inter-Institutional Agreement on better regulation.”

Retailers and wholesalers are very concerned that, in the rush to reach compromises on the over 140 amendments put forward by the Parliament, the EU does not end up with a directive which puts farmers and SME suppliers at a massive disadvantage to large manufacturers, endangers small shops and kills off competition, costing European families billions on their food bills.

We have written to Commissioner Hogan and other Commissioners, and to those directly involved in the trilogues to explain the negative impact on the whole supply chain of some of the possible compromises being discussed, and to ask that proper consideration is given to their impacts. These focus on:

• The EP’s demands to extend the scope of the directive. The amendments would allow already powerful multinationals to stop any meaningful negotiation dead, with no benefit accruing to farmers.
• Extending the scope to relations between a very small seller and a slightly larger SME buyer will mean that independent shops and wholesalers will have to comply with the full panoply of prohibitions and restrictions in the directive. This will expose them to justifying their transactions to public authorities and demand resources they simply do not have. Small shops will be obliged to avoid this legal risk by simply stopping buying from local producers. This will directly harm farmers, and drive small retailers into the arms of multinational brand manufacturers.
• Deviating from the SME definition to cover companies with more than 250 employees/50 million euro threshold would go well beyond the size of almost any farm or local cooperative, and what is possible under the legal base. If this does not include the requirement in the SME definition that a company must be autonomous from a larger group, it also risks - absurdly - covering the local subsidiaries of major multinationals in smaller countries.
• Extending the scope to services creates legal uncertainty: the concept of services is ill-defined (retail and wholesale are in themselves a service) and risks creating confusion with the list of prohibited and restricted practices, which already cover some of the services provided by retailers and wholesalers.

•     Creating a general UTP definition could create an undesirable precedent for future legislation and scope for arbitrary interpretation by member states.

• Reversing the burden of proof in a directive which already gives rights to sellers and none to buyers makes the directive inherently discriminatory; this goes against fundamental EU principles of equality before the law and non-discrimination, the charter of fundamental rights as well as constitutional rights in a number of Member States.

•     Prohibiting mutually beneficial practices wherever there is “economic dependence" will act as a disincentive for retailers to grow their relationships with small suppliers, and push them to deal only with big brands.

•     An amendment still in play prohibiting retailers from working with farmers for higher animal welfare and environmental standards to meet consumer demand will stop farmers achieving a better return for their hard work.

•     An amendment prohibiting purchasing groups will kill off the small shops who can build up valuable relationships with local suppliers and farmers, but cannot survive if they have to buy at the very high list prices of large brands’ goods which they need to carry.

Generally, the more elaborate the list of practices prohibited, and more vaguely-worded they are, the less likely it is that shops struggling on the margin of profitability will be able to deal with them.

This is why the three EU Institutions should observe strictly the inter-institutional agreement they all signed in 2016 and ensure that no amendment to the Commission proposal is adopted without a clear idea of its impact on farmers and the rest of the supply chain. Anything else could be legally challengeable.

Verschueren added: “We have absolutely no interest in seeing the many small suppliers, with whom retailers put considerable effort into building a mutually beneficial relationship, being harmed. We are worried to see a proposal aimed at helping farmers being hijacked by large manufacturers to boost their already large profits. Resolution of the outstanding issues in the proposal must be on the basis of a careful and considered approach which takes full account of the interests of farmers, the 29 million Europeans directly employed by our sector – and the 500 million consumers they serve every day.”

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Contact:

Kinga Timaru-Kast - +32 2 894 64 83 - timaru@eurocommerce.eu   
Neil McMillan - +32 2 737 05 99 - mcmillan@eurocommerce.eu   

EuroCommerce, jointly with business stakeholders has sent a statement to the key EP stakeholders and MEPS calling for better safeguards against the risk of abusive litigation.

EuroCommerce, jointly with business stakeholders has supported a statement sent to Council, ahead of the Transport, Telecommunications and Energy Council meeting on 4 December calling the Council for more considerations when adopting the position.

This year marks the 25th anniversary of the European Single Market, but also the 25th anniversary of EuroCommerce, the principal European association representing retail and wholesale, the largest private sector employer in Europe, accounting for 10% of its GDP.

The EuroCommerce event today is not just looking to celebrate retailers, wholesalers, but also the 500 million customers they serve every day, helping them to live a better, healthier and more convenient life.

