The Making of Consumer Law and Policy in Europe 9781509944835, 9781509944866, 9781509944859

Table of contents :
Preface
Contents
About the Contributors
1. Cross (?) Fertilisation
I. Beyond the Borders of the Roman Limes
II. Consumer Law, Consumer Policy, and Reality
III. New Diagnoses, Unreliable Therapies, the Search for a Vaccine
PART I: THE MAKING OF CONSUMER LAW IN THE EU
2. The Origins of Consumer Law and Policy at EU Level
I. Institutionalisation of Consumer Protection
II. The First Consumer Protection Programme
III. Participation in the Law Making Process
IV. Economic Interests of Consumers
V. Concepts of Consumer Protection
VI. Other Issues
VII. Concluding Remarks
3. The Early Years of the European Consumer Organisation BEUC, 1962–1985
I. Introduction
II. Birth and Infancy (1962–68)
III. Childhood (1969–73)
IV. Adolescence (1974–77)
V. Early Adulthood (1978–82)
VI. Adulthood (1983–85 and Beyond)
4. The Intellectual Community of Consumer Law and Policy in the EU
I. Disclaimer – A Personal Note
II. The Establishment of the Intellectual Community
III. The Politics of Action
IV. The Way Ahead
PART II: THE MAKING OF NATIONAL CONSUMER LAW AND POLICY AND ITS INTERACTION WITH THE EU
5. German Consumer Law: Own Initiatives in the 1970s and Transposition of EU Directives Since the 1980s
I. Introduction
II. The 1950s and 1960s
III. The 1970s
IV. The 1980s and 1990s
V. Schuldrechtsmodernisierung 2002
VI. Transposition of Full Harmonising Directives
VII. The Leitbild Discussion
VIII. Own Initiatives and Missed Initiatives of the German Legislator
IX. Enforcement
X. Conclusion
6. The Making of Consumer Law and Policy in Italy
I. 'Consumer': The Construction of a Juridical Concept
II. Producer's Liability: From Fault to Strict Liability
III. Consumer Contracts and Unfair Terms
IV. The Consumer Code
V. The Antitrust Law
VI. ADR
VII. ADR in Action
VIII. Class Actions
IX. Current Discussion on the Notion of Consumer
X. The Rights of Associations of Consumers and Users
7. The Emergence of Nordic Consumer Law and a Nordic Consumer Law Community and Its Impact on Nordic Legal Unity
I. Introduction
II. The Nordic Legal Family and Consumer Law
III. A Nordic Consumer Law?
IV. National Politics and Nordic Consumer Law
V. The Legal Establishment and Consumer Law
VI. Consumer Law and the Decline of the Nordic Legal Community
VII. Conclusions: Lessons for Europe?
8. Consumer Law in Poland: Or There and Back Again
I. The (Non)Trivial Question
II. Consumer Law before 2001
III. Consumer Law and Policy before EU Accession
IV. European Revolution and European Delusion
V. Polish Consumer Law at a Crossroads
9. Ordoliberalism and Opportunism? The Making of Consumer Law in the UK
I. Introduction
II. 1951–1970
III. 1970–74: The 'Big Burst' – An Amuse-Bouche for Neo-liberalism?
IV. Consumer Credit Regulation
V. Analysis
Appendix
PART III: POST WAR HISTORY AND THE SOCIOLOGY OF CONSUMPTION
10. Consumer Imaginaries, Political Visions and the Ordering of Modern Society
I. Prologue
II. The Emergence of the Consumer as a Socio-Political Figure
III. The Weak Consumer
IV. The Liberated Consumer
V. The Sovereign Consumer
VI. The Efficient Consumer
VII. The Marketised Consumer
VIII. Epilogue
11. The Making of Consumer Law – A Sociological Critique
I. Disclaimer
II. Consumer Policy in the European Commission
III. The Intellectual Context in the European Economic Community
IV. Consumer Associations in the Making of European Consumer Law
V. Differences in National Approaches
VI. Final Thoughts
12. Looking Back to Look Forward: Spring 2021
I. The Shaky Concept of the Consumer
II. The Guiding Consumer Image
III. The Autonomy and Boundaries of Consumer Law
IV. Interaction between National ConsumerLaw and European Consumer Law and Policy
V. Actors of Consumer Law and Policy
Index

Citation preview

THE MAKING OF CONSUMER LAW AND POLICY IN EUROPE This book analyses the founding years of consumer law and consumer policy in Europe. It combines two dimensions: the making of national consumer law and the making of European consumer law, and how both are intertwined. The chapters on Germany, Italy, the Nordic countries and the United Kingdom serve to explain the economic and political background which led to different legal and policy approaches in the then old Member States from the 1960s onwards. The chapter on Poland adds a different layer, exploring how the domestic consumer law of a former socialist country was affected by joining the EU. The making of European consumer law started in the 1970s rather cautiously, but gradually the European Commission took an ever stronger position in promoting not only European consumer law but also in supporting the building of the European Consumer Organisation (BEUC), the umbrella organisation of the national consumer bodies. The book unites the early protagonists who were involved in the making of consumer law in Europe: Guido Alpa, Ludwig Krämer, Ewa Łętowska, Hans-W Micklitz, Klaus Tonner, Iain Ramsay, and Thomas Wilhelmsson, supported by the younger generation, Aneta Wiewiórowska-Domagalska, Mateusz Grochowski, and Koen Docter, who reconstruct the history of BEUC. Niklas Olsen and Thomas Roethe analyse the construction of this policy field from a historical and sociological perspective. This book offers a unique opportunity to understand a legal and political field, that of consumer law and policy, which plays a fundamental role in our contemporary societies.

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The Making of Consumer Law and Policy in Europe Edited by

Hans-W Micklitz

HART PUBLISHING Bloomsbury Publishing Plc Kemp House, Chawley Park, Cumnor Hill, Oxford, OX2 9PH, UK 1385 Broadway, New York, NY 10018, USA 29 Earlsfort Terrace, Dublin 2, Ireland HART PUBLISHING, the Hart/Stag logo, BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc First published in Great Britain 2021 Copyright © The editor and contributors severally 2021 The editor and contributors have asserted their right under the Copyright, Designs and Patents Act 1988 to be identified as Authors of this work. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. While every care has been taken to ensure the accuracy of this work, no responsibility for loss or damage occasioned to any person acting or refraining from action as a result of any statement in it can be accepted by the authors, editors or publishers. All UK Government legislation and other public sector information used in the work is Crown Copyright ©. All House of Lords and House of Commons information used in the work is Parliamentary Copyright ©. This information is reused under the terms of the Open Government Licence v3.0 (http://www.nationalarchives.gov.uk/doc/ open-government-licence/version/3) except where otherwise stated. All Eur-lex material used in the work is © European Union, http://eur-lex.europa.eu/, 1998–2021. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication data Names: Micklitz, Hans-W., editor. Title: The making of consumer law and policy in Europe / edited by Hans-W Micklitz. Description: Oxford ; New York : Hart, 2021.  |  Includes bibliographical references and index. Identifiers: LCCN 2021032699 (print)  |  LCCN 2021032700 (ebook)  |  ISBN 9781509944835 (hardback)  | ISBN 9781509944873 (paperback)  |  ISBN 9781509944859 (pdf)  |  ISBN 9781509944842 (Epub) Subjects: LCSH: Consumer protection—Law and legislation—Europe. Classification: LCC KJC6577 .M35 2021 (print)  |  LCC KJC6577 (ebook)  |  DDC 343.407/1—dc23 LC record available at https://lccn.loc.gov/2021032699 LC ebook record available at https://lccn.loc.gov/2021032700 ISBN: HB: 978-1-50994-483-5 ePDF: 978-1-50994-485-9 ePub: 978-1-50994-484-2 Typeset by Compuscript Ltd, Shannon To find out more about our authors and books visit www.hartpublishing.co.uk. Here you will find extracts, author information, details of forthcoming events and the option to sign up for our newsletters.

PREFACE In 2022, the famous Kennedy declaration will be exactly 60 years old. It is fair to say that consumer law and consumer policy has its own history, just like European labour law. Bob Hepple and Bruno Veneziani1 have broken down the history of labour law into two phases: the making and the transformation. So far there has been no book on the history of consumer law in the EU, but only an e-book on ‘The Fathers and the Mothers of Consumer Law’.2 Key intellectuals from the Member States and from the European Commission, be they at a university, in ministries or in consumer organisations, were asked to tell their own narrative of the founding years, the 1970s and the 1980s. How consumer policy emerged, how law became an instrument to implement new policy, what kind of objectives were pursued. The present book offers a fully-fledged analysis of the founding years of the making of consumer law and policy in the EU. It combines two dimensions, the making of consumer law in a selection of EU Member States, the making of consumer law in the EU and how the two are intertwined. Ewa Łętowska has written the introduction on cross (?) fertilisation. The remaining contributions are divided into three parts: in Part I Hans-W Micklitz examines the intellectual community of consumer lawyers, Ludwig Krämer points to the origins of European consumer law and policy, and Koen Doctor reconstructs the founding years of BEUC (Bureau Européen des Unions des Consommateurs), Part II unites a series of country reports on the making of consumer law in the Member States, Klaus Tonner on Germany, Guido Alpa on Italy, Thomas Wilhelmsson on the Nordic Countries, Aneta Wiewiórowska Domagalska and Mateusz Grochowski on Poland, Iain Ramsay on the United Kingdom. The third part looks into the history of consumption and consumer law. Niklas Olsen analyses consumer imaginaries, political visions and the ordering of modern society. Thomas Roethe concludes with a sociological critique of the foundational years in law making. I would like to thank the contributors, who are also my colleagues and friends, for their commitment and their patience, Sinead Molony for her enthusiasm about the

1 Bob Hepple (ed), The Making of Labour Law in Europe. A comparative Study of Nine Countries up to 1945 (London, Mansell Publishing, 1986) and Bob Hepple and Bruno Veneziani (eds), The Transformation of Labour Law in Europe. A Comparative Study of 15 Countries 1945–2004 (Oxford, Hart Publishing, 2009). 2 Hans-Wolfgang Micklitz, Ewoud Hondius, Thom van Mierlo and Thomas Roethe (eds), The Mothers and Fathers of Consumer Law and Policy in Europe, The Foundational Years 1950–1980 (Florence, European University Institute, 2019).

vi  Preface book project, Evgenia Ralli for her careful technical support, Christopher Goddard for bringing many contributions into decent English, always with a sense of humour. The Academy of Finland generously supported finalisation of the book through the Finland Distinguished Professor Programme. The Academy equally financed my research professorship at the University of Helsinki in 2019/2020, which allowed me to bring the project to a successful conclusion. Hans-W Micklitz Berlin/Helsinki Spring 2021

CONTENTS Preface���������������������������������������������������������������������������������������������������������������������������������������� v About the Contributors����������������������������������������������������������������������������������������������������������� xv 1. Cross (?) Fertilisation������������������������������������������������������������������������������������������������������1 Ewa Łętowska I. Beyond the Borders of the Roman Limes����������������������������������������������������������� 1 II. Consumer Law, Consumer Policy, and Reality�������������������������������������������������� 4 III. New Diagnoses, Unreliable Therapies, the Search for a Vaccine��������������������� 8 PART I THE MAKING OF CONSUMER LAW IN THE EU 2. The Origins of Consumer Law and Policy at EU Level�����������������������������������������������13 Ludwig Krämer I. II. III. IV. V. VI. VII.

Institutionalisation of Consumer Protection��������������������������������������������������� 13 The First Consumer Protection Programme��������������������������������������������������� 17 Participation in the Law Making Process��������������������������������������������������������� 19 Economic Interests of Consumers��������������������������������������������������������������������� 21 Concepts of Consumer Protection�������������������������������������������������������������������� 25 Other Issues���������������������������������������������������������������������������������������������������������� 27 Concluding Remarks������������������������������������������������������������������������������������������� 28

3. The Early Years of the European Consumer Organisation BEUC, 1962–1985����������31 Koen Docter I. Introduction��������������������������������������������������������������������������������������������������������� 31 II. Birth and Infancy (1962–68)������������������������������������������������������������������������������ 32 A. Organisation: The Establishment of BEUC��������������������������������������������� 32 B. Activities: The Contact Committee and Euro-Tests������������������������������� 34 III. Childhood (1969–73)������������������������������������������������������������������������������������������ 35 A. From Contact Committee to Consumer’s Consultative Committee��������������������������������������������������������������������������������������������������� 35 B. Organisation: Establishment of a Permanent Secretariat���������������������� 37

viii  Contents C. Defining Consumer Priorities�������������������������������������������������������������������� 39 D. The Consumer Protection Charter (1973) and First Consumer Programme (1975)�������������������������������������������������������������������������������������� 40 IV. Adolescence (1974–77)��������������������������������������������������������������������������������������� 43 A. Organisation: Expansion under Eirlys Roberts��������������������������������������� 43 B. Resistance to the Common Agricultural Policy�������������������������������������� 45 C. The Italian Corruption Scandal����������������������������������������������������������������� 47 D. European Consumer Law Group��������������������������������������������������������������� 50 V. Early Adulthood (1978–82)�������������������������������������������������������������������������������� 50 A. Organisation: Growth and Pessimism under Tony Venables���������������� 50 B. New Interests: Energy Policy and Disadvantaged Consumers�������������� 53 C. New Initiatives: Competition Cases and Dangerous Products Interpol���������������������������������������������������������������������������������������������������������� 55 D. The First Elections for the European Parliament (1979)������������������������ 56 E. The Growth Hormone Scandal������������������������������������������������������������������ 58 VI. Adulthood (1983–85 and Beyond)�������������������������������������������������������������������� 59 A. Renewed Optimism������������������������������������������������������������������������������������� 59 B. Twenty-Five Years of European Consumer Protection�������������������������� 61 4. The Intellectual Community of Consumer Law and Policy in the EU������������������������63 Hans-W Micklitz I. Disclaimer – A Personal Note���������������������������������������������������������������������������� 63 II. The Establishment of the Intellectual Community������������������������������������������ 64 A. The European Project on Consumer Protection Laws��������������������������� 65 B. The European Consumer Law Group������������������������������������������������������� 67 C. The Centre de Droit de la Consommation in Louvain-la-Neuve���������� 69 D. The Centre for European Legal Policy in Bremen����������������������������������� 70 E. The Consumer Law Centres in Brunel, Geneva, Leuven and Montpellier��������������������������������������������������������������������������������������������������� 72 F. The Consumer Law and Policy Journals��������������������������������������������������� 73 G. The EU, the OECD and the Council of Europe��������������������������������������� 74 H. The Integration through Law Project�������������������������������������������������������� 76 III. The Politics of Action������������������������������������������������������������������������������������������� 77 A. The Decline of the Welfare State and the Rise of European Consumer Policy����������������������������������������������������������������������������������������� 78 B. The European Commission – The Spider in the Net������������������������������ 81 C. The ECLG and the EU Organs������������������������������������������������������������������� 83 D. From Harmonisation through Law in 1975 to Stakeholder Dialogue in 1981������������������������������������������������������������������������������������������ 85 E. A Better and More Just Society through Consumer Law����������������������� 87 F. Access to Justice, Collective Interests and Public Interest Litigation������������������������������������������������������������������������������������������������������� 89 IV. The Way Ahead����������������������������������������������������������������������������������������������������� 92

Contents  ix PART II THE MAKING OF NATIONAL CONSUMER LAW AND POLICY AND ITS INTERACTION WITH THE EU 5. German Consumer Law: Own Initiatives in the 1970s and Transposition of EU Directives Since the 1980s����������������������������������������������������������������������������������95 Klaus Tonner I. Introduction�������������������������������������������������������������������������������������������������������� 95 A. Consumer Contract Law��������������������������������������������������������������������������� 95 B. Enforcement����������������������������������������������������������������������������������������������� 97 II. The 1950s and 1960s������������������������������������������������������������������������������������������� 98 A. Competition as the Consumer’s Best Friend������������������������������������������ 98 B. Control of Standard Terms����������������������������������������������������������������������� 99 C. Paternalistic Approach in Unfair Commercial Practices Law�����������100 D. The Role of Consumer Centres��������������������������������������������������������������102 E. The Stiftung Warentest�����������������������������������������������������������������������������102 III. The 1970s�����������������������������������������������������������������������������������������������������������103 A. The Influence of the Kennedy Message�������������������������������������������������103 B. German Consumer Protection Policy as a Result of Welfare State Policy������������������������������������������������������������������������������������������������105 C. Sonderprivatrechte������������������������������������������������������������������������������������106 D. Standard Contract Terms Act 1976�������������������������������������������������������107 E. Package Travel Law����������������������������������������������������������������������������������108 F. Failure of UWG Reform��������������������������������������������������������������������������109 G. Summary���������������������������������������������������������������������������������������������������109 IV. The 1980s and 1990s�����������������������������������������������������������������������������������������109 A. Coexistence of National and European Initiatives in the 1980s��������109 B. After 1987: Saving as Much as Possible from National Law��������������111 C. A Special Issue: Consumer Credit Contracts���������������������������������������113 D. Summary���������������������������������������������������������������������������������������������������114 V. Schuldrechtsmodernisierung 2002�������������������������������������������������������������������114 VI. Transposition of Full Harmonising Directives���������������������������������������������117 A. Consumer Contract Law�������������������������������������������������������������������������117 B. Unfair Commercial Practices Law���������������������������������������������������������120 C. E-Commerce��������������������������������������������������������������������������������������������122 VII. The Leitbild Discussion������������������������������������������������������������������������������������123 VIII. Own Initiatives and Missed Initiatives of the German Legislator��������������125 A. Own Initiatives�����������������������������������������������������������������������������������������125 B. Missed Initiatives�������������������������������������������������������������������������������������125 IX. Enforcement������������������������������������������������������������������������������������������������������127 A. Enforcement of Individual Rights���������������������������������������������������������127 B. Collective Enforcement���������������������������������������������������������������������������129 C. Public Enforcement���������������������������������������������������������������������������������131 D. Summary���������������������������������������������������������������������������������������������������132

x  Contents X. Conclusion���������������������������������������������������������������������������������������������������������133 A. Strong Relevance of Case Law����������������������������������������������������������������133 B. No Separate Consumer Law�������������������������������������������������������������������134 C. Restriction of Sanctions to Private Law Instruments��������������������������134 D. No Consumer Protection Beyond the EU Standard���������������������������135 6. The Making of Consumer Law and Policy in Italy����������������������������������������������������137 Guido Alpa I. ‘Consumer’: The Construction of a Juridical Concept��������������������������������137 II. Producer’s Liability: From Fault to Strict Liability���������������������������������������141 III. Consumer Contracts and Unfair Terms.�������������������������������������������������������146 IV. The Consumer Code����������������������������������������������������������������������������������������151 V. The Antitrust Law���������������������������������������������������������������������������������������������152 VI. ADR��������������������������������������������������������������������������������������������������������������������154 VII. ADR in Action��������������������������������������������������������������������������������������������������158 VIII. Class Actions�����������������������������������������������������������������������������������������������������160 IX. Current Discussion on the Notion of Consumer�����������������������������������������165 X. The Rights of Associations of Consumers and Users�����������������������������������168 7. The Emergence of Nordic Consumer Law and a Nordic Consumer Law Community and Its Impact on Nordic Legal Unity�������������������������������������������171 Thomas Wilhelmsson I. Introduction������������������������������������������������������������������������������������������������������171 II. The Nordic Legal Family and Consumer Law����������������������������������������������172 III. A Nordic Consumer Law?�������������������������������������������������������������������������������175 IV. National Politics and Nordic Consumer Law�����������������������������������������������179 V. The Legal Establishment and Consumer Law�����������������������������������������������183 VI. Consumer Law and the Decline of the Nordic Legal Community������������186 VII. Conclusions: Lessons for Europe?������������������������������������������������������������������190 8. Consumer Law in Poland: Or There and Back Again�����������������������������������������������193 Aneta Wiewiórowska-Domagalska and Mateusz Grochowski I. The (Non)Trivial Question������������������������������������������������������������������������������193 II. Consumer Law before 2001�����������������������������������������������������������������������������194 A. The Mass Contract Origins of Consumer Instruments: The Inter-War Period�������������������������������������������������������������������������������194 B. Consumer Market under the Socialist Regime – The Ideology���������197 C. The Reality of the Socialist Consumer Market������������������������������������199 D. Legal Framework of the Consumer Market: Between Individualism and the Collectivist Approach��������������������������������������201 E. The Initial Impulse – Doctrine���������������������������������������������������������������205 F. Consumer Protection from the Inside Out – The Role of Case-Law����������������������������������������������������������������������������������������������209

Contents  xi III. Consumer Law and Policy before EU Accession��������������������������������������������212 A. Reframing the Landscape: The Libertarian Turn�����������������������������������212 B. Legislative Reforms and Implementation of European Law����������������215 C. Frictions in Transposition of EU Rules (Or: Even the Most Difficult Transposition is Less Difficult than Proper Implementation)����������������������������������������������������������������������������������������218 IV. European Revolution and European Delusion�����������������������������������������������221 A. Inhibitors and Barriers������������������������������������������������������������������������������221 B. The Fall and Rise of Rule of Law for Consumers�����������������������������������222 C. Case-Law: An Uneasy Dialogue���������������������������������������������������������������224 D. Unfair Contract Terms as an Example����������������������������������������������������227 E. ‘Weaker Party’ Constricting����������������������������������������������������������������������231 V. Polish Consumer Law at a Crossroads�������������������������������������������������������������231 9. Ordoliberalism and Opportunism? The Making of Consumer Law in the UK���������������������������������������������������������������������������������������������������������������������235 Iain Ramsay I. Introduction��������������������������������������������������������������������������������������������������������235 A. Ideas�������������������������������������������������������������������������������������������������������������238 B. Actors�����������������������������������������������������������������������������������������������������������239 C. Institutional Frameworks��������������������������������������������������������������������������239 II. 1951–1970������������������������������������������������������������������������������������������������������������240 A. Molony and its Progeny�����������������������������������������������������������������������������241 B. The Emergence of Advertising ‘Self-regulation’�������������������������������������244 C. The Limits of the English Courts and Law Reform: Exemption Clauses���������������������������������������������������������������������������������������������������������247 D. The Law Commissions������������������������������������������������������������������������������249 E. Legitimation of the Consumers Association as a Representative of the Consumer Interest and the Role of the Private Members Bill Procedure���������������������������������������������������������������������������������������������250 F. The Rediscovery of Poverty����������������������������������������������������������������������252 III. 1970–74: The ‘Big Burst’ – An Amuse-Bouche for Neo-liberalism?�������������253 A. The Fair Trading Act 1973 and the Director General of Fair Trading��������������������������������������������������������������������������������������������254 B. Protection for the ‘Inarticulate and Disadvantaged’: The National Consumer Council�������������������������������������������������������������257 IV. Consumer Credit Regulation����������������������������������������������������������������������������259 A. Establishing the Post War Ground Rules of Consumer Lending��������259 B. The Crowther Committee and the Consumer Credit Act 1974: Legitimating Consumer Credit����������������������������������������������������������������262 C. Unleashing Household Credit������������������������������������������������������������������267 V. Analysis����������������������������������������������������������������������������������������������������������������269 Appendix������������������������������������������������������������������������������������������������������������������������271

xii  Contents PART III POST WAR HISTORY AND THE SOCIOLOGY OF CONSUMPTION 10. Consumer Imaginaries, Political Visions and the Ordering of Modern Society�������277 Niklas Olsen I. Prologue�������������������������������������������������������������������������������������������������������������277 II. The Emergence of the Consumer as a Socio-Political Figure���������������������278 III. The Weak Consumer����������������������������������������������������������������������������������������284 IV. The Liberated Consumer���������������������������������������������������������������������������������287 V. The Sovereign Consumer��������������������������������������������������������������������������������290 VI. The Efficient Consumer�����������������������������������������������������������������������������������294 VII. The Marketised Consumer������������������������������������������������������������������������������298 VIII. Epilogue�������������������������������������������������������������������������������������������������������������302 11. The Making of Consumer Law – A Sociological Critique�����������������������������������������305 Thomas Roethe I. Disclaimer����������������������������������������������������������������������������������������������������������305 II. Consumer Policy in the European Commission������������������������������������������305 A. The Institutional Anchoring of Consumer Policy within the European Commission���������������������������������������������������������������������306 B. The Making of the EU Programme on Consumer Policy������������������312 III. The Intellectual Context in the European Economic Community������������317 A. The European Consumer Law Group���������������������������������������������������318 B. The Self-Understanding of the Community�����������������������������������������319 C. The Role of the Welfare State������������������������������������������������������������������321 D. Merging Theory and Practice�����������������������������������������������������������������322 E. Law as a Tool for Social Change������������������������������������������������������������324 F. Legal Entrepreneurship���������������������������������������������������������������������������326 G. The ‘New’ Law of Consumer Protection�����������������������������������������������328 IV. Consumer Associations in the Making of European Consumer Law��������������������������������������������������������������������������������������������������330 A. Organisation and Political Necessity�����������������������������������������������������330 B. Differences between Consumer Organisations������������������������������������332 C. The EU Action Programme and the Consumer Organisations���������336 V. Differences in National Approaches��������������������������������������������������������������336 A. The Nordic ‘Advanced’ Position�������������������������������������������������������������337 B. Kreisky: Exploitation through the Market��������������������������������������������337 C. Intellectuals as Spearheads of Legislative Action���������������������������������338 D. The Communist Legacy��������������������������������������������������������������������������339 E. Legislature and Judiciary – Who Takes the Lead?�������������������������������340 F. French and English Pragmatism������������������������������������������������������������341 VI. Final Thoughts��������������������������������������������������������������������������������������������������342

Contents  xiii 12. Looking Back to Look Forward: Spring 2021�������������������������������������������������������������345 Hans-W Micklitz/Thomas Wilhelmsson I. II. III. IV.

The Shaky Concept of the Consumer���������������������������������������������������������������345 The Guiding Consumer Image��������������������������������������������������������������������������346 The Autonomy and Boundaries of Consumer Law����������������������������������������347 Interaction between National Consumer Law and European Consumer Law and Policy���������������������������������������������������������������������������������349 V. Actors of Consumer Law and Policy����������������������������������������������������������������350 Index���������������������������������������������������������������������������������������������������������������������������������������351

xiv

ABOUT THE CONTRIBUTORS Guido Alpa Emeritus of Civil Law Sapienza Rome University, President Emeritus of the Italian Bar Council. Koen Docter PhD from the European University Institute (2018), Research Associate at the Department of Law of the EUI (2018–19), Research Advisor at the Province of Overijssel, the Netherlands (2019-present). Mateusz Grochowski Senior Research Fellow at the Max Planck Institute for Comparative and International Private Law, Assistant Professor at the Institute of Law Studies of the Polish Academy of Sciences, Affiliated Fellow at the Information Society Project, Yale Law School. Ludwig Krämer Judge at Landgericht Kiel (Germany), Official at the European Commission (Consumer and Environment Protection), Retired from both functions. Ewa Łętowska Professor of Law, Dr h c mult, Member of the Polish Academy of Sciences, Member of the Polish Academy of Arts and Sciences, The first Ombudsman (1988–1992), Judge of the Supreme Administrative Court (1999–2002) and the Constitutional Tribunal (2002–2011). Hans-Wolfgang Micklitz Professor of Economic Law at the Robert Schuman Centre for Advanced Legal Studies, European University Institute and Finland Distinguished Professor, University of Helsinki. Niklas Olsen Associate Professor of History, D.Phil, The Saxo Institute, University of Copenhagen. Iain Ramsay Emeritus Professor of Law, Kent Law School, University of Kent, Canterbury, UK. Thomas Roethe Former part-time Professor at the European University Institute. Klaus Tonner Professor of Private Law and European Law at the University of Rostock (1994–2012), Judge at the Oberlandesgericht (Higher Regional Court) Rostock (2006–2012).

xvi  About the Contributors Aneta Wiewiórowska-Domagalska PhD, Senior Lecturer ESLI, Osnabrueck University, Co-President of the Consumer Forum established by Polish Ombudsman. Thomas Wilhelmsson Professor of Civil and Commercial Law, Rector and Chancellor Emeritus, University of Helsinki, Dr h c mult.

1 Cross (?) Fertilisation EWA ŁĘTOWSKA

I.  Beyond the Borders of the Roman Limes The poem ‘Voices’ by Wisława Szymborska, a Polish Nobel Prizewinner, speaks about the difficulty the Romans had in spreading Latin civilisation.1 The Romans act among ‘irksome little nations’, with their ‘reprehensible customs, backward laws and ineffectual gods’. The Romans seem tired of their own endless mission to civilise, which they carry out, but not without complacent hypocrisy: ‘The Fidenates’ stubbornness. / The Feliscans’ ill will. / The Labicanians and Pelignians, offensively aloof. / They drive us mildmannered sorts to sterner measures. / With every new mountain we cross ….’ The Romans do not intend to pay attention to ‘irksome little nations’. They offer an orderly world of a well-conceived law that (as history teaches us) passes the test of time victoriously. They bring along tried and tested customs and effective policies. The nucleus of Europe is the area of the Roman limes, while the rest of Europe has always lingered on the periphery, just not quite cut off by a kind of Chinese wall. The civilizational and intellectual effulgence of Europe has always included areas outside those limes. As we know, the Romans themselves succumbed imperceptibly to the influence of the peoples who formed their empire, as the process of Hellenisation proves, for example. The Romans’ faith in their own elitism was therefore exaggerated. Perhaps all these Sabines, Tarquinians, Volscians, Latins and others did not pass away without any trace. A form of cross (?) fertilisation maybe. This volume commemorates 50 years of consumer law and consumer policy. In 2022 the famous Kennedy declaration of 15 March 1962 will be exactly 60 years old. The ‘Special Message to the Congress on Protecting the Consumer Interest’2 did not go unnoticed even in Central Europe, which at the time was neither part of a united Europe nor adhered to the market economy concept. My own contact with the idea of consumer protection dates back to 1977. Characteristically, it took place through German writing, known and appreciated on the periphery of Europe at the time.3 In Central Europe, 1 Wisława Szymborska, ‘Voices’ in Wisława Szymborska (ed), Poems New and Collected 1957–1977, trans from Polish by Stanislaw Barańczak and Clare Cavanagh (Orlando, Harcourt Inc., 2000) 116–117. 2 John F Kennedy, ‘Special Message to the Congress on Protecting the Consumer Interest – March 15, 1962’ (1962) Public Papers of the Presidents of the United States 235. 3 Ewa Łętowska, ‘Review of E. von Hippel, Verbraucherschutz (Tübingen, 1974)’ (1997) 8–9 Państwo  i Prawo (English trans: State and Law) 229, 229–231; Ewa Łętowska, ‘Review of E. von Hippel, Der Schutz

2  Ewa Łętowska the emergence of the idea of consumer protection preceded the turn to EU law by a quarter of a century. In the 1970s and 1980s, jurisprudence and legal writing (prawoznawstwo i piśmiennictwo naukowe) inspired by European consumer law played a major role in terms of ensuring convergence and fertilising new ideas. It prepared the foundation for introducing changes to the law when EU accession appeared on the horizon.4 Another thing is that this convergence of legal culture was rather elitist; it concerned academic circles rather than the judiciary. Consumer protection in legal debate is often reduced to a description or analysis of many fragmentary technical or dogmatic legal solutions. The fact that a more general axiological perspective5 is not adopted impoverishes the debate. To give a wider perspective, in terms of consumer protection, three attitudes (‘narratives’) can be ­identified: (a) liberal, (b) economic, and (c) democratic. (a) The liberal and neoliberal narrative sees consumer protection as an undesirable, novel deviation from the formally recognised freedom of contract. It unjustifiably accuses the idea of consumer protection of destroying freedoms. Restrictions on contractual freedom in the interests of variously defined ‘weaker parties’ constitute an inherent feature of private law. It is enough to point out, for example, protection of children, the disabled, and, during certain historical periods, also women who were portrayed as intellectually weaker. This has resulted in the introduction of special rules regarding representation in legal transactions, for establishing defects in declarations of intent, and creating form requirements in contract law. Never and nowhere was freedom of contract an absolute concept. Demands to introduce ‘ein Tropfen sozialistisches Öl’ into private law mechanisms already appeared back during work on civil law codification in Germany.6 (b) The economic narrative of consumer protection, which dominated the initial period of European integration, sees it as a factor of economic and market revival. Here, consumer protection is secondary to competition protection. It is merely a means to an end, namely, protecting the consumer as the end user, for whom market production as a whole is intended. (c) The democratic narrative of consumer protection refers to the mechanism of ensuring equal opportunities. Civil law, freedom of contract or even a contract as such are thoroughly democratic instruments. They enable entities, treated by law al pari, to exchange goods and services, in a way determined by their intentions and freedoms. The seemingly democratic and conciliatory instruments of agreements and negotiations, as well as participation in trade, in fact constitute excellent and desirable instruments of freedom, as long as the strength and determination of both parties during negotiations are more or less equal. ‘To be able’, ‘to know how’ and ‘to want’ must exist in the right proportion, not howled

des Schwacheren (Tübingen, 1982)’ (1984) 1 Ruch Prawniczy Ekonomiczny i Socjologiczny (English trans: Economic and Sociological Legal Movement) 327, 327–328. 4 See Aneta Wiewiórowska-Domagalska and Mateusz Grochowski, ‘Consumer law in Poland: or There and Back Again’ ch 8 in this volume. 5 A system of values underpinning accepted solutions. 6 Otto Gierke, Die soziale Aufgabe des Privatrechts: Vortrag gehalten am 5. April 1889 in der juristischen Gesellschaft zu Wien, 1889th edn (Berlin, Springer, 1889) 10.

Cross (?) Fertilisation  3 down by the other party. If this condition is not met, the contract serves only the stronger party. In contemporary conditions, the parties generally do not have equal bargaining power. Bargaining power depends on the market position of the group to which the creditor or the debtor in spe belong. This is shaped by many economic and structural factors (including information culture, knowledge of economic and market relations, or the availability of an alternative possibility to fulfil the purpose of the contract in a competitive market, with another party). A contract by itself does not ensure democratic relations between the parties and their equal self-­determination. With no equal bargaining power, when parity of knowledge, intention, competence and determination is shattered, the contract does not serve freedom so much as the party that is economically and socially stronger and who knows more. The law, therefore, must ensure equal opportunities from the start, at the moment of concluding a contract. This is how consumer law was created and this is how consumer policies work. In Western Europe, the beginning of integration and the early stages of consumer law and consumer policy (1970s) were marked by a ‘productivist’ attitude. The single market provided new opportunities. Potential new buyers should not have been discouraged by cross-border difficulties or obstacles relating to choice of applicable law. Crippling consumers in the market would inhibit demand, which would create an obstacle to development of the common market and would lead to restriction of competition. This ‘productivist’ attitude of the initial consumer protection programmes and strategies has evolved over time. Consumer law has become autonomous, elevated to the status of one of the autonomous Community policies. At the same time, while ­valuing the consumer approach, consumer law itself became pathological. It was no longer so much about consumer protection as about supporting consumption as the economic flywheel. At that time, Central Europe overestimated the importance of state enterprise interests. That led not only to underappreciation of consumer interests, but also undermined individual autonomy, where the subjectivity of the individual was generally disregarded and its position impaired. This is why Kennedy’s concept, enshrined in the Consumer Bill of Rights, where the protection of consumer interests is constructed in terms that are close to the notion of constitutional ‘rights’, fell on fertile ground. It assumes the perspective of the status of citizen: a member of an under-represented social group. Thus, behind the concept of the consumer and consumer protection on which the Consumer Bill of Rights is based lies not protectionism, but participation in social and public matters by citizens who at the same time – each one and always – act as consumers. An active, participatory, deliberative democracy, ensuring the active participation of consumers in the decision-making that concerns them, stands behind the concept of consumer protection, in Kennedy’s view. This is a reference to the Aristotelian concept of an active member of society (Nicomachean Ethics). The consumer is meant to be a dramatis persona, an actor, a participant, rather than a passive spectator when facing market forces. Citizens perform many social roles in society; ‘being a consumer’ is one of them.7 European consumer protection, even though it refers to the American 7 Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups (Cambridge, Mass, Harvard University Press, 1971).

4  Ewa Łętowska concept, generally defines the problem within private law. It introduces additional information obligations for professionals, and interferes with the distribution of contractual risks. In the European literature, there has been a visible reluctance to see consumer protection from a ‘constitutional’ perspective. It seemed to have an excess of pathos and artificial theatrics.8 This reluctance could be understood in the European countries of the ‘old democracies’. They had a developed constitutionalism, and the status of the ­individual participating in social life was not questioned. It was different in Central Europe, however. Here, the holistic axiology of private law gave priority to the interests of state-owned enterprises, at the expense of the undervalued interest of ­individual consumers. Such an approach resulted from disregard for individual autonomy and the subjectivity of the individual in the public sphere, too. Consequently, in Central Europe, the idea of consumer protection not only played the role of Speerspitze for the development of private law,9 but also served to strengthen the democratic status of the individual who acts autonomously and has the right to make decisions in one of their most important social roles.

II.  Consumer Law, Consumer Policy, and Reality Reading the text of legal acts does not tell us much about the market situations in which consumers function, about the real risks that consumers face, or about the level and possibilities of protecting consumer interests. The wording of the law only provides a general framework for the content of contracts. Private law often uses ius dispositivum norms. By concluding a contract and deciding on its content, the parties can effectively exclude the application of such norms in concreto. Private law, therefore, frequently takes a subsidiary position to the contract. Hence, knowing the letter of the law does not provide us with an understanding of market reality. And without knowing the market reality, little can be grasped about consumer law and consumer policy. In order to know and understand consumer law and policy, one must know and understand the environment in which the law operates. This environment consists of market reality (knowing the content of contracts and practices that the parties employ in contracts) and knowing the mentality of the legal actors and the way they use their bargaining power. Market reality extends not only to consumers and their professional contractors, but also to judges, who are able (or not) to properly exploit the instruments they potentially have at their disposal. Therefore, a thorough understanding of reality is required. Empirical research of private law operations, contracts, or commercial law faces considerable difficulties. The facts (‘how it really is’) are difficult to establish in terms of content, because it is impossible to examine millions of real transactions. Private law creates a kind of ‘self-service’ mechanism. Not every aspect that determines the

8 Ulf Bernitz, ‘Schwedisches Verbraucherschutzrecht’ (1976) 40 Rabels Zeitschrift für ausländisches und internationales Privatrecht 593, 593ff. 9 Hans-Wolfgang Micklitz, ‘Ein einheitliches Kaufrecht für Verbraucher in der EG?’ (1997) 8 Europäische Zeitschrift für Wirtschafrsrecht 229, 236.

Cross (?) Fertilisation  5 content of a specific contract is expressis verbis regulated in the law. Parties conclude a contract themselves, negotiate and draw up the content of the contract largely by themselves, and then – without external intervention – are supposed to execute it themselves. The assistance of the state authorities (including the courts) essentially has a subsidiary character. As a result, a normally functioning legal relationship is created, is performed and expires without the intervention of the court, or any official body to record the contracts as such and their performance. Therefore, the belief that it is possible to examine practice by referring only to judicial decisions is incorrect. Case law is always fragmentary and therefore distorted. For the same reasons, court statistics fail as a source of information. The former use camouflage and fake labels here (doe more see the next point). The latter must first of all know that their situation is a justiciable problem that could be solved if they were presented to a competent lawyer and/or a competent court in due time.10 Research tools such as interviews and questionnaires addressed to p ­ rofessionals and consumers also fail. Interviews or questionnaires will not be able to detect phenomena that, as a rule, are supposed to remain hidden. As a rule, professionals use camouflage and false labels. The first argument here, of course, concerns ‘trade secrets’. However, it is only seemingly about the fear of disclosing business secrets to the competition. There are other, more important reasons. It has long been known to economic historians that profit derives not so much from implementing the rules of a competitive economy as from bending and circumventing them. Private law (especially contract law), contrary to what it itself declares and what we expect from it, can be used pathologically and instrumentally in the service of profit, politics, or entertainment, in the selfish interest of those who can use it cunningly. Cleverness, ingenuity, and the capital at one’s disposal create a situation where the legal instruments used by traders become in themselves a kind of ‘capital’ for those who know how to wield them. The boundaries of law are skilfully experimented with, with the participation of well-prepared professionals. They are interpretatively exploited to the limits of the patience and intellectual capacity of judges. In this way, the law itself can become an instrument of legal harassment, used against the weaker players in the market game. Since ensuring the ‘benevolence of the state’ is necessary for the success of the game, it is also necessary to maintain the appearance of using the law in a reliable manner. The law (or its institutions) thus becomes corrupted and, most unfortunately, this happens in a process that remains invisible to lawyers. The law that academics deal with and teach is not designed to inflict harm on anyone. Business, however, uses camouflage techniques to disguise the process and its effects. Business participants in the market are normally deeply reluctant to disclose ‘how things really are’ and maintain – often by using false labels – that their behaviour falls into the categories of ‘how it should be’. This camouflage technique is also applied against researchers that deal with empirical market behaviours. The reluctance to admit ‘how it really is’ stems from a mundane caution: not to get caught. Business constantly tests the boundaries of the law, pushing them if it can afford to.

10 Jan Winczorek, Dostęp do prawa: Ujęcie socjologiczne (English trans: Access to the Law: Sociological Approach) (Warszawa, Wydawnictwo Naukowe Scholar, 2019) 127. The author considers the problem in the perspective of the paradigm path to justice.

6  Ewa Łętowska This happens when the courts act too slowly to offer real help, when access to justice is too expensive, or when the courts are too formalistic, making them unable or unwilling to notice the camouflage and instead concentrating on the false label. Constructing a useful research tool that would be capable of penetrating the screen of camouflage requires an insider’s knowledge of law (which is not available to sociologists of law). This knowledge is indispensable for formulating a proper research hypothesis and the tools to verify it, if only to see that the problem, for example, is created by a sophisticated juxtaposition of the right sequence of otherwise acceptable instruments of law and an effective dissemination of fake news relating to such things as the importance of specific provisions of EU law or judgments of the Court of Justice of the European Union that protect consumers. I will present two examples to illustrate this mechanism. The first: a ­sociologist of my acquaintance has undertaken research into the market of small consumer loans. She wanted to establish how such loan contracts function, and how effective legal protection in this area is. Acting in the best of faith, she conducted research based on questionnaires, addressed to both borrowers (consumers) and lenders (professional loan companies). The questionnaires revealed that consumers have absolutely no knowledge about any of the existing instruments of legal protection. Consumers do not pursue claims in courts because they are unaware that such a possibility is open to them. To pursue a claim in court is also too complicated for them. As a result, they remain outside any legal protection. In the lending companies, the questionnaire was addressed to legal advisors providing legal services to the lending companies. The legal advisors presented comprehensive textbook-type information, though no information was provided regarding existing (albeit scant) judicial practice. Protective EU legislation, as well as the extensive case-law of the CJEU, was completely omitted in their answers. Nothing was said about tricks, or unfair contract terms and abusive practices used by professionals. The sociologist who carried out the research obtained a picture representing not reality, but an artefact created by the legal services of the loan companies for the purposes of the research. It was a conscious, not disinterested camouflage of their own practice. Fortunately for the reliability of the research, the sociologist turned to independent lawyers who supplemented the picture of reality she had been painted with a case law analysis and information about CJEU judgments. Unfortunately, lack of data on how loan companies really operate could not be satisfactorily filled in. In the latter respect, only fragmentary data were obtained – from the media and consumer complaints. The barrier of the professionals’ silence and their camouflage turned out to be impenetrable. And yet ‘if we measure the wrong things, we will act wrong. And if we don’t measure something, we don’t pay attention to it and act as if the problem doesn’t exist at all’.11

11 Joseph E Stiglitz, Jean-Paul Fitoussi and Martine Durand, Poza PKB: Mierzmy To Co Ma Znaczenie Dla Rozwoju Społeczno Gospodarczego (Paris, OECD Publishing; Warsaw, Polish Economic Society, 2019) (English trans: Joseph E Stiglitz, Jean-Paul Fitoussi and Martine Durand, Beyond GDP: Measuring What Counts for Economic and Social Performance (Paris, OECD Publishing, 2018). All the more so because ‘effective articulation of one’s rights by law is not an obvious and understandable activity for people’ (Winczorek, Dostęp do prawa (n 10) 127).

Cross (?) Fertilisation  7 The second example refers to the 2010s, when, especially in the poorer countries of the European Union, consumer foreign currency mortgage loans became highly popular. However, currency appreciation (most often CHF), combined with unfavourable credit indexation clauses, meant that these loans very often turned out to be ruinous for consumers. CJEU case law (on the basis of Directive 93/13) conducive for consumers developed many sophisticated instruments of protection.12 At the same time, however, banks began a strong and sometimes rather brutal lobbying campaign. This was addressed primarily at the courts and sought to promote an interpretation of national law that would disregard or distort the interpretation of Directive 93/13. In this ‘war of interpretations’, lawyers (advisors) representing the banks sought to influence mainstream interpretation. As a result, the courts were unable to make use of the consumer-friendly case-law of the CJEU. This phenomenon in practice, however, is only visible to an exceptionally attentive external observer. Unfortunately, this is underestimated by academic lawyers, who focus on observation and analysis of legal texts, which makes it impossible to see how effective the standard of their application is. Integration of the countries of Central Europe with the EU has also involved introducing consumer law and consumer policies to those countries. However, there was no time to make gradual adjustments and reflect on the consequences of certain legislative and systematic changes – instead it was rather a case of shock therapy. The sudden, one-off change in law was not followed by a change in legal culture and the mentality of lawyers. Consumers and judges were thrown in at the deep end. Traders were the fastest to learn, but, unfortunately, they learned how to take advantage of market opportunities for their own benefit, profit, and convenience. New and previously unknown practices of aggressive client acquisition by traders emerged in the market. Prior to EU accession, the law and the courts tried to ensure that the consumer would be able to ‘enter’ into a contract, and to receive its in natura performance. This was typical of a situation where money was chasing goods, and producers could always count on demand for their goods (even of poor quality) in a ‘hungry’ market.13 Judges were accustomed to such a market and to this specific type of threat. The judges themselves were consumers and were also accustomed to asymmetrical treatment by state-owned enterprises, which were granted privileges by law. This situation did not, therefore, raise objections when, as judges, they played a different social role as consumers. They were

12 The Directive as a whole is a necessary measure to achieve the tasks entrusted to the EU, and in particular to improve the standard of living and quality of life throughout the EU (Case C-168/05 Elisa María Mostaza Claro v Centro Móvil Milenium SL [2006] ECR I-10421, paras 26, 37; Case C-243/08 Budaörsi Városi Bíróság (Hungary)) – Pannon GSM Zrt v Erzsébet Sustikné Győrfi [2009] ECR I-04713, para 26; Case C-618/10 Banco Español de Crédito, SA v Joaquín Calderón Camino [2012], para 67). In order to ensure the protection intended by the Directive, the inequality between the consumer and the trader can only be c­ ounterbalanced by the positive intervention of a non-contractual party (Joined Cases C-240/98 to C 244/98 Océano Grupo Editorial SA v Roció Murciano Quintero (C-240/98) and Salvat Editores SA v José M. Sánchez Alcón Prades (C-241/98), José Luis Copano Badillo (C-242/98), Mohammed Berroane (C-243/98) and Emilio Viñas Feliú (C-244/98) [2000] ECR I-04941, para 27; Case C-40/08 Asturcom Telecomunicaciones SL v Cristina Rodríguez Nogueira [2009] ECR I-09579, paras 51, 31; Case C-470/12 Pohotovosť s.r.o. v Miroslav Vašuta [2014], para 39. 13 Bogudar Kordasiewicz, ‘Der Verbraucherschutz in der Übersgangsperiode zur Marktwirtschaft’ in Josef Aregger, Jerzy Poczobut and Mirosław Wyrzykowski, Rechtsfragen der Transformation in Polen: schweizerischpolnisches Kolloquium: Referate und Diskussionsbeiträge des schweizerisch-polnischen Kolloquiums von 11.-14. Mai 1994 in Warszawa (Wydawn. Baran i Suszczyński, 1995).

8  Ewa Łętowska not struck by this treatment; they did not actively seek remedies against something that they themselves agreed to as consumers, and that they believed other consumers should also agree to. Excessive formalism is characteristic of Central Europe’s courts. This is a factor that hindered acceptance of the new consumer axiology in these countries after their accession to the EU. It also makes it difficult, even today, to accept the effet utile required by EU law. The reason lies in the past. The legal culture of real socialism was dominated by ‘ultra-formalism’. In fact, initially after WWII it was only a camouflage that protected the courts from political pressure. In their search for a safe harbour, judges hid their own interpretative initiative behind a barrier of formalism, presenting themselves as passive implementers of the letter of the law.14 Unfortunately, what was initially useful lip service led over time to a reduction in interpretative efforts. Formal adherence to the narrowly understood letter of the law requires less effort and knowledge from the courts. It blunts the sensitivity of the judge, limits a willingness to ‘squeeze’ anything out of the wording of the law by interpretation. This approach made it difficult to accept consumer protection axiology, which is required by the effet utile of EU consumer law. One German professor, when writing about the development of European law, said that ‘in Germany, lawyers had 50 years to get used to the new way of thinking in the categories of consumer protection’.15 If so, is it any wonder that courts in Central Europe still have problems with consumer policy? Especially when faced with skilful and aggressive uses of law by traders. The law can be changed quite rapidly. Changes in legal culture and the mentality of lawyers, however, are slow, requiring time, effort, and systematic implementation. It is more difficult to notice and assess them when dealing only with legal texts. But it is easier to overlook them: both when these changes take place, as well as when there is no progress.

III.  New Diagnoses, Unreliable Therapies, the Search for a Vaccine The last 50 years of consumer law and consumer policy have not been a period of stability and calm. Environmental pollution, climate change, the overexploitation of energy sources and other natural resources have become palpably visible. For consumers, it has meant a deterioration in the quality of life, even in its existential dimension. As a reaction, the circular economy16 and the postulate of sustainability were put forward. The increasing use of consumer law as a driver of production and consumer aspirations

14 Zdeněk Kühn, The Judiciary in Central and Eastern Europe: Mechanical Jurisprudence in Transformation? (Leiden, Martinus Nijhoff Publishers, 2011). 15 Marcus Lutter, ‘Polskie ustawodawstwo w ochronie konsumentów oraz inwestorów rynku kapitałowego’ (English trans: ‘Polish legislation in the protection of consumers and capital market investors, text of a lecture given in Poland’) (2001) 1 Prawo Papierów Wartościowych (English trans: Securities Law) 5. 16 The circular economy principle may require a change in legal paradigms underlying constitutional and criminal law; cf BVerfG, 5.8.2020, 2 BvR 1985/19, point III(3)(e), on the theft of food thrown away by a supermarket.

Cross (?) Fertilisation  9 is slowly becoming a cause for concern. At the same time, in the functioning of consumer law itself, a gradual weakening of its own protective function has been noted. The problem refers not only to a lack of remedies for deterioration in the quality of life as a result of changing natural living conditions on our planet. Existing protective instruments have become inefficient due to market evolution and new market­ instruments – the effects of digitalisation on a global scale. It is enough to point out here digital exclusion, the position of global corporations (for example – GAFA, pharmaceutical companies, public service providers and the healthcare sector). It is no wonder that the increasingly evident inefficiencies in consumer law have been labelled as squaring the circle.17 The crisis culminated in the COVID-19 pandemic, with such drastic consequences for the current model of life and consumption. The scale of these consequences cannot be predicted at the moment – whether it be the health situation, the economy, or consumers’ habitus.18 One thing is known, though: ‘Se vogliamo che tutto rimanga com’è bisogna che tutto cambi’ in English: ‘If we want things to stay as they are, things will have to change’. But does that simply mean that everything stays the same as it was before? This is what Giuseppe Tomasi di Lampedusa assures us of in The Leopard. I hope, however, that here his prediction will not come to pass. Optimists believe that COVID-19 is a window of opportunity.19 If the evaluation criterion is to be the potential of the opportunity itself, this view could be endorsed. However, chance is not reality. It is true that the extraordinary measures and policies applied by states could limit traders’ egoism and desire to increase production. Likewise, the sanitary regimes that restrict offers could lead to a reduction in consumers’ excessive appetites. The reality, however, does not give much cause for optimism. The actions and measures taken to control the health and economic crises caused by COVID-19 are extraordinary; decisions are made on an ad hoc basis. The measures themselves are a source of chaos and cause deprivation to consumers, or even individuals as citizens. The fight against COVID 19 has strengthened authoritarian tendencies and the arbitrariness of governments, which as such is a constitutional problem. Observation of this practice (the truth is seen in Poland, a country that has not been doing remarkably well in this area)20 indicates that the situation of consumers in terms of healthcare, education and services by financial institutions has only deteriorated during the pandemic. And this has happened not only because of the pandemic itself, but also because of the side effects of the therapies used to fight it. The pandemic, moreover, has given traders an additional opportunity to introduce new restrictions and practices that are burdensome for consumers. The state, on the other hand, which has not always been busy with successful efforts to combat COVID-19, has failed to adequately protect its citizens and consumers. To make matters worse, the administration overly believes in 17 Hans-Wolfgang Micklitz, ‘Squaring the Circle? Reconciling Consumer Law and the Circular Economy’ (2019) 8 Journal of European Consumer and Market Law 229. 18 Grzegorz W Kołodko, ‘After the Calamity: Economics and Politics in the Post-Pandemic World’ (2020) 210 Polish Sociological Review 137, 137–155. 19 Hans-Wolfgang Micklitz, ‘The COVID-19 Threat: An Opportunity to Rethink the European Economic Constitution and European Private Law’ (2020) 11 European Journal of Risk Regulation 249. 20 Aneta Wiewiórowska-Domagalska, ‘When Pandemic Meets Politics: “Corona Contract Law” in Poland’ in Ewoud Hondius, Marta Santos Silva, Andrea Nicolussi, Pablo Salvador Coderch, Christiane Wendehorst and Fryderyk Zoll (eds), Coronavirus and the Law in Europe (Intersentia, 2020) 243ff.

10  Ewa Łętowska the advantages of ad hoc and personal decision-making, combined with centralisation. Citizen-consumers are largely left to their own devices: they have to deal with problems themselves. This, in turn, means a deficit of protection for the helpless, the poorer and the rejected. COVID-19 is a window of opportunity. However, occasio ­praeceps, experimentum periculosum, iudicium difficile; the second part of Hippocrates’ oath commands caution in diagnosis and therapy. What does the history of consumer law teach us? My first comment relates to its ­axiology. The origins of consumer law come from a shortage of ‘ein Tropfen ­sozialistisches Öl’, noticeable already in the nineteenth century. However, none of the consumer protection motivations have made consumer law immune to its pathologisation. None of the narratives have proved effective: neither economic (we protect the consumer because we want to protect competition of supply and demand), nor democratic (because whoever is informed and understands the information addressed to them is free to decide). Modern production and market conditions are not conducive to transparency. This applies both to the subject matter of the offer (quality or safety of the goods offered) and the way it is used (terms of contracts, legal consequences of consumer behaviour). The influence of traders on creating consumer law is clear. It is also easily noticeable how traders manipulate consumer awareness. The appeal to rethink the European Economic Constitution is therefore still valid. However, the search for a vaccine capable of stopping manipulation of traders’ and consumers’ egoism is the next stage: a practical one, in terms of both legislation and policies. Observing these practical actions confirms the conclusion of historians: the expansion of Roman culture (including legal culture) has indeed resulted in cross-fertilisation.

part i The Making of Consumer Law in the EU

12

2 The Origins of Consumer Law and Policy at EU Level LUDWIG KRÄMER

I.  Institutionalisation of Consumer Protection The Treaty on the European Community (EEC Treaty), which entered into force on 1 January 1958, mentioned consumers only in a very marginal way, in Articles 39 and 40 EEC Treaty (now Articles 39 and 40 TFEU) on agricultural policy and in Articles 85 and 86 EEC Treaty (now Articles 101 and 102 TFEU) on competition policy. In the early years, the European Commission tried to get national associations, groupings or cooperation bodies accustomed to organising themselves at European level – which obviously was easier for vested interest groups such as car producers, pharmaceutical companies, and food producers, than for citizens, workers or other civil society groupings. The Commission strongly favoured the establishment of Europe-wide associations or committees in all areas of societal life. In 1962, it assisted in the establishment of a Contact Committee for Consumers, where emerging European consumer, family and cooperative organisations as well as three European trade unions assembled to discuss the impact of the EEC on consumers. Diverging interests, scarcity of human and financial resources and communication problems prevented this committee ever reaching common positions on consumer interests in the EEC or becoming a significant voice at European level. The Committee dissolved itself in 1972. European and global developments in the 1960s – the Paris disturbances of 1968, student revolts in the US, Japan, Latin America and several European countries – and a growing awareness of the impact of excessive market economies on the well-being of society, progressively led to the awareness that the EEC could not aim at economic growth alone, but needed to consider its impact on citizens. In 1968, the Commission installed a very small administrative unit on consumer protection in its competition directorate-general. This unit, consisting of three persons,1 had no impact on the daily administrative business of the competition department, the Commission, or the EEC as a whole. None of the three officials had any knowledge of consumer policy, consumer 1 The head of the unit was Léon Klein (France), assisted by Jacques Brard (France) and Monique Coquette (Belgium).

14  Ludwig Krämer interests or of rule-making procedures at EEC level – and, what is worse, their interest in such questions was limited. The unit kept itself occupied with trying to bring together national consumer organisations at European level and get them interested in issues of European integration. However, these efforts were of limited success, as national consumer organisations were principally interested in ‘better value for money’ in the product sector, in comparative testing, and in scandals in the food sector. Things only changed slowly, in particular due to a greater awareness at the level of the Commission – Commissioners Spinelli (Italy) and Borschette (Luxemburg) – that the EEC was not just a mechanism to promote free trade and the interests of big business. This evolution led, in 1972, to the first serious manifestation of the consumer unit – which is itself a model of how policy and law at EEC level was made at that time. The French cosmetic industry tried to take advantage of the bigger European market. It took several years before it convinced the cosmetic industry from the other Member States of the advantages of EEC legislation. In 1972, it submitted a proposal to the Commission for a directive on cosmetic products. The core of this text consisted of a ‘negative list’ which contained substances that were not allowed to enter cosmetic products; this list contained more than 350 substances, many of which had never been considered to enter cosmetics. The Commission only proceeded to a superficial examination of the proposal and some months later submitted the industry proposal with slight amendments as an official legislative proposal for a directive.2 This the consumer unit opposed, asking to replace the negative list and amend other details of the text. This opposition sent shockwaves through the Commission as until then neither in the consumer nor in the environmental or in the social field had a legislative proposal ever been blocked within the Commission. The objections of the consumer unit were quickly overcome: However, consumer organisations at EEC and national level became aware of the problem and mobilised public opinion, the European Parliament, and national administrations. As a result, the Directive was only adopted after four years of discussions in Council which led to significant amendments; and even later, the struggle between consumer health and safety and industry interests continued and led to further legislative changes in the Directive. This process made the Commission itself aware of the necessity and the potential of using consumer protection arguments in its attempts to harmonise national standards for products and services. It contributed actively to preparing the first ever meeting of heads of state and governments of nine EEC countries, which took place in October 1972 in Paris.3 The final statement of that meeting declared, in words which are still valid today: Economic expansion is not an end in itself. Its first aim should be to enable disparities in living conditions to be reduced. It must take place with the participation of all its social ­partners. It should result in an improvement in the quality of life as well as in standards of living. As befits the genius of Europe, particular attention will be given to intangible values.4 2 At that time, it was by no means extraordinary that industry wrote the EEC (proposals for) legislation itself. A particularly obvious example is that of the many technical directives in the car sector. 3 Denmark, Ireland and the UK were to join the EEC as of 1 January 1973. The Paris Conference constituted the solemn inaugural meeting of this enlarged EEC. 4 European Commission, Sixth General Report on the Activities of the European Communities 1972 (1973) 8.

The Origins of Consumer Law and Policy at EU Level  15 The EEC institutions were, among other things, required to elaborate a consumer protection programme with concrete measures in favour of consumers. The Commission used this request to restructure its services and set up, in early 1973, an Environment and Consumer Protection Service (SEPC according to its French ­acronym) which it placed under the responsibility of a vice-president of the Commission. The basic idea was that the activities of the different Commission departments – internal market, agriculture, transport, competition, and so on – should be checked, on the one hand, as to their compliance with the EEC Treaty, by the Commission Legal Service; and on the other hand, as regards their aspects of environmental and consumer protection, by the newly created SEPC. This concept, however, did not work. It met stiff opposition and was successfully blocked by the powerful existing directorates-general on agriculture, internal market, competition, and the like, which did not wish to see their activities challenged or questioned by considerations of environmental or consumer protection. The first years after 1973 were marked by an attempt to consolidate and strengthen the Consumer Service (in the following: consumer unit) and to integrate officials from the three new EEC Member States: Denmark, Ireland and the UK. Consequently, the leading posts of the consumer unit were given to an Irishman (Jeremy Sheehan), an Englishman (John Baun) and a Dane (Karen Moeller), all three again with no consumer protection background, no administrative experience and only some interest in the substance of their job. Commission staff policy consisted of placing officials from the new EEC Member States where they least disturbed existing networks; and consumer policy continued to be of very limited relevance to the Commission.5 Substantive work followed three main lines: setting up an advisory body for consumers, elaboration and adoption of a consumer policy action programme, and an attempt to insert the consumer protection dimension into the work of the EEC as a whole and in particular the European Commission. In 1973, the Commission established a Consumer Consultative Committee (CCC) to replace the dissolved Consumer Contact Committee.6 The new body was to advise the Commission, either on request or on its own initiative, on all questions that were of interest to consumers. It grouped delegates of European consumer (Bureau Européen des Consommateurs, BEUC), family (Comité des Organisations Familiales de la Communauté européenne, COFACE) and cooperative organisations (EUROCOOP), as well as trade union representatives (Confédération européenne des Syndicats, CES), together with a number of independent experts. As the CCC’s members had a very different social and economic background – cooperative representatives defended trade interests, trade union representatives were hardly interested in consumer questions at all, and so on – cooperation quickly concentrated on the members of BEUC and its national member organisations. The Committee met four times a year. Its work progressed slowly, with an output of about one opinion or position per month.7

5 It is significant that when, in 1981, Greece joined the EEC, it had to be given the post of a director general. And this post was that of the SEPC which was ‘advanced’ to a directorate-general. 6 Commission Decision of 25 September 1973 relating to the setting up of a Consumers’ Consultative Committee [1973] OJ L283/18. 7 In a publication of 1985, this author listed 97 opinions and 29 resolutions of the CCC between 1973 and 1985, see Ludwig Krämer, EWG-Verbraucherrecht, 1st edn (Baden-Baden, Nomos, 1985) 49.

16  Ludwig Krämer The impact of these opinions, for example on the EECs agricultural policy or other sectors, was not significant. However, the CCC brought together representatives of national consumer and citizens’ movements to discuss EEC initiatives and problems that were also of interest to citizens in the different Member States. In this way, it contributed to spreading the message that the EEC was not only an undertaking for ‘big business’ – a rather widespread impression of socialist, communist and left-wing political and societal forces at that time – but that it was also relevant for the famous ‘man (woman) in the street’.8 Its innovative right to issue opinions on its own initiative – a right not normally given by the Commission to consultative or scientific committees – led it to publicly criticise, for example, parts of the common agricultural policy, thus constituting a rather new tone in discussions on European integration. The discussions of the CCC were mainly held in English, which increased the influence of the British (Tony Venables – BEUC) and Danish (Benedicte Federspiel – BEUC) representatives, who were also accustomed to taking the floor in public discussions – which was not necessarily the case with other members of the CCC, as only few consumer advisory bodies existed at national level. Overall, the influence of the BEUC in the CCC was considerable, if not overwhelming, all the more so as agenda-setting was mainly in the hands of the consumer unit in concertation with the BEUC, the other organisations not having a clear strategy for an EEC consumer policy. In the early 1970s the consumer movement in Member States, to the extent that it had organised itself in consumer associations, was not really interested in developing European integration. The first priority for many organisations was comparative testing of products and services. This allowed income-creation – unless there was generous state funding such as in Germany, which made the consumer movement dependent on (German) policies. A limited knowledge of foreign languages and of other civilisations and cultures contributed to this reserved attitude on the part of national consumer organisations towards the EEC. As the consumer unit had to organise meetings of the CCC and its numerous working groups, it developed good relations with the individual CCC members, in particular with those representing the BEUC, and with the secretary-generals of the different European CCC member organisations. This ensured keeping in touch with consumer policy orientations, strategies and priorities within the Member States and also allowed concerns and susceptibilities which only existed in one or few Member States to be fed into the discussion at EEC level. The existence of the European Economic and Social Committee (EECOSOC) did not help much to promote consumer interests. The EECOSOC was dominated by employers’ and employees’ organisations, with consumers – one or two members of some 300 – belonging to a third group which assembled farmers, traders, free professions, insurers, and so on. The EECOSOC was thus unable to formulate meaningful consumer

8 The trade unions never overcame this prejudice and were unable to see in European integration anything other than an attempt by capitalism to organise itself. It is one of the great errors of European integration to have left aside the social dimension of integration and buy the silence of trade unions with funds for ­vocational training rather than positively associating them with integration. Neither Europe nor the trade unions profited from that omission.

