EU Law Blog

Consumer Guarantees, Defective Goods and Compensation for Use: Case C-404/06

The Court of Justice held in Case C-404/06 Quelle AG v Bundesverband der Verbraucherzentralen und Verbraucherverbände, that Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees precludes national legislation under which a seller who has sold consumer goods which are not in conformity may require the consumer to pay compensation for the use of those defective goods until their replacement with new goods.

The story goes like this. Quelle, a German mail order company, sold and delivered a ‘stove-set’ to a German consumer. But the goods were defective and since repair was not possible, the consumer returned the appliance to Quelle, who replaced it with a new appliance. However, Quelle required her to pay €69.97 (US$109.76) as compensation for the benefit which she had obtained from use of the appliance initially delivered. The Bundesverband, a consumers’ association acting as the consumer’s authorized representative, claimed a refund to her of that amount.

The German court before which the claim was brought referred a question to the Court of Justice question whether the provisions of Directive 1999/44/EC preclude an obligation on the consumer to compensate the seller of goods which are not in conformity.

The Court held that they did preclude such an obligatory payment for the use of the defective goods.

The Court stated that according to the Directive, the seller is to be liable to the consumer for any lack of conformity in the goods at the time when they are delivered. Where goods are not in conformity, the consumer is entitled to require the seller to repair the goods or to replace them – in either case free of charge – unless that is impossible or disproportionate.

It found that if a seller delivers goods which are not in conformity, it has failed to perform correctly the obligation which it accepted in the contract of sale – unlike the consumer, who has already paid the selling price – and must therefore bear the consequences of that faulty performance. It pointed out, however, the seller’s financial interests are protected by the two-year time-limit for repair or replacement and by the fact that it may refuse to replace the goods where that remedy would be disproportionate in that it would impose unreasonable costs on the seller.

During the course of the proceedings, the German government referred to a statement made in the minutes of the Council prior to the adoption of Directive 1999/44/EC giving a restrictive interpretation to the meaning of "free of charge". The Court disregarded it and recalled its settled case-law that, where a statement recorded in Council minutes is not referred to in the wording of a provision of secondary legislation, it cannot be used for the purpose of interpreting that provision (see, inter alia, Case C‑292/89 Antonissen, paragraph 18, and Case C‑402/03 Skov and Bilka, paragraph 42).

Energy Market Report

The Commission has published a report on the implementation of the gas and electricity markets.

You can download the report - COM (2008) 192 final - here.

Of course, creating an efficient European-wide market for gas and electricity in such traditionally balkanized industries is clearly important if Europe wants to remain something of an industrial power in the coming decades.

But the conclusions of the report are not wholly encouraging:

"Despite some encouraging improvements, notably on cross-border coordination at regional level, the overall analysis of progress on the internal market in electricity and natural gas shows that major barriers to the efficient functioning of the market still exist.
Insufficient implementation of European legislation remains a crucial factor."

The fact that the language of the report sometimes descends into impenetrable Commission-babble does not help.

Consolidated Treaty with Lisbon Treaty Amendments

Admit it ! You never thought it was going to happen.

At last, a consolidated version of the Treaties incorporating the Lisbon-Reform Treaty amendments has been made available here. And in all official languages too.

Here's the link to the English language pdf version, and here's the link to the English language MS Word file.

The Articles are properly renumbered too.

Privacy and Search Engines like Google: Opinion of Art. 29 Working Party

The Working Party set up pursuant to Article 29 of Directive 95/46/EC on data protection has issued an interesting opinion on the privacy issues raised by search engines like Google or Yahoo.

You can find the opinion ("WP 148") here.

Part of the executive summary reads as follows:

"In this Opinion the Working Party identifies a clear set of responsibilities under the Data Protection Directive (95/46/EC) for search engine providers as controllers of user data. As providers of content data (i.e. the index of search results), European data protection law also applies to search engines in specific situations, for example if they offer a caching service or specialise in building profiles of individuals. The primary objective throughout the Opinion is to strike a balance between the legitimate business needs of the search engine providers and the protection of the personal data of internet users.

This Opinion addresses the definition of search engines, the kinds of data processed in the provision of search services, the legal framework, purposes/grounds for legitimate processing, the obligation to inform data subjects, and the rights of data subjects.

