The big decisions on retail are now taken in Europe and with proposals including a single set of consumer rights in the offing, Sara McCorquodale reports from Brussels on the EU’s retail plans

Next month the new European Commission and Parliament will take their seats in Brussels and Strasbourg.

The two institutions are often regarded as slow, monolithic organisations that have little immediate effect on their member states. But some issues being debated by the 27 EU member states have a major impact on how UK retailers work.

The most significant piece of potential legislation that could change the way and scale on which businesses operate is the Consumer Rights Directive, put forward by the Commission for consultation by member states.

If put into action, the directive would result in the creation of a single set of consumer rights valid across every country in the EU. The consequence would be changes to consumers’ and UK retailers’ rights.

UK home shopping groups, for instance, would have more time to deliver goods – 30 days rather than 14 at present. However, they would become liable for the cost of any damages incurred over the course of delivery. So-called hidden charges – such as automatic first class delivery unless otherwise specified – would be made illegal, as would the inclusion of pre-ticked boxes on websites that can result in extra costs.

The UK’s Department of Business Enterprise & Regulatory Reform (BERR) is examining the proposed legislation, while France, Germany and Spain have been openly critical of the directive, which would create a single European market for home shopping.

One market online

However, Jacqueline Minor, the Commission’s director of consumer affairs and directorate general for health and consumer protection, believes the advantages of the proposal to shoppers should be considered before members write it off completely.

She says: “Consumers could achieve substantial savings and it would offer more choice. Going online to shop would be more exciting. The benefits of an internal marketplace are enormous and are not yet being realised.

“At the moment, the consumer perceives hurdles when shopping in other member states because they don’t know where they stand as far as their rights are concerned.

“We need to raise consumer confidence and persuade companies to sell to shoppers in other member states. Only one in five currently choose to sell beyond national borders.

“It is understandable – they have to contend with legislation, delivery and language barriers, although the latter is less of a concern. They are not willing to deal with 27 legal regimes. Most retailers we have spoken to said creating a single set of rules really would be a big incentive to take this step.”

She adds: “The interest of businesses and shoppers are not necessarily conflictive. If we can get the internal market working properly there really would be huge advantages for retailers and consumers.”

UKRep – the body of civil servants representing the UK in negotiations at an EU level – acknowledges the benefits of the directive, but does not want to compromise shoppers’ rights in this country.

A spokesman says: “We support the move to create a single set of consumer rights in the EU but we will have difficulties with it if it means lowering consumer rights in the UK.

“There are positives in the Consumer Rights Directive. The extension of the cooling off period for internet and doorstep shopping, a ban on pre-checked boxes on websites, a new rule that says the consumer is not liable for damage to goods during delivery and also the right to reimbursement following late delivery. Also, from the point of view of smaller retailers this would be very good – it would totally open up the market and make it easier for them to trade.”

However, members’ potential opposition is not the only thing that could prevent the directive from being passed by the European Parliament. The European Consumers’ Organisation (The Bureau Européen des Unions de Consommateurs) is lobbying its members to ensure that shoppers are not disadvantaged by the proposal. And, if they are, the pressure group says the directive should be amended or thrown out.

Director-general Monique Goyens says: “We aren’t in favour of an internal market if it’s at the price of consumers’ rights. Also, there is the issue of practicality. Retailers are going to be able to cross borders and trade with no legal barriers.

“There would need to be a lawyer in every member state making sure that everyone was abiding by the rules. We can live with maximum harmonisation if the consumer has a high level of protection.”

Hot topics

While prominent, the directive is not the only issue that will affect retailers when the new Parliament and Commission assemble next month. Sustainable living, closing the gender pay gap and the Lisbon Treaty will also be hot topics.

Minor revealed what she believes are among the other issues involving retailers that EU members will be most concerned with. “Market liberalisation will be an issue, and sustainable consumption will be a question for the next Commission,” she says. “How can we make this easier for the consumer?

Sustainable consumption should not only be for the comfortable, affluent customer, it should be for everyone. Products should be produced in a way that allows people to live sustainably at an affordable price.

“Safety enforcement will also be a continuing theme. If a dangerous product arrives at a port in Greece or Amsterdam it could be in 27 member states within days.”