The Origins of Consumer Law and Policy at EU Level  17 protection positions and did not constitute a competitor to the CCC.9 Furthermore, the EECOSOC only adopted positions and opinions on formal Commission legislative proposals and strategic documents,10 while the CCC gave opinions before the Commission had formally adopted a proposal. This factual division of work prevented contacts, controversies and jealousies.

II.  The First Consumer Protection Programme The consumer protection action programme was to a considerable extent inspired by Council of Europe resolutions in this area.11 The Council of Europe had taken up the subject of consumer protection since the 1960s and progressively developed recommendations and resolutions in this regard. It also tried to develop international binding agreements in some areas affecting consumers, based on detailed comparative law research, such as on product liability and unfair consumer contract terms. But activities on consumer agreements were not really successful, as the differences among the states were too great and participating countries were not inclined to bind themselves through international conventions. Since the end of the EEC transition period in 1969, the EEC became more and more a competitor in law-making, pushing the Council of Europe more in the direction of protection of human and social rights, as well as protection of minorities and citizens’ rights. The EEC consumer protection programme,12 following the Council of Europe, established five basic ‘rights’ of consumers, namely the right to health and safety, the right to protection of economic interests, the right to redress, the right to information and education, and the right to representation (the right to be heard). These rights had first been developed by the Council of Europe and were proclaimed by the EEC without too much attention being paid to a precise definition or at least a detailed description of the content of those rights. For each of the sectors concerned by rights, some actions were proposed. However, such actions were announced vaguely: the programme did not declare that the EEC would adopt legislation in order to realise rights in this or that field. The Council resolution which adopted the programme only declared that the

9 Another aspect which needs to be mentioned here is the fact that, according to the EEC Treaty – and this has not changed until the present time (Art 13(4) TEU) – the EECOSOC was also to advise the Commission. In practice, however, the Committee reacted almost entirely only after the Commission had made a formal proposal for legislation or other activity. It completely abandoned its advisory tasks vis-à-vis the Commission. 10 Legally, the EECOSOC had always had the task also to advise the Commission, see the present Art 13(4) TEU. However, in practice, the EECOSOC only advised the Council. 11 The EEC and the Council of Europe had agreed some forms of cooperation, subsequent to which the EEC Commission participated in working group meetings of the Council of Europe as observer. See generally Art 230 EEC Treaty. A similar form of cooperation existed, on the basis of Art 231 EEC Treaty, with the OECD. 12 Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for a consumer protection and information policy [1975] OJ C92/1. This programme was followed, in 1981, by Council Resolution of 19 May 1981 on a second programme of the European Economic Community for a consumer protection and information policy [1981] OJ C133/1, which did not develop new concepts or initiatives.

18  Ludwig Krämer principles were approved and that the Commission should come up, at a later stage, with appropriate proposals for measures. Politically, the existence of the programme was useful, as the Commission could indicate that a consensus among Member States existed to address this or that aspect; subsidiarity questions did not play any significant role in the discussions of the 1970s. This general content of the proposed programme had made it politically easy for the European Parliament to give a positive opinion on it and for the Council to adopt the programme. Nevertheless, the emerging consumer protection administrations of the Member States considered it necessary to discuss the draft programme for more than 18 months, weighing it word by word. This was also due to the fact that in particular France raised doubts as to the possibility of consumer measures at EEC level, as such measures were not explicitly foreseen in the EEC Treaty. At the end of the day, the form of adoption of the programme – by resolution rather than by a decision – clarified that the programme in itself was not legally binding, and that any future Commission proposal on EEC legislation would have to be assessed on its merits; the fact that a specific topic was mentioned in the programme did not constitute any sort of legal commitment. Overall, the consumer protection programme had the merit to exist. For the first time it brought the issue of consumer protection to the level of the EEC as a whole and signalled that approximation of national legislation should also take into consideration its impact on consumers. Of course, the programme was influenced by the general priority of the time, namely to eliminate national barriers to trade (‘negative integration’) rather than to try to develop specific EEC-wide standards (‘positive integration’). Since no Member State in the mid-1970s had a national ministry that was specifically in charge of consumer protection,13 support from the EEC capitals to lead an active European consumer protection policy was limited. The consumer protection programme did not have a significant impact on EEC policy. However, proclamation of the five consumer rights became rather popular and influenced national and EEC consumer policy to a considerable degree. With the exception of consumer education – which was considered to come too clearly into the realm of national competences on consumer protection policies (subsidiarity)14 – rights are still visible in the EU consumer policy of the twenty-first century – and in those Member States which pursue a national consumer protection policy. In substance, the consumer unit of the SEPC spent a considerable time in addressing issues of health and safety of consumers. The EEC had adopted detailed work programmes and timetables for food and industrial products to harmonise national legislation.15 This filled the Commission’s agenda and led to a greater weight of discussions on these topics than on economic questions. In the preliminary consumer 13 Responsibilities for consumer affairs in the Member States were attributed to the Ministries of Economic Affairs, Trade, Industry, Justice or Social Affairs, with often joint responsibilities of different Ministries. 14 In the 1970s, discussions on subsidiarity did not take place at European level; the term ‘subsidiarity’ was inserted into the European Treaties only in 1985, in the chapter on environment policy. 15 See in particular Consolidated version of Council Resolution of 28 March 1969 on a general programme for the elimination of technical barriers to trade in industrial products and foodstuffs resulting from disparities between the positions laid down by law, regulation or administrative provision in the Member States [1969] OJ C76/1.

The Origins of Consumer Law and Policy at EU Level  19 protection programme the Commission and the Council had enumerated a number of sectors which were of particular interest to consumers.16 The consumer unit saw it as its first priority to bring the consumer protection dimension into discussions on these products between the EEC institutions and the Member States, as well as into discussions with vested interest groups, for whom the defence of consumer interests often constituted a new element.

III.  Participation in the Law Making Process Participation in this work was extremely time-consuming, as some examples might illustrate. In the area of foodstuffs, EEC legislation was elaborated on additives to food. This included long positive lists on colouring agents, preservatives, antioxidants, emulsifiers, flavouring substances, solvents, and so on. The EEC Scientific Committee for Food prepared the work, but was not always able to keep pace with pressure from the food industry, which urged to see all additives that were admitted in one Member State also admitted in all other Member States. To such questions of authorisation were added questions on labelling, a ban or restriction on heavy metals or other undesirable substances, residues of pesticides, irradiation and other treatment questions. In the car sector, heated discussions took place at EEC level as to whether cars should have to be equipped with head rests and safety belts. The car industry fought with emphasis on making safety belts17 and head rests mandatory only for larger cars; it continuously questioned any studies or data on accident impacts.18 Another big dispute concerned the question whether the presence of lead in petrol should be restricted or banned. The car industry argued that lead-free petrol would ruin the European car industry and succeeded in slowing down the introduction of lead-free petrol until the year 2000.19 Other issues concerned, for example, when an aerosol had to be considered inflammable, when its content started to burn at 23°C or at 45°C. Such questions were discussed in several meetings with experts from governments and the interested industry and were highly time-consuming. The consumer department tried to find experts in 16 See Council Resolution of 14 April 1975 on a preliminary programme (n 7) para 16. These sectors concerned foodstuffs, cosmetics and detergents, utensils and consumer durables, cars, textiles, toys, ­dangerous substances, materials coming in contact with foodstuffs, pharmaceuticals, fertilizers, pesticides and ­herbicides, veterinary products and animal feedstuffs. 17 Safety belts were made mandatory in the EEC by Council Directive 77/541/EEC of 28 June 1977 on the approximation of the laws of the Member States relating to safety belts and restraint systems of motor vehicles [1977] OJ L220/85. 18 Directives in the car sector in the 1970s were so-called optional directives which means that they only applied to transborder trade. Within their territory, the Member States were free to provide for other provisions – or no provisions at all. The system of optional directives was abolished after 1985 (Single European Act). 19 The first directive to reduce the lead content of petrol was Council Directive 78/611/EEC of 29 June 1978 on the approximation of the laws of the Member States concerning the lead content of petrol [1978] OJ L197/19, the last one Consolidated version of Directive 98/70/EC of the European Parliament and of the Council of 13 October 1998 relating to the quality of petrol and diesel fuels and amending Council Directive 93/12/EEC [1998] OJ L358/58. The breakthrough for drastic EEC measures on lead-free petrol came in 1985, when Germany – for environmental reasons (Waldsterben) – and the UK – for consumer protection reasons (consumer health problems from traffic emissions) – joined forces.

20  Ludwig Krämer Member States’ consumer organisations, for example those who had made comparative tests, or academic researchers who had published on a specific topic. Generally, factual support was small, though also because consumer organisations normally did not have the necessary know-how. No EEC or national consumer organisation showed interest in the question whether cars should be equipped with safety belts or head rests, or whether lead in petrol should be reduced. National car users’ organisations had not organised themselves at EEC level. The Commission was interested in new legislation, not so much in its content. The consumer unit had thus itself to develop a strategy and set priorities. For reasons of staff resources, the consumer unit did not cover all sectors which it was requested to cover under the preliminary programme. It received practically no support on research results, tests, studies and the like from national or European consumer organisations, which were in turn not equipped for collecting data; nor were they too interested in the tedious procedure of EEC standard-setting. The consumer unit, too, did not have any network of bodies, academia, research institutes or others which could supply information on specific or horizontal questions. Therefore, it concentrated on food issues, cosmetics, cars, toys, standardisation of pre-packaging and textile labelling. Nor did the consumer unit of the Commission or European consumer groups or the CCC show a particular interest in participating in work on pharmaceutical products, pesticides,20 electrical goods, veterinary products or detergents; the issues of dangerous chemicals, quality of drinking or bathing water or hazardous waste were left to the SEPC environmental unit. Overall, the consumer unit’s direct impact on the text of different pieces of legislation was limited. However, already its presence in the different expert groups contributed to the fact that the final outcome of Commission legislative proposals – perhaps less of the Council’s final decisions – was not altogether aligned with the wishes and preferences of trade and industry groups.21 Support for defence of consumer interests came in particular from Danish experts or representatives, to a less continuous degree also from Netherlands and German experts. Scarce staff resources and the fact that the officials in the consumer unit were trained in law, political science and general consumer information questions rather than in biology, chemistry or other natural sciences and that their vision of European integration as well as their ambition was limited, also had as a consequence that the consumer unit did not even consider developing horizontal EEC legislation on its own in areas of health and safety, for example as regards consumer product safety, labelling of foodstuffs or textiles or on cosmetic products. Such initiatives were left to the Commission directorates-general for agriculture, the internal market or industry which, quite naturally, did not necessarily have consumer interests and needs primarily in mind.

20 In order to illustrate the length of procedures and the difficulty for the Consumer unit to be represented, the example of pesticides may be quoted: the Commission proposal for a directive in this area dated from 1969; it was adopted in 1991, see Council Directive 91/414/EEC of 15 July 1991 concerning the placing of plant protection products on the market [1991] OJ L 230/1. 21 Examples are EEC legislation on cosmetic products, but also on head rests and safety belts for cars or food additives.

The Origins of Consumer Law and Policy at EU Level  21

IV.  Economic Interests of Consumers In areas concerning the economic interests of consumers, the Commission had not developed a programme to eliminate barriers to trade or harmonise national legislation and, logically, neither had the European Parliament or the Council. Fair trading issues – in a broad sense – were strongly influenced by a voluminous comparative law study which the German Max-Planck-Institute had elaborated since the mid-1960s.22 However, it was left to the different Commission directorates-general which topic they would pick out of this unfair competition sector or other areas of law, and try to elaborate EEC-wide provisions. The insurance sector, for example, had an agenda of its own, strongly influenced by the German and later the British national insurance industry. The banking sector, in contrast, did not see itself affected by European integration policy and did not develop initiatives of its own to approximate national legislation; German savings banks (Sparkassen) played a particularly regressive role in this. Outside the health and safety sector, the consumer unit’s relations with other Commission departments or administrative units were very limited, for reasons of lack of personal resources – and of language problems.23 They concentrated on the internal market (unfair competition) department and the Legal Service, also because many Commission departments were convinced in any case that in their daily activities they also considered the general interests of consumers/citizens, and that the consumer unit – without specialised, detailed knowledge of the different files – was disturbing rather than helpful. The relationship with Member-State administrations mainly took place during expert meetings between the Commission and the national governments to discuss an action programme or prepare legislation. Few Member States had specialised consumer departments and where such consumer units existed, they were understaffed and marginalised by stronger trade and business-oriented administrative departments. Contacts with government experts on product liability and unfair contract terms were established via Council of Europe working groups. On consumer credit, an official from the internal market department and of the consumer unit made visits to all capitals, in order to discuss draft versions of the future proposal for a directive and to establish contacts. In the 1970s the European Parliament was mainly interested in concrete legislative proposals, less in discussions on consumer policies or strategies. Contacts with deputies were thus very limited. The same applied to contacts with members of the EECOSOC, for the reasons mentioned above. The consumer unit regularly attended expert meetings of the Council of Europe and the OECD, where consumer protection questions were discussed but, overall, took limited advantage of these meetings.

22 Eugen Ulmer (ed), Das Recht des unlauteren Wettbewerbs in den Mitgliedstaaten der Europäischen Wirtschaftsgemeinschaft : Gutachten erstattet im Auftrag der Kommission der Europäischen Wirtschaftsgemeinschaft vom Max-Planck-Institut für Ausländisches und Internationales Patent-, Urheber- und Wettbewerbsrecht in München (Munchen, Beck/Köln, C Heymann, 1967). 23 The leading persons in the consumer department in the 1970s and the early 1980s came from the UK, Ireland and Denmark, who had limited knowledge of foreign languages and had not worked in (ministerial) administrations before.

22  Ludwig Krämer The EEC consumer protection programme suggested promoting protection of the economic interests of consumers, by fixing a number of priority areas which should be addressed:24 –– –– –– –– ––

consumer credit; false or misleading advertising; unfair commercial practices;25 product liability; range and quality of consumer products.

Enumeration of these areas did not mean, though, that administrative responsibility for the different files was attributed to the consumer unit within the Commission. Rather, the majority of file leadership – in particular consumer credit, misleading advertising, and product liability – continued to be under the responsibility of the Commission Directorate-General for Internal Affairs, which had a staff about ten times as numerous as the consumer unit. For all measures which were signalled in the consumer action programme, the legal basis for action at EEC level was arguable. Article100 EEC Treaty (now Article 114 TFEU) provided for measures in order to approximate legislation to allow the ‘establishment and functioning’ of the common market. Whether, for example, measures on consumer credit or doorstep selling complied with this criterion was often enough contested in the European Parliament and in the literature; some authors argued that there was no common market for consumers, so that Article 100 did not constitute a legal basis for measures. The Commission, though, argued that it would not be reasonable to organise the establishment and functioning of a market for trade and industry and their products and services, but ignore consumer interests. Therefore, the Commission based its proposals for legislative measures almost completely on Article 100 EEC Treaty which, until 1985, required unanimity in the Council. This legal basis was never contested before the Court of Justice. The Commission proposal for a directive on consumer credit26 owed much to the reform of consumer credit law which the UK had undertaken in the 1970s. For continental Europe the departure from hire-purchase legislation and the approach on all forms of credit, whether linked to the purchase of a product or not, was a new approach; Italy and Greece even had practically no legislation on hire-purchase or consumer credit. It took the national administrations about eight years to organise themselves, proceed with the necessary consultations and discussions and agree on the substance. The proposal limited itself to establishing a number of basic requirements as regards 24 Council Resolution of 14 April 1975 on a preliminary programme (n 7) paras 18 to 31. 25 This area was sub-divided into unfair contract terms, door-to-door sales, premium offers, unsolicited goods and services, and labelling, see Council Resolution of 14 April 1975 on a preliminary programme (n 7) para 24. 26 European Commission, Proposal for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit [1979] OJ C80/4. After significant amendments, this proposal was adopted as Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L42/48.

The Origins of Consumer Law and Policy at EU Level  23 advertising, contract form and content, information obligations for consumers, and public surveillance obligations. It favoured a broad approach to consumer credit and included credit intermediaries, but excluded mortgages and other forms of credit on immovable property. It required a written form of the credit contract and required the creditor to indicate the effective costs of the credit, a measure which was heavily contested by the financial industry.27 European or national consumer organisations showed no interest in the negotiations on consumer credit legislation. Some social-oriented research in Member States was helpful to advance the consumer point of view, though, overall, the credit industry managed to get legislation adopted which did not really disturb its activities. The proposal for a directive on misleading advertising28 more or less took up the concept of German advertising legislation. The Commission text, based on Article100 EEC Treaty, also covered unfair advertising which met with objections from the powerful advertising industry in the UK, where unfair advertising did not constitute an undesirable practice. The Commission proposal did not define misleading or unfair advertising, but gave some indications on the possible content of these terms. It suggested allowing, within certain limits, comparative advertising. It asked Member States to introduce legislation to fight misleading and unfair advertising and, as a rule, to provide some public control of misleading advertising. The legal basis of the proposal – Article 100 EEC Treaty – was only marginally put in question, as satellite television and other upcoming electronic communication means were evidence of (the possibility of) transborder advertising campaigns. Several Member States, in particular the UK, contested the necessity of national regulatory provisions and backed a system of voluntary self-control by the industry, without significant public control. Consumers and consumer organisations in practically all Member States and at EU level did not participate in discussions of the directive proposal. They voiced their concern with regard to misleading advertising, but did not have concrete drafting proposals to offer. Nor did they have a strong position with regard to national implementation measures, enforcement of the provisions, and public controls of advertising. The Directive which was finally adopted29 thus reflected the interests of the ­advertising industry in having general clauses and vague terminology and obligations, rather than constituting a true piece of consumer protection legislation. The consumer unit had no alternative proposals to make, as apparently no Member State at that time had detailed legislation on advertising. Additionally, the Commission proposal for a directive on product liability was based on Article 100 EEC Treaty.30 Its content was to a very large extent taken over from 27 In 1998, Directive 98/7/EC of the European Parliament and of the Council of 16 February 1998 amending Directive 87/102/EEC for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit [1998] OJ L101/17, introduced a uniform calculation method for the effective interest rate. 28 Commission, Proposal for a Council Directive relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading and unfair advertising [1978] OJ C70/4. 29 Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising [1984] OJ L 250/17. 30 Commission, Proposal for a directive on the producer’s liability for defective products [1976] OJ C241/9.

24  Ludwig Krämer a draft Convention on product liability which the Council of Europe had discussed. This Convention was never ratified by a sufficient number of Contracting Parties and thus did not enter into force – probably also because the EEC Member States preferred a discussion and final decision – at EEC level. One decisive point was that the draft Convention also included liability of the producer for development risks which industry – supported in particular by the German Government – opposed very strongly. The Commission wanted in particular to avoid following the example of the US, where producers were held liable when they placed a product on the market that was ‘unreasonably dangerous’ and caused damage. In thus following the Council of Europe’s work, the Commission developed a definition of ‘defective product’ which was to lead to strict liability of the producer.31 The producer would also be held liable for so-called development risks which referred to damage which, at the time of marketing of the product, was not foreseeable. The liability of the producer was to cover death and personal injury and economic damage suffered by consumers. How arguable the legal discussions on legislation at EEC level sometimes were at that time, might be illustrated by the fact that the Legal Committee of the European Parliament rejected the Commission proposal with the argument that there was no legal basis for it in the EEC Treaty. When the Commission announced that liability for development risks would be excluded from the text, the Legal Committee – and later the Plenary of the European Parliament – accepted Article 100 EEC Treaty as a legal basis.32 And a renowned German law professor questioned the legal basis of Article 100 EEC because the Directive would not add to the four freedoms of the EEC Treaty, but would increase lack of freedom.33 Overall, it took the Council nine years of discussions before the Commission proposal was finally adopted in 1985, excluding the producer’s liability for development risks.34 A proposal for a directive on doorstep selling – officially: on contracts negotiated away from business premises – was elaborated by the SEPC itself and adopted by the Commission in 1977.35 Conceptually, it owed a lot to provisions which had been introduced at national level in the Netherlands. It started from the reflection that typically contractual negotiations which took place away from business premises were begun at the initiative of the seller, not of the consumer. In order to counterbalance the element of surprise which was inherent in such negotiations, the consumer was to be granted a cooling-off period within which withdrawal was possible from the contract. Again, it took the Member States a long time before they were able, in 1985, to agree to the proposal.36 The concept of a contractual cooling-off period was new and even 31 See ibid, Art 6 according to which a product is defective if it does not offer the safety which one is entitled to expect in view of all circumstances. 32 See for further references Krämer (n 7) 307. 33 Bodo Börner, ‘Die Produkthaftung oder das vergessene Gemeinschaftsrecht’ in Hans Kutscher, Wilhelm G Grewe, Hans Rupp, Hans Schneider (eds), Europäische Gerichtsbarkeit Und Nationale Verfassungsgerichtsbarkeit : Festschrift Zum 70. Geburtstag von Hans Kutscher, 1st edn (Baden-Baden, Nomos, 1981) 43. 34 Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products [1985] OJ L210/29. 35 European Commission, Proposal for a Council Directive to protect the consumer in respect of contracts which have been negotiated away from business premises [1977] OJ C 22/6. 36 Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises [1985] OJ L 372/31.

The Origins of Consumer Law and Policy at EU Level  25 revolutionary to most EEC Member States, which were accustomed to the sacrosanct character of contractual obligations which could not be changed. It was the first piece of EEC legislation, in the area of civil and/or trade law, which gave specific rights to a group of citizens in order to take account of their vulnerable situation. These four directives formed the core of the activities of the consumer unit of the SEPC between 1973 and 1986. These activities were guided by a number of concepts which were, at the beginning, not clearly elaborated and conceptualised, but which gained precision during discussions and negotiations at EEC level and within the Member States.

V.  Concepts of Consumer Protection The first of these concepts was the realisation that consumers were to be regarded and treated as a group of its own and needed specific provisions to protect their interests. For the consumer unit the question whether ‘consumers’ were to be mentioned alone or whether small businesses or craftsmen were also to be mentioned alongside consumers, was of secondary importance. In the Council, the opinion finally prevailed that it was preferable to legislate only with regard to consumers, as the delimitation between ‘small’ and not so small professional activities would become too complicated – also in view of countries such as Greece, Italy and the accession countries, Spain and Portugal. The next basic issue concerned the legal basis of consumer legislation. There was a consensus that Article 100 EEC Treaty was a more appropriate legal basis than Article 235 EEC Treaty (the present Article 352 TFEU), because in all areas – credit and advertising, product liability and doorstep contracts – there was some difference in national legislation which might impair the free circulation of goods and services. However, the use of Article 100 EEC had the disadvantage that up to the arrival of consumer policy issues, approximation of national legislation had the effect that national legislation was completely substituted by EEC legislation; thus any protective measures for consumers that existed in national legislation were lost. In these circumstances, in early 1973 two Danish representatives of consumer organ­ isations, Liz Grohs and Benedicte Federspiel, launched the idea of consumer legislation being minimum legislation which should allow Member States to maintain or introduce at national level legislation which gave better protection to consumers. This idea was taken up by the consumer unit and successfully bargained first with the internal market Directorate-General, then with the Commission, and then with the Council. The minimum character of consumer legislation is now laid down in Article 169 (4) TFEU.37 It needs to be clarified, though, that minimum clauses also progressively became acceptable under Article 100 EEC Treaty (now Article 114 TFEU) for matters other than 37 See however now Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council Text with EEA relevance [2011] OJ L304/64. This Directive is based on Art 114 TFEU and explicitly excludes the right of Member States to maintain or introduce more protective provisions for consumers.

26  Ludwig Krämer consumer protection. Thus, for example, Directive 2010/63 on the protection of animals used for scientific purposes38 contained a minimum clause; the above-mentioned Directive 85/374 on product liability39 provided that the producer of a defective product was to be liable for damage caused, but allowed Member States to limit this liability to a specific sum, in order to protect business interests. And minimum clauses have even found their way into agricultural directives.40 A common feature of all four above-mentioned directives is that subsequently they were amended and enlarged in their field of application. Indeed, it was clear to the consumer unit right from the beginning that consistent and coherent consumer protection legislation could not be achieved all at once. And discussions on the different legislative proposals by the Commission41 formed and clarified the ideas of the consumer unit, of the Commission, of the Member States, of consumer organisations, academia and the public at large, a process which included ‘learning by doing’. All four directives were subsequently significantly amended: in 2008, the consumer credit directive42 was replaced by a new directive which, among other issues, fixed a lower and upper limit to the credit amount and introduced a 14-day cooling-off period within which the consumer could withdraw from the credit agreement, without giving reasons.43 Directive 84/450 on misleading advertising44 was last amended in 2005 when in particular the provisions on comparative advertising were fine-tuned and further detailed.45 Directive 85/374 on product liability46 was further specified in particular by jurisprudence from the EU Court of Justice and by Directive 1999/34 which deleted legal exemption of liability caused by agricultural products.47 And finally, Directive 85/577 on doorstep contracts48 was replaced by a general directive on consumer rights which, among other issues, generalised a right of withdrawal within fourteen days from distance or off-premises contracts.49

38 Directive 2010/63/EU of the European Parliament and of the Council of 22 September 2010 on the protection of animals used for scientific purposes Text with EEA relevance [2010] OJ L 276/33. 39 Directive 85/374 (n 34) Art 16. 40 See Council Directive 2008/120/EC of 18 December 2008 laying down minimum standards for the protection of pigs (Codified version) [2008] OJ L47/5. 41 See for details of the negotiations concerning the scope, legal basis, content etc of these four directives Krämer (n 7) 345 (consumer credit), 188 (misleading advertising), 306 (product liability), 172 (doorstep contracts); Norbert Reich and Hans-W Micklitz, Europäisches Verbraucherrecht (4. Auflage., Nomos 2003) 735 (consumer credit), 281 (misleading advertising), 1031 (product liability), 539 (doorstep contracts). 42 Directive 87/102 (n 26). 43 Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC [2008] OJ L133/66. 44 Directive 84/450 (n 29). 45 Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’) (Text with EEA relevance) [2005] OJ L149/22. 46 Directive 85/374 (n 34). 47 Directive 1999/34/EC of the European Parliament and of the Council of 10 May 1999 amending Council Directive 85/374/EEC on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products [1999] OJ L141/20. 48 Directive 85/577 (n 36). 49 Directive 2011/83 (n 37).

The Origins of Consumer Law and Policy at EU Level  27

VI.  Other Issues The EEC price provisions, in particular those of the Common Agricultural Policy and the Customs Union, were not accessible to the consumer unit. The only activity which the consumer unit could deploy and actually deployed was its attempt to ensure transparent price labelling of products. It elaborated a directive on unit price labelling for foodstuffs50 which was based on Article 235 EEC Treaty (now Article 352 TFEU); this legal basis demonstrated the existing conviction of the Council that measures to protect consumers had no real legal basis in the EEC Treaty. The Directive imposed the indication of the price per litre or g/kg of prepacked food. A later directive on the price indication for non-food products was then based on Article 100a (the present Article 114 TFEU).51 Both directives contained numerous exceptions and were at a later stage replaced by a general directive on price labelling for products.52 Alongside the four consumer core directives mentioned above, the consumer unit was busy participating in the work of other Commission departments on the harmonisation of national legislation. These activities concerned, in particular, advertising issues for specific products – food, alcoholic drinks and tobacco, pharmaceuticals, toys – product labelling, accident data collection, data protection, industrial standardisation, insurance contract terms, car insurance and legal aid insurance, and the consumer in the internal market (passport, driving licence, health or postal services). The consumer unit itself started work on unfair contract terms and package holiday terms. In this and in other legal work it was greatly supported by the Consumer Law Group, a group of academics from the different Member States who were interested in work on consumer protection and who were convened at the initiative of the consumer unit. The Group met regularly, organised comparative studies and proposed legal, often enough innovative, ways to approach consumer protection measures at EEC level. The intellectual input of the Group to the thinking of the consumer unit cannot easily be overestimated. It gave a valuable scientific background to the consumer unit, as in the period under discussion (1973 to 1986) academic interest in protection of consumers was limited – also because research contracts from public or private sources were scarce in consumer matters. Activities in the remaining areas were limited. Consumer information was considered to be sufficiently covered by labelling of products and services. Even no consideration was given to looking at a general measure on free access to information or greater transparency of public authorities. As regards consumer education, the consumer unit started several initiatives to generate educational material for consumer education in schools. However, these initiatives soon faded away, as interest in this subject in Member States was limited, subsidiarity objections were raised more and more frequently and linguistic problems linked with traditional education concepts proved to be major obstacles. 50 Council Directive 79/581/EEC of 19 June 1979 on consumer protection in the indication of the prices of foodstuffs [1979] OJ L158/19. 51 Council Directive 88/314/EEC of 7 June 1988 on consumer protection in the indication of the prices of non-food products [1988] OJ L142/19. 52 Directive 98/6/EC of the European Parliament and of the Council of 16 February 1998 on consumer protection in the indication of the prices of products offered to consumers [1998] OJ L80/27.

28  Ludwig Krämer Consumer participation issues were largely left to consumer organisations themselves. The Commission was of the opinion that establishment of the Consumer Consultative Committee was sufficient, and did not wish to interfere with decisionmaking processes at the level of the Member States. Finally, questions of consumer access to justice were left to agreements under private international law concluded between the Member State governments, though agreements which were concluded referred to the law applicable to contracts, not to questions of access to the courts.53

VII.  Concluding Remarks The first period of deployment of a consumer policy at European level ended with the conclusion of the Single European Act in early 1986, which saw the inclusion of a section on consumer policy in the EEC Treaty. During this period, the administrative and legal foundations were laid to ensure the establishment and functioning of consumer protection policy at European level: a consumer administrative unit within the European Commission, a Committee in the European Parliament which dealt – along with environmental and human health matters – with consumer questions, a Consumer Consultative Committee which enabled the continued presence of consumer organisation representatives at European level, and two consumer protection programmes which laid the basis for structured, concrete and legally binding measures in favour of consumers. This infrastructure was more than the great majority of Member States had installed at national level. It goes beyond the objective of the present contribution to assess the evolution of EU consumer policy beyond 1985. Only indicated will be some aspects of the period before 1985 which may have had some impact on the further development of EEC consumer policy. As regards the consumer unit of the Commission, in the 1970s and the early 1980s, this had won some recognition within the Commission administration. Its presence in numerous meetings with Member State experts – mainly at the level of the Commission and much less in meetings of the different Council working groups – made institutions, lobby groups and the general public aware that a consumer dimension in the policy of European integration had to be taken into consideration; European integration was not just an undertaking for big business. The consumer unit was hopelessly understaffed to cover all consumer-related aspects of EEC law and policy that were actively pursued by the Commission and, subsequently, by the other EEC institutions. It had no strong defender within and outside the European Commission. Interests of trade and industry, the establishment of a common internal market and preservation of the privileges of the agricultural sector prevailed; even when a choice had to be made within the Environment and Consumer Protection Service on

53 Art 220 of the Treaty establishing the European Economic Community [1957] provided for the possibility to conclude law agreements between EEC Member States. The international agreement was replaced, in 1998, by Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) [1998] OJ L177/6.

The Origins of Consumer Law and Policy at EU Level  29 staff attribution or other questions, the interests of the environmental sector were given priority. In contrast, it could not be argued that staff policy during this period deliberately placed officials at the top of the consumer unit who were more committed to other interests than promotion of a consumer protection policy. Nor was lack of financial resources a significant problem. The consumer organisations which operated at European level were not of any significant support. It turned out that the only organisation which tried to defend and promote consumer interests was the BEUC (Bureau Européen des Unions des Consommateurs), a European umbrella organisation of national consumer organisations. In the early 1980s BEUC organised a boycott of beef that contained hormones and succeeded in obtaining a general, EEC-wide ban of such hormones in meat – which still existed in 2019.54 BEUC’s national organisations, though, with the exception of the representatives of Denmark, the UK and the Netherlands, turned out in the large majority to be more occupied with internal national problems, including fund-raising, than having any vision for the consumer aspects of European integration. Family organisations were not concerned to get too closely involved in consumer protection issues, but concentrated more and more on issues of social interest – though there were not many such issues at EEC level. The cooperative movement in a number of countries was first of all active as a trade organisation (‘COOP’), and soon concentrated on trade-related issues. And the trade unions had considerable reservations with regard to the EEC as such which they saw as an emanation of capitalism. This reservation was reflected in their attitude towards consumer protection issues, which the trade union representatives only half-heartedly supported. Not one single initiative in the sector of consumer protection saw the trade unions as authors. The Member States governments did not have specific ministries for consumer affairs. Consumer questions were dealt with in particular by departments of economic affairs, trade, or justice. The prevailing impression in practically all Member States – perhaps with the exception of Denmark – was that an official anyway had to represent the general interest in their negotiations at EEC level, and this general interest included the consumer interest, so that no specific consideration for consumer positions was necessary. To this general approach towards consumer protection policy at EEC level was added the priority that national and European Commission policies attached to the establishment and functioning of a European common (internal) market. Food law and elimination of technical barriers to trade for non-food products had absolute priority and the larger aspects of the car market which also served consumers, of public transport considerations, of fair and loyal trading, appropriate consumer information and participation did not play a significant role in political reflections or discussions. Consumer protection issues were considered a collateral issue to accompany more relevant work, with as little zeal as possible. The British approach to favour voluntary self-regulation and to leave it to the market to deal with consumer problems as regards health and safety

54 However, the EU was condemned by the World Trade Organisation (WTO) for not having proven that hormones in meat were dangerous to human health. It thus continues, even in 2019, to pay compensation to the US for loss of profits from the import of hormone-treated meat into the EU.

30  Ludwig Krämer and the economic interests of consumers, gained more and more influence at European level, also because the English language progressively became the dominant language in day-to-day negotiations and discussions. The famous French nineteenth-century statement that, between the strong and the weak, between rich and poor, between master and servant, it is freedom that oppresses and the law that liberates,55 did not find much echo in the European institutions. In this general climate, early 1986 saw the conclusion of the Single European Act which introduced a new period in the history of European consumer protection policy.

55 Henri Lacordaire (1802–1861): ‘Entre le fort et le faible, entre le riche et le pauvre, entre le maître et le serviteur, c’est la liberté qui opprime et la loi qui affranchit’.

3 The Early Years of the European Consumer Organisation BEUC, 1962–1985 KOEN DOCTER

I. Introduction The Bureau européen des unions de consommateurs (BEUC/the European Consumer Organisation) is the umbrella organisation that represents European consumer organisations in Brussels and has done so since its foundation in 1962. It lobbies with the EU institutions to protect the interests of European consumers. In late 2018, the archives of BEUC were transferred to the Historical Archives of the European Union (HAEU), at the European University Institute in Florence. As a result, BEUC documents dating from the early 1960s to the 2000s have become accessible for research. Thanks to the helpful staff of the HAEU and particularly archivist Ruth Meyer, I was able to analyse a wide range of documents from the early years of BEUC, including minutes of council and assembly meetings, internal notes and memos, mail and telex correspondence, activity reports, budget sheets, draft and published studies, and press releases. With this material I was able to reconstruct the evolution of BEUC during the first two decades of its existence, from a small and loosely organised alliance of European consumer organisations to a well-established organisation with its own office in Brussels and a clear impact on EEC policy. In this chapter, I recount the early history of BEUC by dividing it into five stages of development. During the first period, dubbed ‘birth and infancy’ (1962–68), the members of BEUC were fundamentally still trying to find out what they wanted the new organisation to be and do. The second stage of development, ‘childhood’ (1969–73), was marked by the struggle to establish a permanent secretariat for BEUC and to formalise its impact on the Commission through the foundation of a new Consultative Committee. The third period, ‘adolescence’ (1974–77), was characterised by increased activities thanks to the establishment of a permanent office in Brussels, but also by internal problems caused by the Italian corruption scandal.

32  Koen Docter In the fourth period, ‘early adulthood’ (1978–82), BEUC further widened its scope to include new areas of interest, while the EEC’s consumer policy reached an impasse. Finally, BEUC reached its adulthood roughly from 1983, when the organisation was able to look at the future of European consumer protection with more optimism and self-confidence than before.

II.  Birth and Infancy (1962–68) A.  Organisation: The Establishment of BEUC The creation of the BEUC was directly encouraged by the Commission of the European Economic Community (EEC), which organised a session of study days for consumer organisations in June 1961. Sicco Mansholt, vice-president of the Commission and Commissioner for Agriculture, advised the national consumer organisations to unite, since the interests of consumers in the common market were not protected to the same extent as those of the producers. He specifically stimulated their involvement in discussions about the Common Agricultural Policy (CAP), which was about to be introduced.1 Among those present at the European study days on consumption were four of BEUC’s founding members: André Romieu of the French Union fédérale des consommateurs (UFC), Helga Merkel and Elsbeth Weichmann of the German Arbeitsgemeinschaft der Verbraucherverbände (AgV) and Elisabeth Schadee-Hartree of the Dutch Nederlandse Consumentenbond (NCB), who was also Secretary-General of the International Organisation of Consumers Unions (IOCU).2 In the paper he presented, Romieu called for a close and permanent collaboration between the EEC and consumer organisations. He argued that harmonisation of law in the EEC had to ensure that consumers would benefit from the common market. Therefore, consumers had to be involved in the development of legislation.3 BEUC was officially founded in Brussels on 6 March 1962, at a meeting of the consumer organisations of Germany, Belgium, France, the Netherlands, Italy and Luxembourg.4 The following month, André Romieu was elected as the first president of the ‘bureau permanent’ (executive committee). At the first meeting of the Council, colour additives in food products were mentioned as an early topic of interest, because of the adoption of a directive on this topic by the European Parliamentary Assembly.5

1 Alistair Young, ‘European consumer groups: Multiple levels of governance and multiple logics of collective action’ in Justin Greenwood and Mark Aspinwall (eds), Collective action in the European union: interests and the new politics of associability (London, Routledge, 1998) 149–175, 157–158. 2 Commission of the EEC (1961), Journées d’études européennes sur la consommation: programme & participants. Historical Archives of the European Union (HAEU), BAC 6/1977 no 840 (1960–1968). 3 André Romieu, Les conditions d’intervention des consommateurs dans l’harmonisation des réglementations concernant les produits. Journée d’études européennes sur ‘le consommateur dans le marché commun européen’ (June 1961) HAEU, BAC 6/1977 no 840. 4 Bureau européen des unions de consommateurs (BEUC), Compte-rendu de l’Assemblée Générale Constitutive du 6 mars 1962 à Bruxelles, HAEU, BEUC-1. 5 BEUC, Réunion du Conseil – Luxembourg (5 Avril 1962) HAEU, BEUC-1.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  33 Later that year, article II of the statutes of BEUC defined its general aim and scope as follows: L’association a pour objet de grouper les Unions de Consommateurs des pays de la CEE en vue d’assurer la représentation et la défense des intérêts des consommateurs Européens et notamment: a) b) c) e) f)

De représenter ses membres auprès de la C.E.E. et de tous autres organismes compétents. De les représenter dans le ‘Comité de Contact des Consommateurs de la Communauté Européenne’ (CCCCE). De réunir la documentation utile et de mener à bien les études conformes à son sujet. De favoriser les initiatives conformes à son objet, prises par les Unions de Consommateurs adhérents à l’intérieur de chacun des pays. De prendre toutes les dispositions et mesures utiles à la poursuite de ses buts, en complète indépendance à l’égard des intérêts privés et des pouvoirs publics des pays de la CEE.6

Thus, to protect the interests of European consumers, BEUC had the explicit intention to represent European consumer organisations in the forums of the EEC, as well as to gather documentation and produce its own studies. In 1963, it was decided that the ‘Committee of Euro-Tests’ would initiate a first study in which the European consumer organisations would cooperate: a study on aspirins.7 Numerous other products were under consideration for later studies as well.8 Moreover, BEUC would publish a brochure on ‘the consumer in the common market’ and planned to develop a television broadcast about the activities of BEUC and particularly the outcomes of its tests, which would be financed by the EEC.9 The early membership fees were determined as follows: the German, Italian and French consumer organisations each paid 28,000 Belgian francs (equivalent to €5,039 in 2020).10 Since two French organisations were members of BEUC, this fee was divided equally between the two of them. The Netherlands and Belgium also both had two member organisations, which each paid 7,000 BF (€1,273) for a total of 14,000 BF (€2,546) per country. The Luxembourgish consumer organisation paid 7,000 BF (€1,273).11 In the first years, BEUC still had to sort out many practical organisational questions, limiting its other activities. André Romieu referred to his team as an ‘équipe de pioniers’.12 Representatives of the Dutch consumer organisations repeatedly complained that meetings were protracted13 and that BEUC was taking on too many activities in proportion to its limited budget.14 Moreover, they noted that the Belgians and French dominated 6 BEUC, Statuts (10 Septembre 1962) HAEU, BEUC-1 1. 7 BEUC, A.G. du B.E.U.C., Projet de Compte-Rendu (Rome, 19–20 Avril 1963) HAEU, BEUC-1 3. 8 BEUC, Projet de compte-rendu de la réunion du Conseil du 22 Novembre 1963 à Bonn, HAEU, BEUC-1 7–8. 9 BEUC, Projet de compte-rendu de la réunion du conseil du 17 Juin 1963 à Paris, HAEU, BEUC-1 6–9. 10 In this chapter all sums in BF have been converted to 2020 euro equivalents using a tool provided by the Belgian consumer organisation Test-Achats/Test Aankoop, which corrects for inflation. 11 BEUC, État des cotisations B.E.U.C. (1963) HAEU, BEUC-1. 12 J Groenendaal, Verslag van de vergadering van de conseil van BEUC gehouden op 26 september 1963 te Brussel, HAEU, BEUC-1 1. 13 cf B Plomp, Kort verslag van de vergadering van de ‘Conseil’ van B.E.U.C., gehouden op maandag, 17 juni 1963, te Parijs (27 June 1963) HAEU, BEUC-1. 14 B Plomp and M Fransen, Concept brief aan de Voorzitter van het Bureau Européen des Unions de Consommateurs te Brussel (3 September 1963) HAEU, BEUC-2.

34  Koen Docter discussions, since French was the language used in meetings.15 On 26 September 1963, it was decided that BEUC would become a member of the IOCU, even though several national consumer organisations within BEUC were already members of the IOCU in their own name.16 BEUC and the IOCU reached an agreement over membership fees the following year.17

B.  Activities: The Contact Committee and Euro-Tests As specified under Article II of the Statutes, BEUC represented European consumers in the Comité de Contact des Consommateurs de la Communauté Européenne (CCCCE or simply Contact Committee). The EEC Commission had created this platform to receive consumer input during the policy-making process. It was composed of representatives of European organisations for consumers, families, consumer cooperatives and (secular and Christian) trade unions.18 During its early years, the Contact Committee regularly met with the European Commissioner for Agriculture, Sicco Mansholt, to advise him on diverse questions. For example, BEUC advocated low grain prices and opposed an increase in the prices of margarine and vegetable oils.19 Despite their membership of the Contact Committee, the members of BEUC’s council expressed regret over the fact that consumers had not been represented during the signing of the Treaty of Rome. As a result, consumer organisations had no formal role in the decision-making of the EEC and BEUC’s impact was limited to commenting on policy decisions after they had already been taken. In order to be informed earlier and have a more direct impact, it was suggested that BEUC should aim to become a member of the Economic and Social Council (ESC).20 In 1964, André Romieu lost the presidency of BEUC’s bureau permanent to Elsbeth Weichmann of the German AgV. BEUC also received membership requests from the Inter Scandinavian Committee on Consumer Matters and a laboratory in Budapest, but turned these down on the grounds that BEUC should not duplicate the IOCU.21 In the following years BEUC would regularly receive similar requests from various parties with an interest in consumer affairs, but restricted its membership to national organisations within the EEC, which clearly had the defence of consumers’ interests as their primary aim. The Committee of Euro-Tests reported the aspirin test as completed in 1964 and was working on a test of 35 brands of hand mixers. The members of BEUC expressed satisfaction over the outreach of the aspirin test: ‘The first Eurotest has been the subject of articles in many newspapers and weeklies.’22 Indeed, this first test resulted 15 PM Roos, Vergadering BEUC, 27 Oktober 1964 Brussel (29 October 1964) HAEU, BEUC-1. 16 Groenendaal, Verslag van de vergadering van de conseil van BEUC gehouden op 26 september 1963 te Brussel (n 12) 2. 17 BEUC, Projet de compte rendu de la réunion du Conseil du 11.5.1964, Annexe: 1, Accord de collaboration entre le BEUC et l’I.OCU, HAEU, BEUC-1. 18 Young (n 1) 158. 19 J Groenendaal, Verslag van de bijeenkomst van de conseil van BEUC op vrijdag 22 november 1963 te Bonn, ten kantore van de A.G.V., HAEU, BEUC-1 1. 20 BEUC, Projet de compte rendu de la réunion du Conseil du 11.5.1964, HAEU, BEUC-1 2–3. 21 BEUC, Réunion du conseil du 27.10.1964, HAEU, BEUC-1. 22 EA Schadee-Hartree, Internal Report 4 BEUC Meeting of 27 October 1964 in Brussels (2 November 1964) HAEU, BEUC-1 3.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  35 in good publicity for BEUC. Newspapers reported that the test showed that the quality of aspirins was similar in various European countries, while price differences were considerable.23 As a result, BEUC decided to create a special fund to finance these kinds of tests of consumer products.24 The next year, BEUC’s secretary, Paul Richely of the Belgian Union féminine pour l’information et la défense du consommateur (UFIDEC) proudly declared that the first three Euro-Tests had made a considerable impact: Cette réussite impresionne vivement les milieu de la production. Divers échos montrent que les industriels européens sont préoccupés par nos initiatives. Nous devons donc persévérer et améliorer nos conditions de travail pour réaliser des tests qui donneront satisfaction à chacun d’entre nous.25

With Aldo Diani of the Italian Unione Nazionale Consumatori (UNC) as its new president,26 BEUC established guidelines for its Euro-Tests in 1965, as there had been some internal discussion about the execution of the first tests. The guidelines specified the procedures to be followed for each test. It was also proposed to carry out four to six tests of consumer products each year, prioritising products that were sold in various countries.27 At the same time, Paul Richely wrote a critical report about the (lack of) impact of the Contact Committee on the common market policy of the EEC. He stated that consumer organisations suffered from a lack of financial means in comparison to producers. Moreover, he argued that the Contact Committee was in need of more unity to effectively offer a counterweight to proposals by the EEC Commission and producers, since it had so far rather operated as an association of impulsive individualists. Richely stressed the difficulty of protecting the interests of consumers when it was unclear what their interests were exactly, in particular in the complicated area of the Common Agricultural Policy (CAP). He proposed to establish a modest documentation centre, which could keep the members of BEUC informed about relevant developments in the EEC and which would inform the Contact Committee about the points of view of BEUC.28 Yet in the early years, BEUC lacked the funding to set up such an office.

III.  Childhood (1969–73) A.  From Contact Committee to Consumer’s Consultative Committee In April 1971, the BEUC council formulated its strategies and priorities for the following years. It stressed the importance of the Contact Committee in influencing the policy of the EEC, as this was the only direct way for BEUC to represent European consumers 23 cf Het Vrije Volk, Consumenten in de EEG-landen verenigen zich (1 December 1964) 8. 24 BEUC, Assemblée Générale La Haye 30 juin-1er juillet 1964, Compre rendu, HAEU, BEUC-1 4–5. 25 BEUC, Réunion du conseil, Procès-verbal de la séance du 7 juillet 1965 à Scheveningen, HAEU, BEUC-2 8. 26 ibid 3. 27 BEUC, Assemblée Générale Rome – 24 et 25 mai 1965, Plan d’organisation des Euro-Tests, HAEU, BEUC-2 2. 28 P Richely, Comment organiser et financer les travaux du BEUC au niveau de la C.E.E.? B.E.U.C. – Assemblée Générale du 24 et 25 Mai 1965 a Rome, HAEU, BEUC-2.

36  Koen Docter and protect their interests in the EEC. Therefore, a key task of the secretariat would be to provide information to the Contact Committee and, the other way around, inform the members of BEUC about everything discussed within the Committee. In addition, the various national consumer organisations could indirectly influence EEC policy by lobbying with the government of their own country, as dialogue between national governments eventually determined the directives of the EEC.29 Only months after BEUC had stressed its importance, the Contact Committee was in serious trouble. The European Community of Consumer Cooperatives (EURO COOP), which had until then financed the secretariat of the Committee, was no longer willing to do so and asked the other member organisations to pay an equal share. The BEUC representative immediately indicated that the European Consumer Organisation would be prepared to pay its fair share if the other members of the Committee were willing to do the same. However, the trade unions were considerably more reluctant. There was general dissatisfaction over the ineffectiveness of the Committee.30 As a result, there were different options on the table, one of them being to abolish the Committee altogether. BEUC strongly opposed this option and proposed asking the EEC for financial support,31 but the outgoing secretary of the Contact Committee stated that it would take at least two years to get a subsidy from the EEC.32 Another option considered by BEUC was to continue the Committee together with the organisations for families and consumer cooperatives, but without the trade unions.33 Emotions ran high during the meeting, where representatives of the five constituent organisations discussed the financing of the Committee.34 As they failed to reach a compromise, the Contact Committee had to cease its activities.35 The members of the BEUC council agreed that BEUC could also function as the voice of European consumers without the Contact Committee. In fact, several members of the council believed that BEUC could fulfil this role even more efficiently by contacting the Commission directly, without the involvement of the other organisations.36 They lobbied their national governments to grant BEUC direct access to the Commission.37 In September 1972, a BEUC delegation met with Albert Borschette, the European Commissioner for Competition and Regional Policy. The BEUC delegation included President Gilbert Castelain, Secretary Anne Fransen and Anthony Dumont of the British Consumers’ Association (CA), which had only just joined BEUC. Borschette expressed regret over the fact that the Contact Committee was no longer active and

29 BEUC, Note sur le programme d’activités futures du BEUC (15 April 1971) HAEU, BEUC-4. 30 Comité de Contact, Compte-rendu de l’assemblée plénière du Comité de Contact tenue à Bruxelles (18 June 1971) HAEU, BEUC-4. 31 BEUC, Procès-verbal de la réunion du conseil du BEUC le 29 Septembre à Bruxelles (29 September 1971) HAEU, BEUC-4 3–4. 32 Comité de Contact, Procès-verbal de l’assemblée plénière tenue à Bruxelles (30 September 1971) HAEU, BEUC-4 3. 33 BEUC, Procès-verbal de la réunion du conseil du BEUC à Bruxelles (29 September 1971) HAEU, BEUC-4 3–4. 34 Comité de Contact (n 32) 3. 35 J Semler-Collery, Letter to F.M. Malfatti (23 February 1972) HAEU, BEUC-5. 36 BEUC, Procès-verbal de la réunion du conseil du BEUC tenue à Bruxelles (25 February 1972) HAEU, BEUC-5. 37 BEUC, Procès-verbal de la réunion du conseil du BEUC tenue à Utrecht (15 May 1972) HAEU, BEUC-5 2.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  37 underlined that it was up to the constituent organisations to decide whether they henceforth wanted to operate individually or collectively. He stressed that in any case he would involve consumers in EEC policy and that in its budget for 1973, the Commission had set aside money for the provision of information to consumers. The BEUC delegation argued that money was needed not only to finance provision of information and to hire experts, but also to fund a permanent office. However, Borschette did not promise any funding for this, as he merely stressed that the European Consumer Organisation would be provided with all the information they needed.38 Two days after this meeting, representatives of all constituent organisations of the Contact Committee met with Carlo Scarascia-Mugnozza, Vice-President of the Commission and Commissioner of Agriculture. He urged the organisations to find agreement and to speak with one voice, as he found it difficult to negotiate with consumers if they were internally divided. Various representatives stressed the importance of more direct contact with the Commission. They were in favour of regular meetings to efficiently discuss both technical and political issues. Scarascia-Mugnozza supported the proposal to have two or three structural meetings per year.39 In 1973, the Commission proposed setting up a Consumers’ Consultative Committee (CCC), to replace the dissolved Contact Committee.40 This Committee was officially founded on 25 September of that year. It included the same organisations as the former Contact Committee, plus the communist trade union and independent experts. In contrast to its predecessor, the CCC was funded by the EEC, as it was an official consultative committee.41 Out of all constituent organisations of the CCC, BEUC received the largest share of EEC funding to carry out a number of studies: two out of the seven million Belgian francs (€235,592 out of €824,572) paid by the Commission. The CCC met for the first time in January 1974.42

B.  Organisation: Establishment of a Permanent Secretariat During the early years after its founding in 1962, BEUC operated without permanent staff. Representatives of the various national consumer organisations gathered in the general assembly as well as the council. Each country had two representatives in the council, whereas the general assembly reflected the division of votes also used in the EEC. Activities like Euro-Tests were either carried out in cooperation between the national consumer organisations or by laboratories contracted for the purpose. In practice, the Belgian consumer organisations provided secretarial services, because they were based in Brussels. In 1969, Anne Fransen, director of the Dutch Nederlandse Consumentenbond (NCB) proposed the establishment of a permanent secretariat. She offered to provide a secretary on the payroll of the NCB, who would be based at its headquarters in 38 BEUC, Compte-rendu de l’entretien avec M. le commissaire Borschette, 17 heures (12 September 1972) HAEU, BEUC-5. 39 BEUC, Compte-rendu de la rencontre avec M. le Vice-Président Scarascia Mugnozza, 11 heures (14 September 1972) HAEU, BEUC-5. 40 BEUC, Minutes of the General Assembly (15 May 1973) HAEU, BEUC-5. 41 BEUC, Composition of BEUC and its secretariat (November 1973) HAEU, BEUC-5. 42 BEUC, Progress report of the Council (April 1974) HAEU, BEUC-6.

38  Koen Docter The Hague for a period of three years (1970–3). This would give BEUC time to prepare its own office in Brussels, where the secretariat would henceforth be based.43 The secretary would be available full-time for carrying out decisions taken by the BEUC council, performing consumer research and functioning as a liaison with the EEC and other organisations. In exchange for providing this service, the NCB demanded a more equal division of votes for all countries within the BEUC general assembly of BEUC (replacing the system that gave the three larger countries triple votes) and proposed that German should be allowed as an official language during BEUC meetings, besides French.44 The Dutch proposal was met with mixed reactions from the representatives of other national consumer organisations within BEUC. Some immediately supported the plan, such as Gilbert Castelain of the Belgian Association des Consommateurs (AC). Yet others, including BEUC President Aldo Diani and Jacques Dubois of the French ORganisation GÉnerale des COnsommateurs (OR.GE.CO.) objected that the costs of a secretariat should be equally shared by all organisations. They found it problematic that a Dutch-paid permanent secretary would be subordinated to the Dutch consumer organisation. They also voiced practical concerns about basing the general secretariat in The Hague, as the distance to Brussels would cause inconvenience and increased costs. Moreover, the proposal to change the voting system was criticised.45 The Dutch Consumentenbond was asked to elaborate its proposal for a permanent secretary over the course of 1970,46 while a separate working group addressed the question of revising the voting system within BEUC.47 At the end of the year, the general assembly approved plans for an executive secretary funded by the Consumentenbond, stipulating that BEUC would pay for travel and phone costs. At the same time, the proposal of the working group ‘Vote’ for a more equal voting system was rejected by the French and Italian consumer organisations.48 Gilbert Castelain was elected as the new BEUC president49 and from 1971 the BEUC secretariat was effectively located in The Hague, in the offices of the Consumentenbond. As the first enlargement of the EEC approached, BEUC informed the consumer organisations in the prospective Member States about the possibility to join the European Consumer Organisation.50 The consumer organisations of the UK, Ireland, Denmark and Norway replied that they would consider a membership request once their countries’ decision to enter the common market had been confirmed.51 The British CA formally applied for BEUC membership in January 1972.52 The BEUC general assembly unanimously accepted admission of the CA four months later.53 The prospect 43 BEUC, Procès-verbal de la Réunion du Conseil d’Administration tenue à Bonn (30 June 1969) HAEU, BEUC-3 3. 44 PM Roos, Letter to P. Richely (30 November 1969) HAEU, BEUC-3. 45 BEUC, Procès-verbal de la Réunion du Conseil à Luxembourg (19 December 1969) HAEU, BEUC-3 2–12. 46 PM Roos, Letter to P. Richely (22 February 1970) HAEU, BEUC-4; P Richely, Letter ‘Aux membres du Conseil du BEUC’ (25 February 1970) HAEU, BEUC-4. 47 P Richely, Letter ‘A tous les members du BEUC’ (9 September 1970) HAEU, BEUC-4. 48 BEUC, Résumé de la réunion de l’assemblée générale du BEUC à Paris (11 December 1970) HAEU, BEUC-4. 49 BEUC, Procès-verbal de la réunion du conseil du BEUC (11 December 1970) HAEU, BEUC-4. 50 Conseil du BEUC, Ordre du jour (5 July 1971) HAEU, BEUC-4. 51 BEUC, Procès-verbal de la réunion du conseil du BEUC à Bruxelles (n 33). 52 Peter Goldman, Letter to Miss. A.G. Fransen (13 January 1972) HAEU, BEUC-5. 53 BEUC, Procès-verbal de l’Assemblée Générale du BEUC tenue à Utrecht (15 May 1972) HAEU, BEUC-5.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  39 of four new members gave new impetus to plans to locate the permanent secretariat of BEUC in Brussels, in its own office, as each of them would also contribute financially to the organisation.54 Norway eventually did not enter the EEC after a majority of its voters rejected membership in a referendum held in September 1972,55 but the Danish and Irish consumer organisations officially joined BEUC in 1973. Founded in 1947, the Danish Forbrugerrådet was the oldest consumer organisation in Europe.56 The British and Danish consumer organisations were relatively powerful and had successfully put consumer rights on the agenda in their respective countries. As a result, these two countries had the most advanced consumer legislation in Europe and would play a decisive role in the development of the EEC’s consumer policy over the following years.57 The national consumer organisations agreed to double the BEUC membership fees in order to fund a permanent secretariat in Brussels.58 The BEUC office was established in the centre of Brussels, at Koningsstraat 29. Eirlys Roberts, who had worked for the British CA, was selected as the first executive director of BEUC.59

C.  Defining Consumer Priorities In its 1971 strategic programme for the following years, the BEUC council suggested that the interests of European consumers could be protected most efficiently by focusing on three core areas: (1) agricultural policy, (2) harmonisation of law and (3) competition. With regard to the latter, BEUC predicted that the EEC would soon elaborate its competition policy, so the European Consumer Organisation had to study this topic to be prepared to protect the interests of consumers in this field.60 Consumers could be harmed by the anti-competitive conduct of producers and distributors abusing their dominant position. This meant that BEUC had to urge the EEC to enforce its competition regulations, as well as to monitor the market, in order to ensure that European consumers would benefit from the common market.61 In particular, the European Consumer Organisation argued that the EEC Commission needed to ensure sufficient means to efficiently apply the notification procedure laid down in Regulation 17/62.62 According to this rule, companies had to notify the Commission beforehand about all potentially anti-competitive agreements, decisions and concerted practices and receive authorisation. While BEUC supported this rule, it also argued that the procedure had to 54 BEUC, Proposition de budget pour un secretariat du BEUC à Bruxelles (25 February 1972) HAEU, BEUC-5; Young (n 1)158. 55 Henry Valen, ‘Norway: ‘No’ to EEC’ (1973) 8 Scandinavian Political Studies 214. 56 Benedicte Federspiel, ‘Denmark’ in Hans-Wolfgang Micklitz, Ewoud Hondius, Thom van Mierlo and Thomas Roethe (eds), The fathers and mothers of consumer law and policy in Europe: The foundational years 1950–1980 (Florence, European University Institute, 2019) 65–73. 57 Thierry Bourgoignie, ‘Consumer Law and the European Community: Issues and Prospects’ in Thierry M Bourgoignie and David M Trubek (eds), Consumer Law, Common Markets and Federalism in Europe and the United States, European Universty Institute A (Berlin, De Gruyter, 1987) 120–121. 58 BEUC, Minutes of the General Assembly (15 May 1973) (n 40). 59 BEUC, Composition of BEUC and its secretariat (November 1973) (n 41). 60 BEUC, Note sur le programme d’activités futures du BEUC (15 April 1971) (n 29). 61 JP Debreil, La Politique de la Concurrence (26 November 1971) HAEU, BEUC-4. 62 EEC Council (Council of the European Economic Community): Regulation No 17: First Regulation implementing Articles 85 and 86 of the Treaty [1962] OJ 013/204–211.

40  Koen Docter be swift and efficient, so as not to hinder technological progress and necessary reforms that would actually benefit European consumers. In addition, the EEC needed to provide sufficient means for a posteriori controls of cartels and concentrations.63 As for harmonisation of law, three fields were specified that were likely to be important in the Commission proposals in the following years: food composition, labelling, and instalment loans.64 Moreover, another topic to be studied in the following years was the establishment of a norm with regard to prohibition of harmful ingredients, especially in alimentary, cosmetic and pharmaceutical products.65 Harmonisation of law was a major topic for BEUC, which had to adopt a stance on each specific product affected by the EEC’s proposals. For example, in April 1971, BEUC defined its stance on mineral water, ice cream and milk packaging.66 For each of these, the members of BEUC had to agree on their demands to the EEC, such as specification of the mineral content of mineral water and standardisation of packaging sizes.67 The following year, in January 1972, BEUC further outlined its priorities in a document titled ‘What the EEC can do in the interest of consumers’. The document listed eight contributions the EEC could make, including the before-mentioned: (1) harmonisation of law for consumer products, (2) harmonisation of law for the financial sector and particularly instalment loans and (3) stimulation of competition. The other desired contributions included (4) safety regulations for commonly used products such as electrical devices, (5) legislation for commercial advertising, (6) facilitation of imports, (7) harmonisation of transport legislation to facilitate the free movement of goods and (8) inclusion of consumer organisations (BEUC) in decision-making. BEUC repeated its desire, already expressed in 1964, to represent European consumers in the Economic and Social Committee (ESC). With regard to facilitation of imports, BEUC expressed itself in favour of a reduction of tariffs and import barriers for third countries. The European Consumer Organisation advocated increasing imports of agricultural products from developing countries.68 A ninth priority was added some months later: (9) the environment. BEUC argued that there were rising public concerns about the deterioration of ‘free goods’ such as water, air, silence and nature. The European Consumer Organisation demanded that the EEC take measures to protect these crucial goods.69

D.  The Consumer Protection Charter (1973) and First Consumer Programme (1975) In June 1972, the Committee on Economic Affairs and Development of the Parliamentary Assembly of the Council of Europe approached national consumer protection associations to obtain their input for a ‘European Consumers’ Protection Charter’. Consumer 63 BEUC, Objet: Réglementation permettant d’assurer le jeux de la libre concurrence (26 November 1971) HAEU, BEUC-5. 64 BEUC, Note sur le programme d’activités futures du BEUC (15 April 1971) (n 29). 65 Conseil du BEUC, L’ordre du jour (23 April 1971) HAEU, BEUC-4 3. 66 ibid. 67 BEUC, Procès-verbal de la réunion du conseil du BEUC le 23 Avril à Rome, HAEU, BEUC-4. 68 BEUC, Ce que la CEE peut faire de l’intérêt des consommateurs (25 February 1972) HAEU, BEUC-5. 69 BEUC, Eléments pour un programme de travail (15 May 1972) HAEU, BEUC-5.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  41 organisations were asked to provide a critical analysis of consumer protection in their countries and provide suggestions for improvement. Moreover, the Council of Europe suggested that they list the principles that in their view should figure in the charter.70 A draft resolution and report had already been prepared, which mentioned as key principles protection of the economic interests of consumers, as well as protection of their health and safety.71 In response, BEUC listed the six key principles for the legal protection of consumers: (1) protection against injury, (2) protection against deception, (3) the right to information, (4) protection against unfair market power, (5) the right to redress and (6) the right to full enforcement of the law.72 The first principle held that ‘goods should not be sold or distributed or serviced which, when used in a normal and reasonable way, are likely to be injurious to a significant number of people’. National legislation should ensure the safety of food and other products. In any case, the risk of injury should be reduced to an absolute minimum and whenever a safety risk was unavoidable, products should carry adequate warnings. According to the second principle, ‘promotion of goods and services, including financial services, shall not mislead either directly or indirectly the person to whom they are offered’. To prevent deception, national legislation should prohibit misleading advertising. Moreover, the information provided on product labels should be accurate as well. The third principle stated that the ‘purchaser of goods and services has a right to sufficient information to enable him to make a rational choice between competing products and services and between sizes, models and contracts of one trader’. BEUC underlined that national legislation needed to be developed to ensure this right. The fourth principle specified that the ‘individual buyer of goods and services needs protection against the abuse of the power of the supplier’. As examples of such abuse, BEUC mentioned one-sided standard contracts, cancellation of normal legal rights in contracts and high-pressure door-step selling. Likewise, national legislation should control monopolies and restrictive practices agreed between companies. The fifth principle meant that there ‘should be suitable procedures within the framework of a country’s legal system to enable individual complainants to seek with ease and no unnecessary obstacles redress of their grievances as to the failure of a supplier of goods or services to carry out satisfactory performance of his obligations’. Finally, the sixth principle stipulated that each country ‘should have a strong, independent and effective authority who at national and local level will secure compliance with consumer laws’.73 The Parliamentary Assembly of the Council of Europe adopted its Consumer Protection Charter on 17 May 1973. The Charter encouraged Member States to develop their consumer protection policies. The text sent by BEUC clearly had a significant impact on the eventual Charter. All principles proposed by BEUC made it into the Charter, although they were reorganised into a slightly different structure and some additional principles were included as well. Moreover, the Charter borrowed many phrases from the BEUC text, with only some minor wordings changed. The Charter 70 Éamann Ó Ruaric, Council of Europe letter to the Consumentenbond (12 June 1972) HAEU, BEUC-5. 71 George Darling, Report on Consumer Protection Policy, Consultative Assembly of the Council of Europe (15 May 1972) HAEU, BEUC-5 6. 72 BEUC, Charter for legal consumer protection (September 1972) HAEU, BEUC-5. 73 ibid.

