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Consumer Protection: European Parliament Approves EU-wide Rules for Defective Products

On 22 February 2018, the European Parliament’s Internal Market and Consumer Protection Committee approved a single set of rules to ensure consumers buying online or face-to-face in a local shop obtain the remedies they ought to be entitled to if they purchase a faulty product. The proposed directive provides for more stringent rules than present, and allows Member States to go even further.

Hong Kong sellers will note that this important development gives additional rights to all consumers. The proposed legislation will cover the sale of goods within the EU regardless of whether they are sold online or in-store.

The proposed legislation builds on the European Commission proposal to replace Directive 1999/44/EC on consumer guarantees. A number of deficiencies were identified in the existing framework, not least that there is considerable variation in how it has been implemented at national level. The Commission also expressed concern that traders may be reluctant to sell across borders due to the legal complexity of resulting consumer contracts.

The proposal to enhance consumer rights in the sphere of defective products was first published in December 2015 and has since been complemented by other initiatives targeting the supply of digital content.

The text approved by the European Parliament is substantially in line with the Commission’s 2015 proposal. Significantly, however, the European Parliament has extended the scope of the proposal to include offline sales. By harmonising i) the remedies available to consumers who purchase faulty goods, ii) the burden of proof and iii) the obligations of traders, the proposal seeks to establish uniform minimum rules throughout the EU. The proposal does not go so far as to fully harmonise substantive law, however. Such a step would be opposed by some Member States as well as a number of members of Parliament (MEPs). Instead, the current draft proposes a “practicable set of common contract law rules” in key areas. The main remedies envisaged by the proposed legislation include the following:

  • Consumers who purchase a defective product will, in principle, be free to choose to have it repaired or replaced by the retailer at no extra cost.
  • If the problem persists, or if it takes longer than a month to repair/replace the product, the consumer will be entitled to remedies including a proportionate price reduction or refund.
  • EU Member States may introduce higher standards, especially for “hidden defects” and the right to terminate a contract.
  • The burden of proof will also be reversed in favour of the consumer. For example, for up to a year following the purchase of a product, the consumer would not need to prove that the product was faulty at the time of delivery. Thus, the retailer would be obliged to offer a remedy, or to prove that the defect occurred after the consumer took delivery.
  • Finally, the period of time for which a trader would be liable will be set at two years from the time the consumer received the product. Member States which provide for a longer limitation period may, however, retain this higher level of consumer protection.

Speaking after the vote, Pascal Arimont MEP, who guided the proposal through the committee stage, said that the harmonised rules would be good for both consumers and businesses. While individuals would benefit from “a high level of consumer protection”, businesses would gain from “legal certainty” and a “level-playing field” between large and small retailers who conduct cross-border e-commerce.

The proposal has not been warmly received by consumer rights organisations, however. The European Consumer Organisation (BEUC) said that the changes would be minimal and criticised the absence of a provision for liability of manufacturers.

The proposal will now be subject to negotiations between the European Parliament and the Council of the EU. The Council is composed of representatives of EU Member States and has yet to agree its position. It is expected that this proposal will complement a similar piece of draft legislation concerning contracts for the supply of digital content.

Content provided by Picture: HKTDC Research
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