EU Commissioners Elżbieta Bieńkowska and Vĕra Jourová joined the conference to speak about digital transformation, changing consumer behaviour and how to make the Single Market work better for businesses and consumers.

Régis Degelcke, President of EuroCommerce, said on this occasion:

“In 1992 we were told that the Single Market would be completed. 25 years later we still see significant barriers to trading across the EU. Some €1,000 trillion of goods are traded cross-border in Europe yearly: if we could remove these unjustified barriers we could release an untapped potential of between €183 billion and €269 billion. We see Europe still slow to recover slowly from the economic crisis 10 years ago, and still suffering from too high unemployment. Getting the Single Market working as it should, would create a massive boost to European growth and, most importantly, jobs.”

Elżbieta Bieńkowska, Commissioner for Internal Market, Industry, entrepreneurship and SMEs, added:

“We need to realise the full potential of the retail sector, especially now that it is undergoing a rapid digital transformation. The best practices set out in our Retail Communication should help Member States carry out reforms to improve the productivity and competitiveness of the retail sector and provide for a level playing field between on-line and off-line retail. We will do a follow up on the Retail Communication through discussions with Member States, a further development and updates of the Retail Restrictiveness Indicator and a fact-finding on Territorial Supply Constraints.”

Retailers interact with consumers millions of times a day. A simple legal framework across Europe of consumer protection for both online and offline sales is important in building consumer trust. Retailers need a full harmonisation of consumer protection rules at a balanced and proportionate level as the only way to overcome legal fragmentation and obstacles to the free movement of goods.

Vĕra Jourová, Commissioner for Justice, Consumers and Gender Equality, commented:

“We want individuals and businesses to benefit from the growth in digital services. In the area of commerce, I see many positive opportunities for consumers in the future. However, this will work only if we cooperate - regulators, enforcers and organisations like EuroCommerce - to avoid misleading practices and breaches of consumer protection laws.”

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Contact:

Kinga Timaru-Kast - +32 2 894 64 83 - timaru@eurocommerce.eu   
Neil McMillan - +32 2 737 05 99 - mcmillan@eurocommerce.eu   

We launched our new Manifesto, describing our new four strategic pillars and key policy asks. Our Manifesto is targeted at the incoming European Parliament and Commission in 2019.

Main manifesto

Fair competition
Open markets
Sustainable living
Data economy

Speaking today after publication of the Commission communication on the Single Market in a changing world[1] and yesterday’s Annual Growth Survey, EuroCommerce Director-General Christian Verschueren commented:

“While the Commission survey paints a positive picture of the EU economies, it does not reflect the sad fact that retail and wholesale are suffering more and more from protectionist and populist measures and local rules, as its earlier report on Retail Fit for the 21^st Century highlighted[2]. We regret that the EU institutions have not been able to do more over the past five years to improve conditions for retail and cross-border services, and ensure that the Services Directive – which was adopted in 2006, finally delivers the benefits for the EU economy that it should.”

One of the few remaining legislative proposals that could improve conditions for all services provides, including retailers and wholesalers, would be the rapid adoption of the Commission proposal for a notification procedure for authorisation schemes and requirements related to services[3]. This would allow draft national rules to be assessed by the Commission prior to adoption. This would not only avoid costly and time-consuming infringement cases, but make a major contribution to improving implementation of existing rules under the Services Directive.

Yet this highly needed proposed legislation is making no progress in the Council. Verschueren added: “Services make upover 70% of EU GDP, yet the Council is currently blocking progress on a notification process which could make a major difference to the single market in services and the EU economy. Some Member States may have to change current ways of working. The current tools at the Commission’s disposal make it almost impossible for a clear principle which Member States signed up to 12 years ago – that rules under the directive should be non-discriminatory, justified and proportionate at national, regional and local level – to be enforced.” We agree wholeheartedly with the Commission that ‘deeper integration today requires more political courage and determination than 25 years ago’, and for the need for ‘a renewed commitment by Leaders to all the dimensions of the Single Market.’

**ENDS** 

Contact:

Kinga Timaru-Kast - +32 2 894 64 83 - timaru@eurocommerce.eu
Neil McMillan - +32 2 737 05 99 - mcmillan@eurocommerce.eu