42  Koen Docter was organised around five principles of consumer protection. The first principle was the right of consumers to protection and assistance. This was broken down into two parts: protection against physical damage due to unsafe products (which corresponded to BEUC’s right to protection against injury) and protection against damage to economic interests. The latter grouped two of the principles proposed by BEUC: protection against unfair market practices and protection against deception. A large part of this section was taken directly from the BEUC proposal. The second and third principles of the Charter were also found in the BEUC proposal, although the wording was different: the right to redress against damage and the right to consumer information.74 The fourth principle was not found in the BEUC text: the right to consumer education. It stipulated that ‘Such consumer training shall be given to school-children as will enable them to act as informed consumers throughout their lives’ and ‘Education facilities in the field of consumer problems shall equally be made available to adults.’ Finally, the fifth principle of the Charter was the right to representation and consultation. This section took the text of BEUC’s right to full enforcement of the law, but elaborated this further. It added the demand that consumers’ representatives should be represented on public boards of management and that each government had the duty to carry out research and publish information about consumer products. It also stated that associations of manufacturers and traders should be ‘encouraged to formulate their own codes of trading practices which […] shall seek to promote higher standards’ and which should be submitted for approval to national consumer authorities.75 Although the Charter lacked binding effect, it has been argued that ‘it was the first official recognition at the European level of the need for consumer protection law, provided an impetus for a European international consumer protection movement, and created awareness of a need for some integration of substantive laws enacted under national consumer policies’.76 The Charter also influenced creation of the beforementioned CCC in September 1973.77 When Denmark held the chair of the Council in the second half of 1973, only shortly after becoming a member of the EEC, it took the lead in developing the EEC’s first Consumer Programme.78 The five principles set out in the Charter made their way into this preliminary Consumer Programme, which was approved by the Council of the European Communities in April 197579 and which had been developed in close cooperation with BEUC and the CCC.80 This Resolution has been described as ‘the first attempt to provide a systematic basis in Community law for the protection of the consumer interest’.81 BEUC enthusiastically welcomed 74 Council of Europe, Parliamentary Assembly, Consumer Protection Charter, Resolution 543 (17 May 1973) http://assembly.coe.int/nw/xml/XRef/Xref-XML2HTML-en.asp?fileid=15956&lang=en. 75 ibid. 76 Bourgoignie (n 57) 94. 77 Matthew Hilton, Consumerism in Twentieth-Century Britain: The Search for a Historical Movement (Cambridge, Cambridge University Press, 2003) 301–302. 78 Børge Dahl, ‘Denmark’ in Hans-Wolfgang Micklitz, Ewoud Hondius, Thom van Mierlo and Thomas Roethe (eds), The fathers and mothers of consumer law and policy in Europe: The foundational years 1950–1980 (Florence, European University insttute, 2019) 114. 79 Council Resolution of 14 April 1975 on a Preliminary Programme of the European Economic Community for a Consumer Protection and Information Policy [1975] OJ C92/2. 80 Hilton (n 77) 302. 81 Hans-Wolfgang Micklitz and Stephen Weatherill, ‘Consumer Policy in the European Community: Before and after Maastricht’ (1993) 16 Journal of Consumer Policy 285, 292.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  43 the Programme as ‘a recognition of the importance of the consumers’ place in the Community’, stating: ‘[c]onsumers have been fighting for these things for years. It is very encouraging that they have now been recognized by the European Community.’82 To implement this programme, the Commission prepared various new directives, for which it again consulted the consumer organisations.83

IV.  Adolescence (1974–77) A.  Organisation: Expansion under Eirlys Roberts From 1974, BEUC sharply increased its activities. After the accession of three new Member States and the doubling of BEUC membership fees the year before, the European Consumer Organisation finally had its own office in the centre of Brussels. At the beginning, BEUC had a staff of four: director Eirlys Roberts was accompanied by a research officer, an executive secretary and a secretary.84 BEUC soon expanded the staff with another researcher85 and a librarian.86 The annual budget nearly doubled between 1974 and 1977, from 3.1 million BF (€365,168) to 6 million BF (€510,046).87 By 1977, 3.6 million BF (€306,028) was allocated for the salaries of the staff, 760,000 BF (€64,606) for rent and administrative expenses and the rest for carrying out projects and studies. A little less than half of this budget (2.8 million BF, €238,022) came from the membership fees of the national consumer organisations. The other half was mostly paid by the EEC for various studies to be carried out by BEUC; 0.5 million BF (€42,504) was carried forward from the budget of 1976.88 The largest financial contributions were made by the Dutch Consumentenbond and the British CA, which until 1977 paid the salary and expenses of Eirlys Roberts. These two organisations paid respectively 700,000 BF (€59,505) and 520,000 BF (€44,204).89 The reason for their large contributions was that they were by far the richest of the European consumer organisations: in 1974 the gross annual income of the CA was estimated at 274.5 million BF (€32.4 million) and that of the Consumentenbond at 101.5 million BF (€12.0 million). The third richest national consumer organisation was the French Union fédérale des consommateurs (UFC) with an annual income of 45 million BF (€5.3 million).90 Due to the accession of the three new consumer organisations, the working language of BEUC changed. Minutes and other official documents, which had been written in

82 BEUC, Press release: The Community’s Consumer Programme was adopted on 14th April 1975 (15 April 1975) HAEU, BEUC-14. 83 BEUC, B.E.U.C. News (July 1975) HAEU, BEUC-14 3–4. 84 BEUC, Point 2 on the agenda of the council of 27th September 1974: Contribution and sharing out of expenses (27 September 1974) HAEU, BEUC-12. 85 Eirlys Roberts, Letter to BEUC members (17 December 1975) HAEU, BEUC-14. 86 BEUC, B.E.U.C. Yearly Activity Report 1977 (1978) HAEU, BEUC-33 23. 87 BEUC, Budget – 1974 (1974) HAEU, BEUC-14; BEUC, Point 4 of the agenda of the Council and general meeting: Budget for 1977 (May 1977) HAEU, BEUC-29. 88 BEUC, Point 4 of the agenda of the Council and general meeting: Budget for 1977 (May 1977) (n 87). 89 BEUC, Point 5 of the agenda of the Council and the General Meeting: Proposal contribution 1977 (1977) HAEU, BEUC-29. 90 BEUC, Confidential: Contributions 75 (18 September 1974) HAEU, BEUC-12.

44  Koen Docter French for the first eleven years of BEUC’s existence, were now written in English. It was specified that the secretary of BEUC should be able to speak both languages fluently.91 There was some discussion about the possibility of changing the name of BEUC as well, as Bureau Européen des Unions de Consommateurs was too long, whereas the word ‘bureau’ gave the impression of something too small.92 Eirlys Roberts proposed ‘European Consumers’ as a potential new name,93 but in the end BEUC kept its old name. In May 1976, Anne Fransen of the Dutch Consumentenbond was elected as the new president of BEUC.94 As further enlargement of the EEC loomed large, BEUC decided to reach out to the Mediterranean consumer organisations to facilitate their prospective membership.95 Together with the IOCU, the European Consumer Organisation organised a conference for the nascent Mediterranean consumer organisations.96 The goal of this event was to help these organisations get acquainted, encourage regional cooperation and identify their needs.97 The Portuguese Defeso do Consumidor (DECO) was the first of the new Mediterranean consumer organisations to obtain the status of observer member in 1978, followed by the Spanish Organización de Consumidores y Usuarios (OCU).98 January 1974 saw the first meeting of the new CCC. Lis Groes of BEUC was elected as its first chair, but she tragically passed away only two months later. She was replaced by Anthony Dumont (also BEUC).99 The EEC funded the activities of the CCC and a considerable share of this funding went to BEUC to finance six studies: on misleading advertising, toy safety, exclusion clauses in contracts, safety statistics (home accidents), doorstep selling, and clinical thermometers. The studies were carried out by the national consumer organisations and published under the banner of BEUC.100 All organisations within the CCC could propose subjects for studies, but the Commission decided which ones it wanted and supported financially.101 Anthony Dumont was satisfied with the work done by the CCC as well as the close contact with the Commission, stating in 1976 that ‘this Committee worked better and more efficiently’.102 Still, the members of BEUC complained about the lack of follow-up after the CCC had given advice to the Commission, arguing that ‘it was extremely difficult to know what was happening after the advice was given’.103 Anne Fransen proposed that the members of the CCC should not only give their opinions on draft directives, but also play a more active part by directly proposing directives themselves. In its programme for the following years, 91 BEUC, Council meeting of 1st March 1974 (2 April 1974) HAEU, BEUC-6. 92 BEUC, Minutes of the BEUC Council meeting of 27th September 1974 in Brussels, HAEU, BEUC-6 11. 93 Eirlys Roberts, Point 6 de l’ordre du jour du conseil du 27 septembre 1974: the name of BEUC (27 September 1974) HAEU, BEUC-6. 94 BEUC, Minutes of the BEUC Council meeting held on 10th May 1976 in Paris, HAEU, BEUC-19 4–5. 95 BEUC, Minutes of the BEUC Council meeting of 10th May 1977, HAEU, BEUC-29 7. 96 International Organization of Consumers Unions (IOCU) and BEUC, Mediterranean Consumer Conference: Provisional Programme (March 1977) HAEU, BEUC-28. 97 Claudine Van Lierde, Letter to all council members (19 January 1977) HAEU, BEUC-28. 98 BEUC, Minutes of the BEUC Council meeting of 24 November 1978, HAEU, BEUC-62 3. 99 Anthony Dumont, Progress report on the Consumer Consultative Committee (27 September 1974) HAEU, BEUC-6. 100 BEUC, Progress report of the council (April 1974) (n 42). 101 BEUC, Minutes of the Council meeting of 21st November 1974 in Brussels, HAEU, BEUC-6 3. 102 BEUC, BEUC Council meeting of 29th and 30th January 1976 in Brussels, HAEU, BEUC-19 6. 103 BEUC, Minutes of the Council Meeting held on 16th September 1976 in Brussels, HAEU, BEUC-19 5.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  45 the CCC identified the Common Agricultural Policy (CAP) as one of its key permanent concerns.104 In 1976, BEUC published a report on consumer education in schools. For the first chapter of this study, Eirlys Roberts drafted the ‘profile of the ideal consumer’.105 Although the text did not make it into the final report,106 it gives a good impression of Roberts’ general view on consumerism. She emphasised the general imbalance between well-informed suppliers and ill-informed consumers, since the latter had to divide their attention among innumerable activities and products whereas the former could concentrate on the one product or service they were supplying. Therefore, Roberts first suggested that consumers should gain a broad knowledge about the products they buy: ‘This means knowing enough about physics, chemistry, arithmetic, economics, language, distribution, commerce and manufacturing to understand what is behind the product or service which is being offered for sale.’107 Furthermore, she underlined the importance of a critical attitude, arguing that ‘the consumer must have acquired the habit – when confronted with goods or services and the advertising for them – of questioning, probing and criticising.’108 Consumers should also be aware of the resources available to settle complaints and put things right. Moreover, the ideal consumer should ‘be able to look beyond his or her own selfish interest and perceive (even when they do not pursue) what is in the general interest’. Thereby they should take into consideration ‘the claims of the environment, the quality of life for everybody and the future of the world resources as well as the immediate satisfaction of the individual’.109 Roberts announced her departure as director of BEUC in September 1977. The Council members praised her for having established BEUC as a well-known force in Brussels. Under her watch, BEUC had developed close contacts with the Commission and had started building relations with the European Parliament.110

B.  Resistance to the Common Agricultural Policy BEUC strongly criticised the way the CAP supported farmers with measures that resulted in higher food prices for consumers.111 In addition to the CCC, the European Consumer Organisation was also represented in various Agricultural Consultative Committees of the Commission.112 While BEUC supported the Commission’s attempts to remove border taxes and national subsidies for agricultural products, it repeatedly argued that the agricultural prices fixed by the EEC were far too high.113 It also criticised the artificial conservation of non-competitive agricultural producers through 104 CCC, Programme of activities of the CCC 1977–1979 (1977) HAEU, BEUC-28 6. 105 Eirlys Roberts, Profile of the ideal consumer (19 March 1975) HAEU, BEUC-14. 106 BEUC, Consumer education in schools (October 1976) HAEU, BEUC-9. 107 Eirlys Roberts, Profile of the ideal consumer (19 March 1975) (n 105) 2. 108 ibid. 109 ibid 3. 110 BEUC, Minutes of the Council meeting of 22nd September (1977) HAEU, BEUC-29. 111 BEUC, Consumer opinion on the Common Agricultural Policy (March 1974) HAEU, BEUC-12. 112 BEUC, Progress report of the council (April 1974) (n 42). 113 BEUC, Press release (28 January 1975) HAEU, BEUC-14; BEUC, Press release: Consumers restate their opposition to increased farm prices for products in surplus (25 April 1977) HAEU, BEUC-28.

46  Koen Docter European redistribution, calling it ‘an enormous waste of resources’.114 According to BEUC, the CAP had focused too much on increasing farm incomes and had given insufficient priority to providing food at reasonable prices.115 Criticism was particularly directed at export subsidies and the destruction or dumping of surpluses of agricultural products.116 BEUC blamed the CAP for contributing to overproduction and for stockpiling agricultural products to drive prices up. It also opposed the introduction of quotas, as this would hinder competition and prevent optimal distribution of production, while still preserving the artificially high prices of agricultural products at the cost of European consumers.117 Instead, BEUC argued that the CAP should take into account the interests of consumers rather than of just farmers and distributors, declaring that ‘a common agriculture policy which only takes account of the needs of the producer and not those of the consumer can never be an efficient policy’.118 Therefore, BEUC proposed to transform it from a narrow agricultural policy into a broad ‘food policy’. The main aim should be to ‘produce the right amount of food at the right price’.119 Reduced food prices would contribute to higher consumption and lower production, restoring the balance and terminating the excessive structural surpluses of products such as milk, beef, sugar, wine, and cereals.120 BEUC advocated a freeze of guaranteed prices and proposed support to farmers through social and fiscal means that would not raise food prices, such as payments out of taxes instead of covert taxes on food.121 It also reiterated its plea for support to production of food in developing countries.122 The EEC had to find a way to open its market to agricultural products from third countries.123 Furthermore, the European Consumer Organisation protested specifically against the alleged EEC practice of selling surplus beef to the USSR, in order to ‘keep the prices artificially high for the E.E.C. consumers’.124 In addition, BEUC strongly opposed the Commission’s plan to expand the types and percentages of chemical preservatives permitted in fruit.125 On behalf of BEUC, Rolande Galazzo of France’s OR.GE.CO. oversaw the production of an audio-visual programme on the CAP, which was made available in four languages.126 114 BEUC, Contribution du B.E.U.C. à la préparation des avis du Comité Consultatif des Consommateurs en matière Agricole (1976) HAEU, BEUC-18 2. 115 BEUC, BEUC Report on European consumers and the Common Agricultural Policy (February 1978) HAEU, BEUC-11 5–6. 116 Gilbert Castelain, The Common Agricultural Policy challenged by the Consumers (November 1974) HAEU, BEUC-12. 117 BEUC, Contribution du B.E.U.C. à la préparation des avis du Comité Consultatif des Consommateurs en matière Agricole (1976) (n 114) 8–9. 118 BEUC, Press Release: Consumer reservations on price package agreed by agriculture ministers, HAEU, BEUC-32. 119 BEUC, Consumer programme (September 1977) HAEU, BEUC-28 4. 120 BEUC, BEUC Report on European consumers and the Common Agricultural Policy (12 May 1978) HAEU, BEUC-11 6. 121 BEUC, Press release: BEUC delegation to give evidence to European Parliament committee on agriculture (1 February 1978) HAEU, BEUC-32. 122 BEUC, Consumer opinion on the Common Agricultural Policy (March 1974) (n 111). 123 BEUC, Contribution du B.E.U.C. à la préparation des avis du Comité Consultatif des Consommateurs en matière Agricole (1976) (n 114) 2–3. 124 BEUC, E.E.C. intervention agencies would sell beef to the U.S.S.R. at 35 BF. Per kg (July 1974) HAEU, BEUC-12. 125 BEUC, Thiabendazole or diphenyl: ‘Do not eat the Peel’ (February 1974) HAEU, BEUC-12. 126 BEUC, B.E.U.C. Yearly Activity Report 1977 (1978) (n 86) 7.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  47 BEUC’s plea to reform the CAP into a food policy continued over the following years. Overproduction of agricultural products remained a constant concern: for example, the European Consumer Organisation sharply criticised the ‘disastrous milk situation’, as the milk sector had a production surplus of 20 per cent and swallowed 30 per cent of EEC expenditure. It continued to advocate price cuts to restore the market balance in the milk sector, combined with compensating payments to small farmers.127 BEUC’s 1979 report on the problem of milk surpluses was followed by a similar report about sugar surpluses the following year.128 The European Consumer Organisation pointed out that the ‘scandalous’ surpluses came at a high cost: ‘the Common Agricultural Policy represents 70% of the total EEC budget, but more than half of these funds go to the storage or export of unwanted food’.129 BEUC constantly pressed for price freezes, rejecting quotas or other restrictions which meant that consumers would have to pay higher prices for food.130 The BEUC campaign for reform of the CAP lasted for many years. In 1981, the European Consumer Organisation finally reported that the first promising steps had been made towards reform of the CAP.131 The Commission had made proposals that ‘represented a success for consumers’, because they sought to ‘establish a better relationship between EEC and world prices, stop unlimited guarantees for surplus production, and possibly introduce direct income aids’.132 However, the European governments still remained divided over these proposals. BEUC protested against the record price increase of 12.5 per cent for agricultural products in 1982, as well as the subsidised export of butter to the USSR. The European Consumer Organisation successfully petitioned the European Parliament to reintroduce the sale of so-called ‘Christmas butter’, discounted butter for European markets to reduce surpluses.133

C.  The Italian Corruption Scandal In 1974, a scandal broke out over the Italian consumer organisation UNC, threatening the reputation of the European consumer organisations as a whole. UNC founder and Secretary General Vincenzo Dona, who also was an expert member of the CCC, was arrested under suspicion of corruption and extortion. He was accused of having accepted considerable bribes from olive oil producers. Moreover, he allegedly demanded hush money from a producer of baby food, to cover up the results of a study by the UNC, which had found parasites in their product. In addition, he was suspected of falsifying the UNC membership figures to obtain higher subsidies from the state.134 He was held 127 BEUC, The problem of milk surpluses in the EEC (17 December 1979) HAEU, BEUC-34. 128 BEUC, The problem of sugar surpluses in the EEC (January 1980) HAEU, BEUC-42. 129 BEUC, BEUC Report on European consumers and the Common Agricultural Policy: Comments on the 1980–1981 farm price proposals (March 1980) HAEU, BEUC-42. 130 BEUC, Press release: Farm prices: the Council of Ministers must also take consumer interests into account (30 March 1981) HAEU, BEUC-50. 131 BEUC, Press release: ‘30 May Mandate’: BEUC supports the proposals of the Commission on the reform of the CAP (26 June 1981) HAEU, BEUC-50. 132 BEUC, Annual report for 1981 (1982) HAEU, BEUC-45 2. 133 BEUC, 1982 Annual Report (1983) HAEU, BEUC-45 10. 134 AH Luijdjens, ‘In Italië nu schandaal rond consumentenbond’ NRC Handelsblad (25 March 1974) 4; La Stampa, ‘L’Unione per la difesa dei consumatori bilancio 300 millioni: ma chi pagava?’ La Stampa (25 March 1974) 1.

48  Koen Docter in custody for ten days.135 This led other BEUC members to vote in favour of suspension of the UNC unless it could convincingly invalidate the allegations.136 Dona denied the allegations, stating that funding received from industry had never been conditional and had therefore had no impact on the outcome of the UNC’s studies.137 BEUC President Gilbert Castelain met with Vincenzo Dona and Aldo Diani, who had previously been the president of BEUC. They admitted that their policy had been ‘to accept money from industry to help consumers and that they saw nothing wrong in this. They believed that in Italy at any rate there might be more arguments against taking money from the government.’138 Castelain told them that suspension from BEUC was unavoidable, but agreed to frame it in the press as coming at the request of the UNC, so as not to prejudice Dona’s upcoming trial.139 As a result of a BEUC press release (which indeed stated that the UNC had requested its own suspension),140 BEUC was approached by various Italian groups proposing to form a new Italian consumer organisation.141 For example, BEUC was contacted directly by Biagio Morelli, head of the Parma Group of the UNC, who had led the attacks on Dona in the media.142 He proposed developing a new ‘true consumers’ organization’ independent from industry and commerce, with the help of BEUC’s international expertise.143 Another proposal came from the young lawyer Gustavo Ghidini, who launched the consumer magazine Altroconsumo and proposed a new consumer movement led by university professors.144 In July 1974, Dona resigned from his position as Secretary General of the UNC.145 A year later, the UNC was still suspended and the other members of BEUC wondered if it was going to make any changes that would make it possible to accept its membership again.146 BEUC invited the various Italians who had approached them, including Morelli and Ghidini, to discuss the possibility of founding a new Italian consumer organisation.147 In the meantime, Eirlys Roberts rejected a proposal by Rolande Galazzo of France’s OR.GE.CO. to give Dona’s expert seat in the CCC to a French candidate, explaining that the vacant seat remained reserved for an Italian candidate.148 In December 1975, BEUC reconfirmed the suspension of the UNC, as it had not received updates about the situation in Italy from Dona or Diani.149 Shortly after that, Vincenzo Dona was acquitted of all charges.150 The UNC reprised its activities, having been immobilised for the duration of the two-year legal struggle.151 135 BEUC, Press release (30 May 1974) HAEU, BEUC-12. 136 BEUC, B.E.U.C. Council and General Meeting, 29th April 1974 – Paris. HAEU, BEUC-6. 137 Emilio Pucci, ‘Battaglia fra Dona e i suoi accusatori’ La Stampa (25 April 1974) 11. 138 BEUC, Letter ‘To all BEUC members’ (30 May 1974) HAEU, BEUC-12. 139 ibid. 140 BEUC, Press release (30 May 1974) (n 135). 141 Eirlys Roberts, Confidential notes (July 1974) HAEU, BEUC-12. 142 BEUC, Point 3 on the agenda of the council meeting of 27th September (27 September 1974) HAEU, BEUC-6. 143 Biagio Morelli, Letter to Miss. E. Roberts (20 June 1974) HAEU, BEUC-6. 144 BEUC, Annex to Point 3 on the agenda: Italy (27 September 1974) HAEU, BEUC-6. 145 Guido Tassinari, Letter to Miss Roberts (27 July 1974) HAEU, BEUC-6. 146 BEUC, BEUC Council meeting of 11th and 12th September 1975 in Luxembourg (12 September 1975) HAEU, BEUC-17 7–8. 147 BEUC, BEUC Council meeting of 29th and 30th January 1976 in Brussels (n 102) 8–9. 148 Eirlys Roberts, Letter to Rolande Galazzo (31 October 1975) HAEU, BEUC-14. 149 Gilbert Castelain, Letter to Vincenzo Dona (12 December 1975) HAEU, BEUC-19. 150 Giovanni Conso, ‘È la vittima che paga un errore giudiziario’ La Stampa (7 February 1976) 9. 151 Stampa Sera, ‘L’Unione consumatori riprende la battaglia’ Stampa Sera (2 August 1976) 5.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  49 The Italian consumer organisation then demanded readmission to BEUC and blamed the European Consumer Organisation for having opened its doors to the detractors of the UNC.152 It strongly criticised those who had attacked the UNC, including Morelli and Ghidini, and argued that the ‘UNC is by seniority, tradition, experience, seriousness and continuity of programs the only really representative organization of Italian consumers’.153 As a result, Dona stated that no other Italian organisation should be admitted to BEUC. He repeated his earlier statement that funding received from industry and commerce had never been conditional and had not influenced the decisions of the UNC. He also stressed that the UNC would never accept money from industry again.154 In May 1976, the members of the BEUC Council agreed to carry out a final major investigation to decide whether the suspension of the UNC should be revoked or turned into a definitive exclusion, while also considering the alternative consumer groups that had approached BEUC.155 The following month, Biagio Morelli was expelled from the UNC.156 Moreover, the UNC demanded financial support from BEUC and the EEC for the next two years, in order to reprise its activities and obtain funding from the Italian state. If BEUC and the EEC did not give a favourable reply, the UNC would look for private funding from industry again.157 This demand was unacceptable to BEUC and therefore the UNC was expelled indefinitely.158 As a meeting of the BEUC delegation with Morelli, Ghidini and others had been more promising,159 they were encouraged to form a new league of Italian consumers, which could potentially join BEUC in the future.160 The newly formed Lega per l’Ambiente Utenti e Consumatori Italiani (LAUCI) joined the next assembly meeting as an observer.161 However, LAUCI was short-lived: Ghidini’s organisation Comitato Difesa Consumatori (CDC) decided to apply for BEUC membership independently, since cooperation within the league had proven difficult.162 Its membership request was accepted, initially for a period of two years, during which the CDC had to expand its organisation to cover the whole of Italy.163 After that, the CDC remained a full member of BEUC. The CDC was eventually renamed as Atroconsumo and is still a member of BEUC as of 2020.164 The UNC still exists, but did not regain its BEUC membership. Vincenzo Dona remained Secretary General of the UNC until his death in 2006, after which he was succeeded by his son Massimiliano Dona, who remains the president of the UNC as of 2020.165 152 Guido Tassinari, Lettre à M. Castelain (10 May 1976) HAEU, BEUC-19. 153 Vincenzo Dona, Letter to the B.E.U.C. Counil (20 November 1976) HAEU, BEUC-19. 154 Vincenzo Dona, Lettre à M. Castelain (30 March 1976) HAEU, BEUC-19. 155 BEUC, Minutes of the BEUC Council meeting held on 10th May 1976 in Paris (n 94) 7–8. 156 Vincenzo Dona, Letter to Biagio Morelli (14 June 1976) HAEU, BEUC-19. 157 Unione Nazionale Consumatori, Delibera dell’assemblea generale straordinaria (26–27 June 1976) HAEU, BEUC-19. 158 Anna Fransen, Letter to Vincenzo Dona (21 December 1976) HAEU, BEUC-18. 159 D Kurrer, P Fletcher and E Roberts, Point 3 on the agenda of the Council meeting of 4th December 1976. Report on visit to Italy (December 1976) HAEU, BEUC-19. 160 Anna Fransen, Letter to Biagio Morelli (21 December 1976) HAEU, BEUC-18. 161 BEUC, Minutes of the BEUC Council meeting of 10th May 1977 (n 95). 162 BEUC, Minutes of the Council meeting of 23rd January (1978) HAEU, BEUC-62 5; Gustavo Ghidini, Letter to BEUC (27 April 1978) HAEU, BEUC-62. 163 BEUC, Minutes of the Council meeting of 25 May 1978, HAEU, BEUC-62 4–5. 164 BEUC, Our members: Altroconsumo (2019) www.beuc.eu/beuc-network/members/altroconsumo. 165 Unione Nazionale Consumatori, Massimiliano Dona (2019) www.consumatori.it/massimiliano-dona.

50  Koen Docter

D.  European Consumer Law Group At an international conference on product liability convened in January 1977, several lawyers connected with consumer organisations expressed an interest in discussing various matters of common interest in a European context.166 As a result, the European Consumer Law Group (ECLG) was established in March 1977 as an informal group of lawyers active in consumer legislation or working for consumer organisations.167 David Tench of the British CA took the first initiative to form the ECLG.168 BEUC members Benedicte Federspiel and Gustavo Ghidini were also among the 18 founding members.169 The group met twice a year, mostly in Brussels but from 1980 also in other European cities.170 At these meetings, the lawyers discussed one specific subject at a time, with the aim ‘to formulate criticisms of consumer legislation prepared in the Community institutions’.171 The ECLG published resolutions in the media, independently of other European consumer organisations. However, the group was closely linked to BEUC, whose secretariat provided secretarial and coordination services to the ECLG.172 There was some concern within the European Consumer Organisation that the existence of a parallel consumer group could create confusion in the EEC institutions, but it nevertheless decided to collaborate closely with the ECLG.173 BEUC’s research lawyer Marinus Vromans acted as the first secretary and coordinator of the ECLG in 1977–8. He helped to develop working files on a range of topics.174 Between 1977 and 1985, the ECLG published opinions and reports on nine different subjects: (1) product liability, (2) misleading advertising, (3) access to justice (redress), (4) buying a car, (5) organised travel (package holidays), (6) class and general interest actions, (7) non-legislative means, (8) defective durable goods and (9) insurance contracts.175

V.  Early Adulthood (1978–82) A.  Organisation: Growth and Pessimism under Tony Venables After an open application procedure for which BEUC advertised in national newspapers, received a hundred applications and interviewed various candidates, Tony Venables was 166 David Tench, European Consumer Law Group: Objects, procedures and plans for the future (30 March 1977) HAEU, BEUC-13. 167 Marinus Vromans, Letter to the members of the ECLG (7 June 1978) HAEU, BEUC-13. 168 H De Coninck, Eerste studiedag van de ECLG (29 November 1977) HAEU, BEUC-13. 169 BEUC, Point 6 of the agenda of the Council meeting: BEUC’s proposals for relationship to the C.C.C. and other European groups (January 1978) HAEU, BEUC-62 2. 170 European Consumer Law Group (ECLG), List of meetings (1987) HAEU, BEUC-13. 171 BEUC, Point 6 of the agenda of the Council meeting: BEUC’s proposals for relationship to the C.C.C. and other European groups (January 1978) (n 169) 2. 172 BEUC, Yearly Activity Report 1978 (1979) HAEU, BEUC-33 13. 173 BEUC, Minutes of the Council meeting of 23rd January (1978) (n 162) 3. 174 BEUC, B.E.U.C. Yearly Activity Report 1977 (1978) (n 86) 19. 175 ECLG, List of opinions and reports (1985) HAEU, BEUC-13; Patrick Deboyser, Letter to the members of the ECLG (4 August 1980) HAEU, BEUC-43; ECLG, Report on consumer problems when buying a car (September 1980) HAEU, BEUC-43.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  51 selected to replace Eirlys Roberts as the director of BEUC from May 1978.176 He was chosen for his significant knowledge of the Brussels scene, as he worked in the Council of Ministers and had previously worked for the Council of Europe.177 Roberts remained involved in BEUC as the first honorary member of the Council.178 In April 1979, Benedicte Federspiel of the Danish Forbrugerrådet was elected as the new president of BEUC.179 The Greek organisation INKA was welcomed as an observer member and became a full member upon the accession of Greece to the EEC.180 Under Venables the staff of the secretariat gradually grew from seven in 1978 to ten in 1980, including a lawyer and an economist, a communications officer, a librarian and book-keeper, secretaries and a typist.181 The financial situation improved significantly, as once again the budget nearly doubled: from 6.8 million BF (€516,540) in 1979 to 13.5 million BF (€920,574) in 1981. This allowed BEUC not only to increase its salary budget (from 5.1 to 8.7 million BF: €387,405 to €593,259), but also to multiply its budget for studies (from 0.2 to 1.5 million BF: €15,192 to €102,286) and information and campaigns (from 0.3 to 1.4 million BF: €22,789 to €95,467). The improved financial situation was due both to higher income from membership fees (which increased from 4.1 to 6.6 million BF: €311,443 to €450,059) and a larger contribution from the Commission (from 3.2 to 5.6 million BF: €243,078 to €381,868).182 The British CA remained the largest contributor among the national member organisations (2.3 million BF in 1981: €156,839), followed by the German Stiftung Warentest (1.9 million BF: €129,562) and the Dutch Consumentenbond (0.7 million BF: €47,733).183 Despite BEUC’s larger budget, the first years of Tony Venables’s term as a director were marked by considerable pessimism over the state of consumer protection in the EEC and the lack of progress made. In various successive yearly activity reports, BEUC lamented the ‘unfavourable climate in Brussels’.184 BEUC’s resistance to the CAP continued, still with little tangible result. The European Consumer Organisation characterised 1979 as ‘a year of some limited success in a climate of growing pessimism about the EEC’s consumer policy’.185 Initially, BEUC’s long campaign for lower food prices finally seemed to pay off as the Commission proposed a price freeze for 1979–80. However, the Agricultural Council eventually did not accept this proposal, as ‘the farming lobby proved far stronger’.186 The European Consumer Organisation achieved modest success by convincing the Commission to remove an exemption clause from the Product Liability Directive, which stated that producers should not be held liable if they could demonstrate that they were unable to detect a defect during the development 176 BEUC, Minutes of the Council meeting of 23rd January, 1978. HAEU, BEUC-62; BEUC, Yearly Activity Report 1978 (1979) (n 172). 177 Eirlys Roberts, Letter to all BEUC Council members (13 March 1978) HAEU, BEUC-32. 178 BEUC, Minutes of the general meeting of 25 May 1978, HAEU, BEUC-62 2. 179 BEUC, Yearly Activity Report for 1979 (1980) HAEU, BEUC-33 3. 180 BEUC, Minutes of the Council meeting of 25 February (1980) HAEU, BEUC-23 5. 181 BEUC, Yearly Activity Report 1978 (1979) (n 172) 21; BEUC, Yearly activity report for 1980 (1981) HAEU, BEUC-33 28. 182 BEUC, Budget. 1979–1981 (April 1981) HAEU, BEUC-50. 183 BEUC, Budget 1981 (1980) HAEU, BEUC-43. 184 BEUC, Annual report for 1981 (1982) (n 132) 2. 185 BEUC, Yearly Activity Report for 1979 (1980) (n 179) 2. 186 ibid 1.

52  Koen Docter phase due to the state of science and technology.187 However, the Legal Committee of the European Parliament urged the Commission to change this again the next year.188 In 1980, the mood within BEUC was still similarly gloomy. On the occasion of hearings organised by the European Parliament Committee on the environment, public health and consumer protection, Vice-President Peter Goldman of BEUC stated: ‘the European consumer today is like Cinderella in the fairy story – but before she went to the ball’.189 He further slammed European agriculture ministers for advocating higher prices every year, as if they were the leaders of farmers’ trade unions. Among other things, Goldman argued for the establishment of a Directorate-General for consumer protection, to act as a watch-dog within the Commission. Yet the Parliament did not implement any of Goldman’s proposals. BEUC sharply denounced the Commission for its consumer policy and in particular ‘the scandalous gap between the objectives and reality’.190 The gap meant here was the one between the objectives stated in the preliminary Consumer Programme of 1975 and the limited implementation of the proposed measures. While discussions started on the Commission draft for the second Consumer Programme, there was still continuing and increasing resistance within the EEC to adoption of legislation based on the first programme. BEUC noted that the EEC’s preliminary Consumer Programme of 1975 had been ambitious, but that only one major directive (on food labelling) had been approved by the Council of Ministers so far. Thus, the European Consumer Organisation argued that the second Programme needed a concrete timetable for adoption of measures, both those previously proposed and new ones.191 BEUC was particularly sceptical about the proposal to introduce codes of conduct for industry. It feared these codes of conduct would be too voluntary in nature if not backed up by detailed legislation and enforcement.192 As the Commission’s second Consumer Programme lacked concrete deadlines for its objective, BEUC characterised it as ‘a statement of intent rather than a genuine action programme’.193 After adoption of the programme in 1981, the European Consumer Organisation remarked: ‘Unless the Commission gives the necessary priority to implement its own policy towards consumers, the programme will look increasingly like an unsuccessful public relations exercise.’194 The second Consumer Programme was adopted in May 1981 and led to the EEC’s environment and consumer service being upgraded to a full Directorate-General. However, BEUC still complained about the blocking in the European Parliament and at governmental level of directives such as those on product liability and misleading advertising. It reported that no new legislative proposals were put forward in 1982. Therefore, BEUC organised a joint press conference 187 ibid 13. 188 BEUC, Yearly Activity Report for 1980 (1981) (n 181) 12. 189 BEUC, Minutes of the Council meeting of 25 February, Annex 2: The consumer: Europe’s Cinderella (1980) HAEU, BEUC-23 2. 190 BEUC, Press release: BEUC hopes that the European conference on consumer policy to be held in Paris on 15 to 17 October will give a new emphasis to EEC policy in favour of consumers (10 October 1980) HAEU, BEUC-43. 191 BEUC, Preliminary comments on the Commission’s paper for a second Consumer Programme (1979) HAEU, BEUC-30. 192 BEUC, Minutes of the BEUC Council meeting of 15 February 1979 in Brussels, HAEU, BEUC-30. 193 BEUC, Yearly Activity Report for 1979 (1980) (n 179) 12. 194 BEUC, Annual report for 1981 (1982) (n 132) 1.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  53 with the other members of the CCC in October 1982 to publicly denounce the impasse in the consumer programme.195 On the other hand, BEUC also noted during this period that the economic recession had contributed to increased press interest in its activities. The campaign with the biggest impact was the one on growth hormones in meat production. This was hailed particularly in the French and Belgian press as ‘the first genuine victory by European consumers’196 (see further below). In addition, BEUC carried out various other campaigns. For example, in cooperation with the European Environment Bureau (EEB), the European Consumer Organisation campaigned against lead in petrol.197 The BEUC member organisations organised press conferences and published articles to support this campaign. They stressed that the major car-manufacturing countries outside Europe, the US and Japan had already decided to eliminate lead from petrol, due to the health risks involved, particularly for children and pregnant women.198 BEUC organised a conference on this topic in May 1983 and noted growing support for its lead-free petrol campaign in EEC institutions, national governments and even among industry.199 The Council of Ministers eventually agreed to eliminate lead from petrol in 1985.200 From that year, leaded petrol was gradually phased out and finally outlawed by directive 98/70/EC, which EU members had to apply by 1 January 2000.201

B.  New Interests: Energy Policy and Disadvantaged Consumers While pessimism was widespread, BEUC still looked to expand its scope to other consumer-related subjects. In September 1978, the European Consumer Organisation established a priority programme for its future activities.202 Part of this was clearly in line with similar texts published earlier, for example in 1971–72.203 Again, protection of consumers’ health and safety as well as their economic interests formed key areas of interest.204 However, the priority programme also revealed some new interests, as it identified the following six priorities: (1) the EEC consumer policy programme, (2) the market place and competition policy, (3) agriculture (the CAP), (4) protectionism, (5) energy and (6) disadvantaged consumers.205 195 BEUC, 1982 Annual report (1983) (n 133). 196 BEUC, Yearly Activity Report for 1980 (1981) (n 181) 13. 197 BEUC, Declaration on lead in petrol (28 October 1982) HAEU, BEUC-214. 198 BEUC, 1982 Annual report (1983) (n 133) 11. 199 BEUC, Conference organized by BEUC and the EBB, Brussels, 10 and 11 May 1983 (May 1983) HAEU, BEUC-44; BEUC, 1983 Annual report (2 March 1984) HAEU, BEUC-45 1. 200 BEUC, Annual report 1985 (5 May 1986) HAEU, BEUC-45 1–2. 201 Ludwig Krämer, ‘European Commission’ in Hans-Wolfgang Micklitz, Ewoud Hondius, Thom van Mierlo and Thomas Roethe (eds), The Fathers and Mothers of Consumer Law and Policy in Europe: The Foundational Years 1950–1980 (Florence, European University Institute, 2019); European Environment Agency, Uptake of cleaner fuels. Fact sheet (20 August 2001) www.eea.europa.eu/data-and-maps/indicators/ uptake-of-cleaner-fuels-and/uptake-of-cleaner-and-alternative. 202 BEUC, Note for the BEUC Council: Programme of activities (October 1979 until end of 1980) (1979) HAEU, BEUC-34. 203 BEUC, Minutes of the Council meeting of 1st September 1978, HAEU, BEUC-32. 204 BEUC, Draft programme of priorities for BEUC (July 1978) HAEU, BEUC-32. 205 BEUC, Programme of priorities for BEUC (September 1978) HAEU, BEUC-139.

54  Koen Docter The last two priorities were new areas of interest for BEUC. The inclusion of energy resulted from the energy crisis of the 1970s. The 1973–74 oil crisis had caused a shock and raised awareness of western dependence on oil imports from the Middle East. This concern was exacerbated by the outbreak of the second oil crisis in 1979.206 BEUC outlined the ways consumers could be encouraged to save energy, both for economic and environmental reasons, by highlighting the importance of ‘insulation for houses, energy saving for domestic appliances, more economical automobiles, promotion of public transport’ and stressing the need for further research.207 Moreover, the role of consumer organisations would also be to inform consumers about the possibilities of using alternative energy, as well as the risk of nuclear power stations and promotion of safety measures.208 The members of BEUC expressed concern over the safety of nuclear energy and lack of information about the risks and safety plans provided to consumers.209 BEUC organised a conference about European energy policy.210 It supported the need for a common European energy policy, but argued that more funds had to be allocated to energy saving (especially in the domestic sphere and the transport sector) instead of developing energy supply.211 Another new element in the priority programme was attention to social inequality. According to BEUC, disadvantaged consumers deserved special attention.212 It specifically singled out elderly consumers, since they were for example more vulnerable to pressure selling and misleading advertising of medicaments. BEUC also proposed a reduction card that would entitle elderly people to reductions in services such as public transport, cultural and entertainment facilities.213 The European Consumer Organisation organised a conference of elderly consumers in January 1979.214 Other ‘disadvantaged consumers’ mentioned in the priority programme were low-income groups and minority ethnic groups.215 In addition, the programme emphasised that little progress had been made since the adoption of the EEC’s preliminary Consumer Programme, as the proposed legislation was blocked by the Council of Ministers.216 Finally, another priority for BEUC was its campaign to put consumer interests on the agenda for the first direct elections to the European Parliament in 1979 (see below).217

206 Robert J Lieber, ‘Europe and America in the world energy crisis’ (1979) 55 International Affairs 531. 207 BEUC, Consumers and energy (1978) HAEU, BEUC-32. 208 Gilbert Castelain, Energy, Point 9b of the agenda of the BEUC Council meeting of 20 April 1979 (1979) HAEU, BEUC-30. 209 BEUC, Minutes of the Council meeting of 20 April 1979 in the Hague, HAEU, BEUC-30 5–6. 210 BEUC, Minutes of the Council meeting of 18 June 1980, HAEU, BEUC-23 2; BEUC, Study days of the European consumer organisations on the energy problem – Paris, Palais des Congrès, 12 and 13 May 1980: Recommendations (May 1980) HAEU, BEUC-43. 211 BEUC, European consumers and the efficient use of energy (29 April 1980) HAEU, BEUC-42; BEUC, Press release: Study days of the European consumer organisations on the energy problem (13 May 1980) HAEU, BEUC-42. 212 BEUC, Minutes of the Council meeting of 1st September 1978 (n 203). 213 BEUC, Yearly Activity Report for 1979 (1980) (n 179) 18–19. 214 BEUC, Press release: Conference in Berlin on the problems of the elderly consumer: 24 and 25 January 1979 (11 January 1979) HAEU, BEUC-34. 215 BEUC, Note for the BEUC Council: Programme of activities (October 1979 until end of 1980) (1979) (n 202). 216 BEUC, Yearly Activity Report 1978 (1979) (n 172) 3. 217 BEUC, Summary of BEUC’s priority programme (1 September 1978) HAEU, BEUC-32 2.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  55

C.  New Initiatives: Competition Cases and Dangerous Products Interpol Besides the two new thematic interests (energy and disadvantaged consumers), BEUC also became more active in two different fields: competition cases and the so-called Dangerous Products Interpol. The year 1978 saw two milestones that marked the start of both new activities. First, in June, BEUC reported a competition case to the Commission for the first time: a price-fixing cartel among Belgian beer manufacturers and distributors sanctioned by the Belgian Ministry of Economic Affairs.218 They had established a fixed minimum price, which led to a clear price increase of Belgian beers.219 The cartel was dissolved after having discovered that the Commission had been asked to investigate their case. After this success, BEUC decided to look for other infringements of the EEC’s competition rules, reporting a soft drinks cartel in the Netherlands to the Commission in early 1979.220 It also investigated air fares, the prices of cross channel ferries, consumer electronics and car prices.221 With regard to the latter, BEUC particularly focused on the rights of consumers buying cars in other countries. They faced many difficulties, including artificially high prices, refusal to sell and threats that warranties would not be respected. In 1982, BEUC filed a complaint against BMW, Ford, British Leyland and Fiat for infringement of competition rules. The European Consumer Organisation demanded that the Commission take action, otherwise it would bring the issue to the European Court of Justice. In response, the Commission indeed announced it proposed to take action and took interim measures against Ford, which appealed against this to the Court of Justice.222 BEUC intervened alongside the Commission against Ford in the Court, which ruled that Ford had to restore deliveries of right-hand drive cars to British consumers on the German market.223 Ford appealed against this ruling and – much to the concern of BEUC – the Advocate General went against the Commission and BEUC in his decision.224 However, the Court of Justice eventually rejected Ford’s appeal and confirmed the right of consumers to buy cars in other EEC countries, thereby referring to the arguments brought forward by BEUC.225 The second milestone of 1978 resulted from a drama in Britain, where in July four elderly people contracted botulism from a can of salmon, leading to the death of two of them. The British CA informed the other BEUC members, who discovered that the British authorities had not informed other health authorities and that most remained unaware of the incident. For this reason, BEUC urged the Council of Ministers to

218 Tony Venables, Lettre: limitation de la concurrence dans le secteur de la bière en Belgique (5 June 1978) HAEU, BEUC-106. 219 BEUC, Persmededeling: In verband met het bierkartel in België: het BEUC en Test-Aankoop ondernemen samen een aktie bij de Commissie van de Europese Gemeenschappen (16 June 1978) HAEU, BEUC-32. 220 BEUC, Yearly Activity Report 1978 (1979) (n 172) 15–16. 221 BEUC, Minutes of the Council meeting of 29 June 1979, HAEU, BEUC-30 4; BEUC, Minutes of the Council meeting held on 17 October 1980, HAEU, BEUC-23 3; BEUC, Annual report for 1981 (1982) (n 132) 15–16. 222 BEUC, The ‘Ford’ case (1982) HAEU, BEUC-40. 223 BEUC, 1982 Annual Report (1983) (n 133) 12. 224 BEUC, 1983 Annual report (2 March 1984) (n 199) 1–2. 225 BEUC, Annual report 1985 (5 May 1986) (n 200) 2.

56  Koen Docter implement a ‘Dangerous Products Interpol’, which would oblige all members of the EEC to inform each other if they found a dangerous product on their markets. A Europe-wide scheme would then ensure that such products would be withdrawn from the markets, without dumping them in third countries.226 In anticipation of such measures, BEUC decided to inform its members about any dangerous products found in Member States and which could appear in other countries, because of the Common Market.227 In 1979, the Commission formally proposed the establishment of an EEC early-warning system on dangerous products.228 As the EEC was slow to implement this system, BEUC kept monitoring specific cases and informing the Commission about them, such as the Spanish cooking oil affair. Contaminated olive oil caused the death of over 100 people in Spain and BEUC pressed the Commission to prevent the import of this oil to the EEC. The IOCU also supported BEUC’s call for an international ‘consumer alert’ system.229 In 1982, the European Parliament strengthened the Commission’s proposal for rapid exchange of information.230 The rapid exchange system for information on dangerous products was finally adopted by the first ever Council of Ministers for consumer affairs in December 1983.231

D.  The First Elections for the European Parliament (1979) In its early years, lobbying by BEUC had focused on promoting the interests of European consumers in the EEC Commission. In a memo written in May 1976, Anthony Dumont of the CA drew the attention of the other BEUC members to the growing importance of the European Parliament (EP). He predicted that the influence of the Parliament would continue to grow, especially since it would soon become directly elected. For this reason, he argued that ‘it is most important that BEUC should pay serious attention to influencing as far as it can the members of the European Parliament.’ Thus, he proposed that BEUC had to gain an insight into which MEPs were interested in consumer matters, encourage them to have meetings with other consumer-minded MEPs and supply them with information.232 The BEUC Council members agreed to provide lists of parliamentarians who were interested in consumer affairs.233 Moreover, they stressed the importance of lobbying on the national level as well and informing politicians about the consumer interests at stake in the Common Agricultural Policy. Benedicte Federspiel of the Danish Forbrugerrådet stated: ‘We should try to help people we like to get into Parliament, people whom we can trust.’234

226 BEUC, Press release: Consumers press European health ministers on need for a dangerous products interpol (13 November 1978) HAEU, BEUC-32. 227 BEUC, Yearly Activity Report 1978 (1979) (n 172) 11–14. 228 BEUC, Minutes of the Council meeting of 10 October 1979, HAEU, BEUC-30 3. 229 BEUC, Annual report for 1981 (1982) (n 132). 230 BEUC, 1982 Annual Report (1983) (n 133) 9. 231 BEUC, 1983 Annual report (2 March 1984) (n 199) 1. 232 AA Dumont, BEUC and the European Parliament (May 1976) HAEU, BEUC-19. 233 BEUC, Minutes of the BEUC Council meeting held on 10th May 1976 in Paris (n 94) 9. 234 BEUC, Minutes of the BEUC Council meeting of 10th May 1977 (n 95) 5.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  57 A consumer programme was drafted specifically in the light of future direct elections to the European Parliament.235 Its stated aim was to initiate more regular and frequent contacts with the members of the EP. The programme was structured around the five basic consumer rights as set out in the European Consumer Charter of 1973: the rights to: (1) protection and assistance (broken down into protection of health and safety, and protection of economic interests), (2) redress against damage, (3) consumer information, (4) consumer education, (5) representation and participation. Harmonisation and enforcement of legislation, which BEUC had repeatedly mentioned as a key priority before, was also mentioned as one of the consumer ‘rights’. Finally, the importance of the environment was highlighted: ‘The Community should move from the throwaway philosophy of the present economy towards one which stresses quality and durability.’236 The programme also emphasised the CAP as an important topic, in the chapter on the economic interests of consumers.237 Moreover, a paper about European consumers and the CAP was sent to every member of the EP and was referred to during the debate, which contributed to MEPs recommending ‘a policy much along the lines of the BEUC paper’.238 In the election year, BEUC published a manifesto in the magazines of its member organisations. The text stressed that decisions taken in the EEC had a clear impact on the lives of European citizens, even though many of its concepts might seem complicated, abstract and far-removed from their everyday problems. BEUC outlined its main demands in the interest of consumers, which largely corresponded to the priority programme it had formulated a year earlier, in 1978. Besides BEUC’s long-established focus areas like the CAP, competition, protectionism and consumers’ right to be informed, the manifesto also focused on the more recently developed interests in energy policy, disadvantaged consumers and an early warning system for contaminated or dangerous products.239 After the Parliament was installed, it established relations with the new MEPs and particularly the members of the Committee on the Environment, Public Health and Consumer Protection.240 Members of the BEUC staff travelled to Strasbourg and Luxembourg for most sessions of the Parliament. They provided briefings for members of competent Committees on a range of consumer-related topics, including the CAP, but were disappointed when the Parliament proposed an even higher price increase than the Commission.241 BEUC struggled to offer a counterweight to industry lobbying,242 still sending briefings and organising events for MEPs over the following years. Although BEUC complained about the unpredictability of the Parliament in the various topics of interest to consumers, it also regularly found the EP on its side.243



235 Claudine

Van Lierde, Letter to the members of BEUC (25 July 1977) HAEU, BEUC-28. A consumer policy for Europe (January 1978) HAEU, BEUC-32. 237 BEUC, Consumer programme (September 1977) (n 119). 238 BEUC, BEUC Yearly Activity Report 1977 (1978) HAEU, BEUC-33 9. 239 BEUC, Yearly Activity Report for 1979 (1980) (n 179) 3–6. 240 ibid 2. 241 BEUC, Yearly Activity Report for 1980 (1981) (n 181) 12. 242 BEUC, 1982 Annual Report (1983) (n 133) 7. 243 BEUC, 1983 Annual report (2 March 1984) (n 199) 7–8. 236 BEUC,

58  Koen Docter

E.  The Growth Hormone Scandal When the veal hormone scandal of 1980 broke out, various EEC countries (including France) still allowed the use of growth hormones in cattle breeding, while others (­including Italy) had prohibited this practice. The hormones contributed to faster growth of animals and stimulated their muscle build-up. Since hormone-treated cattle grew 15 per cent faster on average, intensive livestock farming and particularly the meat processing industry obtained substantial economic benefits. Regulatory differences within the EEC led to disputes between the Member States. This culminated in a large scandal when the Italian press reported that DES-enriched veal in baby food (originating in France) had caused infants to develop symptoms like abnormally large genitals and the onset of menstruation.244 BEUC then decided to start a campaign, since the absence of European rules was an evident problem here.245 The European Consumer Organisation advocated harmonisation of European legislation (full prohibition of growth hormones), as well as proper enforcement and exchange of information between Member States (the ‘Dangerous Products Interpol’ proposed earlier).246 The French Union fédérale des consommateurs (UNC) had already initiated a boycott of veal. The BEUC Bureau decided to help the boycott spread to the rest of Europe,247 urging consumers to stop eating veal ‘in order to underline the necessity for IMMEDIATE ACTION on the part of the public authorities’.248 BEUC stressed that European legislation needed to be developed immediately to protect consumers against the use of hormones and that this legislation ‘should in no case be a step backwards by comparison with the most advanced national rules’.249 The BEUC Bureau had acted quickly and therefore received some criticism for having called for a boycott without having consulted or informed its national members.250 Nevertheless, BEUC’s campaign in fact contributed to a drop in veal prices across Europe. It was highly successful in mobilising consumers, thanks to its effective use of the media, calls to boycotts and political initiatives. It used the issue to promote discussion on European agriculture in general. Moreover, BEUC found the EP on its side, eager to prove its worth and increase its influence on EEC policy making. This helped BEUC to successfully pressure the EEC authorities to impose higher levels of protection,251 providing several briefings to MEPs. In February 1981 the EP adopted a favourable opinion on the ban of growth hormones as proposed by the Commission.252 Yet the Council of Ministers hesitated.253 244 Ladina Caduff, ‘Growth Hormones and Beyond’ (2002) Working Paper 8-2002, Swiss Federal Institute of Technology, Center for International Studies http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.517. 7914&rep=rep1&type=pdf. 245 BEUC, Press release: BEUC urges the Commission to take action on the use of hormones in the rearing of calves and cattle in general (23 September 1980) HAEU, BEUC-43. 246 BEUC, Dossier noir des hormones et des antibiotiques (1980) HAEU, BEUC-36 97. 247 BEUC, Yearly Activity Report for 1980 (1981) (n 181) 23. 248 BEUC, Press release: The European Bureau of Consumer Unions (BEUC) invites European consumers not to eat veal (26 September 1980) HAEU, BEUC-43. 249 ibid. 250 AG Fransen, Letter to Tony Venables (2 October 1980) HAEU, BEUC-43. 251 Caduff (n 244). 252 BEUC, Press release: Hormones: All obstacles to EEC legislation now lifted (16 February 1981) HAEU, BEUC-50. 253 BEUC, Press release: Hormones: The Common Market farm ministers are putting their own credibility at risk (8 May 1981) HAEU, BEUC-50.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  59 Despite an initial commitment to ban the use of all growth hormones in the meat sector, BEUC complained that the European agriculture ministers made little progress the following year and only confirmed the ban on substances that had already been forbidden at the national level. The European Consumer Organisation blamed the Council of Ministers for having yielded to the strong agricultural lobby: Once public opinion, which probably considered the issue solved at the end of 1980, was no longer concerned and the boycott over, the Council under pressure from the powerful vested interests involved felt able to go back on its original commitment.254

Moreover, the US opposed tricter EEC legislation on growth hormones. They considered it as a non-tariff barrier to trade, due to the widespread use of hormones in American meat production. BEUC discussed the issue with the American Consumer’s Union and the two organisations together declared that ‘trade considerations should not be allowed to override health issues’.255 Within the EEC, Belgium, Ireland and the UK opposed the prohibition on use of growth hormones as growth promoters.256 Despite initial reluctance on the part of some of its member organisations, BEUC publicly threatened to ask EEC Member States to block all meat imports from these countries if the agricultural ministers failed to take a satisfactory decision.257 After long discussions about compromises and partial bans, the EEC finally agreed on a complete ban on all hormones in meat in 1985, five years after the veal boycott of 1980.258

VI.  Adulthood (1983–85 and Beyond) A.  Renewed Optimism In May 1983, BEUC once again chose a new president, with Peter Goldman of the British CA taking over from Benedicte Federspiel, who in turn was elected President of the CCC. That year, the European Consumer Organisation reported that finally an end seemed in sight for the impasse in the European consumer programme. After pressure from BEUC, the CCC and later also the European Parliament, the first ever EEC Council of Ministers for consumer affairs was organised, under the Presidency of Greece. BEUC thanked Greece for ‘saving the EEC consumer programme’ and mused that it was ‘ironic that a country just starting with consumer protection took the initiative to organize a meeting to try to agree on proposals blocked for years by governments of countries more advanced in consumer protection’.259 The Council immediately decided to adopt

254 BEUC, Annual report for 1981 (1982) (n 132) 10. 255 BEUC, Press release: Hormones: The EEC legislation in danger! (20 March 1981) HAEU, BEUC-50. 256 ibid. 257 BEUC, Draft press release on hormones. Telex to BEUC members (3 April 1981) HAEU, BEUC-50; BEUC, Action in common on hormones. Telex to all BEUC members (9 April 1981) HAEU, BEUC-50; BEUC, Press release: Hormones: If the Council of Ministers does not respect its promises on 15 June, BEUC and its member organisations will ask EEC Member States to block all the meat imports from the countries which are against a strict EEC legislation (12 June 1981) HAEU, BEUC-50. 258 BEUC, Annual report 1985 (5 May 1986) (n 200) 11. 259 BEUC, 1983 Annual report (2 March 1984) (n 199) 1.

60  Koen Docter the rapid exchange system for information on dangerous products, for which BEUC had lobbied for years. Despite high hopes that this would create a momentum from which consumers would benefit, BEUC reported that the impetus was lost under the Irish Presidency in the second half of 1984: directives on doorstep selling, misleading advertising and product liability still remained blocked, as they had been for years.260 Still, the European Consumer Organisation noted some successes. For instance, the Environment Council of the EEC reached agreement on the principle of eliminating lead from petrol. BEUC decided to launch two new campaigns: ‘consumers for a safe market’ and ‘consumers for a free market’. The first was aimed at developing a coherent EEC product safety policy and largely corresponded to BEUC’s earlier campaign for an exchange system for information about dangerous products. The second campaign was directed against protectionism, trade barriers and frontier formalities within the EEC. In 1985, BEUC was much more positive again. According to the yearly activity report, ‘1985 was one of the best years in BEUC’s history’, since it was marked by ‘a considerable improvement in the climate in which BEUC operates as a pressure group with the EEC institutions and tangible legislative results’.261 The European Consumer Organisation welcomed the appointment of Stanley Clinton-Davis as the Commissioner for Environment, Consumer Protection and Transport in the new Commission led by Jacques Delors. Clinton-Davis demonstrated openness to BEUC’s suggestions. Various of the issues that BEUC had campaigned for were brought to a successful conclusion: the ban on hormones in meat, the elimination of lead from petrol and the right to buy cars in other EEC countries. The product liability Directive was agreed after a decade of discussions. Moreover, the Commission presented a ‘green paper’ on agricultural policy, a consultative document that outlined basic options for the future development of the CAP.262 BEUC called this green paper ‘the nearest official endorsement made by an EEC institution of the arguments put forward for a generation by the consumer movement’.263 The mid-1980s also saw the foundation of a fund to support the development of small consumer organisations in some of the EEC Member States. The decision to launch this fund was taken in 1984.264 This fund was eventually named ‘The Peter Goldman Fund’ in 1987, after the BEUC President unexpectedly passed away a mere week before the end of his term.265 Through financial aid and a development plan, small consumer organisations were encouraged to develop their magazines and increase their membership, to strengthen their ability to protect consumer interests. The first organisations that were assisted through this fund were the Portuguese DECO, the Consumers’ Association of Ireland (CAI) and the Greek Kentro Prostasias Katanalotan (KEPKA).266 260 BEUC, 1984 Annual report (25 March 1985) HAEU, BEUC-45 1. 261 BEUC, Annual report 1985 (5 May 1986) (n 200) 1. 262 European Commission, Press release: Perspectives for the Common Agricultural Policy: Green Paper – Introduction (1 July 1985) http://europa.eu/rapid/press-release_P-85-57_en.htm. 263 BEUC, Annual report 1985 (5 May 1986) (n 200) 2. 264 Koos Anderson, A fund for developing small consumer organisations (11 October 1984) HAEU, BEUC-27. 265 BEUC, Annual report 1987 (20 April 1988) HAEU, BEUC-45. 266 BEUC, 1984 Annual report (25 March 1985) (n 260) 3; Peter Goldman Fund, Aid to member organisations (11 July 1988) HAEU, BEUC-27.

The Early Years of the European Consumer Organisation BEUC, 1962–1985  61 The budget of the fund was separate from that of BEUC. The Peter Goldman Fund could obtain its financing from the Commission or national governments, as well as donations from other organisations or individuals, as long as they were not connected with a business.267 Former EEC Commissioner Sicco Mansholt and former EEC President Roy Jenkins were among the first patrons.268 In 1989 the largest contributions came from the British CA (620,000 BF: €28,910), the Belgian Test-Achats (320,000 BF: €14,921) and the Dutch Consumentenbond (185,000 BF: €8,626), for a total budget of 1.3 million BF (€60,618).269

B.  Twenty-Five Years of European Consumer Protection By 1986, there was still one Council member left who had been active in the European Consumer Organisation since the very beginning: Gilbert Castelain of the Belgian consumer organisation Test-Achats/Test-Aankoop. He had served BEUC in different roles and had been its president during establishment of the permanent secretariat in Brussels. Thus, he had witnessed – and contributed to – the transformation of BEUC from a loose club of national consumer organisations into a distinct European organisation that was able to set its own course. For roughly the first decade of its existence, BEUC had no office and no permanent staff. In the 1980s, a staff of between eight and ten ensured that the European Consumer Organisation was able to carry out its own projects and coordinate cooperation between the member organisations more efficiently. This was facilitated by a sharp increase in the BEUC budget: from 119,000 BF (€21,645) in 1963, to 3.1 million BF (€365,168) in 1974 and 13.5 million BF (€920,574) in 1981. Like the EEC itself, the number of states represented in BEUC had also increased, from six in 1962 to 12 in 1986. The years 1972–73 had marked a turning point in the existence of BEUC. The accession of the British CA in 1972 had been particularly important, as this organisation instantly became the largest financial contributor. The Danish Forbrugerrådet was also a powerful consumer organisation with a long history. The accession of these organisations was the long-awaited impetus needed to professionalise BEUC and establish a permanent secretariat in Brussels. Moreover, this led to other organisations sharply increasing their contributions as well. Besides the CA, the Dutch Consumentenbond was also consistently ranked among the top three contributors during the first three decades of BEUC’s existence. It had strongly pushed for the establishment of a permanent secretariat and welcomed the end of francophone hegemony within BEUC thanks to the accession of the British, Irish and Danish consumer organisations. BEUC’s increased recognition contributed to a continuous stream of membership requests from a wide range of organisations. Some of these requests were rejected outright, as they did not meet the basic requirements (for example, based in an EEC Member State, consumer interests as their prime focus). Others were given the status of associate or observer members, in some cases eventually becoming full members. The Italian corruption

267 Peter 268 Peter

Goldman Fund, The Madrid Declaration (1988) HAEU, BEUC-27. Goldman Fund, List of people who have so far agreed to be patrons (1988) HAEU, BEUC-27. P. Goldman Fund Balance sheet 1989 (1990) HAEU, BEUC-27.