In addition, Minor’s department is collecting data on product prices from each country in the EU. Her team is keen to compare the costs of goods, such as groceries, to measure how different they are in the 27 states.

Campaigns being spearheaded by the Commission’s department of employment, social affairs and equal opportunities could have an impact on employers. It is instigating debate over wages and facilitating women’s return to the workplace after having children.

Spokeswoman Katharina von Schnurbein says: “We have lots of things going on that could affect businesses – the gender pay gap campaign in particular. Women still earn 17% less than men. The reason for this is women are more likely to be in jobs that are poorly paid.

“When sectors are feminised we have found the wages decrease. We can’t legalise on this, but we are running a strong campaign to try and change this situation. We have found that women working on the checkout of a supermarket are paid less than men stacking shelves.”

Meanwhile in the Commission’s trade department, the issue of lowering tariffs, particularly on goods from China, will continue to be debated as will the Lisbon Treaty.

If the treaty is passed it would create a federal constitution taking precedence over laws in member states. It would, say its supporters, streamline decision making and allow member states to work more effectively as a single unit.

Trade spokesman Lutz Güllner said: “Trade is a core issue of the EU and a lot of trade-related issues cross into other departments. The Lisbon Treaty would be extremely good for trade as it would make relations between states clearer and investment easier. It would allow the member states to speak with one voice, which would be extremely positive.”

However, the treaty has divided the EU. It was rejected by Irish voters following a referendum last year, but they will be given a second chance to vote on October 2. French and Dutch voters also opposed it in 2005 and the Czech Republic, Germany and Poland have also yet to ratify the treaty. All 27 members must be in agreement if it is to be implemented.

Outside the Commission and Parliament, the British Retail Consortium (BRC) has its own agenda to lobby the EU over key issues affecting retailers in the UK.

BRC Brussels director Alisdair Gray said: “Anything that will help retailers in terms of cash or assistance will be good news. One of the topline issues for us in Europe at the moment is also credit card tariffs. When a customer uses Visa or Mastercard, a sum is given from retailers to the card scheme. This fine is something we’ve been fighting against for more than 10 years and it is going through the courts and European Commission.”

Although it is a political body directly affecting retail across Europe, the lethargic speed of EU decision making can make it, at times, seem irrelevant to the success of business in the UK.

However, the proposals set to be discussed by the new Commission and Parliament could change the face of retail in Europe. They could, supporters believe, open up the European
market to make etailing across borders a more realistic proposition for an increasing number of retailers. They are also likely to mean parity in the wages earned by male and female employees for those retailers that do not already treat staff equally.

The outcome of the debates and subsequent ballots could take a decade to come into force, but if they do, the way in which retailers sell and consumers shop will be irrevocably changed.

EU and Retail: Rocky Relations

2009
September

  • The European Commission says 55% of electronics etailers are breaking consumer protection laws by misleading customers about their rights and prices of goods

August

  • Manufacture and importation of 100-watt, frosted incandescent bulbs is banned to encourage consumers to use environmentally friendly alternatives instead
  • In an EU clampdown breakfast cereal manufacturers are told they will have to abandon claimed health benefits of their products unless they can be scientifically proven

March 

  • Retailers urge the European Commission to lower VAT on energy-efficient household products on the day the Retailers’ Environmental Action Plan was launched. The BRC asks Commission president José Manuel Barroso to allow retailers to apply a reduced rate of VAT to products with a “high potential” for energy savings

2008
October

  • The European Commission temporarily ditches plans to introduce anti-dumping charges on candles made in China

September

  • ebay“>EBay asks the European Union’s antitrust chief to investigate companies that prevent retailers from offering their goods on the auction site or other ecommerce platforms. EBay’s deputy general counsel Tod Cohen said this was “manipulating and controlling the markets beyond EU market rules”

How legislation is passed in the EU

The European Commission – the EU’s biggest institution employing 28,000 employees – initiates and proposes legislation. It is not a decision-making body. Although its 27 commissioners come from each of the member states they are independent of national governments and issues.

Following a proposal, the EU Council – comprising representatives from member states – decides whether legislation should pass, either alone or through the Parliament. At present, the public are not allowed to view Council meetings. However, if the Lisbon Treaty is passed the body will become more transparent. The Parliament debates proposed legislation but its views may not be acted upon by the Council, which is the principal decision-making body in the EU.