A key conclusion of this Opinion is that the Data Protection Directive generally applies to the processing of personal data by search engines, even when their headquarters are outside the EEA, and that the onus is on search engines in this position to clarify their role in the EEA and the scope of their responsibilities under the Directive. The Data Retention Directive (2006/24/EC) is clearly highlighted as not applicable to search engine providers."

The conclusion that Directive 95/46/EC applies to the processing of personal data by search engines outside the EU needs looking at more closely and is likely to be controversial.

Minimum Wages, Collective Agreements and Posted Workers: Case C-346/06

The Court of Justice has handed down an great judgment in Case C-346/06 Dirk Rüffert v. Land Niedersachsen defending the rights of workers posted from a low wage state to work in a high wage state.

The Court held that if a member State has in force a system for declaring the rate of pay fixed by a collective agreement to be universally applicable but fails to make such a declaration, a legislative measure of that member State applicable to public contracts is precluded by Directive 96/71/EC on the posting of workers in the framework of the provision of services from imposing a requirement on providers of cross-border services who post workers to that member State to comply with the rate of pay fixed in the collective agreement.

Here's the story. A German contractor was awarded the contract to build a prison and it undertook to pay those working on the site the wages at the rate fixed in the "Buildings and public works" collective agreement. But the German contractor employed a Polish subcontractor whose workers posted from Poland were paid roughly half the German rate fixed in the collective agreement.

The law of the Land of Lower Saxony - where the prison was being built - on the award of public contracts states that public works contracts may be awarded only to undertakings which agree in writing to pay their employees at least the wages at the rate prescribed by the applicable collective agreement. The contractor must also undertake to impose that obligation on subcontractors and to monitor their compliance with it. Non-compliance with that undertaking triggers the payment of a contractual penalty. Because the Polish subcontractor breached the German contractor's obligation, the German company was fined.

The German company appealed the fine in the competent German court which then referred the question to the Court of Justice whether Article 49 EC on the freedom to provide services precludes a statutory obligation requiring a contractor in a public works contract to undertake to pay its employees at least the remuneration prescribed by the applicable collective agreement.

The Court of Justice held that, in the particular circumstances of this case, the law of the Land of Lower Saxony was contrary to Directive 96/71/EC read in the light of Article 49 EC.

The Court found that the rate of pay provided for by the ‘Buildings and public works’ collective agreement was not fixed according to one of the procedures laid down by Directive 96/71/EC. Although Germany has a system for declaring collective agreements to be of universal application, no such declaration appears to have been made in respect of the collective agreement applicable in this case. As a result, such a rate of pay cannot be considered to constitute a minimum rate of pay within the meaning of Article 3(1)(c) of Directive 96/71 which member States are entitled to impose, pursuant to that directive, on undertakings established in other member States, in the framework of the transnational provision of services (see, Case C‑341/05 Laval un Partneri, paragraphs 70 and 71 - see our post here).

The Court also held that the law of the Land of Lower Saxony was contrary to Article 49 EC. By requiring undertakings performing public works contracts and, indirectly, their subcontractors to apply the minimum wage laid down by the ‘Buildings and public works’ collective agreement, a law such as the one in issue may impose on service providers established in another member State where minimum rates of pay are lower an additional economic burden that may prohibit, impede or render less attractive the provision of their services in the host member State. Therefore, such a measure is capable of constituting a restriction within the meaning of Article 49 EC.

The Court also found that no plausible justification of the measure had been put forward.

Mobile phones to be allowed on planes

The Commission has adopted a decision - not yet published in the Official Journal but available here - allowing the use of mobile phones on board aircraft during flights.

So, the relative peace and quiet of air travel comes to an end. Europeans tend to eat, drink, walk and drive with mobile phones grafted on their ears. Now the can fly with their beloved phones too.

The new decision sets out harmonized technical parameters of onboard equipment for in-flight mobile phone use throughout the EU that will allow member States to recognize each other's licenses for mobile communications on board aircraft without risk to mobile networks on the ground.

Here's a press release and a series of frequently asked questions on the matter.