269 BEUC,

62  Koen Docter scandal of 1974 taught BEUC the importance of ensuring that (prospective) member organisations had no ties to industry. In addition to new members and increased contributions from existing BEUC members, another factor that contributed to an augmented budget was the foundation of the Consumers’ Consultative Committee (CCC) in 1973, after the collapse of its less successful predecessor the CCCCE. Through the CCC, BEUC received funding from the Commission to carry out product studies. The year 1973 marked a turning point in another regard as well, as the Council of Europe adopted its Consumer Protection Charter, which was strongly influenced by a text submitted by BEUC. This Charter even­ tually formed the basis for the first Consumer Programme of the European Community. The permanent secretariat had enabled diversification of BEUC activities. The European Consumer Organisation still protected the interests of consumers in the European Commission through its membership of the CCC. However, lobbying was now also emphatically directed towards the European Parliament, which had grown more powerful since it had become directly elected in 1979. The number of tests and reports carried out by BEUC had increased considerably since the establishment of a permanent secretariat. Moreover, BEUC had gradually expanded its activities into new fields of interest, such as competition, the Dangerous Products Interpol, and energy policy. The latter was the direct result of the oil crises of 1974 and 1979. Environmental concerns also gained prominence. At the same time, the Common Agricultural Policy had been a key concern since the early years of BEUC and remained so for decades. The successful and widely reported boycott of veal in the midst of the growth hormone scandal could be seen as BEUC’s ‘finest hour’. This campaign helped the European Consumer Organisation to become a household name in the European press. It also taught BEUC to respond quickly to highly topical issues, a feat it would emulate for example with the Chornobyl disaster in 1986. The European Consumer Organisation published an alarming report that was immediately picked up by the press, about the strongly divergent policy reactions across the EEC and the diverse national approaches to protecting consumers from radiation in food.270 Thus, by the mid-1980s BEUC had clearly grown up. In a way, the establishment of the Peter Goldman Fund in 1987 could be seen as a symbol of this. Having reached adulthood, the European Consumer Organisation was now looking to adopt its own ‘children’, by supporting the growth of national consumer organisations in countries where consumer protection was still in its infancy. BEUC’s budget continued to grow in the ensuing years, reaching 38.8 million BF (€1.6 million) in 1992. The European Consumer Organisation had grown in size, capacity and reputation, developed new skills and specialisations. Through crises and frustrations, BEUC had become an established defender of consumer interests, both in the European institutions and in the media.

270 BEUC, Annual report 1986 (19 March 1987) HAEU, BEUC-45; cf De Telegraaf, Onthutsende verschillen in aanpak gevolgen Tsjernobyl (1 August 1986) 3.

4 The Intellectual Community of Consumer Law and Policy in the EU1 HANS-W MICKLITZ

I.  Disclaimer – A Personal Note Reconstruction and analysis of intellectual history in the foundational years bears a personal note. The period to be analysed reaches from the mid-1970s until the end of the 1980s. I cannot and will not hide that I was an integral part of the founding years. There were five decisive moments in my life that had a long-term impact on my academic career and my understanding of the role and function of European consumer law and policy. From 1976 to 1978 I was a research assistant to Norbert Reich, who had advertised the position at the University of Hamburg. For my generation he was an intellectual hero. He did not carry the Nazi legacy in his career. He was a critical left-wing scholar, using Marxist theory to build the theoretical foundations of consumer law in Germany in 1974,2 but also through his translation of Stucka,3 the counterpart to Pashukanis.4 From there and through his support I joined the Centre de Droit de la Consommation et du Marché in Montpellier in 1979 as a research fellow, where Jean Calais-Auloy introduced me to French consumer politics. In 1981 I was appointed by a generous but unknown individual as academic advisor to a small group of consumer lawyers within the Consumer Consultative Committee (CCC)5 which over a period 1 I would like to thank my colleagues and friends for their comments, Guido Alpa, Monique Goyens, Geraint Howells, Ludwig Krämer, Ursula Pachl, Iain Ramsay, Christine Riefa, Thomas Roethe, Bob Schmitz, Jules Stuyck, Klaus Tonner, Thomas Wilhelmsson. The responsibility remains mine alone. 2 Norbert Reich, ‘Zivilrechtstheorie, Sozialwissenschaften und Verbraucherschutz’ (1974) 7 Zeitschrift für Rechtspolitik 187. 3 Petr I Stucka and Norbert Reich ‘Introduction’, Die revolutionäre Rolle von Recht und Staat (Frankfurt am Main, Suhrkamp, 1969). 4 On the role of Norbert Reich see Hans-Wolfgang Micklitz, ‘In Memory of Norbert Reich’ (2015) 4 Penn State Journal of Law and International Affairs v–viii; Hans-Wolfgang Micklitz, ‘Nachruf Norbert Reich’ (2016) 71 JuristenZeitung 142; Hans-Wolfgang Micklitz, ‘Norbert Reich, Founder and Pioneer of Consumer Law 1937–2015 – Obituary’ (2016) 39 Journal of Consumer Policy 3; Hans-Wolfgang Micklitz, ‘Norbert Reich, Gründer und Begründer des Verbraucherrechts 1937–2015 – ein Nachruf ’ (2015) Verbraucher und Recht 443. 5 Commission Decision 73/306/EEC of 25 September 1973 relating to the setting up of a Consumers’ Consultative Committee [1973] OJ L283/18–19, which brought together representatives from four different branches at the European level: consumer organisations, family organisations, co-operatives and trade unions,

64  Hans-W Micklitz of six months discussed the impact of the Cassis de Dijon judgment on national and European consumer law. Here I got to know Benedicte Federspiel and Bob Schmitz,6 both key figures in the European intellectual community. I was also confronted with the political importance of the four freedoms, with Articles 30 and 34 TFEU and the case-law of the European Court of Justice in Dassonville. At that time, European law did not form an integral part of legal education (which I had completed in 1976), at least not in Germany. For my generation European law was a subcategory of international public law, with the exception of European competition law. The ‘Cassis de Dijon working group’ triggered a high learning curve and remained an unforgettable experience.7 I used ‘Cassis de Dijon’ in a public lecture at the University of Bremen when I applied for a position as a post doc (in today’s language) at the newly founded Zentrum für Europäische Rechtspolitik (Centre for European Legal Policy), with Norbert Reich as its managing director. In my youthful enthusiasm, I let myself be carried away by the remark that Cassis de Dijon ‘would change the legal world’. The Bremen professors burst into laughter but I got a job. Around the same time I was asked to participate in a rather informal consultative body of engineers, natural scientists and consumer advocates on the elaboration of technical standards by CEN and CENELEC, the European Standards Bodies. The expectation of the European Commission was to give consumer policy a stronger voice. These kind of initiatives were merged in 1995 into an EU8 Commission-sponsored non-profit organisation, called ANEC.9 My early participation allowed me to gain access to the rather closed world of technical standards making, a tool that would gain ever more and ever stronger importance in the ongoing European integration process. All these events put together led to a rather unusual entry into academia: I started straight away as a European private lawyer.

II.  The Establishment of the Intellectual Community Before embarking on the journey, there is a need to clarify how I understand and how I use the term ‘intellectual community’. Tönnies draws a distinction between Gemeinschaft und Gesellschaft, community and society.10 Social ties, this is the distinction, can be see Ludwig Krämer, EWG-Verbraucherrecht. 1st edn (Baden-Baden, Nomos, 1985) Rdnr 61, available also in English EEC Consumer Law (Brussels, Springer, 1986). 6 See Hans-Wolfgang Micklitz, Ewoud Hondius, Thom van Mierlo and Thomas Roethe (eds), The Fathers and Mothers of Consumer Law and Policy in Europe: The Foundational Years 1950–1980 (Florence, European University Institute, 2019) 65, 213. 7 The experience I gained is summed up in Christian Joerges, Josef Falke, Hans-Wolfgang Micklitz and Gert Brüggemeier, Die Sicherheit von Konsumgütern und die Entwicklung der Europäischen Gemeinschaft, Band 2 (Baden-Baden, Nomos, 1988) Kapitel/Chapter V.6, 401–430, in English Gert Brüggemeier, Josef Falke, Christian Joerges and Hans-Wolfgang Micklitz, ‘European Product Safety, Internal Market Policy and the New Approach to Technical Harmonisation and Standards – Reissued’ (2010) 6 Hanse Law Review 107–114; and conceptually linked to the market freedoms in Hans-Wolfgang Micklitz, ‘Technische Normen, Produzentenhaftung und EWG-Vertrag’ (1983) 10 Neue juristische Wochenschrift 483, 483–489. 8 Throughout the chapter I will use EU for European Union, I will not refer to the differences between EEC, EC and EU. 9 www.anec.eu. 10 Ferdinand Tönnies, Gemeinschaft und Gesellschaft: Grundbegriffe der reinen Soziologie (Darmstadt, Wissenschaftliche Buchgesellschaft, 1972).

The Intellectual Community of Consumer Law and Policy in the EU  65 categorised as belonging to personal social interactions, and the roles, values, and beliefs based on those interactions, or as belonging to indirect interactions, impersonal roles, formal values, and beliefs based on those interactions. The dichotomy is purely conceptual, though not an ideal type in the sense of Weber. The community I am going to describe is an intellectual community that has brought together academics and practitioners who are connected through personal ties and who share the common value and the common belief that a better and more just society can be established through promotion of consumer policy and law so as to give the European integration process a social face. The community to be described should not be conceived of as a coherent institutionalised body. It is, rather, a loose connection with a nucleus in the form of the European Consumer Law Group and wider in particular academic circles that may have personal ties to one or some of the members of the ECLG or that may have no personal connections but share the values and beliefs. In what follows I am trying to structure the establishment of the claimed European intellectual community around eight constituent parameters: the initial project on analysis of the consumer protection laws in the Member States which prepared the ground for EU action, the reconstruction of the European Consumer Law Group and the key research centres, the Centre de Droit de la Consommation in Louvain-la-Neuve, the Centre for European Legal Policy in Bremen, the Centres in Leuven, Brunel, Geneva and Montpellier, the establishment of a platform for exchange through consumer law and policy journals, the location of the European Commission in its interaction with the Council of Europe and the OECD and last but not least the opening of the European intellectual community to the US through the Integration through Law projects. I have been in contact with all of them for many decades and each of the centres certainly deserves its own chapter. In that sense the reconstruction of the intellectual community is certainly biased, coined through a somewhat arbitrary choice and my personal experience.

A.  The European Project on Consumer Protection Laws In the background to the EU project on Consumer Protection Laws stands adoption of the first consumer policy programme in 1975. The European Commission, in the person of Ludwig Krämer,11 sought intellectual input from the Member States’ laws, more particularly from emerging consumer law academia to give shape to the five consumer rights enshrined in the first programme. The project was not tendered. It was only much later that the EU Commission changed its policy.12 Norbert Reich received 100,000 ECU13 for carrying out country reports in the then nine Member States (Belgium,

11 Ludwig Krämer in Micklitz, Hondius, van Mierlo and Roethe (eds), The Fathers and Mothers (n 6) 23. 12 On the ambiguities of the tendering process see Hans-Wolfgang Micklitz and Aurélie Villanueva, ‘REFIT or Rethink – The Politics of EU Research – A Grand Misunderstanding?’ in Esther van Schagen and Stephen Weatherill (eds), Better Regulation in EU Contract Law: The Fitness Check and the New Deal for Consumers (Oxford, Hart Publishing, 2019) 37–59. 13 ECU, the European Currency Unit (French: Unité de compte européenne, German: Europäische Währungseinheit ; ₠, ECU, or XEU), was a unit of account used by European Economic Community composed

66  Hans-W Micklitz Denmark, Germany, France, Ireland, Italy, Luxemburg, the Netherlands, and the UK), comparative reports and for organising work sessions. Norbert Reich had received a mandate from the European Commission, to investigate consumer protection laws and to provide a comparative analysis. He was looking for a research assistant. This is how my career started in 1976 at the Hochschule für Wirtschaft und Politik, where I also met Klaus Tonner.14 Our encounter would turn into a lifelong – nearly 40 years – fruitful co-operation and friendship. The first crucial step was to find reporters for the nine countries. Here the European Commission played a key role. In 1975 the European Commission had sponsored the very first European conference on ‘The Judicial and Quasi-Judicial Means of Consumer Protection’, in Montpellier.15 That very same year, Jean Calais-Auloy had established the Centre du Droit de la Consommation et du Marché.16 Participating in the conference were Jean Calais-Auloy and Jean Maury (France), Gustavo Ghidini (Italy), Ewoud Hondius (Netherlands) and Norbert Reich (Germany); these five took over the country reports in the 1976 project. The project was joined by Marcel Fontaine and Thierry Bourgoignie for Belgium and Luxembourg, Børge Dahl for Denmark, and Michael Whincup for Ireland and the UK. Jean Calais-Auloy divided the responsibilities between Hélène Bricks, Marie-Thérèse Calais Auloy, Jean Maury, Frank Steinmetz and Henri Temple; and Norbert Reich took me on board as co-reporter for Germany and co-author of the comparative analysis. In late autumn 1976 Norbert Reich convened a meeting in Brussels, where most of the contributors and Ludwig Krämer participated. Here I got to know my colleagues from the eight Member States – colleagues who have accompanied me throughout my academic life. The purpose of the meeting was to agree on a joint format for the stocktaking of the national consumer protection laws. At the time, nobody used ‘consumer law’; the unquestioned term was consumer protection laws. Norbert Reich and I took inspiration from Eike von Hippel’s Verbraucherschutz, published in 1974,17 from the study which Norbert Reich, Klaus Tonner and Hartmut Wegner had executed for the Commission on Economic and Social Change (Kommission für wirtschaftlichen und sozialen Wandel) in 197618 and from Norbert Reich’s monograph ‘Markt und Recht’, also published in 1976.19 Until today, the then agreed structure influenced the understanding of what should come under the notion of consumer law: A general frame (consumer organisations, consumer policy, the notion of the consumer, the concept of consumer law), consumers and prices (price control and price indication), consumer information (labelling, measures, weight and packaging, the role of consumer organisations), advertising of a basket of member country currencies. The ECU came into operation on 13 March 1979 and was assigned the ISO 4217 code. It was the predecessor of the Euro. The European Commission used the ECU in the tendering of projects. 14 Klaus Tonner in Micklitz, Hondius, van Mierlo, Roethe (eds), The Fathers and Mothers (n 6) 142. 15 The conference papers, http://op.europa.eu/en/publication-detail/-/publication/b194e6b0-0399-4f34bc50-d8b7fa92ea53. 16 http://cdcm-montpellier.com/presentation. 17 Eike von Hippel, Verbraucherschutz (Tübingen, Mohr Siebeck, 1974). 18 Norbert Reich, Klaus Tonner and Hartmut Wegener, Verbraucher und Recht (Göttingen, Schwartz, 1976). The Commission was established by the German Government. 19 Norbert Reich, Markt und Recht: Theorie und Praxis des Wirtschaftsrechts in der Bundesrepublik Deutschland (Neuwied, Darmstadt, Luchterhand, 1977).

The Intellectual Community of Consumer Law and Policy in the EU  67 (unfair, misleading comparative) and sales promotion (including door-to-door sales), safety of products and services (pre-market control of particularly dangerous products and product liability), quality of goods and services (in particular civil liability for the quality of goods in consumer sales, after-sales service, special rules on services such as travel contracts and correspondence course contracts), unfair contract terms (premarket control, judicial review, distinction between the control of individual terms and of standard terms), consumer credit (hire purchase, instalment transactions, interest rates, securities) and legal advice and law enforcement (individual and collective). Perhaps one difference stands in comparison to today – statutory price control is no longer a topic. The digital economy and digital society has brought competition law back on to the agenda. In a remarkable judgment the German Supreme Court exercised control over the behaviour of market-dominant companies, very much in line what Norbert Reich argued for as early as 1976.20 The initial plan of the European Commission was to initiate country reports for each new Member State. However, this plan was not realised. Worth mentioning, though, is the report by Ludwig Krämer on EU Consumer Law, which roughly follows the same structure.21

B.  The European Consumer Law Group The very same Ludwig Krämer played a key role in the foundation of the European Consumer Law Group in 1977.22 The idea of concentrating expertise had been running around since the conference on product liability in London.23 Ludwig Krämer had invited stakeholders from all over Europe. Five to six consumer lawyers saw themselves confronted with 300 business representatives. This imbalance triggered the decision by the consumer lawyers to unite forces and to lobby as a group. The first meeting of the then established European Consumer Law Group took place on the 30 March 197724 and the first topic selected was to write an opinion on product liability, which was published in December 1977.25 The whole project could not have taken off without Ludwig Krämer, though. He convinced the European Commission to provide the necessary funds for bi-annual meetings through the Commission. The members worked pro bono. The ECLG

20 Bundesgerichtshof (BGH), Beschluss vom 23.06.2020 in der Kartellverwaltungssache (2020) KVR 69/19, http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?Gericht=bgh&Art=en&nr=109506; Reich (n 19) ch 5, under V. 21 Krämer, EWG-Verbraucherrecht (n 5). 22 For more detail, Koen Docter, ‘The early years of the European consumer organisation BEUC, 1962–1985’ in this volume, ch 3, IV.D. 23 Thierry Bourgoignie in Micklitz, Hondius, van Mierlo and Roethe (eds), The Fathers and Mothers (n 6) 55. 24 Present: Thierry Bourgoignie, Børge Dahl, Hans de Coninck, Loes Dommering, Benedicte Federspiel, Marc Goossens, Cécile Housiaux, Janine Jacquot, Ludwig Krämer, David Tench, Elsemarie Stork, Marinus Vromans and probably also Leslie Yoomans. 25 European Consumer Law Groups, Reports and opinions (September 1977 – March 1984, Rapports et avis (septembre 1977 – mars 1984), Centre de Droit de la Consommation (Brussels, E. Story-Scientia, 1986).

68  Hans-W Micklitz brought together two representatives per Member State, in the shape of a representative from academia alongside a practitioner from the national consumer organisations, thus uniting research and practice. The Group, however, was not limited to Member States. Representatives from non-Member States that joined the EU later, such as Greece, Finland, Portugal and Sweden, participated through academics and in the case of Finland and Sweden also through their ombuds. Representatives from non-EU countries such as Switzerland and Norway complemented the group. The authors and contributors of the series edited by Norbert Reich on Consumer Protection Law in the Nine Member States formed the academic core of the ECLG. The language within the ECLG was English and French as is documented in the ECLGs opinions, which until the mid-1980s were written in both languages. The ECLG existed for nearly 25 years, led by different chairmen – in between Norbert Reich and Thierry Bourgoignie – and administered by BEUC (Bureau des Unions des Consommateurs), the umbrella organisation of the national consumer organisations.26 In line with ground-breaking transformations at the EU level – namely the Lisbon Summit of 2000,27 the move towards neoliberalism, the adoption of the Charter of Fundamental Rights in 200028 and the White Paper on Governance,29 which reduced the role of law in European integration, in 2001 – the European Commission stopped its institutional funding of ECLG. This went hand in hand with Thierry Bourgoignie leaving the Centre de Droit de la Consommation. By the time I was appointed chairman and I had the awesome task of negotiating with the European Commission for possible new opportunities to hold together the intellectual community of consumer lawyers and practitioners. The only remaining option was to move towards project funding. In such a situation, project funding requires a ‘call for project proposals’ from the European Commission, an applicant who is ready and willing to take over the administrative burden, and then a group of consumer lawyers who commit to the project and write the necessary reports. BEUC in the person of Ursula Pachl took over the lead, with the focus on consumer law enforcement. In fact CLEF and COJEF allowed at least parts of the group to hold together,30 keeping the idea of academic research and consumer practice alive. Sadly, though, the intellectual community, as it had existed, built around a constant and ongoing exchange between academics and practitioners around selfselected topics, disintegrated and was never re-established. Two further developments deserve a mention as they stabilised the nascent European intellectual community – the establishment of the Centre de Droit de la 26 On the reconstruction of the history of BEUC, Koen Docter, ‘The early years’ (n 22). 27 The Lisbon Strategy of 2000 (Lisbon European Council 23–24 March 2000, Presidency conclusions) www.europarl.europa.eu/summits/lis1_en.htm. 28 Charter of Fundamental Rights of the European Union [2000] OJ C364/1, www.europarl.europa.eu/ charter/pdf/text_en.pdf. 29 European Commission, ‘European Governance: A White Paper’ COM (2001) 428 final, http://ec.europa. eu/commission/presscorner/detail/en/DOC_01_10. 30 Geraint Howells and Hans-Wolfgang Micklitz, Consumer Law Enforcement Forum Project, Guidelines for Consumer Organisations on Enforcement and Collective Redress (September 2009) www.mpo.cz/assets/ dokumenty/40585/45442/550298/priloha001.pdf; Consumer Justice Enforcement Forum, Guidelines for enforcement on consumer rights (prepared with the support of Geraint Howells and Hans-Wolfgang Micklitz) (2013); Consumer Justice Enforcement Forum II, Enforcement of Consumer Rights: Strategies and Recommendations (prepared with the support of Evelyn Terryn, Geraint Howells, Hans-Wolfgang Micklitz) (May 2016) www.beuc.eu/publications/beuc-x-2016-051_cojef_ii-enforcement_of_consumer_rights.pdf.

The Intellectual Community of Consumer Law and Policy in the EU  69 Consommation (CDC) at the University of Louvain-la-Neuve in Belgium31 by Thierry Bourgoignie in 1978 and the Centre of European Legal Policy (Zentrum für Europäische Rechtspolitik) at the University of Bremen in 1982 with Norbert Reich as the managing director.32 A strong mutual relationship existed between the two: Norbert Reich was a member of the jury before which Thierry Bourgoignie publicly defended his monograph on ‘Éléments pour une théorie du droit de la consommation’.33 Thierry Bourgoignie published the English version of Norbert Reich’s monograph – written in collaboration with Deidre Leahy and edited by the CDC – on the internal market and the diffuse interest in collection of consumer law.34

C.  The Centre de Droit de la Consommation in Louvain-la-Neuve The foundation of the CDC through Thierry Bourgoignie was a personal initiative. He managed to get support from the law faculty, although he was not yet a full professor. However, the CDC did not receive institutional funding from the university to hire researchers and to build an administrative infrastructure. It was dependent on external funding. Therefore the CDC in Louvain-la-Neuve could not develop its own research agenda. The European Commission set the agenda first through its two foundational consumer policy programmes in 1975 and 1981,35 later through consecutive – two, three, four and now five-year – action plans.36 The European Commission is bound to the action plans, which need approval by the Council of Ministers and – after the EP had been granted co-decision power – by the European Parliament. The CDC had to engage with the European Commission action plans in its fundraising activities. The then dominant research tools were comparative studies to prepare legislative action and complementary conferences. The CDC published a considerable number of these studies and conference contributions with Story-Scientia distributed by the publishers Bruylant.37 The long list of publications demonstrates that the CDC 31 http://uclouvain.be/fr/instituts-recherche/juri/cdc. 32 www.uni-bremen.de/jura/zerp. 33 Thierry Bourgoignie, Eléments pour une théorie du droit de la consommation: au regard des développements du droit belge et du droit de la Communauté économique européenne (Brussels, E. Story-Scientia, Distributed by Ed Bruylant, 1988). 34 Norbert Reich and Deirdre Leahy, Internal Market and Diffuse Interests: An Introduction to EC Trade Law (Brussels, E. Story-Scientia, 1990). 35 As approved by the Council, Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for a consumer protection and information policy [1975] OJ C92/1; Council Resolution of 19 May 1981 on a second programme of the European Economic Community for a consumer protection and information policy [1981] OJ C133/1. 36 European Sources Online (ESO), Information Guide Consumer Policy: A guide to the European Union’s Consumer Policy, with hyperlinks to sources of information within European Sources Online and on external websites, 2014 which provides for an overview, available at: http://aei.pitt.edu/75406/2/Consumer-Policy.pdf. The current one covers the period from 2020 until 2025, European Commission, ‘Communication from the Commission to the European Parliament and the Council New Consumer Agenda: Strengthening consumer resilience for sustainable recovery’ COM (2020) 696 final. 37 Unfortunately, the website of the CDC does not list the publications. Wordcat lists 219 publications in the series; however, they are not in chronological order, www.worldcat.org/search?q=se%3A%22Collection+Dro it+et+consommation%22&fq=&dblist=638&start=31&qt=next_page.

70  Hans-W Micklitz was heavily involved in all relevant fields of European Consumer Policy, by and large reflecting the topics chosen for the country reports on national consumer protection laws. Again it has to be recalled that there was no tendering and if there was tendering at all it was rather lightly handled and very much built on personal relations. The CDC kept close ties to public officials within the European Commission. Thierry Bourgoigine mentions – besides Ludwig Krämer – Jean-Marie Courtois, Dieter Hoffmann, Madame van Nieuwenhove, Jeremy Sheehan, Peter Prendergast and Michel Carpentier.38 More or less each and every consumer lawyer in Europe and in South America (particularly Brazil) was in some way involved in the activities of the CDC. If they did not join projects or conferences, they came to summer courses as lecturers or participants. These summer courses, which started in 1989, turned into a new forum of community building, in particular through the involvement of young scholars from the old and the later new Member States and beyond. After the fall of the Berlin Wall in 1989, the CDC played a key role in the development of consumer law in the then 12 candidate countries that joined the EU in 2004 or 2007. The results of the extensive consultancy business,39 where the CDC could rely on its network of western consumer lawyers, were not published in Story-Scientia but in what could be called a particular series of discussion papers (the so-called blue series), which, however, are not available online. The CDC played a key role in two different periods, namely establishment of European Consumer Policy in the 1980s and promotion of EU consumer policy towards the Eastern enlargement through the opening of the intellectual community via the PHARE programme40 adopted in 1994. During roughly 20 years, from the late 70s to the late 1990s, the CDC was one of the epicentres of European intellectual exchange, with Thierry Bourgoignie41 as director, who had the necessary funds provided by the European Commission and the skills to unite consumer lawyers from the Member States in Brussels/Louvain-la-Neuve and make the CDC an attractive place of research.

D.  The Centre for European Legal Policy in Bremen The second major institution which played a crucial role in the formative years of European Consumer law and policy is the Centre for European Legal Policy in Germany, (ZERP) at the University of Bremen, which was founded in 1982. In contrast to the CDC in Louvain-la-Neuve, the ZERP had a much larger mandate that reached far beyond consumer protection. This institute, founded by Bremen’s mayor Hans Koschnick in the smallest German Land, had been given the political mission to focus on social regulation in the European integration process. Time matters. In 1982 the EU was in (already or again) a stage of crisis, there was no Single European Act on the horizon yet, there were no competences for the EU in the 38 Bourgoignie (n 23). 39 The consumer lawyers who advised the candidate states were remunerated via the CDC through Commission money. 40 On the history of the Phare Programme see www.cvce.eu/en/collections/unit-content/-/unit/02bb76d f-d066-4c08-a58a-d4686a3e68ff/8e77fc44-4f9a-48ee-9f71-696b2dad042b/Resources. 41 See Bourgoignie (n 23); Thomas Roethe, ‘The Making of Consumer Law – A Sociological Critique’ ch 11 in this volume.

The Intellectual Community of Consumer Law and Policy in the EU  71 field of consumer policy, there was not even the idea of establishing an Internal Market. Jacques Delors became president of the European Commission in 1985. The Bremen mayor needed political courage and farsightedness to envisage a European Economic Community, as it then was, with a ‘social face’, an EU not focusing on market integration alone, but an EU actively promoting social integration through secondary EU Law. In 1982 the ZERP held a rather unique position through its mandate and through the combination of legal and empirically oriented European socio-legal research.42 ZERP received institutional funding from Land Bremen. There were three directors, apart from Norbert Reich as managing director, Christian Joerges and Volkmar Gessner as co-directors, eight full time positions for researchers (one of the eight was mine) and three administrative positions. The mandate of ZERP reached far beyond consumer policy, built to cover the whole range of social policies, from employment law, social security to non-discrimination and migration. ZERP, however, was also expected to raise money from research institutions in Germany as well as through the European Commission. The institutional funding was meant to lay the foundations from which large research projects would be acquired. With regard to EU consumer policy, ZERP functioned as a kind of competitor with the CDC in Louvain-la-Neuve, though personally strongly interwoven. The competition was rather friendly as ZERP in line with its mandate was not built to serve the political interests of the European Commission. That is why ZERP did not compete with the CDC over the Commission-driven research agenda but tried to build its own profile in particular areas of consumer law. In the language of competition law, CDC and ZERP divided the market. ZERP received funds from the European Commission in two research fields: in the automobile sector, where Christian Joerges took the lead, in the foundational project on European consumer safety and Internal Market Policy and the organisation of two conferences: one on consumer credit in 1985 and the other on the role and function of self-regulation that the European Commission already promoted in the second consumer policy programme.43 Like the CDC, ZERP established its own series with NOMOS. In Germany this meant finding the funds to sponsor publication of research projects, a policy which differs from UK publishers, which – after review – take over the financial risk. 42 Armin Höland, ‘Die Rechtssoziologie auf dem Weg vom Hamburger MPI zum Bremischen ZERP’ in Christian Joerges, Tobias Pinkel and Ulf Uetzmann (eds), Josef Falke zum 65. Geburtstag (Bremen, ZERP Diskussionspapier, 1, 2014) 25–28. 43 I was involved in both research projects. In the study on the automobile sector I wrote the report on France, in Christian Joerges, Eugen Hiller, Knut Holzscheck and Hans-Wolfgang Micklitz, Vertriebspraktiken im Automobilersatzsektor: Ihre Auswirkungen auf die Interessen der Verbraucher (Peter Lang GmbH, Internationaler Verlag der Wissenschaften, 1985), in the foundational study on product safety, I wrote the French report, the part on the role of technical standards in the EU and jointly with Christian Joerges the part on the concept of consumer safety, see Joerges, Falke, Micklitz and Brüggemeier, Die Sicherheit (n 7). Later I conduced my own research project on post market control and on Federalism and Responsibility, Hans-Wolfgang Micklitz, Post Market Control of Consumer Goods, 1st edn (Baden-Baden, Nomos, 1990); Hans-Wolfgang Micklitz, Thomas Roethe and Stephen Weatherill (eds), Federalism and Responsibility: A Study on Product Safety Law and Practice in the European Community (London, Graham & Trotmann, 1994). The findings of the two conferences were also published: the Proceedings of the twist in European consumer police towards soft law in Journal of Consumer Policy, Vol 7, Issue 2 (1984) and the findings of the credit conference in Günter Hörmann (ed), Consumer Credit and Consumer Insolvency: Perspectives for Legal Policy from Europe and the USA (Bremen, ZEPR, 1986).

72  Hans-W Micklitz Until today, 78 volumes have been published in the ZERP series.44 The publication list mirrors the mandate of ZERP until today and equally demonstrates that consumer law and policy have played a substantial role in the research – but, in contrast to CDC consumer law and policy, formed just one topic in between many others. It might be fair to conclude that the CDC in Louvain-la-Neuve was EU policydriven not least through its dependence on Commission money, whereas ZERP was research-driven, what is called in German ‘Grundlagenforschung’ and which could be translated as ‘foundational’ or ‘basic research’. ZERP followed its own agenda and was not ready to accept the agenda of political institutions, whether European, national or regional. Compromises were necessary, but the differences between the CDC in Louvain-la-Neuve and ZERP in Bremen remained obvious. The distinction, however, suffers from a certain bias. The self-perception in the late 1970s and early 1980s was that carrying out a comparative study on behalf of the European Commission was ‘proper research’. This seems justified as the European Commission left much more freedom to researchers on how to draft the research, how to execute the study, and how to define the conclusions.45

E.  The Consumer Law Centres in Brunel, Geneva, Leuven and Montpellier The history and origins of the consumer law centres in Brunel, Geneva, Leuven and Montpellier are more difficult to reconstruct. I have built personal relations with all centres and their directors Geoffrey Woodroffe in Brunel, Bernd Stauder in Switzerland, Jules Stuyck in Leuven and Jean Calais Auloy in Montpellier, mainly via my collaboration with Norbert Reich. There was strong intellectual exchange between the centres, either via the European Consumer Law Group where the leaders regularly met, via the growing number of comparative research projects, where the centres relied on their mutual skills in national consumer law and policy, via organisation of conferences and last but not least via young scholars (like myself) who joined the centres in the respective countries and who started to build their own network of the second generation of consumer lawyers. Via these centres I got to know Geraint Howells, Hildegard Stauder, Henri Temple, Evelyne Terryn, Stephen Weatherill, Chris Willet, just to name those with whom I have remained connected until today. The research centre in Leuven/Belgium was run by Jules Stuyck,46 in Montpellier/ France by Jean-Calais Auloy,47 in Geneva by Bernd Stauder48 and in Brunel by Geoffrey Woodroffe.49 Montpellier was the first consumer centre, already established in 1975, 44 www.uni-bremen.de/jura/zerp/publikationen/zerp-schriftenreihe. 45 Micklitz and Villanueva, ‘REFIT or Rethink’ (n 12) 37–59. 46 Jules Stuyck and Ludwig Krämer in Micklitz, Hondius, van Mierlo and Roethe (eds), The Fathers and Mothers (n 6) 83, 23. 47 See Christine Riefa, ‘Editorial’ (2015) 4 Journal of European Consumer and Market Law 77, 77–78, where she explains the role of the Montpellier Centre. 48 Bernd Stauder died in 2008, see Klaus Tonner, ‘Nachruf Bernd Stauder’ (2009) 17 ReiseRechts Aktuell 56. 49 See Geraint Howells, ‘Geoffrey Woodroffe 1934–2018: An obituary on one of consumer law’s founding fathers’ (2018) 7 Journal of European Consumer and Market Law 177.

The Intellectual Community of Consumer Law and Policy in the EU  73 and it bears a visionary title ‘Centre de Droit de la Consommation et du Marché’. In her editorial, Christine Riefa celebrates the 40th birthday of the Centre and highlights the legacy of its name which was revitalised in the name of the journal she co-edits ‘European Journal of European Consumer and Market Law’. The Centre put the focus on postgraduate education. Hundreds of students did their master’s in consumer law in France. During my year in Montpellier, I was involved in teaching, at that time in French. Bernd Stauder successfully established a documentation centre on consumer law, which enabled consulting on the development of consumer law and policy in Europe and beyond. The Geneva Centre aimed at linking Swiss consumer law to the fast-moving development of European Consumer law. Bernd Stauder regularly organised conferences and set up the Jahrbuch des Konsumentenrechts in 1995.50 Geoffrey Woodroffe led the Consumer and Commercial Law Research Centre at Brunel. Originally established with funds from the European Commission, the Centre ran research projects on public utilities and consumer safety, where Geraint Howells, Steve Weatherill and Chris Willet were involved.51

F.  The Consumer Law and Policy Journals Establishing a journal is the classic means for an emerging intellectual community to provide a platform that serves very different objectives: the platform allows consumer lawyers to exchange their views and opinions. In that sense it is a means of community building. The platform makes a new policy field visible to the outside world. It gives the emergent community a common voice. Last but not least and in a perfect world of intellectual curiosity, such a platform enables engaging in an exchange with critiques and opponents. It is therefore not surprising that the idea of a genuine journal dealing with consumer law and policy accompanied the rise of consumer law in nearly all Member States. One of the first projects was the Zeitschrift für Verbraucherpolitik (ZVP) which was established in 1977 by two economists – Folke Ölander and Gerhard Scherhorn – and one lawyer, Norbert Reich. The interdisciplinary concept was ground-breaking and did justice to a new legal field that could not neatly be limited to law. However, the project did not fly. In 1981 Springer took over the ZVP and the language switched from German to English. The journal was renamed Journal of Consumer Policy and from that year on it definitely took a European if not an international perspective on consumer policy. Law was just one aspect among consumer economics, consumer sociology and consumer psychology.52

50 www.swissbib.ch/Record/323982646. 51 I relied on them when I started research in consumer safety at the Centre for European Legal Policy in Bremen, as can easily be demonstrated through joint publications and/or contributions, see references in (n 43). 52 See Alan Mathios, Hans-Wolfgang Micklitz, Lucia A. Reisch, John Thøgersen and Christian Twigg-Flesner, ‘Celebration of 40 Years of the Journal of Consumer Policy and What the Next 40 Might Look Like’ (2017) 40 Journal of Consumer Policy 235.

74  Hans-W Micklitz There were various attempts in the Member States to set up a consumer law journal: in Germany through Verbraucher und Recht, established in 1986 with Fritz Bultmann, Hans-W. Micklitz, Udo Reifner, Walter Stillner and Klaus Tonner as editors; in the UK through the Consumer Law Journal edited by Geraint Howells from 1993 on; in Belgium through Droit et Consommateurs, edited by Jules Stuyck and Hans de Coninck. However, these were journals focusing on national consumer law and policy. If anything, they were discussing European consumer law and policy through national lenses. A genuinely European project was the trilingual Revue Européenne de Droit de la Consommation/European Journal of Consumer Law founded in 1986, with Monique Goyens as chief editor in the founding years and still in full swing today, though mainly in French. Despite its official bilingual title, the Revue addresses a predominantly French-speaking audience and is less and less accessible to young scholars where the French language has lost impetus. After various attempts to set up a European Consumer Law Journal in English, a group of young consumer lawyers – I would call them the third generation – successfully set up the Journal of European Consumer and Market Law in 2011,53 a joint undertaking by three publishers: C.H. Beck, Nomos, and Kluwer, a Dutch/German Project published in English only. Even this journal has a bilingual background, as it goes back to an Austrian initiative. However, in line with English as lingua franca, it seems as if a journal on European consumer law, emphasis on European, can only survive in English.

G.  The EU, the OECD and the Council of Europe In the founding years of consumer policy in the nation states – but not European consumer policy – the European Commission had to face two strong competitors: the Organisation of Economic Cooperation and Development (OECD) in Paris, originally founded in 1948 to manage the US Marshall Fund after World War II; and the Council of Europe, founded in 1949 by Belgium, Denmark, France, Ireland, Italy, Luxembourg, Netherlands, Norway, Sweden and the UK. In 1973 the Council of Europe adopted the Consumer Protection Charter and later a considerable number of resolutions and recommendations on misleading advertising (1972), door-to-door sales (1973), unfair contract terms (1976), after-sales service (1978), consumer representation in standardisation bodies (1979), consumer education and information (1971–1979), legal aid for consumers (1974–1978), collective interests of consumers (1981), consumer access to justice (1981), sales of pharmaceuticals in third world countries (1983) and even a convention on product liability (1977).54 The Council of Europe’s long-standing policy in the field of consumer protection did not stop in 1983. As the list of recommendations and resolutions shows, the Council of Europe demonstrated a political presence in the field long before the European Commission entered the agenda. The OECD held a key position from the beginnings of consumer policy in the 1970s more or less up until the late 1980s. In 1972 the OECD adopted guidelines on consumer 53 http://rsw.beck.de/zeitschriften/eucml. 54 http://semantic-pace.net/?search=KjoqfGNhdGVnb3J5X3N0cl9lbjoiQWRvcHRlZCB0ZXh0Ig==& lang=en.

The Intellectual Community of Consumer Law and Policy in the EU  75 policy in the member countries which set out the agenda for the years to come.55 Unfortunately the many recommendations and resolutions are only online from 1999 onwards.56 I recall from our research at the Centre of European Policy in Bremen that the OECD had adopted a large number of recommendations in the field of product safety, very much inspired by the then leading US legislation and the key role of the US Product Safety Commission. The Single European Act dramatically changed the relationship between the two institutions. The SEA granted the EU the competence in Article 114 TFEU to complete the Internal Market at ‘a high level of consumer protection’. Thereby the European Commission turned into a key player which via its monopoly to initiate legislative action and through the newly introduced majority principle succeeded in boosting elaboration of a consistent body of secondary EU law. Until the mid-1980s the OECD had served as kind of platform for its nation-state members to pool their political interests in the field of consumer protection. Until the end of Jimmy Carter’s presidency in early 1981, the US set the tone not only in consumer policy but also in channelling US consumer policy via the OECD to Europe. A whole series of OECD policy papers bear witness to how the OECD served as a catalyst for balancing out US and European interests. The CPC – the Consumer Policy Committee – was established in 1969 and was headed in the foundational years by Erich Linke.57 The OECD influenced the anchoring of consumer policy in the various national programmes and left a deep footprint on the making of national consumer laws – not only but in particular in the field of product safety. In the four years between the fall of the Berlin Wall in 1989 and the Copenhagen Summit decision in 1993 that ‘the associated countries in Central and Eastern Europe that so desire shall become members of the European Union’,58 it was unclear what consumer law in the former communist states could and should look like. There was a kind of tug-of-war between the US on the one side and the EU on the other side, the effects of which can be felt even today in the economic order of the new Member States.59 Temporary uncertainties on the future of the Central and Eastern European Countries produced a political vacuum which brought the OECD back on the political agenda for a short while. The CCP in the OECD developed its own agenda on the development of consumer policy, less rigid and much more policy oriented.60 The EU, 55 Reprinted in Eike von Hippel, Verbraucherschutz, 3rd edn (Tübingen, Mohr Siebeck, 1986) 414. 56 www.oecd.org/sti/consumer/latestdocuments/9/. 57 www.oecd.org/sti/consumer/workofthecommitteeonconsumerpolicy.htm#:~:text=The%20 Committee%20on%20Consumer%20Policy%20(CCP)%20was%20established,at%20the%20OECD%20 in%201969.&text=Consumer%20policy%20aims%20at%20strengthening,practices%20and%20from%20 unsafe%20products. 58 www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/72921.pdf. 59 See the contributions in Fabrizio Cafaggi, Olha Cherednychenko, Marise Cremona, Kati Cseres, Lukasz Gorywoda, Rozeta Karova, Hans-Wolfgang Micklitz and Karolina Podstawa, ‘Europeanization of Private Law in Central and Eastern Europe Countries (CEECs): Preliminary Findings and Research Agenda’ (2010) Working Paper EUI Law 2010/15. 60 Erich Linke, ‘Consumer Policy Activities in OECD’ in Hans-Wolfgang Micklitz, Rechtseinheit oder Rechtsvielfalt in Europa?: Rolle und Funktion des Verbraucherrechts in der EG und den MOE-Staaten (Baden-Baden, Nomos, 1996) 127–160; Thierry Bourgoignie, ‘The Approximation Process of Consumer Laws of Central and Eastern European Countries to EU Legislation: A Favorable Context but an Urgent Need for Clarification’ in Hans-Wolfgang Micklitz, Rechtseinheit oder Rechtsvielfalt in Europa?: Rolle und Funktion des Verbraucherrechts in der EG und den MOE-Staaten (Baden-Baden, Nomos, 1996) 91–126.

76  Hans-W Micklitz in stark contrast, made integration of the consumer acquis conditional for membership. This political decision is the wider political background which allowed the CDC in Louvain-la-Neuve to consult the candidate states in the adaptation process. However, the institutional environment in which Ludwig Krämer operated in the European Commission and Erich Linke as head of the CCP are hardly comparable. The European Commission provides a stable institutional infrastructure. Once the European Commission has received a political mandate, it is relatively free to operate within that mandate. Though the Consumer Policy Committee suggests a certain similarity, in practice the Committee was very much dependent on political decisions by the OECD members and their willingness to take over the role and responsibility of a lead country that is ready to sponsor elaboration of concrete policy papers. There was no stable structure that could pave the way for establishment of an intellectual community as a counterpart to the ECLG. If any, a community could grow around certain fields of consumer law, where the OECD had set a priority, such as in product safety.61

H.  The Integration through Law Project Both directors of the two centres went to the US in the 1970s to benefit from advanced intellectual development in the US for their career building. Thierry Bourgoignie did an LLM at Yale University in 1973–197462 under the supervision of Arthur Leff. Norbert Reich studied legal sociology at George Washington University in 1965–1966 and built contacts with Wisconsin, then the centre of socio-legal research, where he returned in 1982. In the early stage of consumer law, not so much at the European level, but mainly at the Member State level, US consumer policy was ten years ahead of Europe and set the agenda through its major components: the US Federal Trade Commission, the US class action, and consumer credit and consumer safety, in particular through the US Product Safety Commission.63 However, a cross-country institutionalised US-EU intellectual community in consumer law did not really exist and was never about to exist. There were bilateral ties between individual researchers, US scholars were invited to Louvain-la-Neuve and Bremen, comparative research projects at both places involved US scholars or European scholars working in the US with ties to US universities. Initially the European Commission was ready and interested to include the US experience in comparative projects aiming to prepare European legislation. There is one exception: the ‘Integration through Law project’, initiated by Mauro Cappelletti, executed together with Monica Seccombe and J.H.H. Weiler and published by De Gruyter between 1985 and 1988.64 The project focused, as the subtitle indicates, on ‘Europe and the US Federal experience’. It laid the intellectual foundations for the

61 See in particular the contribution of Erich Linke (n 61). 62 www.oas.org/dil/esp/cv_Thierry_Bourgoignie.pdf. 63 Fabrizio Cafaggi, ‘The Great Transformation. Administrative and Judicial Enforcement in Consumer Protection: A Remedial Perspective’ (2009) 21 Loyola Consumer Law Review 496. 64 See www.degruyter.com/view/mvw/ITL-B, with a list of all in all 7 volumes, published between 1985 and 1988.

The Intellectual Community of Consumer Law and Policy in the EU  77 constitutional discourse of the EU.65 Thierry Bourgoignie for the EU and David Trubek for the US wrote the analysis on consumer law, combining substantive analysis with an institutional dimension on how the EU in light of US federal experience could build the appropriate constitutional structures through a model of shared competences.66 Whilst the Integration through Law project was and remains highly influential not only within the academic environment but also with regard to the role and self-understanding of the European Court of Justice, it did not lead to the establishment of a stable trans-Atlantic intellectual discourse, let alone a joint EU/US intellectual consumer law community. In looking back, Thierry Bourgoignie67 stressed the introduction of new concepts such as regulatory gaps theory, as well as negative and positive integration, but also made a case for a separate and comprehensive regional European consumer law and policy. The two worlds, the old and the new, remained divided.

III.  The Politics of Action The above mentioned seven parameters that determined the establishment of the intellectual community in the late 1970s/early 1980s do not provide much help in understanding how the role, the function and the potential influence of the European intellectual community unfolded in the political process of the making of European Consumer Law and Policy. In the following I try to locate the European intellectual community in the major discourse on the role of the welfare state, the interaction of the ECLG with the European Commission, its connection to the organs of the then European Economic Community in the law-making process, and last but not least how the intellectual community understood and conceptualised consumer protection law and what kind of rights, remedies and procedures68 are needed to secure proper enforcement of European consumer law. This serves as a starter to describing the potential impact. In the times we are living in, a question like the one posed immediately triggers a call for evidence, be it through quantitative or qualitative research. None of this is available; at the very best we can rely on the self-assessment of the ‘Mothers and Fathers of Consumer Law and Policy’.69 The ECLG did not produce minutes of its meetings which would allow a deeper insight into discussions on the various topics. BEUC has transmitted its archives to the European University Institute, which provide only a rather broad picture of the history of the ECLG.70

65 Helpful for putting the project into a historical perspective, Rebekka Byberg, ‘The History of the Integration Through Law Project: Creating the Academic Expression of a Constitutional Legal Vision for Europe’ (2017) 18 German Law Journal 1531. 66 Thierry Bourgoignie and David M Trubek, Consumer Law, Common Markets and Federalism in Europe and the United States: Europe and the American Federal Experience (Berlin, Walter De Gruyter, 1987). 67 Micklitz, Hondius, van Mierlo and Roethe (eds), The Fathers and Mother (n 6) 55. 68 Walter van Gerven, ‘Of Rights, Remedies and Procedures’ (2000) 37 Common Market Law Review 501. 69 Micklitz, Hondius, van Mierlo and Roethe (eds), The Fathers and Mother (n 6). 70 Docter, ‘The early years’ (n 22) ch 3, IV.D.

78  Hans-W Micklitz

A.  The Decline of the Welfare State and the Rise of European Consumer Policy One of the unfinished projects with Norbert Reich was a paper we wanted to write on whether and to what extent the EU had ‘saved’ consumer law from oblivion. The question we were asking ourselves was: what would have happened to consumer law if the EU had not taken over the legal field? Would national consumer law have survived; if so, in what form? What would national consumer law look like – similar to US consumer law, with a focus on consumer finance and collective action and shrinking administrative enforcement of commercial practices and health and safety issues? The question already suggests that the EU played a crucial role in the ‘rescue manoeuvre’ and that the European intellectual community had their part to play in the shift from the national to the European level. Most Member States only have a strong body of consumer law because they had to implement European directives. Plainly, the rise of the welfare state in western Europe in the 1960s and 1970s and the rise of consumer law and policy went hand in hand. Fritz Scharpf termed the period that affected more or less all western European democracies the ‘social democratisation’ (Sozialdemokratisierung) of Europe,71 from a UK/US perspective often associated with the shift from producerism to consumerism.72 A common characteristic was reliance on the state as the key actor and statutory legislation to achieve the three policy objectives that dominated the debate – worker protection, environmental protection, and consumer protection. By that time consumer protection was first and foremost a matter of national concern. The members of the intellectual community had all grown up in their respective national political environment. They were involved in building national consumer policy programmes, national consumer laws, and national consumer law enforcement structures. The EU did not invent consumer law and policy. When the EU joined the political agenda in 1972 through the EEC Summit of the Heads of State and Government ‘Europe with a human face’, a considerable number of Member States were in the middle of developing a national consumer policy and a national consumer law. Sweden set the agenda with adoption of the Marketing Practices Act and Contract Terms Act in 1970–1971. The Netherlands adopted door-to-door legislation, in 1973. The UK followed with the 1973 Fair Trading Act and the Consumer Credit Act in 1974, Denmark with the Marketing Practices Act 1974, Germany with the 1976 Act on Standard Contract Terms and the 1976 Act on the Strict Liability of pharmaceutical companies in the aftermath of the Thalidomide catastrophe, Finland with the Consumer Protection Act in 1977 and France through the Loi Scrivener in 1978.73 The sometimes fierce legislative debates saw a growing confrontation between traditional private lawyers and

71 Fritz W Scharpf, Crisis and Choice in European Social Democracy (trans by Ruth Crowley and Fred Thompson) (Ithaca, Cornell University Press, 1991); Thomas Piketty, Capital et idéologie, 1st edn (Paris, Seuil, 2019) 567–569. 72 James Q Whitman, ‘Consumerism Versus Producerism: A Study in Comparative Law’ (2007) 117 The Yale Law Journal 340. 73 http://fr.wikipedia.org/wiki/Loi_relative_%C3%A0_l%27information_et_%C3%A0_la_protection_des_ consommateurs_dans_le_domaine_de_certaines_op%C3%A9rations_de_cr%C3%A9dit.

The Intellectual Community of Consumer Law and Policy in the EU  79 consumer lawyers, who were gaining ground politically and in total numbers. Two of the Member States, France and Belgium, even undertook the attempt to develop a selfstanding national Consumer Law Code, separated from the respective civil codes. The Commission de la Refonte headed by Jean Calais-Auloy elaborated a kind of a model code in 1985 that could have set a precedent for Europe in the tradition of the Code Civil of 1804.74 Belgium repeated the exercise ten years later under the chairmanship of Thierry Bourgoignie.75 Both projects failed due to lack of political support. What is often forgotten is the successful attempt by the Nordic countries to adopt self-standing consumer legislation. The institutional setting might differ, though, as the Nordic countries do not have a fully-fledged civil code comparable to continental codifications. There was, however, close co-operation among individual scholars: Thierry Bourgoignie was a member of the French Commission de la Refonte, Ewoud Hondius, Ludwig Krämer and Jules Stuyck of the Belgian Royal Committee in charge of codification in Belgium. Academia was far ahead of political development. But the focus was not on development of European consumer law but on national consumer laws. The ambitious intellectual projects in Belgium and France did not correlate with the changing realities in the Member States. By the late 1970s consumer protection started to lose impetus. The process of social democratisation was over and neo-conservatism gained ground in some though not all Member States. A failure rhetoric started: failure of regulation, failure of enforcement, the capture of administrative agencies. The political wind changed. Margaret Thatcher took office in 1979 and Helmut Kohl in 1982, though Mitterand was elected in 1981. Therefore the European Commission had not an easy start when it entered the political arena. The growing tension on where to place and how to execute consumer policy is reflected in the different language between the first and the second consumer programme. The 1975 programme still carries the optimism of the 1960s, revitalising Kennedy’s consumer rights rhetoric. The 1981 programme is more reluctant: instead of regulatory interventionism, the programme discusses co-operation between business and consumers and soft law instead of hard law. The 1984 conference in Bremen mirrors the irritation of consumer lawyers.76 The change in the official language reflects the different Zeitgeist. The European Commission had to find a middle way, taking into account that each and every legislative measure needed unanimity in the Council. Its strategy was to use the existing body of consumer legislation in the Member States as a starting point for developing a common platform for European consumer protection through the means of minimum harmonisation. To put it bluntly, the European Commission needed the Member States’ consumer protection laws as legitimacy to take action. And if there was no national consumer 74 Jean Calais-Auloy, Henri Emmanuelli (Commission de refonte du droit de la consommation), Propositions pour un nouveau droit de la consommation: rapport final (la Documentation française, 1985); Hans-Wolfgang Micklitz, The Politics of Justice in European Private Law: Social Justice, Access Justice, Societal Justice (Cambridge, Cambridge University Press, 2018) 60–61. 75 The Commission was set up in 1987, the final report is published by the Ministère des Affaires Economiques, Thierry Bourgoignie (Président de la CERDC), Propositions pour une Loi Générale sur la Protection des Consommateurs, Rapport de la Commission d’Étude pour la Réforme du Droit de la Consommation (CERDC) (Brussels, Belgian Ministry of Economic Affairs, 1995). 76 See Journal of Consumer Policy (n 43).

80  Hans-W Micklitz law yet, as in the field of product liability, the Commission needed the explicit willingness of the Member States to take action, if any, at the European level. The position of the European Commission was further complicated by the fact that there was no commissioner responsible for consumer affairs. Michel Carpentier as director was responsible for consumer affairs. But the consumer unit was not responsible for product liability, commercial practices and consumer credit. The competencies lay with the Commissioner responsible for the then Common Market. There was also a certain lack of interest at the top level of the European Commission to strongly engage in promotion of consumer affairs. In his lecture in June 2017 Thierry Bourgoignie77 spoke of an ‘exceptional symbiosis between dedicated EU officials Ludwig Krämer, Dieter Hoffmann, Jean-Marie Courtois, MMe van Nieuwenhowe, Jeremy Sheeman, Peter Prendergast and Michel Carpentier as well as consumer lawyers’, whom he did not mention, but implicitly referring to the members of the European Consumer Law Group and all those who had joined the intellectual community via the different strands of access. The symbiosis was not only exceptional; it was also an emergency community, eine Notgemeinschaft – the dedicated European Commission officials who lacked backing from the top Commission level78 needed the support of national consumer lawyers against growing resistance by the Member States to promoting further development of consumer law. There is a timely coincidence between a gradual backtracking from consumer policy in many Member States and the growing importance and gradual institutionalisation of consumer policy in the European Commission. When ZERP was founded in 1982, the national impetus had gone. The European Commission carried the hope for furtherance of consumer policy. The common denominator for the European Commission, for the consumer lawyers, and later for the Member States was a belief and trust in a common platform. Nobody thought of replacing national consumer law through European consumer law by way of maximum harmonisation. That is why there was a political outcry after the ECJ decided that Directive 85/374/EEC on product liability aimed at full harmonisation.79 In that sense it might be fair to speak of the European Commission and later on the EU as ‘saviours’ of consumer law and policy. The mutual dependency of the European Commission and the European intellectual community, with the ECLG holding a prominent, if not a leading position, might explain how it was possible for a community of academics and consumer activists to gain access to the building of European consumer law and policy. It has to be remembered, though, that even exceptional symbiosis would have failed without the Single European Act in 1986, the introduction of Article 114 and the majority vote.

77 See Micklitz, Hondius, van Mierlo and Roethe (eds), The Fathers and Mother (n 6) 55. 78 On the role of the European Commission see Ludwig Krämer, ‘The origins of consumer law and policy at EU level’ ch 2 in this volume. 79 Case C-183/00 María Victoria González Sánchez v Medicina Asturiana SA [2002] ECR I-03901; The judgment even led to a Council Resolution, in which the Member States criticised the interpretation of the ECJ in rather strong language, Council Resolution of 19 December 2002 on amendment of the liability for defective products Directive [2003] OJ C26/2; see also Reter Rott, ‘Produkthaftung und Vollharmonisierung – der Rat kartet nach’ (2003) 4 Recht der Internationalen Wirtschaft 1 (Editorial).

The Intellectual Community of Consumer Law and Policy in the EU  81

B.  The European Commission – The Spider in the Net The policy shift and the changing political and economic environment around the late 1979s/early 1980s affected fundraising opportunities. It became difficult to raise money from the national authorities to promote consumer protection. The European Commission, however, obviously had resources that sufficed to finance research projects to initiate legislative action and to sponsor conferences. A powerful tool in the hands of European officials were the 15,000 ECU projects. From a certain level of hierarchy on, public officials were allowed to grant 15,000 ECU ad personam. This mechanism enabled the European Commission to select consumer lawyers from the intellectual community on a rather discretionary basis and to entrust them with a mutually agreed mandate. Even larger grants could be steered by the public official in charge so as to make sure that the ‘right’ people were getting the project. The EU official concerned had to draft the project, organise the call and defend their choice before a budget committee. There were no procedural rules in place that could even barely be compared with the sophisticated tendering procedure that governs the Commission’s research policy today. Somewhat overstated, the procurement procedure of the 1980s could be characterised as through personal relationship and personal trust rather than through impersonal procedural rules and belief in fair procedures. The dark side is obvious: the risk of ‘old boys’ connections’ and the existence of a kind of research cartel that was not accessible to non-members. Whether formalisation of procurement has led to better research results is doubtful, but a comparison of the 1980s projects with those of 2020s reaches beyond the purpose of this chapter.80 Exceptional symbiosis led to intense co-operation in drafting projects, to selection of countries, to selection of the reporters and – when it came to organising conferences – to the choice of invitees.81 This is not to say that the European Commission through its key public officials exerted pressure or even directly intervened in drafting and execution. In a relationship of mutual trust such thinking was superfluous. The joint intention was to select the most advanced Member States with promising innovative legislation in the particular field, to find the most competent national consumer lawyers so as to come up with the most suitable results for a possible European legislative measure. Approval of the outcome lay in the hands of the public official who had commissioned the study. There was no expectation that the research must cover all Member States, but rather the most innovative and the most relevant ones. Usually four to five Member States were under review: France, Germany, the UK, plus two others depending on the topic. The task of the responsible research institution, here overwhelmingly the CDC and ZERP, was to draft a common frame of analysis that allowed for a comparative analysis. The limited number of Member States and the limited number of languages under investigation rendered a comparative analysis feasible. The research design put emphasis on law in the books and law in action. Usually there was no quantitative or qualitative research in today’s understanding. The overall purpose of the comparative analysis was 80 Micklitz and Villanueva, ‘REFIT or Rethink’ (n 12) 37–59. 81 Rob van Gestel and Hans-Wolfgang Micklitz, ‘Comparative Law and EU-Legislation: Inspiration, Evaluation or Justification?’ in Maurice Adams and Dirk Heirbaut (eds), The Method and Culture of Comparative Law: Essays in Honour of Mark Van Hoecke (Oxford, Hart Publishing, 1952) 301–319.

82  Hans-W Micklitz the search for the best suitable solution – being more often than not equated with a kind of maximization strategy, pulling together the best bits and pieces out of the different legal orders and merging them in one joint proposal for action. This was the functional method in action!82 The expectation was not to draft a directive but to lay down bullet points that the European Commission could take into consideration. The ECLG integrated the comparative research into its opinions. The much wider representation of the Member States and even non-Member States in the ECLG compensated for the research gaps which resulted from the limited choice of national legal orders. The way in which the research was organised allowed keeping the intellectual community of consumer lawyers together. Each research project united between five to ten consumer lawyers. Often two projects were running in parallel, though not at the same research unit. Together with nearly annual conferences organised by the CDC in Louvain and occasional ones in Bremen, Brussels, Leuven and Geneva, the European Commission sponsored activities that kept the European intellectual community alive and tightened personal relations. One might go as far as saying that the intellectual community enjoyed a common identity, being pro-European, pro-European integration, pro-Europe with a social face and therefore pro consumer law. In the founding years there was little self-reflection on the role and function of the European intellectual community in the making of secondary EU law, on whether the kind of policy-driven investigation of national consumer laws could be called research,83 on the limits of functional methods,84 on the problematique of legal transfer,85 on the suitability of compiled national practices to a supranational legal order, on the implications of the competence shift from the nation-state level to the EU level and what it could all mean for consumer law and policy in the long run. Most of the critical reflection on comparative law started in the aftermath of the rise of the legal origins theory (LOT) in the late 1990s.86 Looking back, there remains an element of uneasiness about a missed opportunity.

82 Ernst Rabel, Das Recht des Warenkaufs: Eine rechtsvergleichende Darstellung (Berlin, De Gruyter, 1936); René David, Traité élémentaire de droit civil comparé: introduction à l’étude des droits étrangers et à la méthode comparative (Paris, Librairie Générale de Droit et de Jurisprudence, 1950); Konrad Zweigert, Hein Kötz, Einführung in die Rechtsvergleichung auf dem Gebiete des Privatrechts, 1st edn (Tübingen, Mohr Siebeck, 1971); for a revival, Uwe Kischel, Comparative Law (Oxford, Oxford University Press, 2019); Günter Frankenberg, ‘Kischel, Uwe: Rechtsvergleichung: “Rechtsvergleichung” – A New Gold Standard?’ (2016) 76 Zeitschrift für ausländisches öffentliches Recht und Völkerrecht 1001–1021, referring to Peter Mankowski, ‘Book review of Rechtsvergleichung’ (Uwe Kischel) (2016) 69 Neue Juristische Wochenschrift 1644. 83 Micklitz and Villanueva, ‘REFIT or Rethink’ (n 12) 37–59. 84 Günter Frankenberg, ‘Critical comparisons: re-thinking comparative law’ (1985) 26 Harvard International Law Journal 411; Günter Frankenberg, Comparative Law as Critique (Cheltenham, Edward Elgar, 2016); Jaakko Husa, A New Introduction to Comparative Law (Oxford, Hart Publishing, 2015); Esin Örücü, David Nelken, Comparative Law: A Handbook (Oxford, Hart Publishing, 2007); Geoffrey Samuel, An Introduction to Comparative Law. Theory and Method (Oxford, Hart Publishing, 2014); Mathias Siems, Comparative Law, 2nd edn (Cambridge, Cambridge University Press, 2014) 11–94; Jan M Smits (ed), Elgar Encyclopedia on Comparative Law, 2nd edn (Cheltenham, Edward Elgar, 2012). 85 Pierre Legrand, ‘The same and the different’ in Pierre Legrand, Roderich Munday (eds) Comparative Legal Studies: Traditions and Transitions (Cambridge, Cambridge University Press, 2003) 240–311; Alan Watson, Legal Transplants: An Approach to Comparative Law, 2nd edn (Athens, Georgia, University of Georgia Press, 1993); for the impact of Watson on comparative law, see Michele Graziadei, ‘Comparative law as the study of transplants and receptions’ in Mathias Reimann and Reinhard Zimmermann, The Oxford Handbook of Comparative Law (Oxford, Oxford University Press, 2006) 442. 86 Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert W Vishny, ‘Law and Finance’ (1998) 106 Journal of Political Economy 1113; Rafael La Porta, Florencio Lopez-de-Silanes and Andrei Shleifer,

The Intellectual Community of Consumer Law and Policy in the EU  83

C.  The ECLG and the EU Organs The primary addressee in the debates among the European intellectual community was the EU legislature, at that time primarily the Council of Ministers. For today’s reader it might be useful to recall the wording of Article 100 in order to better understand the political environment in which the European Commission and the European intellectual community were operating before adoption of the Single European Act in 1986: The Council, acting by means of a unanimous vote on a proposal of the Commission, shall issue directives for the approximation of such legislative and administrative provisions of the Member States as have a direct incidence on the establishment or functioning of the Common Market. The Assembly and the Economic and Social Committee shall be consulted concerning any directives whose implementation in one or more of the Member States would involve amendment of legislative provisions.

