EU Parliament Approves Law On Unfair Commercial Practices

by Ulrika Lomas, for LawAndTax-News.com, Brussels

28 February 2005

Speaking on Thursday, Markos Kyprianou, European Commissioner for Health and Consumer Protection, welcomed the European Parliament's decision to approve a new EU law banning pressure selling and misleading marketing.

The new legislation to harmonise Member States’ rules on unfair commercial practices aims to clarify consumers' rights and facilitate cross-border trade by establishing common, EU-wide rules against aggressive or misleading business-to-consumer marketing.

"Sharp practices" prohibited EU-wide under the new law include:

• Pressure selling activities, such as implying that the consumer cannot leave the shop until they sign a contract, or conducting personal visits to the consumer’s home and ignoring the consumer's request to leave or not to return; and
• Misleading marketing practices, such as claiming to be a signatory to a code of conduct when the trader is not, or describing a product as “free” or “without charge” if the consumer has to pay anything other than unavoidable delivery or collection costs.

The legislation also lays down general principles which can be used to assess whether other types of practices should be prohibited as unfair. The key test, in most cases, is whether the practice would unfairly distort the behaviour of an ‘average’ consumer, although there are also provisions aimed at preventing exploitation of particularly vulnerable consumers. The EC argues that by defining only what should be prohibited rather than telling firms how to go about their business, the law leaves room for business to innovate in developing new, fair commercial practices.

Companies who comply with the rules will be able to do business in all EU countries.

The legislation is expected to be formally endorsed by the Council of Ministers in the next few weeks, and should be implemented throughout the EU by 2007.

"This law marks a big step forward for consumers and for EU competitiveness. It boosts the protection consumers enjoy across the EU, while simplifying the regulatory environment for businesses," Mr Kyprianou observed.

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