The Commission also issued a Recommendation for a harmonized approach on licensing which will promote mutual recognition between national authorizations for mobile communications services on aircraft.

Here's an article by the BBC explaining how the system will work.

The case for noise canceling earphones has never been stronger!

Review of Regulatory Agencies

Those interested in administrative law would do well to look at the Commission's review of regulatory agencies entitled "European Agencies - The Way Forward" (COM(2008) 135 final). That document is accompanied by another one, referenced SEC(2008) 323, but the Commission true to its secretive form has not made that document public!

The purpose of the document which is in fact a Communication to the European Parliament and the Court is to review the current agencies, how they are structured and how they work. It seeks to lay the ground work for a common framework for regulatory agencies but the Commission announces that it will withdraw its proposal for an interinstitutional agreement on the operating framework for regulatory agencies (COM (2005) 59).

It concentrates on regulatory agencies of which there are now 29. A regulatory agency is a body governed by EU law, distinct from the EU Institutions (Council, Parliament, Commission, etc.) with its own legal personality. It is set up by a directive or regulation in order to accomplish a very specific technical, scientific or managerial task. For a list of them, see here. The three CFSP agencies are listedhere. The Police and Judicial Cooperation in Criminal Matters agencies are listed here.

According to the Communication, regulatory agencies employ an incredible 3800 staff.

Executive agencies, on the other hand, are not covered by this Communication. They areorganizations entrusted with certain tasks relating to the management of one or more Community programs, are set up for a fixed period and must located in Brussels or Luxembourg. They are established in accordance with Council Regulation 58/2003. For a list, see here.

White Paper on Antitrust Damages Actions

The long awaited White Paper on Damages Actions for Breach of the EC antitrust rules has been made public.

As you probably know, it is almost impossible to get damages for breach of the antitrust rules in Europe. Instead, if you are a corporation, you go crying to the government for some state handout or protective regulation. For some time, the Commission has been looking into ways to improve the ways in which the tort system works in the member States.

The idea of the White Paper is to set out a certain number of policy choices so that they may be examined and discussed before an actual proposal is made. It deals with such matters as standing, discovery, costs, quantum of damages, limitation periods and such like. The White Paper itself is superficial and probably not very constructive.

Nevertheless, it invites comments, to be submitted to the Commission by July 15th, 2008.

Much more detailed and helpful is the Staff Working Paper which should be read also. Why the Commission wants to make life difficult by splitting the two documents is a mystery.

Also worth reading is the Impact Assessment Report. Here's an executive summary of the Impact Assessment Report.

The Commission prepared this brief press release, a series of "frequently asked questions" and a dumbed down "Citizen's Summary" (are we really held in such low esteem ?).

The White Paper draws on this study that had been prepared for the Commission and follows on from the 2005 Green Paper.

A "white paper" is a document "containing proposals for Community action in a specific area. In some cases they follow a Green Paper published to launch a consultation process at European level. When a White Paper is favourably received by the Council, it can lead to an action programme for the Union in the area concerned."

UPDATE: For a quick and interesting early comment on this White Paper, read this by Assimakis Komninos of White and Case.

Conflict of Laws and EU Law

Dash over to the Conflict of Laws blog.

There's a terrific guest editorial by Professor Horatia Muir-Watt on "Reshaping Private International Law in a Changing World". It contains many insights that a student of EU law would appreciate.

Just go over there and read the whole thing.

2007 Annual Reports from the Courts

Following on from the presentation of the statistics we noted here, the 2007 Annual Reports of the Court of Justice, the Court of First Instance and the Civil Service Tribunal are now available online at least in a provisional form here (for the Court of Justice), here (for the Court of First Instance) and here (for the Civil Service Tribunal).

Everyone with an interest in EU law should read them. They contain a survey of what each jurisdiction considers to be the major cases and other developments of the year.

And, for you students out there, read the surveys carefully because they are a fantastic revision aid when exams come up. The cases mentioned are the ones you will expected to know about ! There's an excellent summary of the Microsoft judgment, for example, here (scroll down a bit).

Also invaluable are the statistical annexes (here for the Court of Justice, here for the Court of First Instance and here for the Civil Service Tribunal).

For the 2006 Annual Reports, look here and for the 2005 Annual Reports, here.