The Commission held the monopoly in terms of proposing a legislative measure. The measure had to be a directive (not a regulation) aiming at ‘approximation’ of Member States’ laws and administrative regulations to build a ‘common market’. The Council of Ministers had to decide unanimously. There was no co-decision procedure. This was introduced only in 1992. The then existing ‘Assembly’ (what later turned into the European Parliament) and the Economic and Social Committee were to be heard, but the Council was free to decide as long as there was unity. The Treaty of Rome had granted two institutions the power to take legislative action: the European Commission, which had to take the initiative, and the Council of Ministers, which had to decide unanimously. The EP and the ECSC were not involved in the decision-making process. They could only try to make their voice heard and hope that the European Commission and/or the Member States united in the Council would take their position into account. The then existing institutional framework granted the European Commission full control over initiation of legislative procedure. The European Commission could take into account the opinions of the Assembly and the ECSC in the drafting process. However, formally the Commission was not bound by the advice it received. As to the role and function of the European intellectual community, here the ECLG, one has to distinguish between its formal institutional dimension and the informal one – intellectual symbiosis. The ECLG had no status in the law-making procedure, not even one comparable to the Consumer Consultative Committee, which had been given a status through the European Commission. The ECLG was a non-institution, there was no ‘inaugural decree’; the ECLG was not a registered association; it had no bylaws. Its power, if there was any at all, resulted solely from arguments and from knowledge of national consumer laws and/or collected through participation in research studies initiated by the European Commission. Exceptional symbiosis is the key to understanding the objective of the European intellectual community, here of the ECLG, in elaboration of legislative measures. The ECLG had a major interest in being involved in the drafting procedure, at the very best ‘The Economic Consequences of Legal Origins’ (2008) 46 Journal of Economic Literature 285; Ralf Michaels, ‘Comparative Law by Numbers? Legal Origins Thesis, Doing Business Reports, and the Silence of Traditional Comparative Law’ (2009) 57 American Journal of Comparative Law 765.

84  Hans-W Micklitz prior to publication of a proposal in the Official Journal, which also means prior to official hearings being organised by the Assembly and the ESCS. Such an envisaged intense intellectual exchange could only work ad personam, through symbiosis, through mutual trust. Therefore the ECLG invited and enticed the key figures of the European Commission to participate in the bi-annual meetings of the ECLG held in Brussels, ideally together with the public official in charge of elaborating the first draft. These meetings in a group of 15 to 20 people allowed for an open exchange notwithstanding the status of the member and their country of origin. The discussion focused on the concrete matter at hand, a debate where academics and practitioners did not speak with one voice. There was no ‘us’ (the national representatives) against ‘them’ (the European Commission). The existence of an intellectual symbiosis implies a kind of domination of free discourse (herrschaftsfreier Diskurs) that Habermas had in mind.87 It is hard to find evidence that allows us to evaluate the effect of symbiosis, whether the European Commission got corrupted by what Ernst Steindorff seemed to insinuate when he spoke pejoratively of ‘consumer circles’.88 This would imply that the European Commission had taken over the position of the ECLG on the various directives. As I was not a member of the ECLG in the founding years and as there are no minutes or protocols of the bi-annual meetings, the only source that could provide evidence on the impact of the ECLG would be a comparison of the respective opinions with the first published Commission draft. Such a comparison would equally demonstrate the moment in time, whether the ECLG managed to write down its opinions early enough so as to be taken into consideration by the European Commission. Luckily the CDC had published the opinions of the ECLG in two reports, from 1977 to 1984 and 1986 to 1997.89 It is amazing to see that the first bunch of opinions was produced far ahead of the legislative measures which had been taken years after the respective opinions. This changed the longer the ECLG existed: in the second volume there are even opinions on draft proposals of the European Commission. The timing is no more than an opportunity for exchange. An impact analysis would require comparison of the two texts, a method which is much easier to apply at times of big data analytics. When I joined the ECLG in the late 1990s, the relationship between the members of the ECLG and the European Commission was far away from the symbiosis that Thierry Bourgoignie describes. It ended perhaps not in conflict but in a lack of interest in having such an intellectual community and finally in the dissolution of the ECLG through the European Commission simply by stopping funding of the bi-annual meetings. It remains to be said that neither the European intellectual community in general nor the ECLG in particular was involved in a lobbying exercise in influencing the political procedure at the various stages of law making. There were no institutional ties either formal or informal between the ECLG on the one hand and the Assembly and the ECSC on the other. It was also not the self-understanding of the ECLG to go beyond the internal argument-based exchange between the stakeholders from the different Member 87 Jürgen Habermas, Theorie des kommunikativen Handels (Frankfurt am Main, Suhrkamp, 1981). 88 Ernst Steindorff, EG-Vertrag und Privatrecht (Baden-Baden, Nomos, 1996). 89 European Consumer Law Group, Reports and Opinions (Rapports et Avis September 1977 – March 1984, Centre de Droit de La Consommation) (Brussels, E. Story-Scientia, 1986); European Consumer Law Group, Reports and Opinions (Rapport et Avis 1986–1997) (Brussels, E. Story-Scientia, 1997).

The Intellectual Community of Consumer Law and Policy in the EU  85 States and the European Commission. It could happen that individual members of the ECLG were invited to hearings of the Assembly, the ESCS or the Consumer Consultative Committee, or even to be asked to write an opinion for one of the three bodies. In practice, the lobbying exercise lay in the hands of BEUC, which was in charge of the secretariat of the ECLG. The ECLG served as an important intellectual source for BEUC at least in areas which overlapped the Commission’s agenda.

D.  From Harmonisation through Law in 1975 to Stakeholder Dialogue in 1981 As already indicated, a policy change occurred between the first consumer programme (1975) and the second consumer programme (1981). Thierry Bourgoignie90 and Ludwig Krämer91 argue that one of the reasons behind the policy change is the different position of the European Parliament. The resolution of the European Parliament on the first (1975) programme is rather activist,92 whereas the resolution93 on the second consumer programme is much more reluctant, advocating a dialogue between the different stakeholders, business and consumers, the supremacy of voluntary agreements between stakeholders over binding regulatory action and if regulatory action is the only legitimate solution, a directive should provide a framework and demonstrate the financial implications. One might wonder where the difference is coming from. The 1977 resolution was taken by the Assembly in the form provided for by the Treaty of Rome in Article 100. The second resolution, however, was taken by the first directly elected European Parliament. The institutional difference can hardly explain the policy shift. It seems that the European Parliament is mirroring the growing spirit of the times, the increased reluctance against legislative measures to the benefit of consumers. This seems all the more amazing as the neo-conservative move had not yet reached the majority of the Member States. There were growing conflicts in the Member States on the role and function of consumer law and policy, but in countries like France and Germany social democratisation had not yet come to an end. The policy change enticed the ECLG to elaborate a report on ‘Non-legislative means of consumer protection: ECLG report adopted in October 1982’. The report was produced after the European Commission had made its second consumer policy programme public. This indicates that the ECLG was not contacted by the European Commission before the official publication. The ‘exceptional symbiosis’ did not cover the involvement of the ECLG in development of the broader action plan of the European Commission. This means that the European Commission used the ECLG to fill the action plan, which

90 Thierry Bourgoignie, ‘Vers un droit européen de la consommation? Possibilités et limites’ (1982) Revue Trimestrielle de Droit Européen 1. 91 Krämer, EWG-Verbraucherrecht (n 5) Rdnr 61. 92 Resolution on Community consumer policy [1977] OJ C241/23. 93 Resolution embodying the opinion of the European Parliament on the communication from the Commission of the European Communities to the Council concerning an action programme of the European Community with regard to consumers [1980] OJ C291/39.

86  Hans-W Micklitz is formally entirely correct and even convincing, but which indicates the limits of what an informal institution with no status can reach. The ECLG report concludes with the following words:94 The European Consumer Law Group does not see much value in the idea of voluntary agreements put forward by the European Commission unless the above mentioned requirements are met (the ECLG refers to minimum requirements on negotiation, on public-ness, on content and on monitoring HWM). The European Consumer Law Group therefore advises consumer organisations not to embark upon negotiations of codes at the EU level. The European Consumer Law Group is of the opinion that the European Commission has a mandate and a duty to make proposals for the effective implementation of the principles laid down in the Second Consumer Action Programme. Where EC legislation could not be achieved it would be better to adopt national legislation.

This statement characterises the scepticism of the European intellectual community against all sorts of codes, recommendations, and guidelines – which comes under the notion of soft law – up until today.95 There has been a strong preference for binding law. The ECLG even favours national binding legislation over soft EU law. Since 1982 the European Commission has made various attempts to revitalise the ‘idea’ of voluntary agreements. The most comprehensive – though failed – attempt was the joint effort by representatives of business and consumers to elaborate a set of standard terms in the field of package tours.96 It seems that the European Commission also recognised the limits of a soft approach, as becomes clear through its adoption of a whole series of consumer law directives after adoption of the Single European Act and the introduction of majority voting in the Council. As long as the unanimity rules applied, the EU managed to get only three consumer directives adopted: Directive 84/450/EEC on misleading advertising, Directive 85/577/EEC on door-to-door sales and Directive 87/102/EEC on consumer credit. The majority rule took the pressure away from the European Commission to seek unanimity for its implementation plans. Revision of the Treaty equally affected the symbiosis between the European Commission and the European intellectual community. Seen through the eyes of the European Commission, the ECLG helped to understand what was going on in the Member States in the respective fields of consumer law. The two representatives from each country were a kind of sounding board that reflected the political atmosphere in the Member States. Whilst the ECLG did not lose its function, the European Commission needed to build strategic alliances with supporting Member States in order to secure the necessary majority. Six years later, the Maastricht Treaty introduced the co-decision procedure. From then on the European Commission had to seek support not only from Member States in the Council but also from the European Parliament. One might

94 Reprinted in European Consumer Law Group, Reports and Opinions (Rapports et Avis September 1977–March 1984) (n 90) 347. 95 For a deeper analysis Fabrizio Cafaggi (ed), Reframing Self-Regulation in European Private Law (Dordrecht, London, Kluwer, 2006). 96 Klaus Tonner, ‘Ein Europäischer Verhaltenskodex für Pauschalreisen’ (2001) 9 ReiseRechts Aktuell 175; Hugh Collins, The European Civil Code: The Way Forward (Cambridge, Cambridge University Press, 2008).

The Intellectual Community of Consumer Law and Policy in the EU  87 therefore come to the conclusion that there is a relationship between the Treaty amendments in 1986–1992, the majority decision in the Council and the co-decision procedure of the Council and the European Parliament and the gradual break-up of the symbiosis between the European Commission and the European intellectual community.

E.  A Better and More Just Society through Consumer Law The ECLG has not delivered an opinion that deals explicitly with the role and function of consumer law in a market economy, what the role of consumer law should be and what the expectations are, in particular for social change. This is in a way amazing as there was a fierce transnational theoretical and conceptual debate on how to place consumer law into private law or economic law. In blunt language the crucial question was whether the market economy can be transformed through law into a social market economy or whether a different economy is needed. In Germany the debate on so-called Sonderprivatrecht (something like special purpose private law or private law with special status) split private law academia for roughly 30 years, with limited intellectual exchange between the two camps.97 Those who accept that private law is able to integrate consumer law take a reformist position. They accept and take for granted that the nation state is at least theoretically in a position to integrate the ‘social’ in the market economy – via law. This exercise is what Duncan Kennedy termed ‘the second globalization’.98 The period concerned is claimed to have lasted from 1900 until 1968, though from a European perspective one might feel tempted to extend the period of the ‘social’ up to the late 1970s. Sixty or 70 years of statutory intervention in the market produced status-related labour law from the 1920s onwards and – from the beginning of the consumer society in the 1950s/1960s – statusrelated consumer law. Just as labour law provides social protection to workers, consumer law is claimed to provide social protection for consumers. It is evident that for status-related laws the key question is cui bono: who may benefit from the status? For those who argued in favour of a systemic change, consumer law provided an opportunity to revitalise the long-standing fundamental critique against a private law order that favours a capitalist market economy99 and to combine the debate

97 In favour of Sonderprivatrecht Christian Joerges, Verbraucherschutz als Rechtsproblem: Eine Untersuchung zum Stand der Theorie und zu den Entwicklungsperspektiven des Verbraucherrechts (Heidelberg, Deutscher Fachverlag, 1981); Against Barbara Dauner-Lieb, Verbraucherschutz durch Ausbildung eines Sonderprivatrechts für Verbraucher: systemkonforme Weiterentwicklung oder Schrittmacher der Systemveränderung? (Berlin, Duncker and Humblot, 1983). 98 Duncan Kennedy, ‘Three Globalizations of Law and Legal Thought: 1850–2000’ in David M Trubek and Alavaro Santos (eds), The New Law and Economic Development: A Critical Appraisal (New York, Cambridge University Press, 2006) 19–73. 99 Otto v Gierke, Die soziale Aufgabe des Privatrechts (Berlin, Springer, 1889) 15; See its English version, Otto v Gierke, ‘The social role of private law’ (trans by Ewan McGaughey) (2018) 19 German Law Journal 1017; François Gény, Méthode d’interprétation et sources en droit privé positif, 2nd edn (Paris, Librairie Générale de Droit et de Jurisprudence, 1919); François Gény, Science et technique en droit privé positif: nouvelle ­contribution à la critique de la méthode juridique (Paris, Societe du Recueil Sirey, 1913).

88  Hans-W Micklitz of the 1920s with the debates of the 1960s/1970s. Debate took place in various European legal orders, but was particularly lively in France, Germany and Italy.100 Consequently the theoretical conceptual debate focused on possible parallels between the worker and the consumer.101 It has to be recalled that both the worker and the consumer were understood as ideal types in Max Weber’s sense. There was no differentiation between different degrees of weakness or vulnerability. However, in practice the reformers gained ground not least through the successful application of consumer laws in nearly all Member States. The 1968 revolt did not lead to a system change, either politically or economically. When consumer policy shifted from the nation state to the European level, the intellectual community moved towards a reformist perspective, despite single voices that called for system change.102 The reports of the ECLG are telling. They start from the premise that it is possible to give the European integration a social face – through law. There is no documented discussion on the possible consequences of the shift from the national to the EU level, on whether a legal construct like the EU is in a position similar to the nation state in domesticising a capitalist market economy. There is, however, a second strand of debate which is much more related to the role and function of legal theory. Christian Joerges and David Trubek squeeze the different understandings of legal theory into the following categories:103 On the one hand, there is Practice of Theory – theory as representation of the world as it is, where theory is expected to produce guidance for social action, for changing the economy and the society. On the other hand, there is Theory as Practice – theory is being understood itself as practice, a normative vision that structures individuals. Theory’s goal is to change the way in which we think and NOT to contribute to changing the world.

There is no need to waste words on where to locate the core of the European intellectual community, the European Consumer Law Group. Both camps – those who advocate a system change as well as those who call for and believe in reform of the private law order through consumer law – share an instrumentalist understanding of the role of law and legal theory. Legal theory will guide social action, here of the EU legislature. This is not to say that there were not single voices who pointed to the difficulties of such an instrumentalist understanding of legal theory, of the potential consequences of the transfer

100 With regard to Germany, Rudolf Wiethölter, Rechtswissenschaft, (Frankfurt am Main, Fischer Verlag, 1968); and his concept of ‘political jurisprudence’, with regard to France, Michel Miaille, L’état du droit: introduction à une critique du droit constitutionnel (Paris, Maspero, 1978); Michel Wieviorka, L’État, le Partonat et les Consommateurs (Paris, PUF, 1977); with regard to Italy, Guido Alpa, Responsabilità dell’impresa e tutela del consumatore (Milano, Giuffrè, 1975). 101 Enzo Roppo, ‘Verbraucherschutz und Klassentheorie’ (1976) Demokratie und Recht 109; the response by Klaus Tonner, ‘Verbraucherschutz und Klassentheorie – Erwiderung auf Enzo Roppo’ (1976) Demokratie und Recht 241; Udo Reifner, Alternatives Wirtschaftsrecht am Beispiel der Verbraucherverschuldung: Realitätsverleugnung u. soziale Auslegung im Zivilrecht (Darmstadt, Neuwied, Luchterhand, 1978). 102 One of them was Thierry Bourgoignie, Éléments pour une théorie du droit de la consommation. Au regard des développements du droit belge et du droit de la Communauté économique Européenne, Collection Droit et Consommation (Brussels, Story Scientia, 1988). 103 Christian Joerges and David Trubek, Critical Legal Thought: An American-German Debate, Schriftenreihe des Zentrums für Europäische Rechtspolitik an der Universität Bremen (Baden-Baden, Nomos, 1989) 11 Schriftenreihe des Zentrums für Europäische Rechtspolitik (republished in (2011) 12 German Law Journal 7).

The Intellectual Community of Consumer Law and Policy in the EU  89 and what it could mean for the design of a consumer protection law. Mainstream thinking and mainstream policy making activities looked different. It took until after the new millennium before the transformation of consumer law (and not consumer law alone) through the EU was put into the limelight.104

F.  Access to Justice, Collective Interests and Public Interest Litigation The rise of consumer policy from the 1970s onwards brought two dimensions to the forefront of political action – access to justice and protection of the collective interests of consumers. Both went beyond the canon of rules and principles of civil law and common law. They are only loosely connected to the 1975 and 1981 consumer programmes. Neither of them appears in the two programmes. The first consumer policy programme refers to consumer advice and consumer redress but only with regard to individual consumers. The word ‘collective’ appears twice but is not defined. At the very least under No. 33 the programme states:105 To this end, the Commission will: (i) study: – systems of assistance and advice in the Member States, – systems of redress, arbitration and the amicable settlement of disputes ­existing in the Member States, – the laws of the Member States relating to consumer protection in the courts, particularly the various means of recourse and procedures, including actions brought by consumer associations or other bodies.

The reluctance might result from the then still dominating understanding in the Treaty that it is for the EU to adopt secondary EU law and for the Member States to enforce it. The European Commission had not yet tested whether Article 100 Treaty of Rome would also cover rules on individual and collective remedies and a specification on how Member States should organise law enforcement. In the field of consumer law, Directive 84/450/EEC served as a test case, introducing the action of injunction in the hands of public agencies and/or consumer organisations. On the other hand the ECJ had already decided REWE in December 1976.106 The Court argued that the Member States’ procedural autonomy had to be assessed against the principle of equivalence and the principle of effectiveness. This statement would have given the European Commission some leeway. The wider academic debate was very much affected by US policy. In the US access to justice is deeply connected to the struggle from the 1950s of black people for their citizen’s rights, often connected to denomination as a ‘movement’.107 Litigation in the courts

104 See the contributions in Dimitry Kochenov, Gráinne de Búrca and Andrew Williams (eds), Europe’s Justice Deficit? (Oxford, Hart Publishing, 2015); Poul Kjaer (ed), The Law of Political Economy: Transformation in the Function of Law (Cambridge: Cambridge University Press, 2020). 105 Council Resolution of 14 April 1975 on a preliminary programme of the European Economic Community for a consumer protection and information policy [1975] OJ C92/1, C92/8. 106 Case C-33/76 Rewe-Zentralfinanz eG and Rewe-Zentral AG v Landwirtschaftskammer für das Saarland [1976] ECR 1976 -01989. 107 Joel F Handler, Social Movements and the Legal System, A Theory of Law Reform and Social Change (New York, Academic Press, 1978).

90  Hans-W Micklitz has played a key role. Courts in the US have been used as public fora not only to defend the civil rights of one particular person. The plaintiff stood as a kind of representative of the whole class of a discriminated-against group – here, black people. The civil rights movement was the beginning of what later became known as public interest litigation. Litigation was no longer limited to race discrimination: it moved from there to environmental and consumer protection. Two publications hit budding environmental and consumer lawyers: Rachel Carson’s Silent Spring in 1962108 and Ralph Nader’s Unsafe at any Speed in 1965.109 They prepared the ground for collective action, but consumer activists had to struggle with the ‘Collective Action Problem’ which Mancur Olson had already identified in 1965.110 Joel Handler analysed the rise of public interest litigation and its move from race discrimination to consumer protection in 1978. David Trubek111 analysed public interest litigation in the light of the critical legal studies movement. All this is to say that the US debate was far ahead of European development and that there would have been great potential for mutual exchange and for stretching the European intellectual community across the Atlantic. It needed another 30 years, however, before the possible parallel became a subject of academic interest.112 Europe followed a different avenue. However, it should be recalled that the US debate on access to justice and public interest litigation was not widely known in Europe; access depended very much on individual research focus and interests. Due to high communication costs, it was difficult to gain access to developments in the US without having access to a top library, without travelling there, and without being in contact with US scholars working in the field. European scholarship followed the US strand, but the intellectual debate did not take place in confrontation with US scholarship. As far as access to justice is concerned European scholars revitalized the debate on ‘Klassenjustiz’ (class justice) of the 1920s and connected the search for a solution to socio-legal research.113 The focus lay on the rights of individuals and the barriers the individual citizen, in between the consumer, had to overcome in the fight for their rights. The Nordic Countries took the lead in providing easily accessible dispute resolution schemes for consumers.114 Delegating dispute resolution away from the courts, however, was never fully accepted as a means of granting justice to consumers. Until today opinions differ

108 Rachel Carson, Silent Spring (US, Houghton Mifflin, 1962); David Pimentel, ‘Silent Spring, the 50th Anniversary of Rachel Carson’s Book’ (2012) 12 BMC Ecology 20. 109 Ralph Nader, Unsafe at Any Speed (New York, Grossman Publishers, 1965). 110 Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups (Cambridge, Harvard University Press, 1965). 111 David Trubek, ‘Where the Action Is: Critical Legal Studies and Empiricism’ (1984) 36 Stanford Law Review 575. 112 Daniel Kelemen, Eurolegalism: The Transformation of Law and Regulation in the European Union (Cambridge, Mass., Harvard University Press, 2011). 113 Erhard Blankenburg and Udo Reifner, Rechtsberatung: Soziale Definition von Rechtsproblemen durch Rechtsberatungsangebote (Neuwied, Darmstadt, Luchterhand, 1982); Mandfred Rehbinder and Bernd Rebe (eds), Zugang zum Recht (Bielefeld, Gieseking Verlag, 1978). 114 For Denmark, see Børge Dahl, Consumer Legislation in Denmark (Wokingham, Van Nostrand Reinhold, 1981) 122; For Sweden, see Ulf Bernitz and John Draper, Consumer protection in Sweden: Legislations, institutions and practice, 2nd edn (Stockholm, Institute for Intellectual Property and Market Law, Stockholm University, 1986) 65.

The Intellectual Community of Consumer Law and Policy in the EU  91 considerably in the European intellectual community. The reason might be differences in access to the court system, costs and the speed of decision-making.115 The idea of public interest litigation was still in its infancy. One of the few scholars who deeply engaged with protection of the consumer’s collective interests early on was Udo Reifner. Sponsored by the German Federal Ministry of Justice, Udo Reifner set up an ‘action research unit’ in 1980.116 The consumer advice centre in Hamburg (Verbraucherzentrale Hamburg) served as the platform for initiating model litigation to combat collective problems of consumers before the German courts. At the time the only collective remedy available was an action for injunction on the basis of unfair terms and unfair commercial practices. The introduction of a collective compensation scheme – at least for unfair commercial practices –did not find political support in the coalition of the social democratic and the liberal party.117 That is why the project had to find individual consumers whose case could be regarded as being representative of a collective problem.118 I was involved in the project as responsible for the section on repair services119 whereas Udo Reifner worked on consumer credit. In sum, access to justice and public interest litigation was located at the national level. The then totally underdeveloped field of access to justice and public interest litigation at the European level was somewhat compensated by the experience of some members of the European Consumer Law Group which Thierry Bourgoignie and Norbert Reich had gained through their studies in the US. It is therefore not surprising that the ECLG stressed the need to introduce appropriate means of collective redress into the European legal order. As early as 1981 the ECLG adopted an opinion on ‘Group Action and Collective Interests’.120 The opinion is rather academic in tone. It includes and refers to the much more advanced discussions on group actions in the US and Canada, bearing witness to the experience of those members who were able to collect the necessary information abroad. It was to take 40 years, until 2021,121 before the EU found support from the European Parliament and the Member States to adopt a fully

115 Burkhard Hess and Pietro Ortolani (eds), Impediments of National Procedural Law to the Free Movement of Judgments, Volume I (Beck, Hart Publishing, 2019); Burkhard Hess and Stephanie Law (eds), Implementing EU Consumer Rights by National Procedural Law: Luxembourg Report on European Procedural Law, Volume II (Beck, Hart Publishing, 2019). 116 The government was still built of a coalition of social democrats and the liberal party, with Helmut Schmidt as chancellor and H.-D. Genscher as foreign minister. Kohl came to power in 1982. 117 The German Government had commissioned the Max-Planck Institute in Munich to evaluate the potential collective damage that could result from unfair and misleading advertising, for a reconstruction of the failed exercise Hans-Wolfgang Micklitz, ‘Kollektiver Schadensersatzanspruch im UWG – Scheitern oder Neubeginn’ in Hans-Wolfgang Micklitz (ed), Rechtseinheit oder Rechtsvielfalt in Europa? (Baden-Baden, Nomos, 1996) 383–414. 118 Hans-Wolfgang Micklitz, Der Schutz des Verbrauchers vor ungerechtfertigten Handwerker- und Kun-dendienstforderungen (Bremen, ZERP, 1985); Udo Reifner and Michael Volkmer, Neue Formen der Verbraucherrechtsberatung (Frankfurt, Campus Verlag, 1988). 119 Udo Reifner and Michael Volkmer, Ratenkredite an Konsumenten: Rechtsprobleme, Hintergründe und Strategien zum Verbraucherschutz gegenüber Banken (Hamburg, Verbraucher-Zentrale, 1984). 120 Reprinted in European Consumer Law Group, Reports and Opinions (Rapports et Avis September 1977 – March 1984) (n 90) 243. 121 Directive 2020/1828/EU of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC [2020] OJ L409/1.

92  Hans-W Micklitz developed scheme of collective redress that reaches beyond the action for injunction, which was introduced in misleading advertising in 1984, in unfair terms in 1993, and in cross-border litigation in 1998.

IV.  The Way Ahead For all those who played an active role in the founding years, the 1970s/1980s were the glorious years of consumer law and consumer policy. Whether this was the case or whether this is the usual glorification of mothers and fathers will have to be critically assessed by others. My description of the intellectual community should be understood as a stock-taking exercise – as a best effort, if not necessarily best practice. No more than that. Certainly a more distant and more critical analysis is needed, on the role the intellectual community played, on ‘exceptional symbiosis’ between scholars, practitioners and public officials of the European Commission, on the tensions between academics and practitioners, between national consumer lawyers and the European Commission, and – last but not least – on the politics behind consumer law, its ‘leftist’ touch at the national level and the ‘market’ bias at the EU level, which determined the realisation of ‘leftist’ political goals. Christian Twigg-Flesner and I are planning a follow-up, this time on the ‘transformation of consumer law’, in order to cover the decades that followed. The participants are the next generation of consumer lawyers who are invited to contrast the past with the present.

part ii The Making of National Consumer Law and Policy and its Interaction with the EU

94

5 German Consumer Law: Own Initiatives in the 1970s and Transposition of EU Directives Since the 1980s KLAUS TONNER*

I. Introduction This chapter highlights the role of legislation and case law in the development of consumer law since the 1950s. Academic discussion remains in the background. The focus is laid on consumer contract law and the law of unfair commercial practices as well as its enforcement. These are the most important cornerstones of modern consumer law during the past 70 years.1

A.  Consumer Contract Law The history of German consumer law is a history of its private law development. This applies both to substantive law and law enforcement. Public law has always played a role only in marginal areas. The core of consumer law is the Civil Code, the Bürgerliche Gesetzbuch, BGB, which came into force on 1 January 1900 and is based on private autonomy. Whether the focus on private law might be modified due to the influence of European law in the future is uncertain.2 The general clauses of the Civil Code have * Dr. jur., Professor emeritus for Private Law and European Law at the University of Rostock, Germany, retired part time Judge at the Oberlandesgericht Rostock. The author wants to thank Hans W. Micklitz for his comments on the first version of this chapter. 1 For a view into the future cf Peter Rott, ‘Rechtsklarheit, Rechtsdurchsetzung und Verbraucherschutz’ in Hans-Wolfgang Micklitz, Lucia A Reisch, Gesche Joost and Helga Zander-Hayat (eds), Verbraucherrecht 2.0 – Verbraucher in Der Digitalen Welt (Baden-Baden, Nomos, 2017) 221ff; for an analysis of developments since the 1970s cf Hans-Wolfgang Micklitz, ‘Verbraucherwissenschaft und – politik im Spannungsfeld zwischen Kontinuität und Diskontinuität’ in Peter Kenning, Andreas Oehler, Lucia A Reisch and Christian Grugel (eds), Verbraucherwissenschaften: Rahmenbedingungen, Forschungsfelder und Institutionen, 1st edn (Wiesbaden, Springer Gabler Verlag, 2017) 31ff (2nd edn forthcoming). 2 Klaus Tonner, ‘Das Bundeskartellamt auf dem Weg zur Verbraucherschutzbehörde? – Ansätze zu mehr Verbraucherrechtsdurchsetzung’, in Tobias Klose, Martin Klusmann and Stefan Thomas (eds),

96  Klaus Tonner always allowed the courts modest interventions, to protect the weaker party to the contract. This became particularly clear in the field of standard terms (below II.B). In the area of the welfare state of the 1970s, consumer protection was discovered as an independent policy area. The legislator codified judge-made law into standard terms in the Standard Contract Terms Act, AGB-Gesetz (below III.D).3 The general clauses of this Act allowed the courts a significant influence on the further development of consumer contract law. Another important step by the legislator before the beginning of the Europeanisation of consumer law was the Consumer Credit Act (Verbraucherkreditgesetz, VerbrKG)4 (below III.E), which was the result of the first economic crisis after the second World War. After the Single European Act came into force and the European legislator passed a greater number of consumer law Directives, the German legislator limited its own activity to implementing those Directives (below IV). Further, internal counteracting powers prevented further larger steps by the autonomous German legislator. The debate on special private rights (Sonderprivatrechte, below III.C) finally led to regulation of consumer contract law in subsidiary acts to the BGB being given up and the whole of consumer contract law was integrated with the BGB (below V). Separate codification of consumer law never played a role, though suggested by leading consumer academics.5 The Europeanisation of consumer contract law meant that independent initiatives by the German legislator were largely relinquished, although the minimum standard character of directives issued until 1999 would have given the legislator opportunity to implement its own ideas. Even full harmonisation directives allow small margins for own initiatives due to the targeted harmonisation principle. But the German legislator did not exploit this in favour of consumers in the days after modernising the law of obligations (Schuldrechtsmodernisierung), which came into force in 1 January 2002 (below VI.A).6 In the field of unfair commercial practices law, a review of the Act against unfair competition (Gesetz gegen unlauteren Wettbewerb, UWG) in the 1970s failed (below III.F), and it took a long time to implement the Unfair Commercial Practices Directive correctly (below VI.B).7 Own initiatives by the German legislator did not play a significant role in the days of fully harmonising Directives (below VII). The substance of

Das Unternehmen in der Wettbewerbsordnung: Festschrift für Gerhard Wiedemann zum 70. Geburtstag (München, Beck, 2020) 991ff. 3 1976 Standard Terms Act (Gesetz zur Regelung des Rechts der Allgemeinen Geschäftsbedingungen) (AGB-Gesetz) (Bundesgesetzblatt, BGBl) 1976 I 3317. 4 Verbraucherkreditgesetz (Bundesgesetzblatt, BGBl) 1990 I 2840. 5 For the early days cf Norbert Reich, ‘Zivilrechtstheorie, Sozialwissenschaften Und Verbraucherschutz’ (1974) 7 Zeitschrift für Rechtspolitik 187, 187ff; recently Hans-Wolfgang Micklitz, Brauchen Konsumenten und Unternehmen eine neue Architektur des Verbraucherrechts? Gutachten A zum 69. Deutschen Juristentag (München, Beck, 2012) 25ff. 6 For targeted harmonisation cf Norbert Reich and Hans-Wolfgang Micklitz in Norbert Reich, Hans-Wolfgang Micklirz, Peter Rott and Klaus Tonner, European Consumer Law, 2nd edn (Cambridge, Intersentia, 2014) 41ff. 7 Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market, [2005] OJ L149/22.

German Consumer Law  97 German consumer law in the twenty-first century consists in implementation of EU directives. There are two topics in which German policy did not really act – except for lip service. These are sustainable consumption and digitisation. It remains to be seen whether the ‘Green Deal’ of the EU Commission and transposition of the Digital Content Directive will change this finding (below VIII.B).

B. Enforcement The German legislator has always relied on private individual enforcement, which explains the importance of the courts in consumer protection (below III.D). The small claims debate of the 1970s was not taken up in Germany. It was not until the first decade of this century that sector-specific conciliation centres of some importance were established. Nationwide implementation of the ADR Directive8 and its Implementation Act, the Consumer Dispute Settlement Act (Verbraucherstreitbeilegungsgesetz VSBG),9 have not been effective until now except in limited specific areas (below IX.A). As a result of lack of public enforcement, Germany was at the forefront in collective enforcement by introducing the injunction claim, which has been granted to associations of business and consumers. This was introduced in the Unfair Competition Act in 1965 and in the Standard Contract Terms Act in 1976. But it was never amended. Efforts to expand the sanctions of the UWG failed. The Commission’s recommendation on class actions was not taken up. Only the VW Diesel scandal required a reaction from the legislator, which happened in 2018 in the shape of the Musterfeststellungsklagengesetz (Act for a model action for a declaratory judgment, below IX.B).10 The first action under this act ended with an out-of-court settlement. In 2005 the KapMuG (KapitalanlegerMusterverfahrensgesetz, Capital investor model action act), an act with limited scope, came into force. Enforcement of consumer law by state agencies has never been an issue in Germany. The competence of the Federal Cartel Office (Bundeskartellamt, BKartA) for standard terms control was rejected in the 1970s. After that, this topic did not come on the agenda for decades. Recently, however, a turnaround has been emerging. The Federal Cartel Office is authorised to conduct sector inquiries.11 It remains to be seen whether it will be developed by forthcoming legislation into a consumer protection authority with intervention powers, but it seems doubtful whether there really will be a fundamental change (below IX.C).

8 Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes [2013] OJ L165/63. 9 Gesetz über die alternative Streitbeilegung in Verbrauchersachen (Verbraucherstreitbeilegungsgesetz, VSBG) (Bundesgesetzblatt, BGBl) 2018 I 254. 10 Gesetz zur Einführung einer zivilprozessualen Musterfeststellungsklage (MuFKlaG) (Bundesgesetzblatt, BGBl) 2018 I 1151. 11 Neuntes Gesetz zur Änderung des Gesetzes gegen Wettbewerbsbeschränkungen (Bundesgesetzblatt, BGBl) 2017 I 1416.

98  Klaus Tonner

II.  The 1950s and 1960s A.  Competition as the Consumer’s Best Friend12 In the first 15 years after the foundation of the Federal Republic of Germany in 1949 there was no attempt to adopt any specific law dealing with consumers and their protection. The social market economy (soziale Marktwirtschaft) was established. Ludwig Erhard13 and Alfred Müller-Armack,14 who created the term of the soziale Marktwirtschaft, were the leading politicians so far. The soziale Marktwirtschaft followed the theory of ordo liberalism of the Freiburg School (Walter Eucken,15 Franz Böhm16). This model means a liberal economy with frame regulation, which facilitates the functioning of the market. The representatives of ordo liberalism were of the opinion that the structure of both sides of the markets had to be a polypolistic one; monopolies or even oligopolies would jeopardise the balance of the two sides of the market. As a consequence, monopolies and narrow oligopolies had to be under control of the state. A further and important prerequisite for the functioning of the markets was that there were no agreements between enterprises on one side of the market in restraint of competition, in particular by establishing cartels. The basic act on economic law in Germany, the Act against restraints on competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB) was modelled according to the requirements of ordo liberalism.17 Cartels were forbidden, and enterprises which enjoyed dominant market position were subject to control of possible misuse of their market power. To enforce the law, an agency was established, the Bundeskartellamt, in 1957. The idea behind the GWB with regard to consumer policy was that no specific consumer policy was required as long as the markets were functioning. The consumer must be protected by a strictly enforced law against restraints on competition. On the supply side of the market there would be no unfair offers to the consumer as long as there was competition between suppliers. This idea dominated the discussion for a long time in Germany, and even consumer associations believed in those days that ‘der Wettbewerb ist der beste Freund des Verbrauchers’ (‘competition is the consumer’s best friend’). This idea was abandoned by consumer associations not earlier than in the early 1970s,18 whereas the competition policy of the government changed from the theory of functioning markets by the late 1960s to the theory of dynamic competition. Nevertheless the first roots of later developments in consumer law date back to the 1950s and early 1960s. These were decisions of the Federal Supreme Court 12 cf Hans-Wolfgang Micklitz, ‘Aschenputtel – die Lebens-Leidensgeschichte der Königin Verbraucher’ (2005) Verbraucher und Recht 283. 13 Ludwig Erhard (1897–1977): Bundeswirtschaftsminister (1949–1963), Bundeskanzler (1963–1966). 14 Alfred Müller-Armack (1901–1978): Staatssekretär (deputy minister) of the Bundeswirtschaftsministerium (1958–1963). 15 Walter Eucken, Grundsätze der Wirtschaftspolitik (Bern, A Francke, 1952). 16 Franz Böhm, Wirtschaftsordnung und Staatsverfassung: nach einem Vortrag vom 24.01.1949 (Mohr, 1950). 17 Gesetz gegen Wettbewerbsbeschränkungen, originally (Bundesgesetzblatt, BGBl) 1957 I 1081. 18 cf Aktionsprogramm der Arbeitsgemeinschaft der Verbraucher vom 29.5.1973 with critical remarks about consumer sovereignty, re-published in Eike von Hippel, Verbraucherschutz, 3rd edn (Tübingen, Mohr Siebeck, 1986) 319ff.

German Consumer Law  99 (Bundesgerichtshof, BGH), which were based on general clauses in private law, this is to say in the BGB and in the UWG. Both the BGB (1900) and the UWG (1909) came into force before the First World War in a time of a liberal economy, but their general clauses allowed intervention by the courts against excessive use of freedom.

B.  Control of Standard Terms The majority of contract law rules of the original BGB consisted of optional provisions; this is to say a great playing field is left to freedom of contract. But this did not mean that freedom was unlimited. As already mentioned, general clauses allowed interventions by the courts.19 There were two such general clauses in the BGB. These have remained more or less unchanged since 1900. The first is § 138 BGB, according to which a legal transaction which is immoral (sittenwidrig) is void. According to § 242 BGB an obligor has to perform according to the requirements of good faith (Treu und Glauben). Both clauses played a role with regard to standard contract terms. Even the Reichsgericht20 began such control. It applied § 138 BGB in particular to liability limitation or exclusion clauses.21 It did not matter whether the other party to the contract was a consumer or another business. The most important observation is that the Reichsgericht did not follow a model of unlimited freedom of contract. Standard terms were also a subject of academic research.22 After the Second World War, the BGH switched from § 138 BGB to § 242 BGB. A landmark case, decided in 1956,23 dealt with defective furniture. Being based on the principles of Roman law, the sales law of the BGB in its original version did not provide a right to repair before the transposition of the Sale of Consumer Goods Directive24 in 2001 this is to say at the time of the decision of the BGH of 1956, but only a right to price reduction or a right to cancel the contract in cases of a nonconformity (in German Mangel). Nevertheless, modern mass production of goods required a right to repair, and so it was very often part of standard terms, whereas the rights under the BGB were excluded. In the 1956 case the seller did so and tried to repair the defective furniture several times, but without success. Eventually the buyer claimed for cancellation of the contract, which the seller refused. The BGH said that it is in line with Treu und Glauben to replace the BGB rights by a right to repair, if at the end of the day the buyer has a good without defects. Therefore, according to the BGH, the legal rights of 19 Ludwig Raiser, ‘Vertragsfreiheit Heute’ (1958) 13 JuristenZeitung 1. 20 Supreme Court of the German Empire 1879–1945. 21 Reichsgericht (RG) 21.10.1921, I ZR 135/21, 102 RGZ (official collection of decisions of the Reichsgericht in civil law matters) 397; RG 26.10.1921, I ZR 123/21, 103 RGZ 82. For an analysis of cases of the RG and the BGH before adoption of the AGB-Gesetz cf Norbert Reich and Klaus Tonner, ‘Rechtstheoretische und rechtspolitische Überlegungen zum Problem der Allgemeinen Geschäftsbedingungen’ (1973) 18 Hamburger Jahrbuch für Wirtschafts- und Gesellschaftspolitik 213, 220ff. 22 Ludwig Raiser, Das Recht Der Allgemeinen Geschäftsbedingungen (Hamburg, Hanseatische Verlagsanstalt, 1935). This book was quoted very often during drafting the AGB-Gesetz in the 1970s. 23 BGH 29.10.1956, II ZR 79/55, 22 BGHZ (Official collection of decisions of the Bundesgerichtshof in private law (Amtliche Entscheidungssammlung des Bundesgerichtshofs in Zivilsachen)) 90. 24 Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees [1999] OJ L171/12.

100  Klaus Tonner the BGB revive if the repair fails (Wiederaufleben der gesetzlichen Gewährleistung). The case proved to be the basic case for Gewährleistung in sales law. Later, the case became part of the black list of the AGB Gesetz and since 2002 of the BGB. The 1956 case was a consumer case, but that was not decisive for the BGH; the judges would have applied the same rule, if, for example, the furniture had been bought by a small enterprise. The idea of the BGH was not to protect the consumer and not even the weaker party to the contract, but just the other party to the contract, who is not able to make use of its own standard terms. It is important to understand that German standard terms law is originally not designed as consumer law. Even today, it is a mixture of law applicable to the contractual relations between the user (Verwender) of standard terms and the other party, be it a consumer, be it a business. Further creations of the BGH based on § 242 BGB are to avoid clauses which are so unusual that the consumer would not expect them in the relevant section of the standard terms.25 They were called ‘überraschende Klauseln’ (surprise clauses). The legislator of the AGB Gesetz codified this case law; today it is § 305c subs. 1 BGB. These ‘surprise clauses’ overlap with the transparency principle of the Unfair Contract Terms Directive,26 which was transposed to German law in (today) § 307 BGB, and so courts today refer more to the transparency principle than to ‘surprise clauses’, but § 305c BGB is still a provision of German standard contract terms law. In a 1964 decision, the BGH restricted the freedom to deviate from optional rules of the BGB in standard terms.27 Standard terms may not deviate from optional contract law if the norms which are to be deviated from express an essential principle. This has been codified in the Standard Contract Terms Act in § 9 (2) no. 1, today § 307 (2) no. 1 BGB.

C.  Paternalistic Approach in Unfair Commercial Practices Law Today the unfair commercial practices law as codified in the UWG28 is regarded as a second pillar of consumer protection beside the consumer contract law in the BGB. As mentioned, the UWG is nearly as old as the BGB. It was originally adopted in 1909 as a piece of legislation of a liberal area, which did not know the term ‘consumer protection’. The Act included two general clauses, which allowed intervention and further development by the courts. The so called große Generalklausel (§ 1 UWG) forbids unfair competition, and the kleine Generalklausel (§ 3 UWG) misleading competition. The history of the general clauses of the UWG is of even more relevance for the development of the UWG than the history of Treu und Glauben for contract law according to the BGB. The courts ‘filled up’ the general clauses with groups of cases, which have become the substance of the UWG. In the first decades after its coming into force the UWG was regarded – in line with its liberal roots – as an act only to protect competitors. But already in the late 1920s the 25 BGH 28.2.1973, IV ZR 34/71, 60 BGHZ 243. 26 Council Directive 93/13/EEC of 5 April 1993 of unfair terms in consumer contracts [1993] OJ L95/25. 27 BGH 17.2.1964, II ZR 98/62, 41 BGHZ 154. 28 UWG means Gesetz gegen den unlauteren Wettbewerb, Act against unfair competition. The German equivalent to the term commercial practices – geschäftliche Handlungen – was not used before implementation of the UCPD.

German Consumer Law  101 Reichsgericht added the Schutz der Allgemeinheit:29 this term did not mean consumer protection in any way but rather protection of the general interests of the economy and the state. After the Second World War the BGH re-established Mitbewerberschutz and Schutz der Allgemeinheit.30 It was left to the legislator to add the third part of the so-called Schutzzweck-Trias, consumer protection, in 1965, by amending the injunction claim against unfair competition to consumer associations, which meant a big step forward to collective consumer rights.31 Today the three goals have been expressly fixed in § 1 UWG. Consumer protection has never been the only goal of the UWG, either before or after transposition of the Unfair Commercial Practices Directive. Before the approval of consumer protection, one aim of the UWG’s first roots of consumer protection could be seen in the case groups of the courts. Two of the case groups later led to some controversy in the process of Europeanisation of the UWG. The BGH focused on cases of misleading advertising aimed at the elusive, uncritical consumer. This is to say that many cases which the BGH regarded as misleading advertising are no longer regarded as such due to the model of the circumspect informed consumer. The model of the elusive consumer was characterised as a paternalistic approach. For example, the elusive, uncritical consumer could assume that a perfume called ‘Clinique’ was a pharmaceutical product. So the perfume ‘Clinique’ had to be distributed in Germany under the label ‘Linique’ before the Clinique decision of the ECJ (today’s CJEU).32 The name ‘Lifting’ for a skin cream could be misunderstood by the consumer as a means of tightening the skin, as the BGH thought.33 But the Court was corrected by the ECJ, which based its decision on the model of the circumspect, informed consumer.34 Another example of the paternalistic approach were the so-called tying offers (Kopplungsangebote), which the BGH did not allow.35 Further, ‘emotional advertising’ (gefühlsbetonte Werbung) was restricted.36 The idea behind this was that the consumer should make a decision to buy only because of the price and the quality of the product or service but not be influenced by other circumstances, for example, should not buy coffee because of the allegedly free tin. These were consumer problems dealt with by the courts until the early 1990s. Furthermore, there were ancillary statutes from the time of the Great Depression. For example, discounts were limited to three per cent according to the Rabattgesetz. Seasonal sales were strictly limited in terms of the time of the year when they were allowed. 29 RG 24.1.1928, II ZR 272/27, 120 RGZ 47, 49 – Markenschutzverband. 30 BGH 22.2.1952, I ZR 117/51, 5 BGHZ 189. 31 Gesetz zur Änderung des Gesetzes gegen den unlauteren Wettbewerb, des Warenzeichengesetzes und des Gebrauchsmustergesetzes (Bundesgesetzblatt, BGBl) 1965 I 625. 32 Case C-315/92 Verband Sozialer Wettbewerb eV v Clinique Laboratoires SNC and Estée Lauder Cosmetics GmbH [1994] ECR I-00317. 33 BGH 12.12.1996, I ZR 7/94, (1997) Neue Juristische Wochenschrift – Rechtsprechungsreport (NJW-RR) 931 – Lifting Creme. 34 Case C-220/98 Estée Lauder Cosmetics GmbH & Co. OHG v Lancaster Group GmbH [2000] ECR I-00117. 35 BGH 4.7.1975, I ZR 27/14, 65 BGHZ 68. 36 BGH 22.3.1967, Ib ZR 38/65, (1968) Gewerblicher Rechtsschutz und Urheberrecht (GRUR) 44 – Schwerbeschädigtenbetrieb.

102  Klaus Tonner

D.  The Role of Consumer Centres In the 1950s and 1960s there was no debate in Germany about enforcement of consumer rights. A consumer who was not satisfied with the performance of the seller or the service supplier and could not come to terms as to how to settle a conflict had no choice but to go to court. Except for some small branches there was no conciliation as today. Nevertheless, these were the decades in which consumer centres were established.37 These were not self-contained organisations based on membership of consumers, but independent associations founded by NGOs such as Bundesverband hauswirtschaftlicher Berufe, Bund der Versicherten, Deutscher Mieterbund, Deutscher Caritasverband, or Diakonisches Werk der Evangelischen Kirche. They were financed by the state. Each of the German Länder has its own Verbraucherzentrale and pays for them. Only since the 1990s have the Verbraucherzentralen started to ‘sell’ their services to consumers, so that today they generate a significant part of their budget themselves. But for the basics they are still dependent on taxpayers’ money. The consumer centres of the 1950s and 1960s did not fight for consumer rights. Ironically, they were called Hausfrauenvereine (housewives associations), as they advised housewives how to buy the right washing machine and how to shop more cheaply, for example by making use of seasonal sales. The Arbeitsgemeinschaft der Verbraucherverbände (AgV) was established as an umbrella organisation. The AgV coordinated the consumer centres and was lobbying at the level of the federation. However, they got their money from the federal government. When after German reunification the government moved from Bonn to Berlin, the umbrella organisation was re-established as Verbraucherzentrale Bundesverband (The German Consumer Organisation, vzbv). In the 1970s there was a short period of discussion whether the interests of consumers should be represented by organising themselves (Selbstorganisation) or organisation through other NGOs with an interest in consumer policy (Fremdorganisation), but only the model of Fremdorganisation has remained until now. Also discussed was whether trade unions should represent the interests of their members as consumers.38 The result was a book, which has been forgotten today39 – as well as a debate about trade unions as consumer organisations.

E. The Stiftung Warentest The establishment of the Stiftung Warentest (product test foundation) by the federal government in 1964 was the first admission that it was not enough to allow consumers

37 cf Günter Hörmann, ‘Die Verbraucherzentralen’ in Kenning, Oehler, Reisch and Grugel, Verbraucherwissenschaften (n 1) 517 ff. 38 Klaus Tonner, ‘Verbraucherpolitik als gewerkschaftliche Aufgabe’ (1979) 3 Journal of Consumer Policy 252, 252ff; Klaus Petri, ‘Grenzen gewerkschaftlicher Verbraucherpolitik Anmerkungen zu Tonners Beitrag’ (1979) 3 Journal of Consumer Policy 260, 260ff. 39 Arbeitsgemeinschaft der Verbraucher (AgV) and Deutscher Gewerkschafsbund (DGB) (eds), Handbuch des Verbraucherrechts (Neuwied, Luchterhand, 1983).

German Consumer Law  103 to play their role in the markets only by safeguarding the competitive structure of markets via competition law and enforcement by the Bundeskartellamt. The founders of the Stiftung Warentest observed a failure with regard to informing consumers about prices and quality of goods, which was not automatically provided by the markets. The Stiftung Warentest was supposed to fill this gap. The purpose of the Stiftung Warentest according to their articles has been to perform comparative tests of goods and services and to publish the results.40 This has been financed by selling their journals ‘Test’ and ‘Finanztest’, by selling licences of the test results for marketing purposes, by revenues from the assets of the foundation (today €180 million), and by subsidies from the federal government (€3.9 million in 2017). Two leading cases of the BGH recognise the functioning of the Stiftung Warentest. In a case from 1975, the BGH emphasised the economically meaningful and useful function of the Stiftung.41 Publication of tests is covered by freedom of opinion. The BGH granted the Foundation a margin of discretion when determining the test programme, evaluation and presentation of the test results. This discretion is only exceeded if the Foundation’s approach is no longer justifiable. This is the case for deliberate misjudgements or distortions. In a second landmark case in 1987 the BGH again ruled in favour of the Stiftung Warentest.42 The Court answered in the affirmative whether safety standards set by the foundation may contain higher requirements than corresponding DIN standards (technical standards issued by the national standardisation authority). Establishing the Stiftung Warentest was the first sign that an efficient competition policy is not seen as enough to enable the consumer to play a role in the markets. The market does not provide the necessary information. Therefore the government regarded cautious state intervention as necessary. In the 1950s and early 1960s the consumer was regarded as homo economicus.43 More than an efficient competition policy did not seem to be necessary. Of course, homo economicus does not describe reality. But the long period of increasing economic wealth in Germany in the 1950s could disguise the fact that the consumer is not homo economicus.

III.  The 1970s A.  The Influence of the Kennedy Message The beginning of modern consumer politics in western industrialised countries was the transition from a liberal – in Germany, an ordo liberal – to a Keynesian economic 40 cf Hubertus Primus, ‘Die Stiftung Warentest’ in Kenning, Oehler, Reisch and Grugel, Verbraucherwissenschaften (n 1) 525 ff. 41 BGH 9.121975, VI ZR 157/73, 65 BGHZ 325 – Warentest II. 42 BGH 10.3.1987, VI ZR 144/86, (1987) Neue Juristische Wochenschrift (NJW) 2222. 43 cf critically as to the model of homo oeconomicus, which is the basis of this view, Marina Tamm, Verbraucherschutzrecht: Europäisierung und Materialisierung des deutschen Zivilrechts und die Herausbildung eines Verbraucherschutzprinzips, 1st edn (Tübingen, Mohr Siebeck, 2011) 148ff.

104  Klaus Tonner policy, which brought with it a shift from a supply-side to a demand-oriented economic policy. Confidence in the nation state’s ability to solve social problems resulting from the shortcomings of the market was almost without limits. It was felt that unregulated liberal markets created ‘market failures’ and the national state had the task of intervening to keep markets functioning. In competition policy, this is expressed in the theory of functioning competition.44 However, contemporary policy has responded not only to a modern competition policy, but also to ensure the safety and well-being of citizens and to provide the necessary goods and services by the state if the market did not produce them. Precaution against the risks of life was conceived as a state task. The interdependencies through the global economy that limit the power of the national state had not yet been recognised; it was the national state and not the European or global level to which expectations were directed, even though the national state as a political concept was already outdated at that time – after all, the Coal and Steel Union and the EEC had already been set up. Consumer policy was discovered as part of this orientation of economic policy. If the market did not live up to its promises in terms of prices and quality of consumer goods and services, the state was responsible for finding a remedy. It is not surprising that the starting point for this development was in the US as the most developed economy – unlike today, when consumer and legal developments in the European Union serve as global models. The development in the US does not have to be discussed here in detail,45 but the famous Kennedy message should be recalled to memory, which is generally understood – at least symbolically – as the beginning of Western consumer policy. It starts with the famous words ‘consumers, by definition, include us all’. The four basic rights that are today part of Article 169 TFEU are: –– the right to safety – to be protected against marketing of goods which are hazardous to health or life, –– the right to be informed – to be protected against fraudulent, deceitful, or grossly ­misleading information, advertising, labelling or other practices, and to be given the facts the consumer needs to make an informed choice, –– the right to choose – to be assured wherever possible, access to a variety of products and services at competitive prices, and in those industries where competition is not workable and government regulation is substituted, an assurance of satisfactory quality and services at fair prices, –– the right to be heard – to be assured that consumer interests will receive full and sympathetic consideration in the formulation of government policy, and fair and expeditious treatment in its administrative tribunals.46

Neither the interests of consumers in developing countries nor sustainability formed part of this message. 44 Erhard Kantzenbach, Die Funktionsfähigkeit des Wettbewerbs, 2nd edn (Göttingen, Vandenhoeck und Ruprecht, 1967). 45 From a German point of view cf Norbert Reich, Staatliche Regulierung zwischen Marktversagen und Politikversagen – Erfahrungen mit der amerikanischen Federal Trade Commission und ihre Bedeutung für das Verbraucherschutzrecht (Heidelberg, C.F. Müller, 1984); Hippel, Verbraucherschutz (n 18) quotes many ­examples of US legislation. 46 John F Kennedy, ‘Special Message to the Congress on Protecting the Consumer Interest – March 15, 1962’ (1962) 1962 Public Papers of the Presidents of the United States 235.

German Consumer Law  105

B.  German Consumer Protection Policy as a Result of Welfare State Policy German consumer policy in the early 1970s is not just a takeover of the Kennedy message. It clearly sets other emphases, which above all concern a more active role on the part of the state. Moreover, at that stage German consumer policy also differed from early European consumer policy. Seven years after the Kennedy message, a social democratic government came into office in Germany with Willy Brandt as Chancellor.47 In Austria it was Bruno Kreisky.48 Similar developments took place in both German-speaking countries. Together with the Swedish Prime Minister Olaf Palme,49 Brandt and Kreisky these three were the leading social democratic politicians in Europe. All three have much to do with the establishment of environmental protection law in the 1970s and with consumer law. Though it is clear that ‘sustainable consumption’ could be a link between these two fields of policy, in fact environmental policy and consumer policy started as separate policies. The German federal government adopted consumer policy programmes in 1971 and 1975.50 These two programmes focused on the consumer’s market position, on safety and environmental protection, on the importance of public services and finally on the strengthening of consumer organisations. The rights to safety, to choose and to be heard are clearly identifiable as parts of the Kennedy message, but they are supplemented by specific German components. Environmental protection was discovered as a policy field along with consumer policy at the beginning of the 1970s; both appear at the same time. The Leitbild of sustainable consumption, now more than ever relevant,51 existed from the beginning, but only in the programmes of the government. Implementation of the programmes led to separate policies. The importance of public services affects the relevance of state enterprises. The privatisation of those enterprises, especially in the infrastructure sector (postal and telecommunication services, transport and energy), came later. Today the situation has changed utterly and challenges consumer policy to react with regulatory contractual instruments.52 At the beginning of the 1970s three books were published which supported the idea of consumer protection. Eike von Hippel’s ‘Verbraucherschutz’ was a comparative law study, which collected best practices from states all over the world.53 Norbert Reich’s 47 Willy Brandt (1913–1992): German Bundeskanzler (1969–1974). 48 Bruno Kreisky (1911–1990): Austrian Bundeskanzler (1970–1983). 49 Olaf Palme (1927–1986): Swedish Prime Minister (1969–1976) and (1982–1986). 50 Erster und zweiter Bericht der Bundesregierung zur Verbraucherpolitik vom 18.10.1971 (BundestagsDrucksache VI/2724) and 20.10.1975 (Bundestags-Drucksache 7/4184). 51 Klaus Tonner, ‘Nachhaltiger Konsum, Verbraucherschutz und Recht’ in Thomas Bosecke, Peter Kersandt and Katrin Täufer (eds), Meeresnaturschutz, Erhaltung der Biodiversität und andere Herausforderungen im ‘Kaskadensystem’ des Rechts: Festgabe zur Emeritierung von Detlef Czybulka (Heidelberg, Springer, 2012) 307ff. 52 Micklitz, Brauchen Konsumenten (n 5); Hans-Wolfgang Micklitz, ‘Do Consumers and Businesses Need a New Architecture of Consumer Law? A Thought Provoking Impulse’ (2013) 32 Yearbook of European Law 266, 266ff; Peter Rott, ‘Consumers and Services of General Interest: Is EC Consumer Law the Future?’ (2007) 30 Journal of Consumer Policy 49, 49ff. 53 Hippel, Verbraucherschutz (n 18).

106  Klaus Tonner ‘Verbraucher und Recht’54 developed a strategy for more consumer protection which went far beyond the programmes of the federal government; and Konstantin Simitis’ ‘Verbraucherschutz – Schlagwort oder Rechtsprinzip?’ was a plea for more public enforcement.55 At the end of the 1970s the EEC commissioned a study about consumer law in the Member States.56 The German report was the first overall view of German consumer law to come into force.57

C.  Sonderprivatrechte The 1970s saw an ideological struggle between supporters of emerging consumer protection law and traditional lawyers, who discredited the new consumer law as ‘Sonderprivatrecht’, which would violate the principle of general applicability of private law, in particular, when the Standard Terms Act was drafted. The term ‘Sonderprivatrecht’ as such is neutral; the Commercial Law of the Commercial Code (Handelsgesetzbuch, HGB) was from the beginning in 1900 a Sonderprivatrecht in relation to the BGB.58 But in the debates of the 1970s the term was used like a battle cry in order to prevent the emergence of a new special private law, which, building on the concept of the consumer, would prescribe a higher standard of protection than general contract law, in particular by suppressing the optional character of its provisions. According to those authors, there would be no need for that, since the general clauses of the BGB would be sufficient for the protection of the weaker party in the individual case.59 Instead, the danger was seen that the unity of the private law system would be destroyed by introducing a different standard for consumer contract law, without specifying on a case by case basis whether a need for protection really existed.60 In the academic world, the dispute about consumer protection policy became an ideological battle. An essay by Norbert Reich, who suggested a separate b to c law,61 was attacked as leading to socialistic law.62 This dispute was only overcome in 2002, when

54 Norbert Reich, Klaus Tonner and Hartmut Wegener, Verbraucher und Recht (Göttingen, Otto Schwartz, 1976). 55 Konstantinons Simitis, Verbraucherschutz: Schlagwort oder Rechtsprinzip? (Baden-Baden, Nomos, 1976). 56 Norbert Reich and Hans-Wolfgang Micklitz, Consumer legislation in the EC countries: A comparative analysis (New York, Van Nostrand Reinhold, 1980) (also published in German and French). 57 Norbert Reich and Hans-Wolfgang Micklitz, Verbraucherschutzrecht in der Bundesrepublik Deutschland (New York, Van Nostrand Reinhold, 1980) (also published in English); For a comprehensive explanation of the present consumer law cf Marina Tamm, Klaus Tonner and Tobias Brönneke (eds), Verbraucherrecht: Beratungshandbuch, 3rd edn (Baden-Baden, Nomos, 2019). 58 Karsten Schmidt, ‘“Unternehmer” – “Kaufmann” – “Verbraucher”’ (2005) Betriebsberater 837, 837ff. 59 Barbara Dauner-Lieb, Verbraucherschutz durch Ausbildung eines Sonderprivatrechts für Verbraucher: Systemkonforme Weiterentwicklung oder Schrittmacher der Systemveränderung? (Berlin, Duncker and Humblot, 1983). 60 Franz Bydlinski, ‘Die Suche nach der Mitte als Daueraufgabe der Privatrechtswissenschaft’ (1980) 180 Archiv für die civilistische Praxis 1, 1ff; Wolfgang Zöllner, ‘Zivilrechtswissenschaft und Zivilrecht im ausgehenden 20. Jahrhundert’ (1988) 188 Archiv für die civilistische Praxis 85, 85ff. 61 Norbert Reich, ‘Zivilrechtstheorie, Sozialwissenschaft und Verbraucherschutz’ (1974) 7 Zeitschrift für Rechtspolitik 187, 187ff. 62 For a retrospect of the next generation cf Josef Drexl, Die wirtschaftliche Selbstbestimmung des Verbrauchers, 1st edn (Tübingen, Mohr Siebeck, 1998) 18ff; Tamm, Verbraucherschutzrecht (n 43) 120ff.

German Consumer Law  107 the legislator integrated the consumer contract law into the BGB. But this integration was only a sign of a step from consumer protection law to consumer law (below V).

D.  Standard Contract Terms Act 1976 When the AGB-Gesetz (Standard Contract Terms Act) was drafted, it was undisputed that the new law should be built on the case law of the 1950s and 1960s and its essential results should be transferred into the legislative text. It was also undisputed that in the future, too, case law would play a significant role which should not be obstructed by detailed regulations. This was why a general clause was placed at the centre of the Act, with two lists of prohibited clauses added, a grey list and a black list. The content of these lists was built on the previous rulings of the courts. But there was a big discussion whether the AGB-Gesetz should be shaped either as specific consumer protection law or as general private law. The court decisions before the AGB-Gesetz never drew a distinction between consumers and small business. So these court-made rules had to be applied in b2b contracts and b2c contracts as well. Of course most of these decisions were consumer cases. Then the new consumer law came up with the idea that it should be restricted to b2c relations within contract law. The AGB-Gesetz as adopted was a compromise between these two ideas: On the one side was the federal government with a social democratic head of government and on the other side was a conservative majority in the second chamber of Parliament, the Bundesrat. So the legislator was forced to look for a compromise: According to the AGB-Gesetz as finally adopted the general clause is applicable to all kinds of contracts, whereas the black and grey lists included in this Act are restricted to b2c contracts. But the BGH developed the idea that the essence of the black and grey lists was also part of the general clause and applicable to b2b contracts too.63 So in practice the judges tried to minimise the differences between consumer contract law and general contract law though it had been the idea of the legislator to have separate developments. That created problems later, especially when the Unfair Contract Terms Directive had to be transposed in Germany. The second big discussion concerned the enforcement rules to be adopted. The government bill did not contain any law enforcement provisions. Previously discussion had focused on whether the Bundeskartellamt should take the role of an AGB-monitoring authority.64 The government Bill was silent on that point,65 but in the parliamentary legislative procedure the idea was rejected because of alleged excessive bureaucracy. Instead the injunction claim was introduced, which gave consumer and business organisations the right to claim for an injunction on unfair standard terms in the courts. This was seen as a compromise because of the CDU / CSU majority in the Bundesrat. But a few years after the entry into force of the AGB-Gesetz, there was widespread satisfaction 63 eg BGH 8.3.1984, VII ZR 349/82, 90 BGHZ 273. 64 Norbert Reich, ‘Neue Tendenzen des kartellrechtlichen Verbraucherschutzes in der BRD’ (1977) Journal of Consumer Policy 277, 277ff. He identified a need for more consumer protection in the GWB. 65 Gesetzentwurf der Bundesregierung, Entwurf eines Gesetzes zur Regelung des Rechts der Allgemeinen Geschäftsbedingungen (6.8.1975), Bundestags-Drucksache 7/3919.

