Unfair practices law must not ruin single market, warn firms

by Anna Mclauchlin

Date: 27/01/05

Europe's businesses are to clash with national governments and the European Commission over new EU rules on unfair business practices.

MEPs will vote on the proposal for a second time in the Parliament's internal market committee on 2 February.

But UNICE, an association representing EU's big employers, has warned that amendments tabled to the new rules, which will help lawyers determine unfair practice in the case of a dispute, must be accepted if they are not to fear operating across EU borders. Unfair business practices include aggressive doorstep selling and misleading advertising.

Firms are hoping that the internal market concept, known as the 'country of origin principle', will be revived in the final draft of the proposal.

Under this principle, which national governments stripped out of the original European Commission proposal in May last year, businesses would have to comply with their national fair practice rules rather than those where they are operating.

This, companies argue, would give businesses legal certainty and therefore the confidence to practise across EU borders, which is the ultimate goal of creating an internal market.

"If this is not included then businesses crossing borders will have to comply with a new rule with 25 different faces," says UNICE's Carlos Almaraz. "How can we provide for consumers if a law doesn't make it easier for business to work across Europe?"

The Commission has already said that it will not accept reinstating the country of origin principle, despite including it in the original text. UNICE says that if it does not, the proposal must ensure that member states do not change the rules when transposing them into national law.

European consumer organisation BEUC claims that applying local law would be more risky for the consumer as he or she would not necessarily know the law which applies in the country of the business with which he or she is dealing.

BEUC also argues that the origin principle will make legal disputes more expensive for consumers because they will have to appoint a local legal expert for that country rather than simply applying the international private law that currently protects them.

"In the end this will hurt businesses because the consumer will not take the risk of doing foreign businesses because they will fear that the cost of any complaint will be higher," says BEUC's Cornelia Kutterer. She warns that there is a danger of the unfair practices directive setting the stage for the EU services directive in which there is currently a huge debate over whether or not to include the origin principle when offering cross-border services.

"The unfair business practice directive should not be a test for the services directive," she says.

The directive aims to set out the legal basis on which disputes can be based if a consumer complains that he has been victim of unfair commercial practice.

MEPs will vote on the new draft on 2 February before a plenary vote takes place in the week beginning 21 February.

Anticipation of a vote in the European Parliament's Internal Market Committee on 2 February 2005 on the amended proposal of the unfair business practices directive which was aimed at helping lawyers determine unfair practice in the case of a dispute. Unfair business or commercial practices include for instance aggressive doorstep selling and misleading advertising. Representatives of European industry urged MEPs to accept the proposed amendments and to revive the internal market concept of 'country of origin principle' according to which businesses would have to comply with their national fair practice rules rather than those where they are operating