108  Klaus Tonner with this solution, also on the part of the consumer organisations.66 They could decide from a consumer policy point of view which clauses to attack with their injunction claim. But finally it is left to the courts to decide whether a clause is void or not. Such decisions have played a great role in the further development of consumer contract law. The collective injunction claim was soon considered as a success story in Germany. Nevertheless, the idea of public law enforcement of consumer law found its supporters in the 1970s.67 In particular, the Swedish model of the Konsumentenombudsman68 found friends in Germany.69 However, the legislator could not be convinced to follow the Nordic approach, this is to say, to rely on a public authority that acts on behalf of consumer interests.

E.  Package Travel Law The sections on package travel law were established in 1979 as part of the contract law of the BGB.70 Before the adoption of these sections, the courts were the first to protect consumers against unfair contract terms in package travel contracts. In particular, terms were declared unfair, for example where a tour operator acts as an intermediary only and so was not responsible for performance by service suppliers. According to the courts, the tour operator itself was liable; the Bundesgerichtshof applied the BGB rules applicable to a contract for work and services (Werkvertrag).71 These rules provide for strict liability for non-conformity (Gewährleistung), so that the tour operator could not exclude its liability for circumstances beyond its control – unlike many other legal systems. That was the reason why the German legislator did not ratify an international convention, which was drafted in the 1970s, the so-called CCV,72 because this Convention did not meet the standards of German case law.73 The strict liability principle also means a higher consumer protection level than the later Package Travel Directive of 1990.74 66 Helmut Heinrichs, Walter Löwe and Peter Ulmer (eds), Zehn Jahre AGB-Gesetz (Köln, Verlag Kommunikationsforum, 1987); cf the plea of Hans-Wolfgang Micklitz for the unity of substantial law and enforcement law, Hans-Wolfgang Micklitz, ‘Die Austreibung des Schutzes aus dem Verbraucherrecht und die Wiederkehr des Sozialen im Zivilrecht – eine bittersüße Polemik’ in Detlev Joost, Hartmut Oetker and Marian Paschke (eds), Festschrift für Franz Jürgen Säcker zum 70. Geburtstag (München, Beck, 2011) 125ff. 67 All three authors quoted above (nn 53–55) (Eike von Hippel, Norbert Reich, Konstantinos Simitis) suggested some kind of public law enforcement. 68 Ulf Bernitz, ‘Schwedisches Verbraucherschutzrecht’ (1976) 40 Rabels Zeitschrift für ausländisches und internationales Privatrecht 593. This contribution originally was a presentation on the occasion of the 50th anniversary of the Hamburg Max-Planck-Institute. 69 cf Simitis, Verbraucherschutz: Schlagwort (n 55) 294ff. 70 Reisevertragsgesetz (Bundesgesetzblatt, BGBl) 1979 I 509. 71 BGH 18.10.1973, VII ZR 247/72, 61 BGHZ 267. For the relation between court-made law and codified law cf Klaus Tonner, ‘Die Entwicklung des Reisevertragsrechts durch Rechtsprechung, Gesetzgebung und Verbandsverhandlungen’ (1989) 189 Archiv für die civilistische Praxis 122, 122ff. 72 Convention international relative au contrat de voyage (CCV) (Bruxelles, 23 avril 1970). 73 Eberhard Rebmann, ‘International einheitliche Regelung des Rechts des Reisevertrags’ (1971) Der Betrieb 1949ff, 2002ff. Rebmann was the German representative at the conference which adopted the CCV and later in charge for the Reisevertragsgesetz. He was also responsible for the drafting of the AGB-Gesetz in the Federal Ministry of Justice. 74 Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours [1990] OJ L158/59.

German Consumer Law  109 Instead, the legislator transferred the essence of the case law into the wording of the BGB. Originally, a separate act on package travel law was planned, but the German Parliament decided to integrate the Bill into the BGB. This was justified to prevent fragmentation of contract law – 22 years before the legislator integrated all consumer contract law into the BGB (see below V.).

F.  Failure of UWG Reform The social-liberal federal government had intended a major reform of unfair commercial practices law. The focus would be on claims for damages and on a withdrawal right for the consumer in case of untrue advertising.75 After a conservative government had come into office in 1982,76 the project was not pursued any longer. The UWG was amended only by a completely insignificant provision, according to which claims by consumers were only possible in the case of a knowingly untrue statement.

G. Summary The 1970s (more exactly: the time of the social democratic/liberal government 1969–1982) were characterised by a welfare state policy in which consumer protection was a national issue. The biggest success was the AGB-Gesetz of 1977; another was the Reisevertragsgesetz (§§ 651a et seq. BGB) of 1979. Reform of the UWG failed, while amendments to consumer credit law were postponed to the next period. With regard to law enforcement, the legislator denied – though the matter was discussed – public enforcement and relied on private collective action (injunction claims in the UWG and the AGB-Gesetz). The legislator did not encourage sustainable consumption. National consumer policy, which was welfare state-oriented, stopped halfway.

IV.  The 1980s and 1990s A.  Coexistence of National and European Initiatives in the 1980s Although the earliest roots of European consumer law go back to the early 1970s,77 Member States were still out of touch with their consumer policy in the 1970s.78 This was due to lack of competence on the part of the European legislator. Even though there were programmes, almost nothing was adopted at first, because all legislative acts 75 Government Bill: Bundestags-Drucksache 9/1707. 76 Helmut Kohl (CDU): Bundeskanzler (1982–1998). 77 Klaus Tonner, ‘From the Kennedy message to full harmonising consumer law Directives: a retrospect’ in Kai Purnhagen and Peter Rott (eds), Varieties of European Economic Law and Regulation – Liber amicorum for Hans Micklitz (Heidelberg, Springer, 2014) 693ff. 78 cf Norbert Reich and Hans-Wolfgang Micklitz, Consumer legislation (n 56) which is a mere comparative law study and could not report too much from the EEC level. For the EEC at that time cf Ludwig Krämer, EEC consumer law (Brussels, Story-Scientia, 1986) (also published in German).

110  Klaus Tonner had to be based on the then Article 100 of the EEC Treaty, which required unanimity in the Council.79 Only in the 1980s were the first directives adopted. One can speak of a decade of coexistence between national and European legislators. There were still separate national projects which had to be harmonised with early legislation at European level. The unanimity principle blocked the legislative procedure, and so many of the proposals of the Commission in the 1970s and early 1980s did not pass the Council. This changed in 1987, with adoption of the Single European Act, which provided for majority voting in internal market cases (originally Article 100a EEC Treaty, today Article 95 TFEU). Legal instruments in the field of consumer protection were always regarded as part of internal market policy: an important background for the shift from consumer protection policy to consumer policy. Therefore some authors described European consumer policy as a by-product of internal market policy.80 Examples include the Doorstep Selling Directive, the Product Liability Directive,81 the Misleading Advertising Directive82 and the Consumer Credit Directive. In Germany, the conservative government was sceptical of an extension of the right of withdrawal, but could not ignore it, because the proposal of the Doorstep Selling Directive83 included such a right and was supported by many Member States. Even some regional governments in Germany had brought a proposal into the Bundesrat.84 Thus, in parallel with preparations for the Doorstep Sales Directive, an independent German act was drafted and passed (Haustürwiderrufsgesetz, HWiG) before final adoption of the Directive.85 This caused some difficulties in interpreting the HWiG in line with the Doorstep Sales Directive. The Product Liability Directive did not affect product liability law applicable in Germany, which is based on the tort law of the BGB. The BGB Product Liability was significantly extended by landmark decisions by the BGH,86 decisions that shaped discussions and practice about product liability, rather than the Product Liability Directive and its implementation in the Product Liability Act (Produkthaftungsgesetz, ProdHG).87 Another example is the unfair commercial practices law. As noted, a German reform failed, but in 1984 the European legislator passed the Misleading Advertising Directive,

79 cf Ludwig Krämer, ‘The Origins of Consumer Law and Policy at EU Level’ ch 2 in this volume. 80 Thierry Bourgoignie and David M Trubek, Consumer Law, Common Markets and Federalism in Europe and the United States: Europe and the American Federal Experience (Berlin, De Gruyter, 1987) 200 (by-product); Norbert Reich, Förderung und Schutz diffuser Interessen durch die EG (Baden-Baden, Nomos, 1987) 36 (Huckepackverfahren). 81 Council Directive 85/374/EEC of 25 July 1985 on the approximation of laws, regulations and administrative procedures of the Member States concerning liability for defective products [1985] OJ L210/29. 82 Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative procedures of the Member States concerning misleading advertising [1984] OJ L250/17. 83 European Commission, Proposal for a Council Directive to protect the consumer in respect of contracts which have been negotiated away from business premises [1977] OJ C22/6. 84 Thomas Wiedmann, ‘Haustürgeschäfte’ in Martin Gebauer and Thomas Wiedmann (eds), Zivilrecht unter europäischem Einfluss, 2nd edn (Stuttgart, Boorberg, 2010) ch 7 No 13. 85 Gesetz über den Widerruf von Haustürgeschäften und ähnlichen Geschäften (Bundesgesetzblatt, BGBl) 1986 I 122. 86 BGH 26.11.1968, VI ZR 212/66, 51 BGHZ 91 – Hühnerpest. 87 Gesetz über die Haftung für fehlerhafte Produkte (Bundesgesetzblatt, BGBl) 1989 I 2198.

German Consumer Law  111 which was intended as a first step towards consumer protection in the law of unfair commercial practices. The German legislator did not adopt any transposition of this Directive, because it was of the opinion that the UWG would meet the requirements of the directive without amendments.88 Later, however, it turned out that the mere fact that the ECJ (now CJEU) was now responsible for interpretation led to significant changes in the legal situation, namely through the Leitbild of the informed consumer, which was a result of ECJ cases.89

B.  After 1987: Saving as Much as Possible from National Law After the coming into force of the Single European Act in 1987, numerous consumer law directives were passed in rapid succession. They all followed the minimum standard principle. Whenever a problem was perceived as particularly urgent at the national level, an autonomous German regulation emerged, which often proved to be the forerunner of a later European solution. For example, the Consumer Credit Act of 1990 already contained a right of withdrawal, whereas at European level this was only introduced in 2008.90 The travel law had been already introduced in the BGB in 1979 – eleven years before adoption of the Package Travel Directive.91 The 1980s are characterised by ‘forerunners’ in many Member States.92 Two of these directives concerned matters for which there had been no regulations in German law, namely the Timesharing Directive93 and the Distance Selling Directive.94 These were implemented in ancillary acts to the BGB, namely the Teilzeitwohnrechtegesetz (TzWG, Timesharing Act) and the Fernabsatzgesetz (FernabsG, Distance Selling Act). Up to this point, the transposing legislator did not make use of the minimum standard principle; the directives were transposed as close as possible to their text.

i.  Package Travel Two other directives concerned matters already existing in Germany under the consumer protection legislation of the 1970s, namely the Package Travel Directive and 88 cf Klaus Tonner, ‘The legal control of unfair advertising in the Federal Republic of Germany’ in Eric Balate (ed), Unfair advertising and comparative advertising (Brussels, Story-Scientia, 1988) 93 ff. 89 Case C-210/96 Gut Springenheide GmbH and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt – Amt für Lebensmittelüberwachung [1998] ECR I-04657. 90 Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers [2008] OJ L133/66. 91 Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours [1990] OJ L158/59. 92 eg for the right to withdraw from doorstep sales and distance contracts in France, Katrin Liedtke, Die Umsetzung der Haustürwiderrufs- und der Fernabsatz-Richtlinie in Deutschland und Frankreich (Hamburg, Dr. Kovač, 2007) 71ff and 124ff, for insolvency protection in package travel in countries other than Germany Klaus Tonner, Reiserecht in Europa (Neuwied, Luchterhand, 1992) 143ff. 93 Directive 94/47/EC of the European Parliament and the Council of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis [1994] OJ L280/83. 94 Directive 97/7/EC of 20 May 1997 of the European Parliament and the Council on the protection of consumers in respect of distance selling [1997] OJ L144/19.

112  Klaus Tonner the Unfair Contract Terms Directive. The Package Travel Directive 1990 set a liability standard, which was significantly lower than the standard in German legislation (verschuldensunabhängige Gewährleistung) which could be maintained because of the minimum standard principle of the Directive. On the other hand, for the first time the legislator had to introduce insurance for money paid in advance in the case of insolvency of the tour operator – and had to compensate travellers who were not refunded because there was no insurance due to late transposition of the Directive.95

ii.  Unfair Contract Terms Implementation of the Directive on Unfair Contract Terms was particularly complicated. The observer might have thought that there were only a few implementation problems because the basic model of the Directive, a general clause with an appendix of invalid clauses, went back to German law. However, the implementing legislator wanted to avoid more deviations from the existing AGB-Gesetz than absolutely necessary. The Directive is an instrument only for consumer protection, whereas German law is solely based on the use of standard terms. The applicability to standard terms in b2b contracts has remained. This was allowed because of the minimum standard of the Directive. In German discussion the term ‘überschießende Umsetzung’ (overreaching implementation) was used.96 Most legal writers are of the opinion that an überschießende Umsetzung is also possible in cases of a full harmonising Directive.97 The German AGB-Gesetz has been applicable only for standard terms which are drafted in advance for a multiplicity of contracts. However, according to the Directive, the single use of a term, which had been drafted in advance, falls under its scope. The transposing legislator put the requirement of multiplicity at the top of the regulations (today § 305 subs. 1 BGB) and introduced one-off use as an exception to consumer contracts (today § 310 subs. 3 BGB). However, this is not of very great practical importance; it points to the legislator’s endeavour to preserve the ‘unity of private law’ as far as possible and to limit the influence of Europeanisation in the days of Helmut Kohl’s conservative government. Of considerable importance, however, was explicit introduction of the principle of transparency (§ 307 subs. 1 sentence 2 BGB), which complements the good faith general clause. As a result, other rules derived from the BGH, such as the prohibition of surprise and ambiguous clauses (today § 305c BGB), were diminished in their significance. Today, the BGH very often refers to the transparency principle, which the Court had already developed before transposition of the Unfair Contract Terms Directive.98 The AGB-Gesetz also provided for inclusion of standard terms into the contract. This provision is important, but has no European background. Thereafter, an explicit

95 Joint Cases C-178, C-179, C-188, C-189 and 190/94 Erich Dillenkofer, Christian Erdmann, Hans-Jürgen Schulte, Anke Heuer, Werner, Ursula and Trosten Knor v Bundesrepublik Deutschland [1996] ECR I-04845. 96 Tamm, Verbraucherschutzrecht (n 43) 98ff. 97 Mathias Habersack and Christian Mayer, ‘Die überschießende Umsetzung von Richtlinien’ in Karl Riesenhuber (ed), Europäische Methodenlehre, 3rd edn (Berlin, de Gruyter, 2015) § 14. 98 BGH 24.11.1988, III ZR 188/87, 106 BGHZ 42; BGH [10.7.1990] XI ZR 275/89, 112 BGHZ 115.

German Consumer Law  113 reference to standard terms and the possibility of the other party to take notice of the terms is required (today § 305 subs. 2 BGB).

C.  A Special Issue: Consumer Credit Contracts In the 1970s, consumer credit law was in the foreground of discussions in Germany. An economic crisis broke out in the middle of the 1970s which resulted in people losing their jobs. They were no longer able to pay back their loans. So the question arose whether the law could intervene in favour of consumers.99 The courts were the first to apply the general clauses of the BGB in the late 1970s and 1980s to help consumers. Based on § 138 BGB, the BGH developed case law according to which interest rates which are twice as much as the average market interest at the time of conclusion of the contract are immoral and so the contract is void.100 However, consumer activists felt that this was not enough and tried to put pressure on the national legislator to adopt certain rules which went beyond the Consumer Credit Directive 1987. Finally they were successful, and in 1990 a Verbraucherkreditgesetz (VerbrKrG, Consumer Credit Act) was adopted, which provided significantly more consumer protection than the Directive of 1987.101 The main topic of debate was whether the right to withdraw from a consumer credit contract should be introduced. The German legislator was reluctant to adopt withdrawal rights. A first step was made in 1971 by amending the Abzahlungsgesetz (Hire Purchase Act) by a right to withdraw from contracts such as magazine subscriptions.102 But there was no general right to withdraw from all kinds of doorstep sales contracts as required by consumer activists. Such a right was adopted not before 1985, so to speak ‘at the last minute’ before the Doorstep Sales Directive provided for the right to withdraw.103 After that the right to withdraw was accepted in the Verbraucherkreditgesetz of 1990, though the Consumer Credit Directive 1987 did not provide for such a right. It could only be introduced in the German act because of the minimum standard of the 1987 Directive of 1987. From the very beginning the Verbraucherkreditgesetz of 1990 included residential immovable property loans. German legislation never distinguished between such credits and other credits. Further, if the consumer is in default, the lender cannot cancel the contract immediately. Rather, the debtor must be in default for two successive instalments. Then the lender must allow a two-week period to pay the arrears, and only if the debtor does not pay within this period is the lender allowed to cancel the contract. Another rule concerned the so-called Schuldturmproblematik (debt tower problem): A consumer who paid less than the agreed repayment rate, under certain circumstances

99 Udo Reifner, Alternatives Wirtschaftsrecht am Beispiel der Verbraucherverschuldung (Neuwied, Luchterhand, 1979) 167ff. 100 BGH 24.3.1988, III ZR 30/87, 104 BGHZ 105. 101 Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L42/48. 102 Zweites Gesetz zur Änderung des Abzahlungsgesetzes (Bundesgesetzblatt, BGBl) 1974 I 1169. 103 Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises [1985] OJ L372/31.

114  Klaus Tonner paid only the agreed interest, since according to the BGB repayments are allocated first to interest and then to the principal. This could mean that the loan itself would never be repaid. The legislator accordingly reversed the order of repayment: in consumer credit contracts, repayments are credited first to the principal debt and then to the interest, so that amortisation will always take place.

D. Summary In the 1980s and 1990s no further initiatives followed on a national level. However, there is one remarkable and important exemption: the Verbraucherkreditgesetz of 1990, which went far beyond the Consumer Credit Directive of 1987 because it included a right to withdraw and was applicable to loans for residential immovable property. The German legislator tried to retain as much as possible from the existing law (standard terms legislation, package travel legislation) and transposed Directives for which there were no German rules (timesharing, distant selling), in as minimalistic form as possible. These two Directives also show that the German legislator left new problems to the European level.

V.  Schuldrechtsmodernisierung 2002 The red-green federal government, which had come into office in 1998,104 gave up the minimalist implementation of directives in ancillary acts to the Civil Code. Instead, it carried out the largest reform of the law of obligations of the BGB since it came into force in 1900, the so-called modernising of the law of obligations, which took effect on 1 January 2002. One component of this reform was the integration of the entirety of consumer contract law into the BGB. The AGB-Gesetz, the Verbraucherkreditgesetz, the Teilzeitwohnrechtegesetz and the Fernabsatzgesetz disappeared; the provisions of these acts became provisions of the BGB. One reason was the need to transpose the Consumer Sales Directive of 1999. This was the last consumer contract law Directive at the level of minimum standard legislation. The German legislator wanted to prevent fragmentation of sales law into a b2b sales law and a consumer sales law and as far as possible to adopt the same provisions for all sales contracts in the sense of the ‘unity of private law’. However, this was only possible by dint of a complete redesign of BGB sales law. Implementation of the Consumer Sales Directives was by no means the only reason for modernisation of the law of obligations. The Leistungsstörungsrecht (remedies for improper performance) was too complicated; it played a role more in academic education than in practical life. The sales law did not provide for a right of repair or replacement and the short limitation period of only six months for movables was not in line with the challenges of selling technical goods in the late twentieth century. 104 Gerhard Schröder: Bundeskanzler (1998–2005); Herta Däubler-Gmelin: Bundesjustizministerin (1998–2002).

German Consumer Law  115 Since the UN Convention on Contracts for the International Sale of Goods (CISG) came into effect, the uniform concept of conformity had gained international approval and proved to be a more promising way than maintaining the more than complex structure of the BGB system. The European legislator followed the CISG with the Consumer Sales Directive.105 The social-liberal federal government, which was in office from 1969 to 1982, had already set up a Commission for revision of the law of obligations. Their proposals went in the direction of the CISG,106 but were ignored in the days of the conservative federal government, which was in office from 1982 to 1998. In view of the necessity of transposing the Consumer Sales Directive, the red-green federal government reiterated those proposals and, together with integration of the consumer ancillary acts, these proposals became the basis of the Schuldrechtsmodernisierung 2002. Integration of consumer contract law into the Civil Code took place because, according to the legislator, the citizen should find the rules that were important for them in the central private law codification and not in ancillary acts. For the same reason, tenancy law was also completely absorbed into the BGB. In fact, the legislator was concerned about documenting the ‘unity of private law’ and tried to prevent a repetition of the debates on Sonderprivatrechte, as in the 1970s. The German way of integrating consumer contract law into the Civil Code has been pursued by only a few Member States, for example by the Netherlands with the N.B.W. More common are codifications of consumer law in separate codes, which draw a borderline between consumer law and general private law.107 At the end of the day, the integration of consumer law in the BGB has led to far more attention in the academic world, the commentary literature and in education in Germany, as if it had been further regulated in ancillary acts or in a separate codification. But this was a specific German development and does not mean that a separate codification would not have gained practical importance at all. German sales law is now fully aligned with the requirements of the Consumer Sales Directive and only contains a short section, the regulations of which only apply to the sale of consumer goods. The important difference between the sale of consumer goods and other sales law is that the rules on the sale of consumer goods are not optional rules, but must not deviate from the provisions of the sales law of the BGB. In the years after the entry into force of the provisions, divergences between the BGH and the ECJ (today’s CJEU) appeared. The decisions of the ECJ were much more consumer-friendly than those of the BGH: In a case of delivery of defective floor tiles the buyer demanded a fresh delivery, but the BGH refused to grant compensation for the costs of removing the defective tiles and the installation of the new floor tiles.108

105 Thomas Zerres, Die Bedeutung der Verbrauchsgüterkaufrichtlinie für die Europäisierung des Vertragsrechts (München, Sellier, 2007) 60ff. 106 Bundesministerium der Justiz (ed), Abschlußbericht der Kommission zur Überarbeitung des Schuldrechts (Köln, Bundesanzeiger, 1992). This report was subject of the 60. Deutscher Juristentag 1994 in Münster, which agreed with its suggestions. 107 Examples: Code de la Consommation (France), Codice del Consumo (Italy), Consumer Rights Act (UK). 108 BGH 14.1.2009, VIII ZR 70/08, (2009) NJW 1660.

116  Klaus Tonner The case came to the ECJ. The judges in Luxembourg decided exactly the opposite, but allowed a limitation of the costs as to the value of the tiles.109 The BGH made use of this limitation110 and explained in another case that the principles of the decision of the ECJ on consumer sales contracts were to be limited to consumer cases.111 It could not have expressed its discomfort with the Weber/Putz decision of the ECJ more clearly, because otherwise the principle of unity of private law is always held up to avoid different results in b2b contracts and consumer contracts by accepting an ‘überschießende Umsetzung’. The German legislator codified the Weber/Putz ruling in § 475 subs. 4 BGB – also restricting it to b2c cases. Pursuant to Article 5(3) of the Consumer Sales Directive, reversal of the burden of proof applies according to which the seller has to prove within six months following delivery that a lack of conformity did not exist at the time of delivery. The BGH initially interpreted this provision (originally § 476, today § 477 BGB) very restrictively. It demanded proof by the buyer that the deficiency causing the malfunction, the so-called basic deficiency, existed and caused the malfunction. Only when this proof succeeded was the burden of proof reversed, which only related to the fact that the basic deficiency proved by the consumer not only existed at the time of its occurrence but even at the time of delivery.112 However, in another case, the ECJ decided far more in favour of the consumer.113 In this case, a vehicle caught fire while being driven and burned out completely; the cause could no longer be clarified. The ECJ ruled that the seller had to prove that the fire did not go back to a non-conformity that did not exist at the time of delivery. The BGH nolens volens adapted the ECJ’s case law to this ruling,114 which was transferred to the wording of the BGB sales law sections by the legislator. Efforts to maintain the BGB as the central codification of contract law demanded considerable energy from the legislator and led to complicated rules in the law of obligations. On the other hand, the integration of consumer contract law into the BGB compared to the previously pursued strategy of implementing European directives in ancillary acts to the BGB meant a certain upgrading; the academic world began to keep an eye on it.115 Ten years after the Schuldrechtsmodernisierung the 69 Deutsche Juristentag discussed a new architecture for consumer law. The Gutachten, written by Hans-W Micklitz,116 pleaded for a separate consumer law code outside the Civil Code. The author recommended rethinking the concept of the consumer (the vulnerable, confident and responsible consumer) and to focus on internet sales and services as telecom, energy,

109 Joined Cases C-65 and 87/09, Gebr. Weber GmbH v Jürgen Wittmer (C-65/09) and Ingrid Putz v Medianess Electronics GmbH (C-87/09) [2011] ECR I-05257. 110 BGH 21.12.2011, VIII ZR 70/08, (2012) NJW 1073. 111 BGH 17.10.2012, VIII ZR 226/11, (2013) NJW 220. 112 BGH 2.6.2004, VIII ZR 329/03, 159 BGHZ 215 – Zahnriemen. 113 Cases C-497/13 Froukje Faber v Autobedrijf Hazet Ochten BV [2015]. 114 BGH 12.10.2016, VIII ZR 103/15, 212 BGHZ 224. 115 cf Drexl, Die wirtschaftliche Selbstbestimmung (n 63); Caroline Meller-Hannich, Verbraucherschutz Im Schuldvertragsrecht, 1st edn (Tübingen, Mohr Siebeck 2005); Tamm, Verbraucherschutzrecht (n 43). 116 Originally Micklitz, Brauchen Konsumenten (n 5); English version cf Micklitz, ‘Do Consumers and Businesses’ (n 52). Hans-Wolfgang Micklitz is a member of the Sachverständigenrat für Verbraucherfragen of the federal government since 2014.

German Consumer Law  117 transport and financial services. Enforcement was suggested by individual and collective action including ADR, courts, and administrative bodies. The solution is seen in a movable system (bewegliches System), that allows connecting substantive rights and remedies to the different types of consumers.

VI.  Transposition of Full Harmonising Directives A.  Consumer Contract Law i.  Consumer Rights Directive After the Consumer Sales Directive, the European legislator decided to switch the consumer contract directives issued from 1985 to 1999 to full harmonisation.117 The first major step was the Consumer Rights Directive. This was initially intended to consolidate the Doorstep Sales Directive, the Distance Selling Directive, the Unfair Contract Terms Clauses Directive and the Consumer Sales Directive into one Directive.118 However, this was limited to a recast of the Doorstep Selling Directive and the Distance Selling Directive, not least due to resistance by Member States against the full harmonisation principle.119 The German legislator, even faced with full harmonisation, decided to continue to implement consumer contract directives into the BGB. However, the systematic approach of BGB contract law, with its distinction between the General Part and the Special Part of the Law of Obligations, made this process extremely difficult for the Consumer Rights Directive and led to complicated solutions.120 The Consumer Rights Directive is by no means a general part of consumer contract law but nevertheless was transposed into the General Part of the Law of Obligations, with the result that numerous derogations have become necessary. This is especially noticeable with the right of withdrawal. There is a general rule in § 355 BGB, but this is followed by a variety of provisions on the right of withdrawal for special types of contracts. Regulation of special contract types in the special part of the law of obligations has only references to § 355 BGB. The price for the ‘unity of private law’ is characterised by high complexity of regulations. For a lawyer who is not familiar with the BGB, it is extremely difficult to identify the implementing regulations of directives to the transposition provisions of the BGB. The German legislator was more interested in solving the technical difficulties of implementing a fully harmonising directive into the system of the BGB than in developing its own ideas about consumer protection.

117 European Commission, ‘EU consumer policy strategy 2007–2013’ COM (2007) 99 final. 118 European Commission, ‘Proposal for a Directive of the European Parliament and of the Council on consumer rights’ COM (2008) 614 final. 119 Among them the German Federal Minister of Justice, Brigitte Zypries, ‘Der Vorschlag einer Richtlinie über Verbraucherrechte’ (2009) Zeitschrift für Europäisches Privatrecht 225. 120 cf Tobias Brönneke and Klaus Tonner, Das neue Schuldrecht Verbraucherrechtsreform 2014; Internethandel, Widerrufsrechte, Informationspflichten (Baden-Baden, Nomos, 2014).

118  Klaus Tonner

ii.  Consumer Credit Directive 2008/Residential Immovable Property Credit Directive As noted earlier, German consumer credit law initially had a much higher level of consumer protection than European law. In contrast to Directive 87/102/EEC, the Consumer Credit Act 1990 already contained a right of withdrawal, which also applied to real estate credits (loans). Only the new Consumer Credit Directive of 2008 and the Residential Immovable Property Credit Directive121 caught up with this advance. Now these areas have also been Europeanised. The legislator did not transpose the two Directives separately, but integrated both in the credit contract law of the BGB. The two Directives are dominated by numerous information duties; the European legislator also introduced a so-called Standard European Consumer Credit Information Sheet in the Consumer Credit Directive and a European Standardised Information Sheet (ESIS) in the Residential Immovable Property Credit Directive. In order not to overburden the text of the BGB and to keep its degree of abstraction, the German legislator implemented the information duties and the information sheets in the Introductory Act to the BGB (Einführungsgesetz zum BGB, EGBGB) – as it did later with other European legal acts. However, implementation considerably complicated the current BGB: finding the relevant provision has not become easier by this technique. In addition, the Consumer Credit Directive and the Residential Property Credit Directive are two separate sets of rules with a separate structure. However, the implementing legislator did not want to give up a uniform consumer credit law and nested the transposition provisions of the two directives into one another. As for implementation of the Consumer Credit Directive, the law now uses the term ‘General Consumer Loan Agreement’. The relevant chapter of the Civil Code’s law of obligations contains provisions that apply to all debt loan agreements and additionally those that apply only to the Real Estate Consumer Loan Agreement. This legislative technique in no way enhances consumer protection, but considerably complicates application of the law. Great attention has been paid to the so-called perpetual right of withdrawal, which arises in the case of missing or incorrect information about the right to withdraw. This originally came from the Doorstep Selling Directive122 and according to present law for consumer credits from the Consumer Credit Directive and for financial services from the Distance Selling Financial Services Directive.123 In contrast, the implementation legislator used the opportunity of implementing the Residential Property Directive to limit the perpetual right of withdrawal within the scope of that Directive. Furthermore, doubts were voiced by the courts as to whether exercise of the right of withdrawal can be abusive if the consumer wishes to absolve himself from a credit contract simply because he can obtain a lower interest rate on a new contract or to circumvent a prepayment

121 Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property [2014] OJ L60/34. 122 Case C-481/99 Georg Heininger and Helga Heininger v Bayerische Hypo- und Vereinsbank AG [2001] ECR I-09945. 123 Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services and amending Council Directives 90/619/EEC and Directives 97/7/EC and 98/27/EC [2002] OJ L271/16.

German Consumer Law  119 penalty.124 So far, the BGH has declined to ask the CJEU for a preliminary ruling125 and left it to the lower courts to do so.126

iii.  Package Travel The last Directive in the full harmonisation programme, the Package Travel Directive 2015,127 was implemented in German law in 2018. The Package Travel Directive of 1990 did not require strict liability, but because of the minimum standard it allowed strict liability, so that Germany has been the leader in Europe for decades with this standard. A fully harmonised directive would have compelled Germany to abandon this standard, but the new Directive of 2015 introduced the German standard. As in the case of parts of consumer credit law, this means that there has been a catch-up at the European level compared with the German legal situation. Implementation shows a lack of courage on the part of the legislator, even to maintain further solutions of German law and to ‘test’ the limits of full harmonisation. The BGH had always applied the travel law regulations by analogy to a single travel service – for example, accommodation – if the service was provided ‘veranstaltermäßig’, that is, the service was distributed by a tour operator.128 Following a recital in the new Package Travel Directive, this case law could have been maintained and transformed into the transposition act. However, under pressure from the travel industry, the transposition legislator did not make any use of it, so that implementation led to a decline in the traveller’s legal position.129 Under the new Directive, travel agencies may, under certain circumstances, become liable as tour operators if they sell two different single travel services for the same journey (transposition in § 651b BGB). The Directive thus contains a sector-specific regulation on the platform economy. Unfortunately, neither at the European level nor in German implementation of this sector-specific provision has the connection to the general discussion about platforms been discussed.130 Further, the German legislator did not transpose the insolvency protection rule of the Directive correctly. The German transposition allowed a ceiling of €150 million per year and per insurer. Most experts were of the opinion that this rule does not meet the standards of the Directive.131 After the insolvency of Europe’s second biggest tour 124 eg BGH 16.10.2018, XI ZR 45/18, (2018) WM (Wertpapier-Mitteilungen – Zeitschrift für Wirtschaftsund Bankrecht) 2274. 125 BGH 11.2.2020, XI ZR 648/18; cf critical remarks by Arne Maier, ‘Raum für vernünftige Zweifel – Zur Kontrolle der Rechtsprechung des XI. BGH-Zivilsenats zum Darlehenswiderruf durch den Europäischen Gerichtshof und das Bundesverfassungsgericht’ (2020) Verbraucher und Recht 241, 241ff. 126 Case C-66/19 JC v Kreissparkasse Saarlouis [2020]. 127 Directive 2015/2302/EU of the European Parliament and the Council of 25 November 2015 on package travel and linked travel arrangements [2015] OJ L326/1. 128 BGH 7.1.1985, VII ZR 163/84, (1985) NJW 906. 129 For a critical review cf Ernst Führich, ‘Das neue Pauschalreiserecht’ (2017) Neue Juristische Wochenschrift 2945; Klaus Tonner, ‘Das neue Pauschalreiserecht’ (2018) Monatsschrift für Deutsches Recht 305. 130 Klaus Tonner, ‘Der Vertrieb von Reiseleistungen über Online-Reiseportale’ in Peter Rott and Klaus Tonner (eds), Online-Vermittlungsplattformen in der Rechtspraxis (Baden-Baden, Nomos, 2018) 117ff. 131 Ansgar Staudinger in Ernst Führich and Ansgar Staudinger, Reiserecht: Handbuch des Pauschalreise-, Reisevermittlungs-, Reiseversicherungs- und Individualreiserechts, 8th edn (München, Beck, 2019) § 12 No 21 with further references.

120  Klaus Tonner operator, Thomas Cook, in September 2019, it turned out that this sum was by far not sufficient to cover travellers’ losses. The insurer paid a percentage of 17.5 per cent only, whereas in all other Member States travellers were fully compensated. Fearful that claims against the government for the missing 82.5 per cent might be successful according to the state liability doctrine of the CJEU,132 the government decided to pay voluntarily to travellers the money they did not get from the insurer. But as of October 2020 there was no new rule about insolvency protection in the law, and it remains to be seen what will happen if the next big tour operator might become insolvent due to COVID 19.

B.  Unfair Commercial Practices Law After the UWG reform had failed in the 1980s, the legislator ignored the Directive on Misleading Advertising of 1986. Nevertheless, the Directive influenced the development of the law of unfair commercial practices in Germany, because the ECJ created the Leitbild of the informed consumer based on the Misleading Advertising Directive. For this reason, the BGH had to give up its Leitbild and the paternalistic interpretation of the UWG without any changes to the wording of the UWG by the legislator.133 During the red-green federal government, which was in office from 1998 to 2005, revision of the UWG was again taken up. The most important case groups developed by the courts were incorporated as examples (Regelbeispiele) in the text of the law. The protective purpose trias (trinity)was explicitly included in § 1 UWG; the two general clauses shifted thereby to §§ 3 and 5 UWG. The legislator added a provision about harassment in § 7 UWG. § 7 UWG is not a transposition of Articles 8 and 9 of the Unfair Commercial Practices Directive, which deals with aggressive commercial practices. These two articles were only implemented in 2015, now § 4a UWG. It was important for the German legislator to obtain the provision about harassment, because this provision regulates telephone advertising more specifically than the relevant Annex I No. 26 of the Directive. The legislator is of the opinion that Annex I No. 26 is correctly implemented by § 7 UWG. The discussion about an improving enforcement was not very successful. The legislator introduced a claim for profit absorption (Gewinnabschöpfungsanspruch, § 10 UWG), which was connected to so many hurdles that it could not be effective. The associations having a right to mount injunction claims under the UWG thereafter have the right to require an enterprise to surrender to the federal budget profit which the enterprise obtains through a deliberately illegal commercial practice or unreasonable harassment. The Federation of German Consumer Organisations (vzbv) tried to make the provision work by making use of the services of professional litigation funding, following the Austrian experience. But the BGH declared the business model of litigation

132 Joined cases C-6 and 9/90 Andrea Francovich and Danila Bonifaci and others v Italian Republic [1991] ECR I-05357. 133 BGH 20.10.1999, I ZR 167/97, (2000) Gewerblicher Rechtsschutz und Urheberrecht (GRUR) 619 – Orient-Teppichmuster.

German Consumer Law  121 funding, namely performance-based commission, an abuse of the right according to § 10 UWG.134 Parallel to the 2004 UWG reform, the Directive on Unfair Commercial Practices was drafted.135 It was adopted in 2005 with a longer transitional period and is fully harmonised at European level. The legislator therefore had to redesign the UWG again, opting to maintain the UWG’s traditional and broad scope, rather than restricting it, as did the Directive, to business practices used against consumers. On the other hand, some of the provisions of the Directive have been included with this restriction, in particular the annex with the per se prohibitions. The relationship between the UWG Annex and the standard examples remained unclear. The transposition came into force in 2008. However, the 2008 reform proved insufficient to ensure correct transposition of the Directive and had to be amended by a further revision in 2015. The standard examples, which had been introduced in 2004, were reduced to a short list, which only applies in the relationship between competitors. The Directive’s provision about aggressive commercial practices was implemented, and the consumer general clause introduced in 2008 (§ 3 (2) UWG) was modified. From the consumer’s point of view, § 3a UWG is of particular interest. According to this provision, commercial practices are regarded as unfair if they violate a legal provision outside the UWG which aims to regulate market conduct. The provision is based on a group of cases developed by the courts, which was introduced into law as a standard example as § 4 No. 11 UWG in 2004 and became § 3a UWG in 2015. However, § 3a UWG has no correspondence in the Directive of Unfair Commercial Practices; so discussion is ongoing as to whether the provision is compatible with the fully harmonising Directive.136 Consumer organisations emphasise the importance of the provision because it is the transmission belt for adoption of sanctions under the UWG (injunction claim) for many rules outside the UWG which are considered to be rules of market conduct. Here, regulations in the field of health and environmental protection dominate. In the author’s opinion § 3a UWG is permissible under EU law because the provision does not create any further instances of unfair commercial practices, but merely links the law enforcement instruments of sanction to violation of rules outside the law of unfair commercial practices. Moreover, in the case of these provisions, it should be examined whether the misleading commercial practices provision (§ 5 UWG) or the consumer general clause (§ 3 subs. 2 UWG) will be applicable. Telephone advertising has always been a sensitive topic in Germany. The BGH has always assessed this practice critically and declared it inadmissible on the basis of the UWG’s original general clause in consumer cases as it is an invasion of privacy unless the consumer had previously agreed to the call.137 This jurisprudence was codified by the UWG-Reform 2004 in § 7 subs. 2 UWG.

134 BGH 13.9.2018, I ZR 26/17, (2018) NJW 3581 – Prozessfinanzierer I, with critical annotation A Stadler, (2019) JuristenZeitung (JZ) 203; BGH 9.5.2019, I ZR 205/17, (2019) Wettbewerb in Recht und Praxis (WRP) 1009 – Prozessfinanzierer II. 135 Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market [2005] OJ L149/22. 136 Horst Köhler, Note to BGH 29.9.2016, I ZR 160/15, (2017) WRP 302. 137 BGH 19.6.1970, I ZR 115/68, 54 BGHZ 188 – Telefonwerbung I.

122  Klaus Tonner Moreover, in line with implementation of the Unfair Commercial Practices Directive, the opt-in principle does not require the consumer to specifically declare that he did not want phone calls, but conversely, prior consent of the consumer is required. In 2009, the requirement for consent was tightened by the national legislator.138 Explicit consent is now required, meaning that consent must not be hidden in standard terms. According to a Bill of the Federal Ministry of Justice and for consumer protection a contract for the supply of energy which is concluded via phone is valid only if the consumer confirms the contract in text form.139 This is further evidence of own national initiatives in the field of telephone advertising – and that the legislator limits itself to such an ‘old-fashioned’ medium as the phone and does not try to regulate modern marketing through the internet. By going for the opt-in solution and requiring explicit prior approval, the German legislator went beyond the provisions of the Directive on Unfair Commercial Practices, but in a manner permissible under EU law. The starting point is Annex 26 to the Directive, which, although a per se prohibition, contains a final (also) telephone advertising scheme, but allows Member States to choose between the opt-in and optout solutions. This is done by reference to the Directive on Privacy and Electronic Communications,140 which remains unaffected according to the second sentence of Annex 26. Article 13(3) therefore provides an option for Member States to prohibit adoption of appropriate measures to prohibit transmission of direct marketing messages, either without the consent of the participants concerned or for those who do not want to get such messages. Thus, the opt-in principle stipulated in § 7 subs. UWG moves in the framework drawn from Annex No. 26 of the UCP Directive. The rules on telephone advertising also apply to e-mail advertising. An important step in the area of social media is the BGH’s Facebook decision.141 The BGH criticised the sending of invitation e-mails to persons not previously registered as users of the platform and classified them as harassing advertising.

C. E-Commerce In terms of consumer protection and e-commerce, the legislator was also reluctant with its own initiatives and limited itself to transposition of the relevant directives. It stuck to the approach of transposing directives into the BGB. The provisions of Articles 10

138 Gesetz zur Bekämpfung unerlaubter Telefonwerbung und zur Verbesserung des Verbraucherschutzes bei besonderen Vertriebsformen vom 29.7.2009 (Bundesgesetzblatt, BGBl) 2009 I 2413; Klaus Tonner and Anke Reich, ‘Die Entwicklung der wettbewerbsrechtlichen Beurteilung der Telefonwerbung’ (2009) Verbraucher und Recht 95, 95ff. 139 Gesetzentwurf der Bundesregierung vom 24.2.2021, Entwurf eines Gesetzes für faire Verbraucherverträge, Bundestags-Drucksache 19/26915, www.bmjv.de/SharedDocs/Gesetzgebungsverfahren/Dokumente/RefE_ Faire_Verbraucherverträge.pdf. 140 Directive 2002/58/EC of the European Parliament and the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications) [2002] OJ L201/37. 141 BGH 14.1.2016, I ZR 65/14, (2016) NJW 3445 – Freunde finden.

German Consumer Law  123 and 11 of the E-Commerce Directive142 – which are relevant for all electronic commerce contracts, and not just consumer contracts – were implemented as part of the modernisation of the law of obligations. As in other cases the legislator regulated the information duties in the EGBGB but not in the BGB itself. That said, the provisions of the duty of the service provider to acknowledge receipt of the recipient’s order and the duty to allow correction of input errors became provisions of the BGB itself (originally § 312g BGB, now § 312i BGB). In Germany, there was a lively discussion about ‘cost traps’ on the Internet.143 This expression meant that the consumer entered into contracts without being aware of it, especially subscriptions. The legislator therefore introduced the so-called button solution, according to which a contract is concluded only if the button with which the order is placed is labelled with nothing other than the words ‘order to pay’ or corresponding unambiguous wording.144 However, the autonomous German button solution turns out to have been only an anticipation of a European solution that came with the Consumer Rights Directive. The button solution, now § 312j BGB, now has a European background. In addition, the information requirements had to be expanded. It is noteworthy that in cases of particular urgent problems, the German legislator has found its own solution without waiting for a European solution. However, in many other cases such initiatives are missing.

VII. The Leitbild Discussion The concept of the consumer model plays a major role in German discussion, but more in the academic field than in legislation and case law. Although the term ‘Leitbild’ (overall principle) is often used in non-German speaking countries in German, it is not of German origin, but was developed at the European level, and came from there to the German discussion. In the beginning there was no Leitbild. Rather, as already stated, consumer law was understood as consumer protection law, which served to protect the weaker party. In the focus was its social function. However, elements of the information model shine through in early documents. The second report of the federal government on consumer policy from 1975 underlined that the government has the task of eliminating abuse of freedom to the detriment of other market actors: ‘The consumer therefore, is in need of additional, objective information. To this end, the state must make a contribution, both in the interest of consumers and with regard to the functioning of competition.’145

142 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the internal market (Directive on electronic commerce) [2000] OJ L178/1. 143 Stefan Ernst, ‘Das Gesetz gegen Abo-Fallen – Guter Wille, mehr nicht’ (2012) Verbraucher und Recht 205. 144 Gesetz zum Schutz vor Kostenfallen im elektronischen Geschäftsverkehr vom 10.5.2012 (Bundesgesetzblatt, BGBl) 2012 I 1084. 145 Zweiter Bericht der Bundesregierung zur Verbraucherpolitik vom 20.10.1975, BundestagsDrucksache 7/4181.

124  Klaus Tonner The consumer model of the circumspect, informed consumer was created by the ECJ in unfair commercial practices law.146 In earlier years the term ‘Leitbild’ was not used. The characterisation of trends in earlier times as a ‘Leitbild’ (such as the ‘Leitbild’ of traditional liberal consumer protection, the Leitbild of social protection) was used only from a later retrospective.147 The social protection model had not only protection of consumers in mind, but protection of the weaker party in general. In the 1970s and 1980s there was legislation only applicable to consumers such as the Doorstep Selling Act (Haustürwiderrufsgesetz, HWiG) or the Consumer Credit Act (Verbraucherkreditgesetz, VerbrKrG), whereas other legislation did not restrict itself to consumers, in particular the Standard Terms Act (AGB-Gesetz). After the ECJ had established the Leitbild of the informed consumer in the law of unfair commercial practices, the German courts followed immediately.148 The previous model of the weak consumer was abandoned without resistance. This can be seen against the background of a shift from consumer protection law to consumer law at the European level as an annex of internal market policy. No willingness to maintain the social dimension of consumer protection law could be observed in Germany. The German discussion understood the Leitbild of the informed consumer as a model for the whole of consumer law, although the ECJ had created it only for unfair commercial practices law. It was much later that the ECJ generalised the model to all consumer law.149 German development followed European development without major critical objections. A majority of legal writers followed the information model.150 At most, they criticised the variety of information duties in European Union law directives, which German transposition legislation must follow.151 Only a few authors insisted on consumer protection law as social protection law.152 However, in spite of the information model the ECJ took into account the interest of consumers. This is shown by the numerous judgments in which ECJ corrected the interpretation by the Bundesgerichtshof of directives in favour of consumers. It is discussed whether the level of protection needs to be differentiated. Above all, the ‘flexible system’ developed by Hans Micklitz should 146 Case C-210/96 Gut Springenheide GmbH and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt – Amt für Lebensmittelüberwachung [1998] ECR I-04657; cf above text at section VI.B and accompanying notes. 147 Tamm, Verbraucherschutzrecht (n 43) 147ff. 148 BGH 20.10.1999, I ZR 167/97 – Orient-Teppichmuster; cf above text at section VI.B and accompanying notes. 149 Case C-143/18 Antonio Romano and Lidia Romano v DSL Bank – a branch of DB Privat- und Firmenkundenbank AG, formerly DSL Bank – ein Geschäftsbereich der Deutsche Postbank AG [2019]; Franziska Weber, ‘Das Verbraucherleitbild des Verbrauchervertragsrechts – im Wandel?’ (2020) Verbraucher und Recht 9, 9ff. 150 Peter Bülow and Markus Artz, ‘Fernabsatzverträge und Strukturen des Verbrauchervertragsrechts im BGB’ (2000) Neue Juristische Wochenschrift 2050; Franz Bydlinski, ‘Die Suche nach der Mitte als Daueraufgabe des Privatrechts’ (2004) 204 Archiv für die civilistische Praxis 309, 368; Claus-Wilhelm Canaris, ‘Wandlungen des Schuldrechts – Tendenzen zu einer Materialisierung’ (2000) 200 Archiv für die civilistische Praxis 320, 343; for further references Marina Tamm, in Marina Tamm, Klaus Tonner and Tobias Brönneke (eds), Verbraucherrecht – Beratungshandbuch, 3rd edn (Baden-Baden, Nomos, 2020) § 1 No 25. 151 eg Michel Martinek, ‘Unsystematische Überregulierung und kontraintentionale Effekte im Europäischen Verbraucherschutzrecht’ in Stefan Grundmann (ed), Systembildung und Systemlücken in Kerngebieten des Europäischen Privatrechts (Tübingen, Mohr Siebeck, 2000) 51 ff. 152 Tamm, Verbraucherschutzrecht (n 43) 157ff; Hans-Wolfgang Micklitz in Joost, Oetker and Paschke (n 66) part III, who advocates a protection of the weaker party within in BGB.

German Consumer Law  125 be mentioned, according to which a distinction must be drawn between the responsible, the trusting, and the vulnerable consumer.153 Others insist on a uniform level of protection.154 In practice, however, the ‘vulnerable consumer’ does not prevail, apart from the area of services of general economic interest, where access is the main issue. The ‘flexible system’ deserves assent. A specific German contribution could be based on the case law of the Federal Constitutional Court, according to which constitutionally guaranteed freedom of contract has a material component (‘material Vertragsfreiheit’).155 According to the Federal Constitutional Court, the legislature and courts are obliged to ensure that citizens can exercise their freedom of contract. The conditions for selfdetermination of the individual must actually be given.156 This is to be adhered to.

VIII.  Own Initiatives and Missed Initiatives of the German Legislator A.  Own Initiatives The German legislator has adopted only a few consumer contract acts, which have no relevance to European requirements. This concerns the rules of a medical treatment contract (§§ 630a to 630h BGB), which take up the previous case law of the BGH157 and regulate medical information and documentation obligations. In addition, the legislator redesigned the law on contracts for work and services and thereby created a chapter on the consumer construction contract (§§ 650i to 650o BGB). The consumer construction contract is revocable if it is not concluded before a notary.158 As mentioned, unsolicited phone calls always played a role.

B.  Missed Initiatives Despite all Europeanisation, the German legislator has repeatedly adopted consumerrelated legislation of its own. However, it leaves the ‘big issues’ to European legislation and limits itself to participation in the European legislative process.

i. Digitisation This currently applies, for example, to digitisation and to the platform economy. Although there is no doubt for the German legislator that there is a need for regulation, 153 Micklitz, Brauchen Konsumenten (n 5). 154 Tamm, Verbraucherschutzrecht (n 43) 62ff. 155 Bundesverfassungsgericht 19.10.1993, 89 BVerfGE (official collection of the decisions of the Federal Constitutional Court) 214, 232. 156 Bundesverfassungsgericht 7.9.2010, (2011) NJW 1339. 157 There is much case law, eg BGH 9.11.1982, VI ZR 23/81, (1983) NJW 332; BGH 20.6.1989, VI ZR 320/88, (1989) NJW 2943; BGH 6.10.1998, VI ZR 239/97, (1999) NJW 860. 158 Critical view by Robert Magnus, ‘Das Widerrufsrecht beim Verbraucherbauvertrag’ (2019) 5 JuristenZeitung 224.

126  Klaus Tonner it limits itself to competition law aspects, starting with the 9th GWB Amendment, which came into force in 2017. The 10th GWB amendment will focus on digitisation, but specific consumer law measures are not planned. The opinion of the Expert Council for Consumer Affairs (Sachverständigenrat für Verbraucherfragen) ‘Consumer Law 2.0’159 has shown starting points for the national legislator. However, the German legislator seems to be waiting for the results of the European legislator. This primarily refers to the Directive on digital content,160 the proposal for which161 has been intensively discussed in the academic world in Germany.162 But this Directive does not meet the requirements for regulating platforms.

ii. Sustainability A second point is sustainability. In many Member States, including Germany, a debate has started about the legal framework to support the lifespan of technical consumer products. This has been prevented by the two-year limitation period under the Consumer Sales Directive. However, Member States could override this limitation because of the minimum standard of the Directive of 1999. There are further proposals that aim to expand the manufacturer’s guarantee and establish a connection with sector-specific provisions of public law on individual product groups.163 The Federal Environment Agency (Umweltbundesamt) has commissioned several reports on these issues and has partially adopted the results.164 The consumer ministers’ conference of the Länder is also campaigning for new regulations in this field.165 It remains to be seen how the

159 Sachverständigenrat für Verbraucherfragen beim Bundesministerium der Justiz und für Verbraucherschutz (ed), Verbraucherrecht 2.0: Verbraucher in der digitalen Welt: Gutachten des Sachverständigenrats für Verbraucherfragen (Berlin, December 2016) www.svr-verbraucherfragen.de/wp-content/uploads/2017/01/ Gutachten_SVRV.pdf. A summary of the expert opinion is published in Micklitz, Reisch, Joost, Zander-Hayat, Verbraucherrecht 2.0 (n 1) 9ff. 160 Directive 2019/770/EU of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the supply of digital content and for the provision of digital services [2019] OJ L136/1; cf Axel Metzger, ‘Verträge über digitale Inhalte und digitale Dienstleistungen – Neuer BGB-Vertragstypus oder punktuelle Reform?’ (2019) JuristenZeitung 577, 577ff. 161 European Commission, Proposal for a Directive of the European Parliament and of the Council on certain aspects concerning contracts for the supply of digital content, COM (2015) 634 final. 162 Markus Artz and Beate Gsell (eds), Verbrauchervertragsrecht und digitaler Binnenmarkt (Tübingen, Mohr Siebeck, 2018); Michael Grünberger, ‘Verträge über digitale Güter’ (2018) 218 Archiv für die civilistische Praxis 213, 213ff. (contribution to a conference of the Deutsche Zivilrechtslehrervereinigung). 163 cf the contributions in Tobias Brönneke and Andrea Wechsler (eds), Obsoleszenz interdisziplinär (Baden-Baden, Nomos, 2015); Elize Rudloff, ‘Der Vorschlag einer Warenhandels-Richtlinie der EU – Fortschritt auf dem Wege zu mehr Nachhaltigkeit’ (2018) Verbraucher und Recht 323, 323ff. 164 Sabine Schlacke, Klaus Tonner and Erik Gawel, Stärkung eines nachhaltigen Konsums im Bereich Produktnutzung durch Anpassungen im Zivil- und öffentlichen Recht (Umweltbundesamt, Texte 72/2015); Klaus Tonner, Sabine Schlacke, Erik Gawel, Marina Alt and Wolfgang Bretschneider, ‘Gewährleistung und Garantie als Instrumente der Durchsetzung eines nachhaltigen Produktumgangs’ (2017) 1 Verbraucher und Recht 3, 3ff; Friedhelm Keimeyer, Tobias Brönneke, Rainer Gildeggen, Peter Gailhofer, Kathrin Graulich, Siddharth Prakash, Cara-Sophie Scherf, Ralph Schmitt and Nadja Schwarz, Weiterentwicklung von Strategien gegen Obsoleszenz einschließlich rechtlicher Instrumente (Umweltbundesamt, Texte 115/2020). 165 Projektgruppe der Verbraucherschutzministerkonferenz und Justizministerkonferenz, Gewährleistung und Garantie. Bericht (3 February 2016) www.verbraucherschutzministerkonferenz.de/documents/top53_ bericht_der_projektgruppe_1510318073.pdf.

German Consumer Law  127 German legislator will implement the new Directive on sale of consumer goods.166 As an exemption to the fully harmonising character of the Directive, the provision about the two-year limitation is an optional provision. So discretion is left to the Member States to introduce longer limitation periods, which corresponds to the idea of a lifespan guarantee for technical products. It remains to be seen whether the German legislator will take up this opportunity.

IX. Enforcement A.  Enforcement of Individual Rights For a long time the individual consumer had to rely only on the civil courts for enforcement of individual rights. The general opinion, shared by consumer associations, was that their independence was the guarantee of full enforcement of consumer rights, whereas conciliation included an element of compromise. Above all, it was regarded as necessary to give the courts the opportunity to develop consumer protection law. Therefore, consumer associations have been deeply cautious about alternative forms of individual enforcement, in particular by conciliation, and have been more inclined to improve the ordinary court procedure in consumer matters.167 But the legislator has not taken up the topic. Although there is a threshold to go to court in small claims cases in Germany, willingness to sue is still higher than in many other Member States.168 This is because there are more courts in proportion to the number of inhabitants, the procedures are rather shorter and do not involve such high costs as in other Member States. Conciliation procedures existed in the early years of consumer protection only in the field of repairs169 and in the health sector. But the aim had been to incorporate craftsmanship or medical expertise into the resolution procedures. Only during the last two decades has discussion started about a sector-specific approach to consumer conciliation. While Recommendation 2001/310/EC170 could be regarded as the basis for designing such procedures, it had never been the reason for establishing a general conciliation scheme by law. Instead, a sector approach has been observed. The insurance industry was leading in this field; their insurance ombudsman

166 Directive 2019/771/EU of the European Parliament and the Council of 20 May 2019 on concerning contracts for the sale of goods, amending Regulation 2017/2394 and Directive 2009/22/EC and repealing Directive 1999/44/EC [2019] OJ L136/28. 167 Harald Koch, Verbraucherprozeßrecht: Verfahrensrechtliche Gewährleistung des Verbraucherschutzes, 2nd edn (Baden-Baden, Nomos, 2019). 168 For a comparison with the Netherlands cf Erhard Blankenburg and Freek Bruinsma, Dutch legal culture, 2nd edn (Deventer (Netherlands), Kluwer Law and Taxation Publishers, 1994) 3–13 (reprinted in Volkmar Gessner, Armin Hoeland and Csaba Varga (eds), European Legal Cultures (Aldershot, Dartmouth, 1996) 345). 169 For that early type of conciliation cf Hans-Wolfgang Micklitz, ‘Schieds- und Schlichtungsstellen für Verbraucher – eine kritische Bestandsaufnahme’ (1983) Deutsche Richterzeitung 119, 119ff. 170 Commission Recommendation of 4 April 2001 on the principles for out-of-court bodies involved in the consensual resolution of consumer disputes [2001] OJ L109/56.

128  Klaus Tonner is regarded as a particularly successful model.171 The legislator finally codified conciliation in the Insurance Contract Act (Versicherungsvertragsgesetz, VVG). Conciliation in public transport has also been successful.172 However, this came about only with political pressure – different to the insurance sector. Conciliation was initially accepted only by railway undertakings, while acceptance of conciliation in the aviation sector required strong political pressure. There it has been particularly important to enforce the rights under the Air Passenger Rights Regulation,173 in particular compensation payments in case of delays. The aviation companies finally gave way and the legislator passed a legal basis for this sector-specific conciliation.174 Remarkably, the Passenger Rights Regulation is concerned with EU law, whereas the rules on enforcement by conciliation are autonomous German law. Prior to implementation of the ADR Directive, additional sector-specific focal points were created in the fields of energy – here with a background from EU law175 – services of lawyers and financial services. The ADR Directive has been met with considerable scepticism in Germany. The danger was seen that the quality of conciliation proposals would be considerably lower than that of court judgments.176 Proponents of conciliation disagree that disputes over facts would be settled which would not have reached the ordinary courts.177 The ADR Directive was implemented by the Consumer Dispute Resolution Act (Verbraucherstreitbeilegungsgesetz, VSBG). Its general implementation, independent from specific sectors, has not yet been successful. On the one hand, the ADR Directive requires that every consumer must have access to conciliation, and on the other hand, because of the constitutional guarantee to go to court, no business can be forced to recognise arbitration as binding. That is why the residual ADR entity according to Article 5 of the ADR Directive – in § 29 VSBG called Universalschlichtungsstelle – which has now been set up at the Zentrum für Verbraucherschlichtung (Centre for Consumer Arbitration) in Kehl, does not work. Conciliation will not be successful if required by legal pressure. It works only because of the insight of those involved to practice conciliation voluntarily, as the successful sector-specific conciliations show. The dilemma owing to the ADR Directive has so far not been solved by German consumer policy. 171 Christof Berlin, Alternative Streitbeilegung in Verbraucherkonflikten (Baden-Baden, Nomos, 2014) 227ff.; Naomi Creutzfeld, Vertrauen in außergerichtliche Schlichtung – Fallbeispiel: Der Versicherungsombudsmann (2015) www.law-ox.ac.uk/sites/files/oxlaw/oxford_bericht_teil_vo.pdf; part of the project Trusting the middle man: Impact and legitimacy of ombudsmen in Europe (2016). 172 Creutzfeld, Vertrauen (n 171); part of the project Trusting the middle man: Impact and legitimacy of ombudsmen in Europe (2016); Edgar Isermann, ‘söp-Schlichtung – wie funktioniert das?’ (2016) Reiserecht aktuell 106, 106ff. 173 Regulation 261/2004/EC of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91 [2004] OJ L46/1. 174 Gesetz zur Schlichtung im Luftverkehr (LuftSchlichtG) (Bundesgesetzblatt, BGBl) 2013 I 1545, which amended the Luftverkehrsgesetz (Aviation Act). 175 Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC [2009] OJ L211/55. 176 Horst Eidenmüller and Martin Engel, ‘Die Schlichtungsfalle: Verbraucherrechtsdurchsetzung nach der ADR-Richtlinie und der ODR-Verordnung der EU’ (2013) Zeitschrift für Wirtschaftsrecht 1704, 1704ff. 177 Günther Hirsch, ‘Alternative Streitbeilegung: Risiko oder Chance? – Ein Zwischenruf ’ (2015) Zeitschrift für Kommunikationsmanagement 141. Hirsch was President of the BGH until his retirement and after his retirement Versicherungsombudsmann from 2008 to 2019.

German Consumer Law  129 Out-of-court procedures are regarded today as useful from a consumer’s point of view. They are cheaper and less time consuming than court procedures. But there is one prerequisite for this evaluation: They must not replace the right of consumers and their associations to go to court, so that courts are in a position to develop consumer law.178

B.  Collective Enforcement Outside of individual law enforcement, the focus of collective law enforcement is private enforcement. However, the Bundeskartellamt plays a role at the beginning and at the end of the period under consideration: the GWB is based on the assumption that functioning markets provide adequate conditions for the purchase of goods and services for the consumer. Further measures should be superfluous if a powerful authority ensures the functioning of the markets. However, when it turns out that competition alone does not achieve satisfactory results for the consumer, an extension of the powers of the Federal Cartel Office is rejected. Instead, the legislator relies on collective claims by associations, limited to an injunction claim. This was first introduced in the UWG (1965) and then in the AGB-Gesetz (1976) as an autonomous solution of German law and gives business and consumer associations the right to take action in case of a violation of the UWG or the AGB-Gesetz. For consumer associations, this opens up the far-reaching possibility of bringing dubious clauses to a review by the courts, which can thus on a large scale declare clauses inadmissible and eliminate them. The same applies to unfair commercial practices. The 1980s and 1990s are characterised by stagnation. Legal instruments beyond the injunction claim were not introduced, in particular no sanction for compensation in the UWG. At this stage, the European level was involved in the development of substantive standards in consumer contract law and left enforcement to the Member States. Although the Member States were obliged to enforce them (the effet utile principle), they were free in the choice of legal instruments. For Germany, this meant coexistence of individual law enforcement with the help of the courts and the collective action, which finally also results in judicial decisions. The courts have enjoyed a very strong position. The first step by the European Union legislator in enforcement of consumer law was the Injunction Claims Directive.179 However, since an association’s right to take action was already part of the Standard Contract Terms law, its implementation in the Injunction Claims Act (Unterlassungsklagengesetz, UKlaG) meant only moderate progress for consumer protection. The annex to the Injunction Claims Directive contains a list of – originally seven – European legal acts, infringement of which entitles consumer associations to take action. Associations are to be registered and are referred to as ‘qualified entities’. 178 Klaus Tonner, ‘Der RegE des VSBG aus verbraucherrechtlicher und – politischer Sicht’ (2015) Zeitschrift für Kommunikationsmanagement 132, 132ff. 179 Now Directive 2009/22/EC of the European Parliament and of the Council of 23 April 2009 on injunctions for the protection of consumers’ interests [2009] OJ L110/30.

130  Klaus Tonner The original version of the 1998 Injunction Claims Directive180 was transposed into German law in connection with modernisation of the law of obligations. This was more than a substitute for the right to take action previously regulated in the AGB-Gesetz, since legal standing had to be extended to the other acts enumerated in the Directive. However, this did not mean a relevant extension of collective consumer protection, because the transposition acts of the other European legal acts as enumerated in the Directive were widely qualified by the courts as market conduct rules in the meaning of the UWG,181 so that before the entry into force of the UKlaG a collective action for breach of these rules existed, based on a claim for injunction under the UWG. Consumer associations could – and can in many cases – choose whether they want to start an injunction claim under the UKlaG or under the relevant provision of the UWG (now § 8 UWG). The recast of the Directive in 2009 (above VI.B) led to an extension of the relevant legal acts, infringement of which is subject to the right to take action. The German legislator held back from further action. In particular, the EU Recommendation on Injunctive and Compensatory Collective Redress182 had no consequences, though it triggered a fierce defence by legal writers, because a ‘Klageindustrie’ (claims industry) in the style of the US class action was feared.183 It was not noted that the Commission wished to avoid this by granting the right to sue only to non-profit organisations and required an opt-in in principle. However, the legislator eventually found itself forced to respond to the VW Diesel scandal and passed an act for a model action for a declaratory judgment (Musterfeststellungsklage).184 The drafting of the act had been repeatedly delayed until the dimensions of the VW scandal meant that a reaction by the legislator was inevitable. Previously, there had already been an act for a model action in capital market disputes (Gesetz über Musterverfahren in kapitalmarktrechtlichen Streitigkeiten, KapMuG), which was issued in 2005 against the background of lawsuits by thousands of shareholders of Deutsche Telekom, who saw themselves harmed by incorrect information in the prospectus.185 The KapMuG is not a success story from the consumers’ point of view: The Telekom case has not been settled even after 20 years. In contrast to the KapMuG, the Musterklagengesetz was integrated into the Zivilprozessordnung (Civil Procedural Code, ZPO). A model claim can only be brought by a qualified entity within the meaning of the UKlaG, that is, by a consumer association. The Higher Regional Court (Oberlandesgericht) is responsible at first instance. At least

180 Directive 98/27/EC of the European Parliament and of the Council of 19 May 1998 on injunctions for the protection of the consumers’ interests [1998] OJ L166/51. 181 See above text at section VI.B and accompanying notes (§ 3a UWG). 182 Commission Recommendation of 11 June 2013 on common principles for injunctive and compensatory collective redress mechanism in the Member States concerning violations of rights granted under Union Law (2013/396/EU) [2013] OJ L201/60. 183 Against these attacks Astrid Stadler, ‘Kollektiver Rechtsschutz – Chancen und Risiken’ (2018) 182 Zeitschrift für das gesamte Handelsrecht 623. 184 Gesetz zur Einführung einer zivilprozessualen Musterfeststellungsklage vom 12. Juli 2018 (Bundesgesetzblatt, BGBl) 2018 I 1151. 185 Alex Halfmeier, Peter Rott and Eberhard Feess, Kollektiver Rechtsschutz im Kapitalmarktrecht – Evaluation des Kapitalanleger-Musterverfahrensgesetzes (Frankfurt a.M., Frankfurt School Verlag, 2010); Marina Tamm, ‘Das Kapitalanleger-Musterverfahrensgesetz’ (2010) 174 Zeitschrift für das gesamte Handelsund Wirtschaftsrecht 525, 525ff.

German Consumer Law  131 ten consumers must be affected. Anyone who wants to rely on the court decision has to register in a claim register kept by the Federal Office of Justice. After judgment in the model lawsuit, the consumer has to assert their own individual damages independently, which may lead to a second procedure. The Act came into force on 1 November 2018, just in time before the limitation periods of numerous claims would have ended on 31 December 2018. The Federation of German Consumer Organisations (vzbv) submitted an application to the Oberlandesgericht Braunschweig on 1 November 2018. Especially because of the two procedures which might be necessary, the Act has been subject to strong criticism, for example in discussions of the 72 Deutscher Juristentag 2018 in Leipzig.186 The VW case was settled by an out-of-court agreement between the Federation of German Consumer Organisations (vzbv) and VW in 2020, which was the subject of intense critique.187 As a result of the new deal for consumers at EU level the German legislator will have to put collective action on the agenda again, because it has to implement the Directive on representative actions for protection of the collective interest of consumers.188 This Directive will replace the Injunction Claims Directive and will significantly extend the collective rights of consumers.189 Only a short time after publication of the proposal, legal authors in Germany began to refute these amendments.190

C.  Public Enforcement Only the privatisation of services that serve the Daseinsvorsorge (in the language of the TFEU ‘services of general interest’), left to supervision by the Federal Network Agency (Bundesnetzagentur), concerning electricity, postal services, and telecommunication. Germany is one of the few EU Member States where the legislator had for decades focused exclusively on private law enforcement in consumer law, but at the same time had been reluctant to expand collective redress mechanisms. It is questionable if there will really be a change in favour of more influence from the Bundeskartellamt (Federal Cartel Authority), entrusted with tasks of consumer protection by the 9th GWB amendment, which contained the first steps that are still very modest.191 The Bundeskartellamt 186 Caroline Meller-Hannich, Sammelklagen, Gruppenklagen, Verbandsklagen – Bedarf es neuer Instrumente des kollektiven Rechtsschutzes im Zivilprozess? – Gutachten A zum 72. Deutschen Juristentag (München, Beck, 2018); Astrid Stadler, ‘Kollektiver Rechtsschutz – Quo vadis?’ (2018) JuristenZeitung 793, 793ff. 187 Astrid Stadler, ‘Pyrrhussieg für den Verbraucherschutz – vzbv umgeht durch Vereinbarung mit VW gesetzliche Sicherungsmechanismen’ (2020) Verbraucher und Recht 163, 163ff; defending the vzbv Jutta Gurkmann and Ronny Jahn, ‘Außergerichtlicher Vergleich im Rahmen einer Musterfeststellungsklage’ (2020) Verbraucher und Recht 243, 243ff, who were in charge for the vzbv in that case. 188 Directive 2020/1828/EU of the European Parliament and the Council on representative actions for protection of the collective interests of consumers, and repealing Directive 2009/22/EC [2020] OJ L409/1. 189 For details cf Alex Halfmeier and Peter Rott, ‘Verbandsklage mit Zähnen? – Zum Vorschlag einer Richtlinie über Verbandsklagen zum Schutz der Kollektivinteressen der Verbraucher’ (2018) Verbraucher und Recht 243, 243ff. 190 Alexander Dröge, ‘Der “new deal for consumers” – ein Paradigmenwechsel im UWG’ (2019) Wettbewerb in Recht und Praxis 160, 160ff. 191 cf Konrad Ost, ‘Kartellrecht – Verbraucherrechtsvollzug mit kartellrechtlichen Mitteln?’ in Tobias Brönneke, Andreas Willburger and Sabine Bietz (eds), Verbraucherrechtsvollzug – Zugang der Verbraucher zum Recht (Baden-Baden, Nomos, 2020) 249 ff.

132  Klaus Tonner may initiate sector inquiries in the event of suspected serious breaches of consumer law, clarify the facts if necessary ex officio and publish the results (§ 32e (5) GWB). For this purpose, the Federal Cartel Authority set up its own decision-making department for consumer affairs and conducted a sector inquiry on comparison of internet portals and a second one on smart TVs. However, the Bundeskartellamt is not entitled to any powers of intervention if it finds that a sector inquiry brings legal violations to light. These must be remedied by traditional means of collective redress. The introduction of the sector inquiry can only be understood as a first step in the direction of public enforcement of consumer protection, which would be relatively inadequate if further steps do not follow.192 The Bill for the 10th GWB amendment does not include such further steps. The focus of this amendment, however, is improvement of abuse control in connection with digitisation; the keyword ‘consumer protection’ did not appear in previous considerations. But even traditional means of the law of competition restraint may help the consumer.193 The main focus of the proposed 10th GWB amendment is digitisation. The interesting point is that the legislator has started with competition policy to meet the biggest challenge for consumers today – more than half a century ago it started with competition policy as the consumer’s best friend. The new trend towards public agency solutions is also supported by developments at Union level, as the new EU Consumer Protection Cooperation Regulation194 extends the obligations of cooperation between the EU consumer protection authorities. Member States are forced to designate such authorities. But the German Enforcement Regulation, which will make the CPC Regulation effective,195 follows a minimalistic approach.

D. Summary Enforcement of consumer (protection) law in Germany relies on private law. With regard to individual claims, court procedures are less cost-intensive and less timeconsuming than in many other countries. This might be the reason why the small claims debate in the 1970s did not play a significant role and that out-of-court procedures were not introduced on a general level before the ADR Directive forced the government to

192 Rupprecht Podszun, Christoph Busch and Fraunke Bodewig-Henning, Behördliche Durchsetzung des Verbraucherrechts? (Studie im Auftrag des Bundesministeriums für Wirtschaft und Energie, 2018) www. bmwi.de/Redaktion/DE/Publikationen/Studien/behoerdliche-durchsetzung-des-verbraucherrechts.pdf?__ blob=publicationFile&v=13; English summary: Rupprecht Podszun, ‘Consumer Law in Germany: A shift to public enforcement?’ (2019) European Consumer and Market Law Review 75, 75ff. 193 cf Rupprecht Podszun, ‘Regulatory mishmash? Competition law, Facebook and consumer protection’ (2019) European Consumer and Market Law Review 49, 49ff. 194 Regulation 2017/2394/EU of the European Parliament and of the Council of 12 December 2017 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004 [2017] OJ L345/1. 195 Gesetz zur Durchführung der Verordnung (EU) 2017/2394 des Europäischen Parlaments und des Rates über die Zusammenarbeit zwischen den für die Durchsetzung der Verbraucherschutzgesetze zuständigen nationalen Behörden und zur Aufhebung der Verordnung (EG) Nr. 2006/2004 (EU-Verbraucher schutzdurchführungsgesetz – EU-VSchDG) (Bundesgesetzblatt, BGBl) 2020 I 1474.

German Consumer Law  133 introduce general conciliation. Before the transposition of the ADR Directive, conciliation existed only in specific areas (insurance, transport) and was regarded as successful, whereas general conciliation procedures do not really work. The right of consumer and business associations to take action against unfair commercial practices (adopted already in 1965) and unfair contract terms (adopted in 1976) was regarded as successful and an important German contribution to developing EU consumer law (Injunction Claims Directive). But the German legislator was strongly resistant to going beyond an injunction claim. The EU Recommendation 2013/396/EU was ignored, because the legislator was afraid of anything that might look like a class action. It has still to be seen how the legislator will transpose the Representative Actions Directive. It seems that the German legislator clearly considers the – relatively – effective German courts as sufficient for consumer law enforcement, and therefore never saw a need to amend enforcement by courts with enforcement through a public authority. The competence of the Bundesnetzagentur is an exemption because it deals with – now private – industries which in earlier times were state-owned enterprises in the sector of Daseinsvorsorge (services of general interest). The competence of the Bundeskartellamt undertaking sector inquiries is limited, and it cannot be seen that this competence will be extended. The advantage of enforcement by a public authority is the more extensive power for investigation compared to an association. This is particularly important for complex web problems, for example when algorithms are used. A mix of instruments of improved collective redress and regulatory powers of public authorities seems best suited so as not to completely close enforcement gaps, but at least to minimise them.196

X. Conclusion A.  Strong Relevance of Case Law Although the German legal system is part of the civil law world and has a traditional codification with the BGB, the courts are of paramount importance and relevance. Based on the two general clauses of the Civil Code, §§ 138 and 242 BGB, the courts regularly address problems earlier than the legislator and limit freedom of contract by protecting the weaker party. In many cases, the legislator has only transferred to sections of statute law what the courts had already granted. This is true even of the highly modern AGB-Gesetz at that time, whose clause prohibitions predominantly went back to case law and whose general clause opened the way for further development, which the courts have conducted on a large scale. Nothing else applies to the law of unfair commercial practices. Prior to the 2004 review, there had been two general clauses and their outlines

196 cf Klaus Tonner, ‘Vollzugsdefizite im Verbraucherrecht – Der Befund’ in Tobias Brönneke, Andreas Willburger and Sabine Bietz (eds), Verbraucherrechtsvollzug: Zugang der Verbraucher zum Recht (Baden-Baden, Nomos, 2020) 17ff.

134  Klaus Tonner were filled by case law. The 2004 reform mostly systematised the case groups which had been developed by the courts. In consumer credit law, the basis was case law on violation of morality with regard to interest rates. However, the legislator created some more provisions due to pressure from consumer associations, which paid close attention to consumer credit law in the 1970s and 1980s. The package travel law, adopted in 1979, on the other hand, essentially contained only a codification of principles previously developed by the courts on the basis of the BGB provisions on contracts for work and services. Even the 2002 reform of the law of obligations did not improve material standards in favour of the consumer, but only incorporated the scattered transposition provisions of the Directives into the system of contract law of the BGB. The aim of the reform of 2002 was to achieve greater coherence of the Civil Code and not as a main aim improvement of consumer protection. With the Europeanisation of consumer contract law, the BGH had to share control of this legal area with the CJEU. Although it did so sometimes reluctantly and with a certain time delay, it nevertheless largely followed its duty to seek a preliminary reference of the CJEU under Article 267 TFEU. So it kept the door open for further development of Directives by the CJEU – more or less.

B.  No Separate Consumer Law The courts have never tried to develop a separate consumer law, but saw as their goal a fair balance of interests between the parties, in short, limiting contractual freedom by the good faith principle. Intervention in favour of the weaker party did not correspond to the courts’ self-concept. Accordingly, neither the BGB nor the UWG were designed in their original conceptions as specifically consumer-protecting laws. ‘Einheit des Privatrechts’ (unity of private law) stood above everything; both legislators and courts tried to prevent a ‘Sonderprivatrecht’. The courts tried, for example, to achieve synchronisation between general clause and clause prohibitions in the standard contract terms law. Unlike many other Member States, Germany had no separate codification of consumer law. Rather, the legislator integrated European consumer contract law as far as possible into the Civil Code and sought to ensure consistency between consumer contract law and general contract law. Only if unavoidable due to Union legislation were regulations limited to b2c contracts issued. Outside the Civil Code, for example, the wide scope of the UWG was retained. This approach leads to highly complex regulations.

C.  Restriction of Sanctions to Private Law Instruments The importance of case law requires easy access to the courts. In Germany, there is a comparatively large density of courts and comparatively low costs with short duration of proceedings. The introduction of collective rights of consumer associations in the UWG in 1965 and the AGB-Gesetz in 1977 have also been a great step forward and can be regarded as a model for later development at European level. However, the legislator did not go beyond that. The recommendation on collective redress has been largely ignored; the act on a model action for a declaratory judgment

German Consumer Law  135 adopted due to the VW Diesel scandal has stayed far behind what is needed. It remains to be seen how the legislator will react to the Directive on Representative Action. Moreover, Germany knows no public enforcement of consumer protection rules. Approaches to make the Bundeskartellamt a consumer protection authority were not pursued in the 1970s. Those approaches have recently been revived because of developments at Union level and to meet the challenges of digitisation. However, according to the current state of legislation, the Bundeskartellamt is still a long way from being an effective consumer protection authority.

D.  No Consumer Protection Beyond the EU Standard Since the Union legislator has entered the scene in consumer law, there have hardly been any initiatives from the national legislator. The margins that existed in the times of the minimum standard Directives were only used to maintain existing rules, such as the more extensive liability for package holidays, or to better fit the provisions of the directives into the system of the BGB. However, the German legislator abstained from further regulations of its own, which would have been permissible in times of the minimum standard Directives and which could have been a model for further European development. On the contrary, the federal government dismissed initiatives at Union level. The German Government was among the opponents of the proposal for a Common European Sales Law. It was always concerned with preservation of the existing system and in particular the coherence of its own private law system. The necessary expansion of law enforcement is limited to the half-hearted act on a model action for declaratory claims, while the challenge of digitisation is met by cautious steps limited to competition policy. Instead, the legislator has implemented fully harmonising directives into the BGB. This leads to extreme complexity in terms of maintaining the appearance of the ‘unity of private law’. The German legislator waits for EU directives to solve real problems. A rethink on the part of the German legislator is required. It has to make use of the leeway that is left even by fully harmonising directives. In areas where proposals for directives have not yet been drafted, specific German initiatives are required that might serve as a model for European solutions. In the field of law enforcement, opposition to class actions should be abandoned, and a public authority solution should create a second pillar alongside private law enforcement. Sustainability has to be more than lip service. Unfortunately, the German legislature is far from meeting these challenges.

136

6 The Making of Consumer Law and Policy in Italy GUIDO ALPA

I.  ‘Consumer’: The Construction of a Juridical Concept Although the notion of ‘consumer’ has had difficulty gaining respect in Italian legal culture, it was not actually ignored outright before being sanctified in studies by ­economists, sociologists and law scholars. In particular, it was already well known from the studies of Vilfredo Pareto1 and of other early twentieth-century economists. The Italian Civil Code of 1942, still in force today, already alludes to the monopolist’s counterpart. Although no mention is made of the consumer, by requiring the monopolist to deal with anyone, we are made to understand that the monopolist’s counterpart, usually contractually weaker, must be protected in the purchase of a good or service. In the code, the contract framework generally prefers to use the neutral term ‘party’ or ‘contracting party’; in special contracts, again in a neutral manner, we speak of a purchaser in a contract of sale, of a passenger or consignee in a transport contract, of a lessee in a lease contract, of a borrower in a loan agreement and so on. However, the Report on the Civil Code prepared by Minister of Justice Dino Grandi for the King, illustrating the meaning of the provisions included in the code, mentions the term ‘consumer’ again in relation to competition rules and to the bargaining ­obligation imposed upon the monopolist. The passage reads as follows: In close connection with the matter of competition, it was decided to establish a principle already contained in special laws, which is to say the obligation for all enterprises that are in a condition of legal monopoly to negotiate with anyone that so requests, observing equal treatment (art. 2597 Civil Code). A principle of this kind is imposed to defend the consumer as a necessary tempering of the suppression of competition (..).2

To be sure, this minimal protection does not in fact ensure choice among a number of prices, or among a number of qualities of products, but at any rate the passage shows 1 See Vilfredo Pareto, Cours d’Économie Politique (Lausanne, Rouge, 1897). 2 Relazione del Ministro Guardasigilli Grandi al Codice Civile del 1942, G.U. del 4 aprile 1942, al no 1046 (Report of the Minister of Justice to the King on the Civil Code, 1942, Offical Journal 4 april 1942, para 1046).

138  Guido Alpa a certain awareness by lawmakers of a category of subjects that cannot negotiate the conditions of the service offered them by the entrepreneur and are forced, if they wish to conclude the economic transaction, to accept the conditions imposed by the other party. After 1942, it took a long time to construct the juridical notion of consumer and the conceptual categories allowing the consumer’s status to be defined and appreciated, to introduce regulations to protect the consumer, to promote lines of interpretation favourable to the category of consumers, and, even more, to construct the notion of a user of public services in relations with the public administration. Dating the origin of legal protection of the consumer in the modern sense would then take us to the 1960s: in that sense, it is not a native notion, but rather the effect of importing notions and concepts derived from other, more highly evolved experiences. The juridical notion of ‘consumer’ is itself an emblematic example of the circulation (or transplantation) of ideas. In the US, scholars in this field usually credit President John F Kennedy’s special message to Congress in 1962 with defining the first programmes of legislative intervention in favour of ‘consumers’ with the term to be understood as everyone belonging to society, considered in their role as acquirers or users of products and services (‘all of us are consumers’). And in the UK, a dividing line between past and future was marked by the Report to Parliament by the Committee on Consumer Protection led by Dennis Molony in July that same year. This Report, with great caution and without claiming to modify the regulations in force, acknowledged that the consumer had to be considered as the weaker party in a relationship established with the entrepreneur and that it was therefore appropriate to intervene with some protective measures in the consumer’s favour. John F Kennedy’s message was epoch-making3 because, for the first time, ‘consumer’s rights’ were articulated, which is to say: (i) the right to safety, to be protected from dissemination on the market of products that are life-threatening or hazardous to health; (ii) the right to be informed and to be protected from deceptive, misleading messages, from untruthful labelling and from other nefarious commercial practices, in order that the consumer might be able to make informed choices; (iii) the right to choose, where possible, among a variety of fairly and competitively priced products and services of satisfactory quality; and (iv) the right to be heard, so that consumers’ interests might be taken into proper consideration by government policies and so that consumers might be able to swiftly seek redress in court.4 In the early 1960s, Italian jurists were unprepared to accommodate a notion that had sprouted in the terrain of economics and sociology, but was unknown to lawmakers. The cultivators of civil law were still closely bound to the Civil Code. And the fact 3 John F Kennedy, ‘Special Message to the Congress on Protecting the Consumer Interest – March 15, 1962’ (1962) Public Papers of the Presidents of the United States 235. 4 It is no accident that the list of these ‘essential’ rights can be found in the Charter of Consumer Rights of the Council of Europe of 1973 and in the Resolution of the European Parliament of 1975: see Guido Alpa and Mario Bessone, Il consumatore e l’Europa: raccolta e un commento di testi e materiali della Comunità Economica Europea e del Consiglio d’Europa (Padova, Cedam, 1979). To print this book, we had to rely on the good offices of the Cedam publishing house, because it was considered a ‘boutique’ item intended for a highly restricted market.

The Making of Consumer Law and Policy in Italy  139 that the Report to the King spoke of ‘consumer’ in connection with competition and therefore with market rules was a sign that the drafters of the Civil Code and of the Report did not have in mind a subject to be protected in all phases of the establishment and execution of the consumption relationship, but only in exceptional situations, which is to say of monopoly in the sale of products or services. In other words, it was the triumph of contractual autonomy, in its indifference to the parties’ economic and social conditions. With legal formalism dominating, whoever dealt with these problems was considered either a non-expert in law, or a subversive, and had little following and merited little credit. We must then move forward in time to the early 1970s to record the first changes and the first attempts to demolish the formalist scaffolding. Consumer protection became a tool, a sort of picklock, to take traditional civil law apart piece by piece and to bring legal categories closer to social problems. Now, the conceptual categories of dogmatics built upon the tradition of Roman Law and of its transfiguration by the German Pandectists could no longer meet the needs of civil law scholars sensitive to social values. Scholars began to study the most appropriate remedies for protecting above all the consumer’s health: the liability of the producer of defective goods was the breach that allowed the new civil law to thrive and flourish. There were then two parallel paths: the evolution of civil law, which was gradually abandoning the dogmatics of the nineteenth and early twentieth centuries, and the evolution of commercial law, which no longer dealt only with parties that produce and distribute goods and services on the market, but also with those that purchase or consume them. In particular, in commercial law, we have to turn to the genius of Tullio Ascarelli who, as early as the 1950s, in his essay Teoria della concorrenza e interesse del consumatore (‘theory of competition and the consumer’s interest’)5 attempted for the first time to define the traits of a new market player – the consumer. Subsequently, in 1970, Gustavo Ghidini, who had studied how unfair competition is regulated, published the first book on manufacturer’s liability, placing responsibility within the sphere of the framework governing commercial advertising and consumer information, and thus using the rules on pre-contractual liability.6,7 These were the first attempts to assure some kind of protection to consumers. At that time only economists and sociologists published research in this field, taking account of the behaviour of people in satisfying elementary needs, considering the attitude of persons to acquiring goods and services, and studying the effects of economic development in the country. Political parties and trade unions were not interested in taking initiatives on behalf of consumers. In a few words, the Left thought that consumers’ attitudes or behaviour belonged to a ‘petit bourgeois’ perspective of society, while the Right associated the word ‘consumer’ with a critical approach to a capitalistic society. In other words, jurists near the Left preferred to consider a person in their whole dimension, ie as a ‘citizen’, instead of isolating the economic dimension of human beings shaped as a counterpart

5 Tullio Ascarelli, ‘Teoria della concorrenza e interesse del consumatore’ (1954) Rivista trimestrale di diritto e procedura civile 873. 6 Codice civile (Italian Civil Code), Art 1337 and 1338. 7 Gustavo Ghidini, La responsabilità del produttore di beni di consumo (Milano, Giuffrè, 1970).

140  Guido Alpa to the (capitalistic) undertaking; whereas jurists near the Right thought that any initiative in protecting consumers could result in a cost for entrepreneurs. Consumer associations were at their very beginning: the first, Unione Nazionale dei consumatori, began to publish a weekly journal suggesting the best products to buy, describing the traps of ‘bargains’, or how to negotiate with banks and insurance companies: a highly practical approach which could be well understood by households. Only a small group of jurists, then, were interested in discussing the legal aspects of consumers’ relationships, trying to adapt the existing rules to this new dimension, or suggesting the best rules to fill gaps in the legal system. This small group assumed the task of preparing the ground for political action, legislation and judicial reasoning. In the meantime, civil law scholars began to reshape the method of studying and interpreting civil law in the shape of the Civil Code and special statutes concerning civil law matters. Three directions of interpretation had been undertaken: (i) the ‘constitutionalisation’ of private law, which opened the doors of civil law to the values and principles of the Constitution that had entered force in 1948; in truth, the Constitution never speaks of consumers proper, but protects the weaker parties to a contract, in particular in the labour sector, protects savings and requires everyone to observe the principle of social and economic solidarity, in connection with the proclamation of the principle of equality;8 it also allows private economic enterprise to be limited for reasons of social utility.9 As to the Civil Code, (ii) the use of general clauses, such as good faith and fairness, public order and morality, rarely used by interpreters until that time, offered lawyers more freedom in defining the obligations taken on by the parties in their economic relationships and to introduce a sort of ‘contractual justice’; (iii) the use of legal instruments to achieve social ends – what at the time was called ‘social control.’10 The two perspectives – of commercial and civil law – are not in opposition to one another, but, rather, are complementary: the former looks at the consumption relationship from the business’s standpoint and the latter from the perspective of the weaker party, whether that party is the contracting party, the user or the damaged party. Circulation of defective products had been considered the most important area, because it pertains to the value of the person, protected by the Italian Constitution.11 Regard was given first to health and then to the other aspects of consumer protection, such as conclusion of contracts and control of unfair terms, unfair commercial practices and control of commercial advertising, and so on for other sectors in which the consumer is in a situation of weakness, such as the sectors of commercial sales, banking and finance, tourism services, and relations with public administration. Later on, criminal law scholars (especially as regards adulteration of food and food fraud, as well as fraud in trade) and scholars of trial law, attentive to protection of widespread interests, to the standing of consumer associations and to the introduction of class action scheme, added their spheres of competence.12 8 Costituzione della Repubblica Italiana (Italian Constitution), Art 3. 9 ibid Art 41. 10 See Guido Alpa, Trattato di diritto civile: Vol 1: Storia, fonti, interpretazione (Milano, Giuffrè, 2000) ch I; Stefano Rodotà, Il controllo sociale delle attività private : testi e materiali (Genova, ECIG, 1972). 11 Costituzione della Repubblica Italiana (Italian Constitution), Art 2. 12 For all these aspects, see Guido Alpa and Antonio Catricalà, Diritto dei consumatori (Bologna, Il Mulino, 2016) ch I.

The Making of Consumer Law and Policy in Italy  141

II.  Producer’s Liability: From Fault to Strict Liability However, within the sphere of civil liability, it was necessary to be equipped with new juridical concepts. The principle of ‘no liability without fault’, codified in almost all legal systems and in Italy too,13 was also operative in the matter of the producer’s liability. The first forms of liability, borne by the company for fabricating defective products, were in fact based upon the entrepreneur’s fault and, when absolutely necessary, the pretence of the presumption of fault was resorted to. With this pretence, the result was obtained of reversing the burden of proof on to the producer, while at the same time the traditional sphere of fault continued to include the equally traditional remedy of compensation of damage pursuant to the Lex Aquilia. This constant fact is found in all European legal systems, including in common law. The Italian experience is symptomatic of the backwardness of the law code models. Moreover, case law, in the – albeit rare – decisions in the matter, has always followed the principle of ‘no liability without fault’.14 There was no talk of enterprise liability, or of risk and strict liability.15 The only exception was that of the pioneering studies by Pietro Trimarchi, who in the early 1960s had already designed a reading of civil liability also founded upon economic categories: in Italy and the US alike, we are at the dawn of the interpretative orientation led by the economic analysis of law.16 Early on, an attempt was actually made to exclude the producer’s direct liability.17 However, in the rare decided cases, case law has tended to apply Article 2043 of the Civil Code expansively. For example, liability was affirmed of a manufacturer of a paper cutting machine without screens appropriate for preventing injury to users, by simply establishing that safety mechanisms were required by law, and it was thus possible to find, in this case, the existence of an objective fault due to violation of law.18 Or the liability of the manufacturer of a toy pistol used negligently by a minor, because the article’s construction failed to take into due account the fact that children can also make abnormal use of a product and it is therefore necessary to provide toys with suitable

13 Codice civile (Italian Civil Code), Art 2043. 14 Corte di Cassazione (Cassazione) judgment of 21 January 2000 no 639 in I contratti, 2000, 903, with note by Capoluogo. 15 In truth, objections were recorded in the early twentieth century: See Guido Alpa, La responsabilità civile (Milano, Utet Giuridica, 2015) ch I. 16 Pietro Trimarchi, Rischio e responsabilità oggettiva (Milano, Giuffrè, 1961); Guido Calabresi, ‘Some Thoughts on Risk Distribution and the Law of Torts’ (1961) 70 The Yale Law Journal 499; Guido Calabresi, Costo degli incidenti e responsabilità civile. Analisi economico-giuridica (Milano, Giuffrè, 1975) (trans by Anna de Vita, Vincenzo Varano and Vincenzo Vigoriti with a preface by Stefano Rodotà); Guido Calabresi, The Costs of Accidents: A Legal and Economic Analysis (Haven, Yale University Press, 1970). 17 Corte di Appello di Cagliari judgment of 27 June 1958 in Guido Alpa and Mario Bessone, La responsabilità del produttore (Milano, Giuffrè, 1976) 8 (where the liability of a producer of spoiled carbonic acid used by a merchant to make carbonated beverages was denied, on the ground that the merely economic damage claimed by it was not a legally relevant fact since it did not derive from breach of an absolute subjective right); Cassazione judgment of 15 July 1960 no 1929 in Alpa and Bessone, La responsabilità del produttore (n 17) 8–9 (where the liability of the manufacturer of a defective motor vehicle was excluded given the absence of a cause-and-effect relationship between the fact of construction and the vehicle’s circulation). 18 Cassazione judgment of 10 November 1970 no 2337 in Cossu, I fatti illeciti. Causalità e danno, Padova, 1999, 773.

142  Guido Alpa information and devices to prevent damage to young users.19 The manufacturer’s liability was also invoked in a case in which there was no clear evidence of fault: a bottle of Coca-Cola, removed from the refrigerator, that exploded as soon as placed on the counter, injuring the saleswoman, was considered a circumstance that was sufficient basis for the bottler’s negligence for having introduced a defective container into circulation.20 Moreover, of particular importance are two Supreme Court decisions that are innovative in terms of the orientations of jurisprudence in the matter. The first resorts again to the principle of fault-based liability, but – in the absence of clear evidence of the manufacturer’s negligence – holds that liability may all the same be affirmed when, from a careful assessment of the circumstances, fault may be presumed.21 This was a case about biscuits, sold in a box, which had spoiled and caused damage to the consumer’s health. The second holds that the strict liability of the driver of a motor vehicle for damage due to construction defects22 does not rule out the manufacturer’s fault-based liability.23 Recourse to objective charging criteria in the case of damage caused by products is not typical of the Italian experience; it is, however, typical in North America. And in fact, if I may make a personal reference, I referred precisely to that experience both in preparing my university degree thesis discussed in July 1970, and in later studies. In particular,

19 Cassazione judgment of 21 October 1957 no 4004 in Foro italiano, 1958, I, 45. 20 Tribunale Savona judgment of 31 December 1971 in Massimario della Giurisprudenza italiana, 1970. 21 Cassazione judgment of 25 May 1964 no 1270 in Foro italiano, 1965, I, 2098. These were the fundamental steps of the justification: ‘Once any fault of the shopkeeper as to the alteration of the sold product is excluded (as in the case in point), the trial judge, in exercising his or her discretionary powers, may well link the failure, through a logical process of assumption, to the faulty fabrication of said products, as its only possible cause, and that is to say, in practice, to a negligent conduct by the manufacturing company, which, pursuant to Lex Aquilia, makes it liable for the claimed damages: thus making (as in the concrete case) a proper de facto appreciation, which by its nature is removed from a review of legality. Also without grounds is the second means by which the petitioning company claims that the court has not shown the cause-and-effect relationship between the consumption of spoiled biscuits, by the defendants, and their reported internal indisposition, in order to be able to hold Saiwa liable for the harmful event. In fact, the appeal judges, with justification by no means insufficient albeit concise, unimpeachably recognised the causeand-effect relationship between the consumption of the spoiled food and the toxic phenomena suffered by the defendants, in rapid chronological succession between the two facts demonstrated by various witness depositions, including the particularly qualified one by the medical practitioner, thus basing Saiwa’s liability under Lex Aquilia on this undisputed verification of merit. With the fourth reason, the petitioner complains that the court did not find, failing to state adequate reasons, the complicity of the culpable act of the Schettini spouses (such as to attenuate the liability of this petitioner, pursuant to art. 1227 of the civil code), for having eaten the spoiled biscuits, which, if they had used ordinary diligence, they should not have consumed, as they were foul smelling. However, since Saiwa never asked to prove an assumption of this kind in the appeal, the court obviously did not fail to state adequate reasons on the grounds of not having examined it; and yet, the reason in question is clearly without merit as well.’ (see Guido Alpa and Mario Bessone, La responsabilità civile (Milano, Giuffrè, 1987) 10). Currently, the manufacturer’s fault is also based on damage to the consumer’s health: see Guido Alpa and Mario Bessone, Atipicità dell’illecito, vol I (Milano, Giuffrè, 1979) part I; A Galoppini, ‘Tutela del consumatore e diritto alla salute’ in Francesco Busnelli and Umberto Breccia (eds), Tutela della salute e diritto privato (Milano, Giuffrè, 1978). 22 Pursuant to Codice civile (Italian Civil Code), Art 2054. 23 Cassazione judgment of 02 March 1973 no 577 in Alpa and Bessone, La responsabilità del produttore (n 17) 31–33. The Supreme Court admits the concurrent fault-based liability of the manufacturer of a lorry whose defective hook had caused the detachment of the trailer and the death of a minor, entirely overturning the disposition of the previous ruling (Cassazione judgment of 15 July 1960 no 1929).

The Making of Consumer Law and Policy in Italy  143 in my 1975 book dedicated to Enterprise liability and consumer protection, in which I proposed applying no-fault liability to all cases of manufacturer’s liability – in the areas of design, of the information given to the consumer and of manufacturing proper – I referred to studies by Pietro Trimarchi, Guido Calabresi, William Prosser, Frumer and Fredman, and so on. But conversations with or readings of European authors who studied these issues, such as Gordon Borrie, John Spencer, Jean Calais-Auloy, Norbert Reich, and Hans Micklitz – and later on, Basil Markesinis and Jacques Ghestin or Philippe Malinvaud – were also useful. In Italy, a great debate had opened, perhaps of interest more to scholars than to market operators or to consumers themselves. The proposals that emerged did not tally with the prevailing orientation still based on fault, or with the (cautious) openings towards liability systems more favourable to the consumer. Some held that strict liability should affect only large corporations, while for small businesses and so on, fault-based criteria are more suitable.24 Others proposed applying the business risk criterion only in the case of damage derived from manufacturing defects or failure to provide information, but not in the case of design defects because – since these types of defect are encountered not in an isolated item but in all items under mass production – the burden on the enterprise would be too great.25 The EEC Resolution of 1975 on protection of consumer rights and interests (recognising the right to health, to protect economic interests, to be heard, to be represented, and so on) was a pivotal text through which the entire field of consumer protection could be built ex novo. The new path began with the law of torts, in particular with manufacturers’ liability. This problem was in some aspects overcome in 1985 with the Directive on producer’s liability for defective products.26 The European lawmakers’ choice, founded upon risk rather than fault, is unequivocal. However, some Italian scholars continued to interpret the framework using traditional categories or, at most, ended up admitting that this was an attenuated form of strict liability. In Italy the Directive on producer’s liability for defective products27 was implemented by decree28 and was then considered as a corpus of rules to be entrusted to a special law rather than to be inserted into the Civil Code.29 The Directive left national lawmakers

24 This is the new formulation of the thesis maintained by Gustavo Ghidini, ‘Prevenzione e risarcimento nella responsabilità del produttore’ (1975) Riv. Soc. 1530. This formulation holds that fault may be a ‘complementary criterion of the harmful event,’ Francesco Busnelli, ‘Nuove frontiere della responsabilità civile’ (1976) 23 Jus 41, 63. For a critical review of the theory of fault, cf Stefano Rodotà, Il problema della responsabilità civile (Milano, Giuffrè, 1964). The construction of the theory of business risk is provided, in its modern version, by Pietro Trimarchi, Rischio e responsabilità oggettiva (Milano, Giuffrè, 1961). 25 Thus, Ugo Carnevali, La responsabilità del produttore (Milano, Giuffrè, 1974). The thesis is also followed by Pietro Trimarchi, Istituzioni di diritto privato, 3rd edn (Milano, Giuffrè, 1977) 160. 26 Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products [1985] OJ L210. 27 ibid. 28 Decreto del Presidente della Repubblica DPR 224/88 Attuazione della direttiva CEE n. 85/374 relativa al ravvicinamento delle disposizioni legislative, regolamentari e amministrative degli Stati membri in materia di responsabilità per danno da prodotti difettosi, ai sensi dell’art. 15 della legge 16 aprile 1987, n. 183 (Decree of the President of the Italian Republic on Liability for defective Products’ of 24 May 1988 No 224). 29 Pietro Trimarchi, ‘La responsabilità del fabbricante nella direttiva comunitaria’ (1986) Riv. Soc. 594.

144  Guido Alpa free to expand or restrict the manufacturer’s liability with regard to the state of scientific and technical knowledge available when the product was designed. Italian lawmakers made the choice of limiting liability if the state of scientific and technical knowledge at the moment when the product was introduced into circulation did not yet allow the producer to consider the product as defective. In applying so-called ‘development risk,’ the producer’s conduct is therefore to be assessed starting from objective knowledge of the defect on the basis of the most advanced level of technology and science, combined with that of accessibility of that knowledge.30 Unlike what occurred in other countries in the European Union, case law in the matter of manufacturer’s liability in the first decades of application of the Decree of the President of the Republic no 224 of 198831 was not abundant; in fact, rulings are quite scant in number. It is hard to tell whether this dearth of case law is due to the fact that few cases of injuries caused by defects had occurred, or whether the cases that did take place resulted in damages modest enough to discourage lawsuits, or whether consumers, unaware of their rights, did not take pains to have them defended in court, or, finally, whether proceedings were not brought or were concluded before the decision was handed down, due to settlement between the parties. The last of these possibilities might perhaps be the most plausible justification, given that any publicity given to a decision reflects negatively on the name, prestige, and therefore the market position of a business that has lost in court. At any rate, the (few) rulings that have accumulated appear to be appreciable from the standpoint of technique and from that of the attitude shown towards harmed consumers. For some time now, the Supreme Court of Cassation (Corte di Cassazione) has had an opportunity to specify that the framework of regulations governing producer’s liability for defective products, as it gives rise to strict liability of the importer of a defective product for harm caused by it due to the defect, aims to safeguard consumers from the effects of flaws inherent to processed products ­introduced into circulation by professional economic operators, also regardless of whether there are elements of fault.32

This is a form of special liability that requires the presence of an objective element represented by the private, non-professional use of the damaged item, and a subjective element that, in the case of bivalent use, still requires private use to prevail over ­professional use: Therefore, the absence of these fundamental requirements rules out this type of liability which may in actuality be likened to the objective and/or aggravated liability provided for in articles 2047 and 2052 of the Civil Code, but differs from fault-based liability pursuant to art. 2043 of the Civil Code in terms of assumptions and requirements of evidence.33

The objective nature is confirmed by the fact that it also exists where the producer has no direct fault if it has not acted with recklessness or negligence during the production phase, and thus for the mere fact of having created a dangerous situation, as marketing

30 Tribunale

Sassari judgment of 12 July 2012. del Presidente della Repubblica DPR 224/88 (n 28). 32 Cassazione civile (civil Court of Cassation) Sect III judgment of 14 June 2005 no 12750. 33 Thus, Tribunale Firenze judgment of 26 March 2014. 31 Decreto

The Making of Consumer Law and Policy in Italy  145 a defective product may be:34 the producer automatically becomes liable for damage caused by a good it has manufactured, starting from the moment he puts it on the market, with the only corrective derived from the fact that, for the producer to be held concretely liable, the product must suffer from a defect, damage, and a cause-and-effect relationship between one and the other, for which the injured party must provide evidence.35 An interesting line of case law emerges from the indexes and commentaries, extending to all sectors in which products are consumed or used in daily life.36 The sector with the greatest number of rulings concerns the exercise of hazardous activities. This sector includes, for example, explosion of gas cylinders – a well-known and frequent case.37 In this regard, the Supreme Court has specified that if no evidence of the cause of the explosion is furnished, the presumption of the liability of the producer/distributor, as the party exercising a hazardous activity, and that of user, as keeper, may operate with cumulative effect, as they refer to two different omissions.38 Another interesting sector is that of production of blood products, in which the producer and importer of their components share joint liability with the final producer.39 In addition to identification of the liable party or parties, this case in point involves other delicate problems to be resolved: whether the producer could, based on the means at its disposal, learn of the product’s defectiveness, and the response in this regard was first negative and then positive;40 whether, to relieve themselves of liability, the producer and distributor can provide evidence of having complied with the ad hoc provisions of law, and the response was negative;41 above all, the manufacturer’s strict liability facilitates the burden of proof of the injured party, who might have been infected by other causes as well. Directive 85/374/EEC achieved only partial harmonisation. As has been pointed out, three options had been left open to the Member States regarding the exclusion or inclusion of non-processed agricultural products, the producer’s exemption or nonexemption from liability for development risk, and the ceiling for damages derived from death or personal injury caused by identical products presenting the same defect. Every five years, the Council was supposed to examine application of implementation frameworks and ascertain whether the options and limits should be modified. The first report was submitted in 1995 and highlighted the importance of the Directive in the Member States’ legal systems, the fact that the legal systems had to be ­progressively adapted to the new rules and the scant case law that had been formed

34 Tribunale Trento judgment of 3 May 2012. 35 Tribunale Caltanissetta judgment of 14 October 2008. 36 Corte di Appello di Napoli, 14 September 1979 in Foro padano, 1979, I, 202. 37 The Supreme Court is inclined to affirm the liability of the keeper, which bears the burden of demonstrating the harmful event took place fortuitously or due to an intrinsic flaw in the item chargeable solely to the producer (of many, see Cassazione judgment of 13 January 1982 no 182 in (1982) Giustizia civile Massimario. 38 Cassazione judgment of 19 January 1995 no 567 in (1996) Responsabilita civile e Previdenza 687. In the same vein, Cassazione judgment of 4 June 1998 no 5484 in (1999) Responsabilita civile e Previdenza 115. 39 Cassazione judgment of 20 July 1993 no 8069 in (1994) 1 Giustizia civile 1037, with note by A Barenghi. In the same vein, Cassazione judgment of 27 January 1997 no 814. 40 For a negative response, see Cassazione (Court of Cassation) judgment of 27 July 1991 no 8395 in (1992) 1 La nuova giurisprudenza civile commentata 569, with note by A Barenghi; for the positive one, see ibid. 41 Cassazione judgment of 20 July 1993 (n 39).

146  Guido Alpa during the first years of application. The European Parliament approved the Directive’s modification – ­following the Mad Cow epidemic – based on which non-processed agricultural products and game were included in the area of producer’s liability. In July 1999, the Commission published a Green Paper on Civil Liability for Defective Products to ascertain whether further modifications had to be introduced concerning the victim’s burden of proof, development risk, psychological damage, the threshold of maximum compensation, statutes of limitations and financial limits. On 1 March 2000, the Economic and Social Committee adopted an opinion concerning the Green Paper and the European Parliament voted on a resolution on 30 March 2000. On 31 January 2001, the Commission published a report on the Directive’s application. The thrust of the conclusion was that the time was not yet ripe to modify the Directive as to the options and that it was in the meantime more relevant to continue monitoring action, accompanied by prescription of rules on product safety, redress and extension of environmental liability. In implementing Directive 99/34/EC,42 Legislative Decree no 25 of 2 February 200143 thus modified the provisions of the Decree of the President of the Republic no 224 of 1988 (incorporating Directive 85/374/EEC) removing the exemption for agricultural products.44 Thereafter the provisions were completed with the Directive on sellers’ guarantees to consumers and with the Directive on product safety. Then came the Directive on commercial advertising, transposed into the Directive on unfair commercial practices. But, as already stated, for the history of consumer protection, the problem of producer’s liability is the battering ram that broke down the citadel. And EU law had a great impact on the development of Italian tort law.

III.  Consumer Contracts and Unfair Terms Also belonging to the realm of civil law experts is the other sector particularly characteristic of consumer protection: that of unfair terms in contracts made by a consumer with a professional.45 But in this regard, it must be pointed out that the provisions of the terms, prepared by one party to the contract and imposed on the other, had already been the subject of considerable and analytical regulation in the Civil Code with Articles 1341, 1342 and 1370. These Articles also remained in force after the EC Directive, precisely because they are general in nature and aimed at regulating all standard contracts and not just those signed by the consumer. This also merits a few words. As already mentioned, our code contains rules on standard contracts and, in 1942, was an exception among the codes then in force.

42 Directive 1999/34/EC of the European Parliament and of the Council of 10 May 1999 amending Council Directive 85/374/EEC on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products [1999] OJ L141. 43 Decreto legislativo 2 febbraio 2001 n 25 ‘Attuazione della direttiva 1999/34/CE, che modifica la direttiva 85/374/CEE, in materia di responsabilità’ per danno da prodotti difettosi.’ 44 See above n 42. 45 Among the first analyses made a view to protecting the weaker party see Vincenzo Roppo, Contratti standard: Autonomia e controlli nella disciplina delle attività negoziali di impresa (Milano, Giuffré, 1975).

The Making of Consumer Law and Policy in Italy  147 Hence the interest that the issue has always raised in the tenets of civil law but not of commercial law: the contract is the privileged domain of civil law professors. The code requires the unfair terms listed by Article 1341 paragraph 2 to be signed; in the absence of specific signing, the terms are without effect; it establishes that in the event of uncertainty the interpretation favouring the signatory prevails and if terms are added, the added terms prevail over those already prepared and in situ, so to say. This is because, in every market sector, the practice of standard contracts functional to the strategy of dominant businesses is manifested in particular forms, a practice which is due to the particular structures of the various branches of industry and of mass distribution.46 But wherever mass production and mass distribution exist, the same problems are still open today and the social costs of a phenomenon that is spreading, with results now described by an entire literature, are very high.47 We were all aware of the fact that reliance on negotiating standards unilaterally prepared by manufacturers and operators in the distribution sector (‘contratti per adesione’, ‘contratti conclusi mediante moduli o formulari’) was not under discussion, because in a modern market economy there are no rational alternatives.48 But unilateral preparation of the contract conditions is increasingly aimed at being an instrument at the service of corporate profit, without the need to consider the wider interests of the consuming public.49 The very idea that a contract is an encounter between free wills ends up being ideology, plain and simple.50 The standard contract was increasingly becoming forced adherence by weaker parties to a set of imposed conditions, and thus a matter of grave and continuous abuse, committed in various ways with the modes documented by terms that from time to time circumscribe guarantees, provide exemption from liability, govern the prices of goods and services, establish time limitations, refer to additional conditions established elsewhere, and lay risks upon the occasional operator and the naïve consumer. In the more general perspective of reform heralded by those theorising a new legal status of consumers,51 the problems of governing contractual standards thus presented all the traits of seriousness and urgency reported everywhere, requiring radical corrections of market practices traditionally permitted by entirely inadequate regulatory regimes.52 46 ibid. 47 Georges Berlioz, Le Contrat d’adhésion (Paris, Librairie générale de droit et de jurisprudence, 1973); Konstantinos Simitis, Verbraucherschutz: Schlagwort oder Rechtsprinzip? (Baden-Baden, Nomos, 1976); Guido Alpa, Tutela del consumatore e controlli sull’impresa (Bologna, Il mulino, 1977); Lenhoff, ‘Contracts of Adhésion and the Freedom of Contract: a Comparative Stud in the Light of American and Foreign Law’ (1962) 36 Tulane Law Review 481. 48 Or praticable ones: Georges Berlioz, ‘Exposé introductif ’ in Georges Berlioz (ed), Les contrats d’adhésion et la protection du consommateur (Paris, Librairie générale de droit et de jurisprudence, 1978) 17 ff. 49 Maria Teresa Bonavia, ‘I contratti d’adesione nella problematica dell’equilibrio negoziale’ (1976) Rivista del diritto Commerciale 241. 50 Mario Bessone, ‘Contratti di adesione e natura ideologica del principio di libertà contrattuale’, in Mario Bessone (ed), Saggi di diritto civile (Milano, Giuffré, 1979) 127 ff.; Cosimo Marco Mazzoni, Contratti di massa e controlli nel diritto private (Napoli, Jovene, 1975). 51 Simitis (47) 165 ff.; Reich Norbert, Klaus Tonner and Hartmut Wegener, Verbraucher und Recht. Überholte Konzeptionen, Lücken und Mängel in wichtigen Verbrauchergesetzen und die Praxis der Rechtsprechung (Stuttgart, Schwartz, 1979); Gustavo Ghidini, Per i consumatori (Bologna, Zanichelli, 1977); Alpa, Tutela del consumatore (n 47) 271 ff; Bihil, ‘Vers un droit de la consommation’ (1974) Gazette du Palais 15. 52 Lenhoff, ‘Contracts of Adhesion’ (n 47) 484 ff; Roppo, Contratti standard (n 45) 25 ff; Mario Bessone, Controllo sociale dell’impresa e ordine pubblico tecnologico, now in Saggi (n 50) 315 ff; Stefano Rodotà,

148  Guido Alpa Already in the early 1970s, at a major conference held in Catania by Pietro Barcellona, the possibility was discussed of applying the remedies of the Civil Code to standard contracts, beyond the remedies already established, in order to achieve better control over content and to strengthen the weaker party to the contract. Thus they looked into use of the lawsuit, good faith, the object of the contract and public order. And the young scholars of the time, in the hotbed that was the University of Genoa, to which I myself belonged, devoted their efforts to studying foreign schemes and tendencies in the legal system, in order to achieve the hoped-for objective. I am referring in particular to Enzo Roppo’s monograph on standard contracts, to Mario Bessone’s essays on consumer protection in contractual relations and on allocation of risk in the contract, and of course to our teacher, Stefano Rodotà, with his proposals on private law in modern society. Preparation of the Directive’s designs on unfair terms became the path for accessing a new conception of the contract, in which formal justice was supplemented, through good faith and fairness, by substantive justice.53 Introduction of this Directive, partially borrowed from English law on disclaimers (1977), from German law (AGB, 1977) and from French law of 1978, was an essential achievement for consumer protection in our legal system, since the rules of the Civil Code ensured control only of form but not of content. Adoption of the EC Directive on ‘unfair’ terms54 took place with the statute concerning the implementation of directives for the year 1994 (Disposizioni per l’adempimento di obblighi derivanti dall’appartenenza dell’Italia alle Comunita’ europee – legge comunitaria 1994);55 the text was then inserted into the Civil Code, in chapter XIV bis, under title II on contracts in general, Article 1469 bis et ff.(56) As early as 13 December 1996, just a few months after approval of the adoption text, the Commission made several comments to the Italian Government: (i) a comment on the Directive’s sphere of application, considered too circumscribed for defining the content of consumer contracts to which the code’s framework applies.57 Since, to the contrary, the directive applies ‘to consumer contracts as a set,’ all contracts that do not have as their purpose the supply of goods or services would be removed from the scope of this regulatory framework; (ii) also challenged was that, since the injunction regulation does not repeat exclusion of application of the rule ‘interpretatio contra proferentem’ Italian regulation of

Il Controllo Sociale Delle Attivita Private, 1st edn (Bologna, Il Mulino, 1977) 13 ff; Berlioz, ‘Exposé ­introductif ’ (n 48) 34 ff. 53 Guido Alpa, Le clausole abusive nei contratti dei consumatori (Corr. giur., 1993); Guido Alpa, ‘Libertà contrattuale e tutela costituzionale’ (1995) Rivista critica del diritto privato; Guido Alpa, ‘Nuove frontiere del diritto contrattuale’ (1997) Contratto e Impresa 961. 54 Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L95. 55 Law No 52 of 6 February 1996, Art 25. 56 In this matter, see Guido Alpa and Mario Bessone, I contratti standard (Torino, 1996); Guido Alpa and Salvatore Patti, Le clausole vessatorie nei contratti con i consumatori. Commentario agli articoli 1469-bis, 1469-sexies del Codice civile (Milano, Giuffrè, 1997); Vito Rizzo, Trasparenza e «contratti del consumatore» (la novella al codice civile), Quaderni della Rassegna di diritto civile (Napoli, Edizioni Scientifiche Italiane, 1997); CM Bianca and Guido Alpa (eds), Le clausole vessatorie nei contratti dei consumatori (Padova, 1996). 57 Codice civile (Italian Civil Code), Art 1469 bis.

The Making of Consumer Law and Policy in Italy  149 the matter reduced the room for protection in urgent procedures, since the judge, with an interpretation operation, could have corrected the meaning of the unclear or incomprehensible term, thus without upholding the petition, and allowing the professional to continue employing the term medio tempore; (iii) another comment concerned the application of Article 6, paragraph 2 of the law on application of a framework of regulations more favourable to the consumer in the case of a contract subject to the framework of a third country but connected with the territory of a Member State. Since Article 1469 quinquies, paragraph 5 reproduces the provision on favour, but circumscribes it to ‘this article’ (which concerns terms deemed unfair in any case and the effects of unfairness) and does not extend it to all the provisions of the chapter, its restrictive transposition of the directive was seen; (iv) it was again stressed that the injunction pursuant to Article 1469 sexies does not give consumer associations standing to take action against associations of professionals that have issued recommendations related to the contract forms used by their members. The Italian Government responded to these comments by letter of 14 March 1997, observing: –– as to the first comment, that definition of the objects of consumer contracts did not rule out the regulatory framework introduced applying to all contracts in the category; –– as to the second comment, that the Civil Code already has a provision that imposes a rule of a general nature as to contract interpretation, derogation from which was not justified;58 –– the third comment was upheld; –– the fourth comment was considered immaterial, since recommendations by trade associations have no juridical relevance.

Dissatisfied with the Italian Government’s responses, and at any rate with its inertia, on 6 April 1998 the Commission opened a proceeding for infringement of Article 169 of the Treaty.59 The Commission challenged the Italian Government’s replies, repeating its own observations and, with regard to the injunction, specified that the new framework only concerns the effect subsequent to conclusion of the contract, while it thwarts preventive intervention, which should be possible to propose even before the contract is concluded but the forms are in use by the professional or by associations of professionals. In response to the Commission’s objections, the Italian Government prepared and announced further observations in Brussels. On the first comment, it was observed that specification of the purpose of consumer contracts is not a restriction of the sphere of application, but only an explanation of the purpose, which at any rate also results from the directive’s ‘whereas’ clauses (2, 7, 9 and 18), and it was added that doctrine had already proposed an expansive interpretation of Article 1469 bis to comprise every economic transaction concluded by a consumer with a professional, and therefore, for example, including condominium regulations connected with timeshares, the grant of mortgages, surety, optioning, unilateral contracts, promises and sale of used



58 Codice

civile (Italian Civil Code), Art 1370. Commission, proceeding no 98/2026.

59 European

150  Guido Alpa or occasional goods. As to the second point, given that Article 1370 of the Civil Code on interpretatio contra proferentem already applied, the interpretation most favourable to the consumer is not the one that saves the term (assigning it a meaning more favourable to the consumer), but the one that makes it possible to render the term null and void. On the third comment, it was held that application of Article 1469 quinquies, paragraph 5 is the result of lawmakers’ oversight, which doctrine has already seen to overcoming by proposing an expansive reading aimed at safeguarding consumers’ interests; however, a legislative intervention aimed at removing the error was hoped for. On the fourth comment, it was stressed that in our legal system, simple recommendations by associations of professionals are not legally binding. As to the fifth comment, the government dwelt above all on the interpretation of Article 1469 sexies, which gave rise to contrasting case law, which will be discussed below, some instances of which were restrictive and others expansive, with regard to verifying the prerequisites for an injunction petition; it referred to the orientation of doctrine most favourable to the expansive interpretation that safeguards the consumer. In any event, it stressed that a restrictive interpretation of the procedural rules that would prevent performance of preventive control of unfair terms would conflict with Article 7 of the Directive, and thus be inadmissible in our legal system. The dispute with the Commission did not end there. On 18 December 1998, the Commission issued an opinion in which it was maintained that Italy had not faithfully adopted the Directive and thus asked our country to adopt measures needed to comply with the following indications: –– to apply the provisions of said directive to a set of contracts concluded between a consumer and a professional; –– to adopt art. 5, third sentence, of said directive; –– to fully adopt art. 6, para. 2 of said directive; –– to fully adopt art. 7 para. 3 of said directive.

The Commission only partially upheld the Italian Government’s observations and thus the text of the Civil Code was modified.60 Words specifying the content of a consumer contract under Article 1469 bis paragraph 1 were removed; paragraph 3 was added to Article 1469 quater, so as to specify that the interpretation most favourable to the consumer does not exclude resorting to an injunction pursuant to Article 1469 sexies; Article 1469 quinquies was amended, specifying that ‘any contractual term that, by providing for applicability to the contract of legislation of a non-EU country, has the effect of depriving the consumer of the protection ensured by this chapter, shall be null and void’. Since all the required modifications were not made, the Commission called Italy before the Court of Justice, which found our country in default of its EU obligations, at the very least for having amended its framework only in part, and sanctioned it pursuant to Article 69 no 3 of the procedure regulating disputes before the Court.61 Even

60 It was modified by Legge 21 dicembre 1999 No 526 ‘Disposizioni per l’adempimento di obblighi derivanti dall’appartenenza dell’Italia alle Comunità europee – legge comunitaria 1999’ (Gazzetta Ufficiale no 13 del 18 gennaio 2000 – Supplemento Ordinario no 15) (Law of 21 December 1999 No 526). 61 Case C-372/99 Commission of the European Communities v Italian Republic [2002] ECR I-00819.

The Making of Consumer Law and Policy in Italy  151 the Directive’s translation (from French or from English) into the Italian text posed problems. With regard to controlling unfair contract terms, ‘a dépit de la bonne foi’ was translated as ‘malgrado la buona fede’ or ‘in spite of good faith,’ thereby making the meaning unclear. The error was corrected, but only in the matter of interpretation. In Italy, too, the Directive’s implementation therefore took no easy path. It was first entrusted to a special law. Then, these rules of EC origin, and the rule on guarantees in sales to consumers, were inserted into the Civil Code.62 Classical contract theory drew no distinctions between contracts concluded inter pares and contracts concluded between parties having different status or parties having different contractual power: in fact, it was precisely the presumed (and unquestioned) parity of the parties that had made it possible to create a notion of a contract that was unitary, monolithic and removed from the concrete circumstances in which the contract was supposed to operate. The insertion of a definition of the consumer and the appearance of a new subject in the Civil Code had opened a broad discussion, with some holding that it was a highly appreciable operation (just look at the French Civil Code or the German Civil Code), and others seeing it as a desecration, since the Civil Code deals with contracts in general, but does not concern itself with the parties’ particular status. Regulatory theory distinguishes categories of contracts depending on how they are concluded, depending on whether or not they are for consideration and depending on the parties’ status. Uniform categories of contracts – taking account of the aggregation of rules aimed at regulating the contract in single consolidated laws, industry codes and, even earlier, depending on the economic sphere in which the contracts are an instrument of exchange and cooperation – have been isolated, such as contracts involving consumers and those involving business: banking, financial and insurance contracts, transport contracts, agency contracts and so on. Also in this field the impact of EU Law was enormous. At the very beginning only a few cases were decided applying the new rules, but after more than 20 years we can say that – thanks to European intervention in contract law – Italian consumers are much more protected than in the past.

IV.  The Consumer Code63 In 2005, I was asked to chair a commission at the Ministry of Industry, Commerce and Handicraft to draw up a ‘consumer code.’ The choice was made (perhaps debatable from the standpoint of legal categories, but in line with the contents of other European codes with similar content) to insert those provisions into the Consumer Code. In this regard as well, there was much debate: whether the Civil Code, which was to be considered as the general law in all legal relationships, had to be supplemented, or whether it was necessary to yield to the temptation of imitating neighbouring models like the French one (Code de la consommation) and to condense into a code, a latere, all the rules concerning the consumer. In fact, in 2003, the so-called ‘sectorial codes’ were invented. 62 Codice civile (Italian Civil Code), Art 1469 bis ff, 1519 bis ff. 63 Codice del consumo, a norma dell’articolo 7 della legge 29 luglio 2003 No 229 (Gazzetta Ufficiale no 235) (Legislative Decree of 6 September 2005 No 6).

152  Guido Alpa Sectorial codes were defined as: the instrument by which lawmakers, by replacing the model of mixed consolidated laws and adopting single legislative decrees, implement a substantial re-organisation of specific sectors of the legal system through the simplification, reduction and re-organisation of norms (the excessive production of which is historically due to the multiplication of sources, of different levels and provenances, as well as to constitutional reforms and the increased incidence of EC law). Sectorial codes were born as a consequence of the gradual erosion of the systematic unity of the Civil Code, begun in the second half of the last century with the phenomenon called ‘decodification,’ which describes the way in which special laws have incorporated matters taken from the framework dictated, in fact, by the Civil Code.

They are in other words a glaring example of ‘decodification’. The Consumer Code gathered together most of the norms regarding the consumption relationship. Other codes cover tourism, insurance, cultural assets, construction, and so on. The Consumer Code concerns itself with dictating rules on ‘educating’ consumers, which is to say on their awareness in establishing relationships with professionals and on providing them with suitable information, on representing them with bodies that protect their rights and on their participation in administrative proceedings involving matters of interest to consumers.64 Consumer information in particular covers labelling and package leaflets accompanying products.65 There are particular procedures for indicating prices66 and rules on commercial communications; unfair and aggressive commercial practices are penalised, telemarketing, e-commerce, product safety, financial services and means of defence, in particular the injunction67 and the class action,68 are regulated. Class actions were again governed by statute69 which changed the procedure rules somewhat, including the provisions in the Code of Civil Procedure and aiming at simpler access by groups of ‘homogeneous interest’. The model of class actions had a very scarce appeal in Italy; no action brought against enterprises has had a successful result. I will come back to this item in a few paragraphs.

V.  The Antitrust Law70 Commercial law evolved in parallel with the development of civil law. Our legal system did not have a true system of regulations governing competition, as the Civil Code dedicated itself only to unfair competition. The modern competition framework was introduced into our country on the model of the EC framework only in 1990. Dating in fact to that year was the application of Law no 287 of 10 October 1990, whose title concerns protection of competition and of the market. 64 ibid Art 4. 65 ibid Art 5. 66 ibid Art 13 ff. 67 ibid Arts 139–140. 68 ibid Art 140 bis. 69 Legge 12 aprile 2019 No 31 Disposizioni in materia di azione di classe (Gazzetta Ufficiale no 92) (Law of 12 April 2019 No 31 Provisions concerning Class Actions). 70 Legge 10 ottobre 1990 No 287 – Norme per la tutela della concorrenza e del mercato (Gazzetta Ufficiale no 240) (Law of 10 October 1990 No 287).

The Making of Consumer Law and Policy in Italy  153 As I argued when the law appeared, since they are joined by an ‘and’, the two terms ‘competition’ and ‘market’ might constitute a hendiadys (that is, the two defining a single concept) or they might allude to phenomena different from one another. According to logic, the second alternative is the correct one, in this context: while there can be a market without competition (referred to as a monopolistic or oligopolistic market), there can be no competition without a market; it is therefore reasonable to believe that we are dealing not with a hendiadys but with phenomena different from – although not opposite to – one another. But since competition is a way of being for the market (the ‘free’ market), it could be simpler to refer exclusively to safeguarding competition. If ‘and the market’ is added, the intention was to warn that the spectrum of affected interests is broader than is usually referred to when speaking of competition (that is, the interests of competing entrepreneurs), alluding to such third interests as the public interest, the interest of entrepreneurs acquiring goods and services, consumers’ interests, and all the interests that come into conflict and are put back together in the market. Where the title of law should be taken as the synthesis of the purposes pursued by lawmakers, the conclusion should immediately be reached that this framework of regulations is designed: a) to protect values or goods (competition, market); and therefore b) for the interests involved in those values or in those goods; and that is to say c) for the public interest and for individual interests; thus d) the public interest – in this context – would be identified with competition and the market, and individual interests would be protected insofar as they are compatible with the public interest and with the market; e) individual interests might be diversified, as their holders are economic operators that produce goods and services (bidder entrepreneurs), economic operators receiving goods and services (buyer entrepreneurs), and consumers, considered as operators (homines oeconomici) or as simple users. The interpreters thus noted that reference had to be made to the legal notions of competition and market, as they are understood in the EC framework, cited under paragraph 4 of Article 1 under ‘principles of the legal system of the European Communities in the matter of regulating competition’. In the commentators’ reconstruction, the legal notion of market remains vague, as the market is an ideal figure of the encounter of supply and demand, which varies depending on the goods and services, the regions, the political systems and therefore the economic systems. The notion of competition also varied with regard to unfair competition, to consortia, to non-competition agreements, and the like. In the text in question, the term ‘consumer’ recurs a number of times, in particular: a)

under article 3, paragraph 1, in which, in the matter of abuse of a dominant position, it is specified that it is forbidden to ‘prevent or limit production, market outlets or access, technical development or technological progress, to the detriment of consumers’; b) under article 4, paragraph 1, where, in the matter of derogations from the prohibition against understandings restricting the freedom of competition, said understandings are held as lawful if, being authorised by the administrative agency (the authority instituted by the same law), they give rise to ‘improvements in the conditions of supply on the market, which bring such effects as to involve a substantial benefit for consumers’; c) under article 12, in which, in the description of the Authority’s powers, the elements brought to its knowledge ‘by public administrations or by anyone with an interest therein, including associations representing consumers’ are considered relevant.

154  Guido Alpa I stressed that with the introduction of a framework of laws governing competition ‘and the market’, consumers’ interests are by necessity directly impacted: therefore, not as a case of protecting competition, but of protecting the market. This is because consumers also operate in the market, not as domini in the situation, but not as subiecti either. If the market is the ideal place for conflict and encounter of the various interests at play, then consumers’ interests – from the economic/social standpoint as well as from the legal one – must be taken into consideration. Now, what relevance is given to these interests in the framework of Law no 287 of 1990? Rather modest attention is reserved for consumers’ interests – attention also reflected in the comments on the new regulatory framework, tending to underestimate, if not ignore, the problem (to draw merely a marginal example, the commentary cited on a number of occasions does not include the item ‘consumer’ in its index). The impression one has, upon an overall reading of the text, is that the interest of consumers was taken into consideration only as a point of reference, as a metric for assessing the anti-competitive nature of an act or practice, that is to say as a means, not an end. Things changed over time. The Antitrust Authority is now recognised as having the power of moral suasion to contain or expunge abusive terms, and may levy penalties, following the infraction procedure, on enterprises that fail to comply. As already mentioned, the Consumer Code regulates all the sectors in which the need was felt – first of all in EU law – to take legislative action to protect the consumer. But in a reconnaissance of the origins of consumer protection, the two areas that were taken into greatest consideration – producer’s liability and control of unfair terms – were the first to be the object of analysis and proposals.

VI. ADR The Union started with some initiatives by the Member States and by the Council of Europe: as to the former, consideration was taken of the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters (as modified by the Convention of 9 October 1978) and of the Convention on applicable law to contractual obligations of 9 October 1980; as to the latter, consideration was taken of the Resolution on legal aid and advice of 197871 and the Recommendation on access to the judicial authority of 1981.72 The key factors in this experience were already clearly expressed in the Commission’s memorandum submitted to the Council on 4 January 1985.73 This began from the premise that consumers had to be guaranteed protection of the fundamental rights connected with the consumption relationship, including protection of health and of economic interests, which translates into the right to be compensated for damage; that recognition of these rights is not full if it is not effective; that effectiveness can be achieved only 71 Resolution of the Council of Europe, Committee of Ministers, No (78) 8 on legal aid and advice. 72 Recommendation No R (81) 7 of the Committee of Ministers to Member States on Measures Facilitating Access to Justice (Adopted by the Committee of Ministers on 14 May 1981 at its 68th Session). 73 Commission of the European Communities, Consumer redress, COM (84) 629 (supplement 2/85 of the Bulletin of the European Communities, Luxembourg, 1985).

The Making of Consumer Law and Policy in Italy  155 if redress is facilitated; justice – as ordinarily understood – is organised with procedures that are complex, slow, cumbersome, costly and above all individual. The overall objective to be achieved is to ‘guarantee that consumers throughout the Community can be equally indemnified for damage suffered’. This was an ambitious objective, involving both problems of procedure and those of substantive law. The memorandum organises the matter into four perspectives: achievement of simplified court proceedings; the standing of interest groups to take action; conciliation techniques and arbitration; and consultation centres. In the framework that emerges from the survey of the status quo in the various states in the Union (the data are updated to December 1982), what strikes the Italian legal expert is the vast gulf that, 15 years ago, already separated the experience in certain countries such as France, Germany, the UK, and the Benelux countries from our own, especially as regards standing to bring proceedings, since elsewhere forms of class action are known and practised, special institutions to protect consumers (variously referred to as Ombudsman, Director of Fair Trading, and the like) are operative, consumption, information, and complaintgathering centres are widespread, and so on. What is striking, once more, is: (i) the modern nature of the approach to the ‘justice problem’; (ii) the idea that justice is not done and administered by courts alone, or only in front of a berobed magistrate, but is a function carried out in a diffuse manner articulated in accordance with the status of the interested party, the party’s economic situation, and the type of relationship giving rise to the right to be defended; (iii) the consideration that the problem of the individual is the problem of all, or at least of all belonging to the same category; (iv) the concern that disputes must be prevented and in any case given legal assistance. The memorandum does not consider itself as merely an informative document, but also one that makes proposals. Its proposals were upheld by the Union Council by Resolution of 25 June 1987, which, among other things, ‘recognises the importance of appropriate treatment of consumers’ complaints and the value of providing appropriate means of redress’; stresses the commitment to principles aimed at improving consumer redress; and requires ‘the authorities of the Member States in which practical initiatives launched with the assistance of the Commission have produced positive results to give appropriate attention to such initiatives in order to examine the possibility of implementing them on a wider basis.

The project of consumer redress is further perfected on the basis of additional research. Noteworthy in this perspective was the research conducted in early 1993 by Hondius, Jacobs and Joustra, which saw the participation of scholars from all the countries in the Union, except for Greece:74 the research provides a wide-ranging description of the

74 Consumer Redress Schemes in 11 EC Member States. Specifically, contributions were made by: E Balate (Belgium), L Holk (Denmark), A Morin and P Foucher (France), H Micklitz (Germany), W Fagan (Ireland), G Alpa (Italy), C Schockweiler (Luxembourg), E Hondius, W Jacobs, C Joustra (Holland), J Calvao da Silva and I Mendes Cabeçadas (Portugal), M-A Lopez Sanchez (Spain), J Chapman and C Ervine (Great Britain). The research also contains as an attachment the texts of the most important regulatory measures.

156  Guido Alpa dysfunctions of traditional judicial procedures, and of the new articulated procedures dealing with small claims, the private Ombudsman, ‘ad hoc independent tribunals’ and simplified trial schemes. It was based on this work that the Commission approved the Green Paper on consumer redress, published in late 1993.75 Dominant here is the EC dimension of the problem, in which redress procedures in and out of court do not oppose but work alongside one another; there is discussion of protection of collective interests, of legal aid, of the spread of the injunction, of simplification of proceedings, also with regard to ‘transnational disputes’ and of self-governance. This programme is being implemented. Already in the body of certain directives, reference is made to the control entrusted to the judicial authority, the administrative authority, or impartial bodies, of activities performed by ‘professionals’ and intended for the consumer market;76 in the EC setting, account is also taken of the speed of the proceedings. Essential for the promotion of Alternative Dispute Resolution were the EC initiatives taken some years ago: the two Commission Recommendations77 and the Commission Green Paper of 19 April 2002.78 Since those years, a series of projects has been embarked on, promoted by consumer bodies and associations. These are rules on individual conciliation prepared by Chambers of Commerce, Professional boards (in particular lawyers) and the consumer associations themselves. One of the questions that should be dealt with urgently concerns preparation and approval of conciliation clauses that, if contained in standard contracts, might be characterised as unfair terms. With Directive 2008/52/EC on Certain Aspects of Mediation in Civil and Commercial Matters, the EC bodies underlined – as we read in the ‘whereas’ clauses – that ‘The principle of access to justice is fundamental and, with a view to facilitating better access to justice, the European Council at its meeting in Tampere on 15 and 16 October 1999 called for alternative, extra-judicial procedures to be created by the Member States’. This is because the ‘whereas’ clauses specify that ‘Mediation can provide a cost-effective and quick extrajudicial resolution of disputes in civil and commercial matters through processes tailored to the needs of the parties. Agreements resulting from mediation are more likely to be complied with voluntarily and are more likely to preserve an amicable and sustainable relationship between the parties. These benefits become even more pronounced in situations displaying cross-border elements’.79 75 European Commission, Green Paper: Access of Consumers to Justice and the Settlement of Consumer Disputes in the Single Market, COM (93) 576 Final, 16 November 1993 aei.pitt.edu/1178/. 76 More widely spread, see Guido Alpa, Il diritto dei consumatori (Bologna-Roma, Laterza, 1995); Ellen Vos and Monique Goyens, ‘Les Litiges de Consommation Transfrontières Dans La Communauté Économique Européenne : État Des Lieux et Perspectives’ (1991) Revue Européenne de Droit de la Consommation 207. 77 Commission Recommendation of 30 March 1998 on the principles applicable to the bodies responsible for out-of-court settlement of consumer disputes [1998] OJ L115; Commission Recommendation of 4 April 2001 on the principles for out-of-court bodies involved in the consensual resolution of consumer disputes [2001] OJ L109. 78 European Commission, Green paper on alternative dispute resolution in civil and commercial law, COM (2002) 196 Final. 79 The Directive should apply to cases where a court refers parties to mediation or in which national law prescribes mediation. Mediation is understood as a voluntary process in the sense that the parties are themselves in charge of the process and may organise it as they wish and terminate it at any time. In the field of consumer protection, the Commission has adopted a Recommendation establishing minimum quality criteria which out-of-court bodies involved in the consensual resolution of consumer disputes should offer to

The Making of Consumer Law and Policy in Italy  157 In order to facilitate the implementation of extra-judicial dispute resolution, Italian lawmakers took action in some specific sectors. The ‘provisions to safeguard savings and the regulatory framework of financial markets’ cited by Law of 28 December 2005 no 26280 are the result of a regulatory creation process which – initially promoted to coordinate consolidated law on financial intermediation, consolidated banking law and reform of corporate regulations – gradually took on more duties and raised increasingly high expectations on the part of savers, due to financial scandals that have erupted in succession in our country over the past five years. Lawmakers have in part met and in part left outstanding the obligations emerging from the broad and articulated project prepared at the time, and no care was taken to coordinate the new framework with other regulations entering into force a few months prior to its approval: in particular, two ‘industry codes’, namely the Consumer Code and the Private insurance code,81 these codes, moreover, also being uncoordinated with one another. Certainly, the general principles of the new law and its objectives may be agreed to, and it is also true that the law ‘marks a decisive turning point not only in the procedures for regulating the Italian financial sector, but also in our country’s own juridical and financial culture’; however, the comments that have gradually been collected on the text have laid bare its contradictions, gaps and obscurities of interpretation, which would require corrective legislative intervention so as not to leave unresolved questions of fundamental interest for protecting savers. At any rate, controls in corporate governance, transparency of corporate relations, bank/business relationships, banks’ conflicts of interest in providing investment services, circulation of financial products, rules of behaviour, out-of-court resolution of disputes and establishment of a guarantee fund constitute a complex of solid measures that should already considerably improve investors’ situation. Turning to unmet expectations, a distinction may be drawn between matters dealt with by the new regulatory framework (merely by way of example conflicts of interest, rules of behaviour and out-of-court resolution of disputes) and those that the new

their users. Any mediators or organisations coming within the scope of that Recommendation should be encouraged to respect its principles. In order to facilitate the dissemination of information concerning such bodies, the Commission should set up a database of out-of-court schemes which Member States consider as respecting the principles of that Recommendation. Mediation should not be regarded as a poorer alternative to judicial proceedings in the sense that compliance with agreements resulting from mediation would depend on the goodwill of the parties. Member States should therefore ensure that the parties to a written agreement resulting from mediation can have the content of their agreement made enforceable. It should only be possible for a Member State to refuse to make an agreement enforceable if the content is contrary to its law, including its private international law, or if its law does not provide for the enforceability of the content of the specific agreement. This could be the case if the obligation specified in the agreement was by its nature unenforceable. The content of an agreement resulting from mediation which has been made enforceable in a Member State should be recognised and declared enforceable in the other Member States in accordance with applicable Community or national law. This could, for example, be on the basis of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [4] or Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility. 80 Legge 28 dicembre 2005 No 262: Disposizioni per la tutela del risparmio e la disciplina dei mercati finanziari. 81 Decreto legislativo 7 settembre 2005 No 209 (Legislative Decree of 07 September 2005 No 209).

158  Guido Alpa regulatory framework has ignored, such as remedies in the event of violation of the legislative obligations imposed upon an intermediary in concluding contracts with savers. As to out-of-court resolution of disputes, the discourse should be broader: Article 128 bis added to the consolidated banking law requires banks and financial intermediaries to ‘adhere’ to out-of-court systems to resolve disputes with consumers. The text does not define consumer. It may certainly be noted that, beyond consumption credit, for the first time this term appears in the context of a regulatory framework like that governing banking and finance, in which the professional operator’s counterpart is always termed a client. However, the definition of ‘consumer’ is quite disputed, not only for the multiple legislative formulations contained – in addition to the Consumer Code – in regulations that were not included in the Code, but also for the definition of consumer emerging in broad, varied case law, which goes beyond the positions taken by the Court of Justice and the Constitutional Court. It must then be observed that the procedures were entrusted to a decision by the CICR (Interministerial Committee for Credit and Savings), at the proposal of Banca d’Italia. The impartiality of the deciding body – whose composition is entrusted to the CICR and the representativeness of the interested parties – is imposed. The purposes are speed, an affordable solution and effective protection. But also, not to make an issue of the appropriateness of referring to an administrative decision establishing these bodies, which impact interests (albeit available on the part of the contracting parties) rising to the nature of subjective rights, nothing is said as to the procedural rules, the principle of cross-examination, the nature of the decision (which should be made with fairness, rather than de jure), inclusion of resolution procedures in the contract terms signed by  the customer/consumer, the jurisdiction of the decision-making body and above all the nature of ADR, which might be mere conciliation, or mediation, or even arbitration.

VII.  ADR in Action In our experience, consumer redress has ended up crossing paths with the grave problem of administration of justice in general: the persistence of a backlog difficult to catch up with, consisting of about 1.5 million proceedings (lasting for more than five years) and of an enormous overall caseload (about 3.5 million). Various interventions have taken place over the past 20 years, aiming to increase the resources of the Ministry of Justice, to complete the organisational chart of ordinary judges (who number about 9,000), to confirm assignments for honorary judges and justices of the peace (numbering about 4,000), to introduce the online civil process, to introduce internships for aspiring lawyers and aspiring magistrates at court offices in order to lend assistance to the judges and to reform the ‘judicial geography’ by grouping branch offices with main offices and abolishing small, poorly managed courts (the number has fallen from 165 to 131). ADR has thus taken on a dual value: on the one hand, it is, as at its origin, an instrument to facilitate the solution of consumer disputes; on the other, it is a tool for reducing the judicial system’s caseload. Originally, ADR models were found only in

The Making of Consumer Law and Policy in Italy  159 the Scandinavian countries and in the UK. I recall that at the Montpellier conference of 1975 organised by Jean Calais-Auloy, the volume collecting the participants’ contributions devoted only a few lines to the Italian experience. Then, we began to consider using ADR to relieve the courts of their case backlogs. In this regard, there began to be talk of taking litigation out of the courts. The choice was not easy because, in the face of constitutional principles that guarantee everyone’s access to justice,82 a private party has to bring a dispute to a conciliation body83 where, with the defendant, and through a mediator and assisted by an attorney, they seek to find an understanding. If reached, the report that is drawn up is an instrument of enforcement. This is a sort of ‘privatisation’ of justice, by which the state, unable to quickly resolve all disputes, delegates its duty to private parties (conciliation bodies). It is an improper delegation, because the mediation/conciliation phase is not a phase in the process and, at any rate, since it is linked to the possible continuation of the occurrence, if there was no conciliation or if the conciliation report were challenged, it may be considered ‘pre-process’. In effect, where conciliation is mandatory (in certain sectors such as condominium and property rights, damage caused by road traffic, medical malpractice, divisions, successions and the like), the parties are forced to attempt conciliation and, if they do not do so, they cannot directly bring action in court, as their petition would be barred as to further proceedings. The mandatory nature of conciliation was subjected to assessment by the Constitutional Court. However, the Court did not decide the question due to procedural issues. In the meantime, the European Union issued a new Directive, 2013/11/EU, modifying Regulation (EC) no 2006/2004 and Directive 2009/22/EC.84 The European Union also introduced a Regulation on online dispute resolution for consumer disputes.85 The Regulation calls for setting up an ADR platform providing a single point of entry for consumers and traders seeking out-of-court online resolution of disputes, through ADR entities linked to the platform, to perform their conciliation through quality procedures. The Directive applies to procedures for out-of-court resolution of domestic and cross-border disputes concerning contractual obligations stemming from sales contracts or service contracts between a trader established in the Union and a consumer resident in the Union through the intervention of an ADR entity. The Directive ‘is without prejudice to national legislation making participation in such procedures mandatory …’. Article 6, paragraph 1 establishes that the mediators’ services ‘… are remunerated in a way that is not linked to the outcome of the procedure’. The Directive concerns itself 82 Costituzione della Repubblica Italiana, Art 111. 83 Legge No. 69 del 18 giugno 2009, art. 69 (Law No 69 of 18 June 2009, Art 60); Decreto legislativo No 28 del 4 marzo 2010 (Legislative Decree No 28 of 4 March 2010), Attuazione dell’articolo 60 della legge 18 giugno 2009 (n 69) in materia di mediazione finalizzata alla conciliazione delle controversie civili e commerciali (implementing Article 60 of Law No 69 of 18 June 2009 on mediation for the purposes of conciliation in civil and commercial litigation). 84 Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR) [2013] OJ L165. 85 Regulation (EU) No 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR) [2013] OJ L165.

160  Guido Alpa with the independence, competence and efficiency of conciliation bodies created ad hoc (but that might possibly be grouped with existing ones), because it requires these bodies to: maintain an up-to-date website, which provides the parties with easy access to information concerning the ADR procedure and which enables consumers to submit a complaint and the requisite supporting documents online; provide the parties, at their request, with said information on a durable medium; where applicable, enable the consumer to submit a complaint offline; enable exchange of information between the parties via electronic means or, if applicable, by post; accept both domestic and crossborder disputes, including disputes covered by Regulation (EU) No 524/2013 on online dispute resolution for consumer disputes;86 when dealing with disputes covered by this Directive, take the necessary measures to ensure that the processing of personal data complies with the rules on protection of personal data laid down in national legislation implementing Directive 95/46/EC in the Member State in which the ADR entity is established. Regulation 524/2011 applies to out-of-court resolution of disputes concerning contractual obligations stemming from online sales or service contracts between a consumer resident in the Union and a trader established in the Union through the intervention of an ADR entity listed in accordance with Article 20(2) of the cited Directive and which involves the use of the ADR platform. The ADR platform is an interactive website which can be accessed electronically and free of charge in all the official languages of the institutions of the Union. The Regulation is immediately applicable. The Directive was implemented by Legislative Decree.87 The Directive expressly requires consumers not to be assisted by a lawyer and the mediator/conciliator to be acquainted with the ‘elements of law’. Of course, both provisions may be criticised: the former because the consumer, even in a matter of small claims, is no legal expert and will have difficulty in fully protecting their rights; the latter because the mediator – even if the mediation in and of itself does not entail the solution of questions in point of law – in most cases has to resolve questions of law and it is appropriate for them to be a law expert.

VIII.  Class Actions The first statute concerning class actions (‘Disposizioni per lo sviluppo economico, la semplificazione, la competitività nonché in materia di processo civile’) was enacted in 2009, and was embedded in the Consumer Code. Now, the section of the provision is entitled azione di classe (class action). With reference to persons, the expression ‘class’ is unusual in our legal lexicon and its meaning must thus be construed on the basis of the provision’s own content. No systematic criteria can be used, because in the Consumer Code other trial instruments, such as the actions provided for by Articles 139 and 140, are aimed at protecting ‘consumers’ collective interests’ and are entrusted not 86 ibid. 87 Decreto legislativo 6 agosto 2015 No 130 (Legislative Decree of 6 August 2015 No 130). Attuazione della direttiva 2013/11/UE sulla risoluzione alternativa delle controversie dei consumatori, che modifica il regolamento (CE) n. 2006/2004 e la direttiva 2009/22/CE (direttiva sull’ADR per i consumatori).

The Making of Consumer Law and Policy in Italy  161 to representatives of a class but to associations representing consumers included on the list provided for by Article 137. The legal system enumerates various possibilities of actions to defend category interests – in addition to individual actions promoted in the same suit by a number of subjects – but no provision regarding them may be invoked to interpret Article 140 bis, which is unique in our trial universe. Nor can the EC rules be taken as a model or as a guideline for interpretation, given that a uniform regulatory framework of collective action has not yet come to maturity in the European context; nor can foreign schemes be adopted, given that each of them has its own features. The use of the ‘class action’ formula, with which, for the sake of simplicity, reference is also made to the Italian trial instrument, is the result of a simple assonance with the American class action, and although alluding to the US experience,88 which dates to 1938, there is no pressing further than a mere linguistic convention. Moreover, in the European experience, this trial instrument is defined in various ways, referring in particular to a ‘group’ of parties. The characteristics of a ‘class’ may be seen above all in the characterisation of the parties with grounds to bring suit, characterised as consumers and users. Article 140 bis of the Consumer Code does not define how to identify a party but, since the provision is contained in an industry code, reference may be made to the regulatory context it is placed in,89 which defines as a consumer ‘or’ user a ‘natural person that acts for purposes outside the entrepreneurial, commercial, artisanal, or professional activity that may be performed’ (Article 3 of the Consumer Code). A class action therefore cannot be brought by legal persons, or by bodies without legal personality, except for associations to which a natural person so characterised has given a mandate, or committees in which the natural person takes part (paragraph 1). Nor is it permitted to extend the meaning of consumer or user to parties carrying out the activities referred to above, which are enough to rule out the requested status. Attorneys have no standing, but they may also individually defend the consumer or user that wishes to bring a class action, or assist a consumer that intends to join it (in this case, however, paragraph 3 specifies that a class action may be joined ‘without the aid of an attorney’). A class action may also be brought by a single consumer or user, but must concern a plurality of parties: no adequate minimum number or category ‘representative’ is required. The requirement of a plurality of parties appears several times in the text: for example, under paragraph 2, which speaks of a ‘plurality of consumers and users’ (paragraph 2 letter a)), or of ‘final consumers’ (paragraph 2 letter b)), or the plurality of ‘consumers and users’ (paragraph 2 letter c)), as well as paragraph 3. Even when able to promote protection of own (individual) rights through a class action, the party bringing suit must, however, ‘appear capable of suitably overseeing the interest of the class’ (paragraph 6). A ‘class’ therefore, on the one hand is composed of a number of parties defending individual rights, and on the other becomes the identifier of the parties with standing to bring suit, because assessment of the admissibility of the petition is made by the court in the preliminary phase with regard not so much to the total sum of individual interests



88 US

Federal Rules of Civil Procedure, Rule 23. Class Actions. Art 3, para 1, letter a).

89 Precisely,

162  Guido Alpa as, rather, to the interest of the category. The characteristics of the class then emerge from other regulatory indices, provided by: –– the sphere of the sectors in which the suit may be brought, which, in accordance with paragraph 2, concern contractual rights, damage caused by products, damage derived from unfair commercial practices or from anti-competitive behaviour; –– the holding of rights and the valid grounds of the petition (para 6); –– the non-existence of conflicts of interest of those bringing suit (whose appropriately identified and qualified interest must then have repercussions on the entire class) (para 6); –– the ‘homogeneity’ of individual rights defended – a homogeneity that, depending on the sectors considered above, is given different connotations (para 1); –– the characteristics of the individual rights as defined by the court with the order of admissibility; and –– the criteria for including or excluding the parties to a class action of reference (para 9). In addition to belonging to a number of persons, the rights must be homogeneous, or identical. The homogeneity of defended rights is specified: –– for contractual rights, by the identity of the situation the consumers and users are in, with regard to a given enterprise (and therefore not to a professional in general, as defined by Article 3, paragraph 1, letter c) of the Consumer Code); –– for those harmed by products, by being ‘final consumers’ holding identical rights; –– for those harmed by unfair practices and by anti-competitive behaviour, by being both consumers and users holding identical rights. Are these indices enough to define a class and therefore to assess the possibility of bringing a class action? What do the terms ‘homogeneity’ and ‘identity’ of rights mean? To these questions, one may for the moment respond with other questions. Might it be enough to consider the characterisation based on which one acts? This would seem to be the content of paragraph 3, for which ‘joining the suit involves waiving any act of individual restitution or compensation based on the same characterisation’. But must the identity of rights, which is to say their formal and/or substantive correspondence, be even more profound? If the characterisation stems from the relationship established with the defendant, would holding the right to compensation or restitution, founded in its turn upon a contract or upon an unlawful act, be sufficient? Must consideration also be taken of the de facto circumstances, which is to say the type of damage sustained, the cause-and-effect relationship between behaviour and damage, the injury of the protected interest, which would – in a manner formally identical for all – result in bringing a class action for compensation or restitution? Or is it enough to consider as homogeneous and identical the rights formally enjoyed, with no regard to the specific circumstances in which the damage took place? Would the qualification of homogeneity and of identity change if the action, instead of being aimed at compensation and restitution, were circumscribed to mere ascertainment of the right?

The Making of Consumer Law and Policy in Italy  163 Doctrine has yet to unravel the knot of questions that may be introduced with the class action because, if it were necessary to access the thesis by which the expression ‘ascertainment of liability and sanctioning’ (paragraph 1) alludes to a duality of actions, the possibility of bringing a suit for ascertainment would have to be admitted. But if the words used by lawmakers were to be understood in their literal meaning, the opposite could be argued, that is to say, in the sense of the non-severability of the suits by virtue of the provisions of paragraph 12, according to which ‘if it upholds the petition, the court pronounces the decision ….’. The text of the provision stops at qualifying the rights and does not dwell very long on identifying the criteria of use for their qualification. In other words, up to what point must the process of qualifying homogeneous or identical rights go? Must the damage claimed by those bringing suit be held as identical in the amount as well? The answer should be negative. Returning again to the reading of the regulation, the interpreter notes that paragraph 12 mentions ‘definitive sums’, which would allow the tendency for a possible difference between the sums paid to each party bringing or joining the suit – and thus, when the paragraph refers to the ‘homogenous criterion of calculation for the payment of said sums’. The formula of ‘homogeneous’ rights, ‘identical’ rights, ‘identical’ situations, and so on may therefore be taken at least in three different meanings, which graduate or colour its significance: that of formal identity, derived from the same qualification; that of substantive identity, derived from the same type of damage; and that of absolute identity, consisting of the repetitiveness of situations ‘photographed’, so to speak, in their objectivity, diverging from one another only for their being ascribable to the subjects – not identical, but sharing the same status – composing the ‘class’. But the problems of interpretation do not end here. In other words, must ‘class’ be considered as a single category, or may sub-groups, sub-classes, or sub-categories of rights belonging to the subjects included in the ‘class’ and protected by a broad definition of it, be distinguished? An emblematic example of the question may be drawn from the case law in the matter of violating the duty of providing information on the characteristics of financial products, provided that it is held that the class action is also applicable to this matter (a question that will be discussed shortly): there are cases in which the consumer had signed forms prepared by the intermediary which allowed the intermediary to choose financial products, other cases in which the consumer had signed forms to purchase products that had not been suitably illustrated, other cases in which the consumer had signed forms that contained withdrawal clauses that could be exercised in the long term, and others still in which the consumer had not signed purchase forms but asset management forms; also, cases in which the consumer had not made a purchase but had discovered the securities in their portfolio thanks to a purchase that was, so to speak, ‘imposed’. Moreover: in some cases the consumer had carried out a plurality of investments, and in other cases the investments had been made at different times; and what’s more, some consumers had declared a low propensity for risk, others an average one, and others still a high propensity. Again, one may think of the damage to health derived from dissemination of a batch of spoiled canned food: the damage might concern different batches of products, different time periods for introduction to the market, different impacts on mental and physical integrity, different types of financial damage correlated with working activity

164  Guido Alpa that could not be carried out, different types of consumers distinguished by age and experience, and so on. Paragraph 2 identifies one of the capital sectors of the consumption market – bargaining constraints instituted between consumers and enterprises – alluding to safeguarding the rights that the consumers can protect also by resorting to a class action. These rights are called ‘contractual rights’: usually reference is made to a contractual right as a branch of civil law or a section of the system of private law; here the notion is made subjective, and thus should be understood in the sense of rights derived from a contractual source, which is to say from a contractual constraint instituted by the consumer (or user) with the professional, defined here as an ‘entrepreneur’. The rights derived from a contractual source are the most varied, given the undefined horizon of contractual autonomy. In the area of the ‘consumption relationship’, according to which the regulation contained in the relevant industry code is organised, consumer contracts in general are regulated, which is to say unfair terms,90 promotion of sales,91 consumer credit (even if only remarked upon for reference), conclusion of contracts outside commercial establishments, conclusion of distance contracts – including financial services for consumers – timeshares, tourism services, producer disclaimers,92 and sales warranties.93 Rights recognised by the Consumer Code cannot be waived, as any provision conflicting with the code is null and void.94 By legislative choice, this is the body of rules on consumer contracts to which the rules on the contract in general apply, where not derogated by the former.95 Paragraph Il does not, with regard to ‘contractual rights’, mention the regulatory framework contained in the Consumer Code, but it goes without saying that the primary contractual source consists of the consumer’s contracts, and therefore of the legislative and conventional rules applied to them. The parenthesis ‘including the rights related to contracts executed pursuant to articles 1341 and 1342 of the Civil Code’ is therefore an addition. The ability to know general contract conditions,96 the ineffectiveness of unfair terms97 and the prevalence of clauses added to those prepared in forms or standard contracts98 broaden, to the extent possible, the sphere of protection ensured by the provisions contained in the Consumer Code. The Consumer Code, again with regard to consumer contracts – and therefore to the contractual rights emanating from them – contains a reference norm,99 according to which ‘the provisions of the Civil Code shall apply to the contracts concluded between the consumer and the professional’. Now even if there were the desire to circumscribe protection to the contractual rights derived from relationships established with enterprises (and not with all professionals), and even if contractual rights that may be defended via class action must be enjoyed by a ‘plurality of consumers that are (…) in the identical situation’, actions for fulfilment, for termination and for compensation of

90 Art

33 ff. 39 ff. 92 Art 1124. 93 Art 128 ff. 94 Art 143. 95 Codice civile (Italian Civil Code), Art 1469 bis. 96 Codice civile (Italian Civil Code), Art 1341, para 1. 97 ibid para 2. 98 Codice civile (Italian Civil Code), Art 1342. 99 Codice del consumo (n 63) Art 38. 91 Art

The Making of Consumer Law and Policy in Italy  165 damage would always be foreseeable. May one also think of the nullification action,100 which is an action of ascertainment followed, however, by restitution? Or may one think of nullification incidentally declared to compensating damage pursuant to Article 1338 of the Civil Code, or of compensation of damage due to violation of fairness and good faith? And how are the remedies connected with sales warranties to be understood? Or must one think that the regulations affect only contracts drawn up in writing and rendered in clauses? The identity of situations must also be considered. If identity means identity of contracts concluded by consumers acting through a class action or joining it, nulla quaestio. But does this also mean identity of claims and demands deriving from violation of contractual rights based on the same contract? If the demand regards exemption from a liability clause contained in the contractual form signed by a plurality of consumers, can the judge find, of their own motion (as recently stated by the Court of Justice of the European Union), that the other clauses are null and void? Must as many class actions be brought as there are clauses or groups of clauses to be targeted? If the first of the class actions brought concerns only one clause, may those who brought it, or the consumers joining it, then bring or promote other class actions initiated to target other clauses of the same contract disseminated by the same enterprise? If all the actions brought for each individual clause are submitted before the same judge, may that judge decide to join them together?

IX.  Current Discussion on the Notion of Consumer In doctrine, based on the rules introduced overall by the European Union, on the social policy programmes outlined by the Union and progressively implemented, but also taking into account the evolution of national situations and comparison with schemes outside Europe, the debate has returned on the current meaning of the notion of consumer and on the remedies by which the consumer may be adequately protected. In various contributions,101 Hans Micklitz stresses the distance between the orientation of the European model centred upon limited market freedom, in which the consumer operates as an informed player, and the current US model, in which consumer protection is not pursued through information but, reflexively, through market efficiency. In this alternative, a fundamental role is played by the principle of the consumer’s behavioural rationality – a principle that now appears to have been abandoned by the American Law Institute, which deals with legislative projects of greatest importance for the US economy and society. And then, what model would prevail if an agreement were to be reached between the European Union and the US for an integrated market? In other words, the extension of entry into the market of sectors of distribution of goods and services offered on the Internet and thus open to access by all implies that the consumer is increasingly immersed in economic relations and is considered a pawn in the entire system – the so-called ‘marketised’ consumer. And there is more. 100 Codice del consumo (n 63) Art 36. 101 Hans-Wolfgang Micklitz, ‘Il consumatore mercatizzato, frammentato, costituzionalizzato’ (2016) 70 Rivista trimestrale di diritto e procedura civile 859; Norbert Reich, Hans-Wolfgang Micklitz, Peter Rott and Klaus Tonner, European Consumer Law, 2nd edn (Cambridge, Intersentia, 2014) 45ff.

166  Guido Alpa Since markets are fragmented – there is the market in goods, that of services, the market of supply of essential utilities such as water, gas and electricity, the market of banks and of financial intermediaries – the consumer also appears ‘fragmented’ because, in each of these markets, the consumer receives differentiated protection. And what is more, the consumer is unanchored to the neutral and unifying definition already alluded to, when he or she, from one time to the next, is considered sure and experienced, or responsible, or ‘weak’. Every gradation of ways of being and therefore of situations corresponds to a different apparatus of rules and remedies. A response to all this was the ‘­constitutionalised’ consumer, which is to say the consumer understood as the bearer of fundamental values. Micklitz’s judgment is quite harsh: ‘the consumer was broken by the regulatory and political weight that required him or her to behave as the good and active market player, as a wary and careful customer’; indeed, he doubts that constitutionalisation of the consumer’s legal position is sufficient defence for the millions of people who turn to the market every day. This lucid analysis must alert us not only to the need to assess, from time to time, the consumer’s position in individual relationships, but also of the need to consider the potential of law, and the consumer’s legal protection in general, as not unlimited. In other words, a clear, basic definition of consumer appears absolutely appropriate, that carves out the consumer’s essential aspects and is functional to interpretation and application of the rules; a specification, with respect to the general definition, of situations in which particular relationships require taking into consideration not the average consumer but the weak one appears ineluctable. It appears inappropriate, at any rate, to consider the figure of the advised and responsible consumer, a figure based on the presumption that the information asymmetry and the asymmetry of contractual power can be remedied with a quantity of information and a quantity of remedies sufficient to put the two opposing positions on an equal footing. However, ‘constitutionalisation’ of the consumer’s legal position appears praiseworthy not only because it corresponds to the notion offered by the Charter of Fundamental Rights, but also because the radical criticism that denounces, in constructing the figure of the consumer, a creature of capitalism advanced to the detriment of – or in spite of – protection of the person is wholly myopic. Of course, although no identity exists between the legal position of the person tout court and the legal position of the consumer, it cannot be denied that being a consumer is a dimension of the person and that, by promoting consumer protection, protection of the person is also promoted – that is, the person’s health (precisely by protecting a person from food fraud, from harmful products, from dangerous drugs), their private sphere (in fact by protecting them from unfair practices and from unlawful use of databases), their assets (in fact by protecting them from unfair terms, from deceptive advertising, from economic transactions concluded under the pressure of unfair practices, from inappropriate investments), and also by extending protection to trial aspects with identification of ad hoc remedies (redress through individual and collective remedies). A large harvest of decisions has been reaped on the notion of ‘consumer’ since the restrictive definition chosen by lawmakers and confirmed in the text assembled in the Consumer Code appeared too narrow; in doctrine as well. However, on a number of occasions before the renewal of Article 7 of Legislative Decree no 1/2012 (which inserted letter d-bis into Article 18, paragraph 1, of the Consumer Code and extended the

The Making of Consumer Law and Policy in Italy  167 protection established for consumers to micro-enterprises limited to unfair commercial practices), the Constitutional court ruled out that the provision that defines it, and with it circumscribes the regulations protecting only natural persons, does not conflict with the principles of the Constitution. By order no 469 of 22 November 2002, the Court deemed as ungrounded, by reference to Articles 3, 25 and 41 Const., the question of the constitutional legitimacy of Article 1469 bis, paragraph 2, of the Civil Code [now corresponding to Article 3, paragraph 1, letter a) of the Consumer Code]: in the part in which it does not equate small enterprises and handicraft enterprises with the consumer, since the lawmaker’s choice cannot be criticised, of attributing – in compliance with the text of Directive 93/13/EC concerning unfair terms in the contracts executed with the consumers, the regulations of numerous Member States of the European Union, as well as the project, under development, of the European Civil Code – the character of consumer to a natural person that acts for purposes extraneous to entrepreneurial or professional activity that might be performed, and thus excluding from the corresponding special protection all those parties – such as professionals, small businesses and artisans – that, in individual or also collective form, act for purposes at any rate connected with an economic activity, although without the purpose of making a profit: the preparation of common protection instruments, implemented on the basis of uniform models in the various countries of the European Union, is in fact on its own a suitable reason for legislative policy in support of this choice, and all the more so as it is not unreasonably directed towards protecting parties that, by acting according to ‘id quod plerumque accidit,’ in an occasional, irregular, and non-professional manner, are presumably without the necessary competence for bargaining on an even playing field. The principle of pre-establishment of the judge, on the other hand – as has been repeatedly affirmed – is complied with when the court body has been set up by law on the basis of general criteria set in advance, and not in view of individual disputes; nor can the injury of said principle be held to exist with reference to the impossibility of applying to the judgment in which a joint-stock company is sued as a consequence of lacking the character of consumer, the law on jurisdiction provided for by art. 1469 bis, paragraph 3, no. 19, of the Civil Code, while the criticism according to which the claimed disparity of treatment between the private consumer and the small business may determine a limitation of competition and a hindrance to the free market is inconsistent, due to lack of clear and adequate grounds.

In actuality, as has been seen, the extension took place in other legal systems, but in favour of bodies that do not perform a profit-generating economic activity. What the judge takes into consideration in defining the consumer is the declaration of the consumer who ‘self-characterises’ and then the purpose for which the operation was carried out. By its decision no 24731 of 2013, the Court of Cassation specified that with regard to the regulations on protecting the consumer and on contracts negotiated outside of commercial establishments, a natural person does not have the character of consumer when, through the contract, he or she procures a good or service within the framework of the organisation of a professional activity to be undertaken, taking the initiative of seeking said good or service, precisely for the purpose of achieving that organisation.

However, the professional too – that is, the professional economic operator – may be considered on the level of the simple ‘consumer ’ when concluding a contract to meet the needs of daily life, extraneous to the exercise of said activities.102

102 Cassazione

civile judgment of 14 July 2011 s VI No 15531.

168  Guido Alpa In concrete terms, verifying whether a certain contract was concluded by a legal operator such as a consumer or, rather, within the context of the exercise of that operator’s professional activity, involves an appraisal of the facts, as such reserved for the trial judge and not to be challenged on appeal, where backed by an adequate and juridically correct justification.103 In the matter of an insurance contract executed in favour of third parties, the position of beneficiary-consumer of the insurance policy is likened to that of a party to the contract, with the consequence that the former may also invoke so-called ‘consumer jurisdiction’ or the jurisdiction of the judge in the location where the consumer resides or is domiciled.104 The legislative definition, however, is not so rigid. The relevant case law includes rulings that tend to expand its semantic content. For example, it was held that a condominium – a mere organisation of co-owners with stable representation for specific acts related to specific objects – has the character of consumer to which individual parties would be entitled; therefore the regulations contained in the Consumer Code would be applicable to it.105 Thus, the occasional use, and for marginal sums, of a current account for entrepreneurial, commercial, artisanal, or professional purposes, does not rule out the characterisation of consumer with regard to the banking institution with which the contractual relationship was maintained.106 In the same way, based on an expansive interpretation of the character of party to the contract concluded between a professional and the consumer, the term ‘party to the contract/consumer’ is understood not only as the ‘direct’ stipulating consumer, but also the party at any rate identified as the holder of the relationship, even if the execution thereof, in the various forms provided for by law (in representation, or in the form of a contract for the person to be appointed, or in the form of a contract in favour of third parties, and the like), has been performed by another party. This is why whenever it happens that, as early as the phase of concluding a contract with a professional, it is established that the contract is destined to yield its effects in favour of a party other than the party executing it, with the consequence that this party becomes, from the beginning, the holder, in autonomous and non-derivative fashion, of the rights and obligations arising from the contract, the reasons that are at the basis of the regulations governing protection of the consumer justify – and in fact require – likening the position of the third-party beneficiary to that of the party executing the contract, and thus attributing legal significance to the party’s subjective character of ‘consumer’.107

X.  The Rights of Associations of Consumers and Users Given that the individual consumer is often unable to ascertain their own rights, or to defend them, an important role of associations is that of exercising legal activity 103 Cassazione civile judgment of 5 June 2007 s III no 13083. 104 Cassazione civile judgment of 11 January 2007 s III no 369. 105 Tribunale Genova judgment of 14 February 2012; Tribunale Bari (Court of Bari) judgment of 24 September 2008; Tribunale Bologna judgment of 3 October 2010. 106 Tribunale Torino judgment of 4 June 2010. 107 Tribunale Bari judgment of 24 September 2008 no 2158.

The Making of Consumer Law and Policy in Italy  169 alongside the activity of informing, educating and assisting consumers (including those not belonging to the association), of promoting their interests, of bargaining with enterprises over quality, price, and modes of marketing of goods and services, or of resolving conflicts. Article 3 of said 1998 law must be linked with Article 5, since there is a connection between rights accorded to associations and their representativeness. The right of action consists of: (i) obtaining and pursuing an injunction (against acts and behaviour injurious to the interests of consumers and of users); (ii) taking precautionary action aimed at correcting or eliminating the harmful effects of ascertained violations; (iii) exercising the action of compensating damage in specific form, limited to publication of the measure obtained. These are actions proposed autonomously or ad adiuvandum, in proceedings brought by the individual consumer or user.108 In any event, this recognition of trial rights does not exhaust the list of trial activities that associations may carry out, but supplements the trial activities to which associations are admitted. Before the administrative authority, consumer associations have been admitted to intervene ad adiuvandum and, in some cases, autonomously as well. This is not the case before the ordinary judicial authority. The case law in this regard is still disputed, so that recognition by law, albeit limited, brings clarity for the types of proceedings that are contemplated; in all other cases, the associations’ trial position will remain uncertain until the orientations of judges have consolidated, or until action is taken, this time in organic fashion, to regulate standing and the trial capacity of all the associations, and not only of certain categories of them, as is currently taking place in fact for associations addressing environmental protection, for those addressing consumer protection, and so on. The same associations are accorded the right to bring the conciliation procedure provided for by the Chambers of Commerce reform law.109 This procedure may of course be brought by individual interested parties; here, reference to the regulatory framework appeared useful to avoid questions as to standing; the procedure may conclude with conciliation, the report for which has been declared enforceable by the magistrate.110 Representativeness, which is a condition for exercising the rights provided for by Article 3, is founded upon certain basic requirements: a written Constitution and a legal system with a democratic basis, the exclusive purpose of non-profit protection of consumers and users, a list of members, a membership of no less than 0.5 per thousand of the national population and a presence in at least five regions or autonomous provinces (and with a percentage of at least 0.2 per thousand for each of them), financial statements in compliance with the requirements dictated for unrecognised associations, performance of ongoing activity and representatives’ immunity from conviction. The most important associations defending consumers number about ten, and are generalist in nature. The most well-known are CODACONS, ADUSBEF, ALTROCONSUMO, ADUC and the oldest, UNIONE DEI CONSUMATORI. Some consist of a law firm given the apparent guise of an association. In any event, legal activity is more cultivated than information and education. Their representation is before 108 Art 3, para 7, law 30 luglio 1998 n 281 Legge sui diritti dei consumatori e degli utenti. 109 Decreto Legislativo 29 dicembre 1993 No 580, art. 2, paragrafo 4, lett. a) (Legislative decree of 29 December 1993 No 580, Art 2, para 4, letter a). 110 Art 3, paras 2, 3, 4 of the same statute.

170  Guido Alpa the Ministry of Industry (now Ministry of Economic Development – MISE). The only Italian Government that tried to remove the administrative competence from a ministry dedicated to industry and commerce to a ministry for social affairs was the one led by Carlo Ciampi, who assigned this competence to Minister Fernanda Contri. But this attempt vanished with the subsequent government. The Consumer Code, too, was drawn up at the Ministry of Industry. Ordinary and administrative case law is favourable to the standing of associations, as shown by multiple decisions. It is clear beyond doubt that a consumer-oriented approach to civil and commercial law has been the by-product of the application of EU (secondary) sources of law in the Italian legal system, and that what we now find in the Italian legal system concerning consumer law is of European origin. Legal culture has been a great engine in terms of acquiring the European message, method and mechanisms for opening this field to jurists. Judge-made law has not had a similar impact on the development of this field. The Italian legislator has followed the European legislator.

7 The Emergence of Nordic Consumer Law and a Nordic Consumer Law Community and Its Impact on Nordic Legal Unity THOMAS WILHELMSSON

I. Introduction1 In international consumer law discourse, and sometimes in the Nordic one as well, consumer law solutions adopted by the Nordic countries are often referred to as one distinct approach to the issue of consumer protection. This grouping of the Nordic countries together as bearers of one type of consumer law solutions usually has a positive undertone, at least among those who find consumer protection something worth pursuing. A fairly widespread narrative presents the Nordic model as a specific and successful form of consumer protection. In other words, in the classification of consumer law systems throughout the world, Nordic consumer law is at least to some extent viewed as a consumer law family of its own, in the same way as Nordic law in general is classified as a separate family as well.2 But the narrative goes further than the family metaphor suggests. In comparative law, as well as in biology, grouping into families suggests the existence of similarities within the family, due to shared origins, but does not claim interaction between family members. However, the narrative about Nordic consumer protection surely pictures both similarities related to the origin and content of the rules and interaction between the relevant players across Nordic borders. In that sense, therefore, the concept of ‘community’ seems better to picture the prevailing narrative. This implies that we are dealing with

1 I wish to thank my friend Hans-Wolfgang Micklitz for many useful comments on an earlier draft of this chapter. 2 Konrad Zweigert, Hein Kötz and Tony Weir, An Introduction to Comparative Law 3rd edn (Oxford University Press 1998) 276 find it ‘right to attribute the Nordic laws to the Civil Law’; however, they continue that ‘by reason of their close interrelationship and their common ‘stylistic’ hallmarks, they must undoubtedly be admitted to form a special legal family, alongside the Romanistic and German legal families.’

172  Thomas Wilhelmsson a network of people and institutions with similar values and goals that continuously interact with each other in many ways, both formal and informal. In this chapter I take a closer look at the narrative of the emergence of a Nordic consumer law community. My analysis focuses in particular on the role of that community during the formative years of consumer protection in the 1970s and 1980s. I will discuss the formative process, as opposed to the quality of the results produced within the community. So although I will ask to what extent and in what respects it seems sensible to speak of such a joint narrative, I will not attempt to assess the success of the Nordic approach. At least I will try to avoid the usual lawyer’s proneness to believe that their own system is the best imaginable. An analysis of the Nordic consumer law community and interaction within the community requires some thoughts on the members of the community as well. Analysis and discussion should cover not only the legal features typical within the community – for which one could use the term ‘Nordic consumer law family’ as well – but also the members and driving actors of the community. What impact did interaction within the community have on the development of Nordic consumer law? Finally, I will demonstrate how the ways in which this interaction evolved in the process of developing Nordic consumer law had a profound impact on the general Nordic private law community as well. The fragmented and experimental development of Nordic consumer law challenged the existing high degree of uniformity of (parts of) Nordic private law. This may offer some lessons for discussion on ways to harmonise private law in the EU.

II.  The Nordic Legal Family and Consumer Law Two basic conditions have made the narrative of the emergence of a Nordic consumer law community credible. First, the similar societal and political environment at least makes it likely that legal reactions to perceived societal problems might be similar. Without going into the rather well-known societal similarities between the Nordic countries, I will discuss the Nordic political environments later in the chapter but will start by addressing the second condition for a Nordic consumer law narrative, namely the existence of a Nordic legal family into which consumer law solutions were introduced. The similarity of the legal foundations across the Nordic countries of course offered a fertile breeding ground for joint consumer law solutions. Both the socio-political similarities and cooperation between the Nordic countries as well as the development of the Nordic legal family certainly were also strongly connected with the understanding of the Nordics as at least partially a linguistic community as well.3 3 Danish, Norwegian and Swedish are so similar that, at least with a little practice, speakers of these languages can relatively easily understand each other. Finnish is of course very different, but Finland is formally a bilingual country, so at least in the period under scrutiny most Finnish lawyers could follow or participate in discussions in Swedish. And at that time Icelanders still studied Danish as an obligatory subject in their schools. Therefore, during the period studied, everybody could use Danish, Norwegian or Swedish, whichever was most convenient for that person, at Nordic meetings and for Nordic cooperation. In some areas this use of Nordic languages still continues, though for various reasons English is increasingly used in Nordic cooperation as well – but that is a different story.

The Emergence of Nordic Consumer Law  173 One may speak about the Nordic legal family on several levels of abstraction, all of which have had an impact on the development of consumer law. First, on the most abstract level the Nordic legal family is characterised by a peculiar structure of legal sources. Basically because of this structure many comparatists classify Nordic law as a separate legal family, or at least a separate branch of the civil law family. The Nordic countries are particular in the sense that they lack a comprehensive civil code such as the BGB, even though their concepts and modes of legal reasoning are primarily based on the German tradition. The absence of a civil code with a comprehensive general part and a strongly deductive structure makes it easier for the Nordic countries to adopt a pragmatic approach towards the development of new legal answers to societal challenges. In legal theory, Scandinavian realism tended to support a legal engineering vision of law, with strong emphasis both on legislation and on the value of substantive arguments in legal reasoning.4 The question of the systematic place of new pieces of law was therefore not perceived as very important, even though it might occasionally be posed. Possible resistance by the legal establishment to new institutions and rules could not convincingly be based on legal-systematic arguments. As will be shown later, the introduction of consumer law in the Nordic countries therefore did not cause any strong debate on general private law versus Sonderprivatrecht, as occurred in many other countries. The Nordic consumer law community was at least connected through a joint attitude of pragmatism, which made it easier to create new rules on pragmatic grounds and also to pragmatically learn and borrow from other jurisdictions. Second, the Nordic legal family is not only characterised by a joint structure of legal sources. The similarities go much further. In particular, in private law there is a strong similarity of content as well. The most visible hallmark of this is the existence of highly similar – even more or less identical – legislation in the Nordic countries in the area of private law. The most well-known piece of legislation adopted in almost identical form in the Nordic countries is the Contracts Act.5 Several other examples could be mentioned. Such joint legislation has traditionally been prepared in collaboration and then adopted as ordinary national legislation, with no treaty-based or other international obligation to implement jointly prepared draft laws. Nordic legislative cooperation has been informal but has led to many results. Typically, the drafting of joint Nordic acts has required several years, with work dominated by academic legal scholars: Nordic legislation was firmly anchored in the Nordic academic community.6 However, many

4 Markku Helin, Lainoppi ja metafysiikka: tutkimus skandinaavisen oikeusrealismin tieteenkuvasta ja sen vaikutuksesta Suomen siviilioikeuden tutkimuksessa vuosina 1920–1960 (Helsinki, Suomalainen Lakimiesyhdistys, 1988) 437–438, 442–443. Unfortunately this book, which is one of the best analyses of Scandinavian realism, is only available in Finnish. The references here are to the English Summary (‘Legal dogmatics and metaphysics’). 5 In Sweden, Lag om avtal och andra rättshandlingar på förmögenhetsrättens område (1915:218; in Finland, Laki varallisuusoikeudellisista oikeustoimista/Lag om rättshandlingar på förmögenhetsrättens område (228/1929); in Norway, Avtaleloven (1918/4); and in Denmark, Lov om aftaler og andra retshandler på formuerettens område (re-enacted 1986/600). 6 For example, the Nordic Contracts Acts were prepared by three national committees in which the ­leading roles and Nordic cooperation was conducted by the well-known professors Julius Lassen (Denmark) and

174  Thomas Wilhelmsson other lawyers were also engaged in Nordic cooperation, and the regular Nordic lawyers’ meetings, gathering academics, judges and practising lawyers in great numbers started to convene in the nineteenth century.7 The need for – and possible content of – joint legislation was repeatedly discussed during these meetings. Originally this cooperation was not formalised. Indeed, it is a historical irony that most of the pieces of joint legislation stem from the period before Nordic cooperation was given normative expression in the 1962 Helsinki agreement on cooperation between the Nordic countries.8 This agreement contained, for the first time, an express obligation for the Nordic countries to make their private law as similar as possible.9 However, the only more spectacular joint legislation made since that agreement has been the Nordic Sales Acts,10 which in any case was not adopted by Denmark. Self-evidently, the joint legislative basis made it easier to conduct a cross-border consumer law discourse, in particular in the contract law field. A project was started with a view to updating the Contracts Act with, among other things, a consumer perspective. However, due to different interests and poor timing, it never led to any results.11 As will be noted later, Nordic interest in consumer law did not lead to new joint legislation in other respects as well. One of the issues to be addressed is why the consumer law community did not follow the footpath of the general legal community in this respect. Third, the Nordic legal family is a real legal community in the sense that continuing interaction across borders is taking place. In particular in private law, Nordic law is an excellent example of what one could call ‘free movement of legal sources across the borders’.12 In the Nordic tradition, scholars and courts use literature and cases from other Nordic countries, sometimes almost equally strong as arguments as domestic sources. Nordic non-domestic material is certainly considered ‘less foreign’ than sources from other jurisdictions. In practical legal reasoning, Nordic literature and cases are not only considered useful sources of substantive arguments, as other comparative materials would be treated, but they also have an authoritative status resembling that of domestic sources and are referred to by courts in the other Nordic countries much more often than cases from other jurisdictions. In particular in legal dogmatic literature, scholars

Fredrik Stang (Norway) as well as the docent, civil servant and Supreme Court judge Tore Almén (Sweden), who later wrote the leading commentary to the act; see on their cooperation eg Obligationsrättskommittén (Swedish committee), ‘Förslag till lag om avtal och andra rättshandlingar på förmögenhetsrättens område, lag om avbetalningsköp m.m. avgivna den 31 jan. 1914 av därtill utsedda kommitterade’ (Stockholm, I Marcus’ boktryckeri-aktiebolag, 1914) 3–4. 7 The first ‘Nordiskt juristmöte’ was held in Copenhagen 1872, based on the German model, ‘Deutscher Juristentag’. 8 Samarbetsöverenskommelse mellan Danmark, Finland, Island, Norge och Sverige (in Finland published in FördrS 28/1962). 9 ibid Art 4. 10 In Finland, Kauppalaki/Köplag (355/1987); in Norway, Lov om kjöp (1988/27); and in Sweden Köplag (1990:931). 11 Although committees were eventually appointed in several Nordic countries, their timetables were made so different that there was no room for real cooperation, see, eg Finnish committee, ‘Oikeustoimilakitoimikunnan mietintö/Betänkande av kommissionen för revidering av rättshandlingslagen’ (Kom bet 1990:20) 9. 12 See, eg Thomas Wilhelmsson, ‘Free Movement of Legal Sources: The Use of Foreign Sources in Private Law in Europe’ in Kai Purnhagen and Peter Rott (eds), Varieties of European Economic Law and Regulation: Liber Amicorum for Hans Micklitz (Cham, Springer International Publishing, 2014) 185.

The Emergence of Nordic Consumer Law  175 engage in discussion across borders in the same way as they would in a purely national debate. Courts cite scholars from other Nordic countries: indeed, renowned scholars have been influential throughout the whole Nordic area. Therefore, in harmonised areas court practice is to a highly significant degree similar across the Nordic countries.13 Indeed, the degree of similarity is so strong that one could realistically consider it possible to make a joint Nordic ‘Restatement’, for example of contract law.14 Cooperation between Nordic lawyers of course has not been limited to academics and courts making citations across borders. Cooperation was much more intense and personal, symbolised for example by regular Nordic meetings between courts, between prosecutors, between various ombudsmen and between other groups of lawyers.15 Informal cooperation in statutory drafting and other public matters was a day-to-day activity. As one important public servant wrote in the 1980s, there were few days when no telephone call was made from one Nordic ministry of justice to another.16 The rather self-evident and ongoing scholarly discourse across Nordic borders in private law matters (public law is somewhat less similar) also offered an established arena for Nordic consumer lawyers to exchange views on their subject. The traditionally intense statutory drafting cooperation also facilitated exchange of ideas. The legal soil for a Nordic consumer law community to grow in was undoubtedly present. The legal conditions were favourable for the growth of a joint Nordic consumer law community, based on fairly similar societal conditions. Nordic pragmatism, searching for societally fair solutions rather than dogmatically ‘correct’ ones, a joint private law basis for reforms, and the established tradition of Nordic discourse on all levels of the legal system, would easily have led one to predict the advent of a fairly identical ‘Nordic consumer law’ propelled by a strongly integrated Nordic consumer law community. This did not happen. Even though much was done together and many solutions were similar, the ‘Nordic consumer law community’ was not as strongly ‘Nordic’ as those communities that had produced the Nordic legal community – at least if measured by the level of ambition to harmonise. In this Chapter I will offer some views on why this was the case.

III.  A Nordic Consumer Law? Consumer law was emerging from the 1970s onwards as a new and dynamic field in legal discourse in the Nordic countries. Many legislative reforms were made. These reforms were introduced into a private law that in many fields, in particular within

13 This was the conclusion of Stig Jørgensen, ‘Tillämpningen av den gemensamma lagstiftningen om köp, avtal, kommission och skuldebrev’ in Gemensam lagstiftning i rättstillämpningen (Stockholm, Nordiska utredningar, 1961:6) 27–46, 28. 14 This has nowadays been tried, see Ole Lando, Marie-Louise Holle, Torgny Håstad, Berte-Elen Konow, Peter Møgelvang-Hansen, Soili Nystén-Haarala, Ása Ólafsdóttir and Laila Zackariasson (eds), Restatement of Nordic Contract Law (Jurist-og økonomforbundets forlag, 2016). So far this ‘restatement’ has not gained much attention, however. 15 Inge Lorange Backer, ‘Nordisk lovsamarbeid – status og fremtid’ in Agneta Bäcklund, Anders Eka, Thomas Rolén and David Säfwe, Vänbok till Fredrik Wersäll (Uppsala, Iustus förlag, 2018) 96. 16 Leif Sevón, ‘Några reflektioner kring det nordiska lagstiftningssamarbetet’ (1988) Tidsskrift for rettsvitenskap 509, 514.

176  Thomas Wilhelmsson the law of contract and the law of sales, had a strong foundation in the Nordic legal community, as just described. But the introduction did not happen in the same way and at the same pace in each country. Even though there of course was cooperation between the Nordic countries in these matters, no attempt was made to achieve the ideals of the Nordic legal community: to introduce legislation that would be more or less identical as to both content and form. This can be illustrated for example by the introduction of mandatory rules concerning consumer sales.17 In Sweden a specific Consumer Sales Act containing such rules was introduced in 1973.18 In Norway, on the other hand, the mandatory rules were included in the general Sales Act,19 and a similar solution was adopted in Denmark. In Finland, again, all the provisions on consumer protection were included in a comprehensive Consumer Protection Act, in 1978, with a chapter on Consumer Sales.20 The differences were not, however, related only to form: variations also occurred as to content. For example, the first Swedish Consumer Sales Act was a kind of minimum legislation, in which the mandatory rules were less favourable to the consumer than the rules of the general Sales Act, but the latter had then also to be applied in a declaratory fashion for consumer relations. In the other Nordic countries the mandatory sales rules were identical to the ‘normal’ provisions. In the later Swedish Consumer Sales Act, the Swedish double-track structure was abandoned and all the consumer sales provisions were included in the Consumer Sales Act.21 Many other important examples could be mentioned. To illustrate, the effect of consumer guarantees was regulated in different ways between the Nordic countries.22 And the topical issue of a maximum period of liability for the seller was addressed differently in the different countries, with Finland being most consumer-friendly, as it did not prescribe any such period. Similar rather large variations can also be described in the more public law-oriented fields of consumer protection. Whilst Sweden, Norway and Denmark introduced Marketing Acts in 1970, 1972 and 1974 respectively, the provisions on marketing in Finland were included in Chapter 2 of the Consumer Protection Act 1978.23 In Denmark and Norway (since an amendment in 1981) this legislation could be used to prohibit unfair contract terms as well, whilst Sweden introduced a separate Act on Contract Conditions in 1971.24 In Finland, of course, this item was included in the Consumer Protection Act 1978, in its Chapter 3. The differences related not only to legislative form, but to content as well. These are only two important examples. Particular legislation concerning consumer services, consumer credit and several other consumer contracts was introduced in 17 See, eg Johnny Herre and Jan Ramberg, Konsumentköplagen, 4th edn (Stockholm, Norstedts juridik, 2014) 36–37. 18 Konsumentköplag 1973 (1973:877). 19 Later divided to form a separate Consumer sales act, Lov om forbrukerkjøp (2002/34). 20 Kuluttajansuojalaki/Konsumentskyddslag (1978/38), ch 5. 21 Konsumentköplag (1990:932). 22 Börge Dahl and Peter Møgelvang-Hansen, Garantier (Copenhagen, Jurist-og Økonomforbundets forlag, 1985) 34–35. 23 See, eg Dahl and Møgelvang-Hansen, Garantier (n 22) 36; Swedish report, Ny marknadsföringslag (SOU 1993:59) 179–190. 24 Lag om avtalsvillkor i konsumentförhållanden (1971:112), recast in 1994 (Act 1994:1512).

The Emergence of Nordic Consumer Law  177 different forms and with varying content in the Nordic countries. In Finland, most – but not all – of these rules were introduced as new chapters in the Consumer Protection Act, whilst in other Nordic countries separate acts were the predominant form of legislation. If there are such differences, why then is it common both in Nordic as well as in international discourse to speak of a Nordic model of consumer protection? This might be understood only as an indication of a rather widespread belief that Nordic consumer protection is fairly advanced and offers effective protection for consumers. There are, however, more common features than that. Of course, in many details there are similarities, but this is not a sufficient basis for speaking of a joint model. More importantly, several common basic features are shared by the consumer laws of the Nordic countries. I will mention a few here. A functioning consumer law requires both substance and an effective enforcement mechanism. As to substance, the consumer image underlying Nordic legislation differed at least to some extent from the general view in many other European countries, certainly when assessed on the basis of how EU consumer protection legislation was developed. Whilst EU law was originally based on the idea of an active internal market consumer who strove to be well informed,25 and therefore emphasised the use of information to enhance consumer choice, the Nordics were less eager to underline the rationality of the consumer.26 Here – perhaps as a consequence of the welfarist political ethos within the consumer law community – the focus was more on how to protect the consumer against poor consumer decisions, to ensure the financial and physical security of the consumer and to support the consumer’s right to be heard. However, nowadays these differences may have diminished as a result of changes both in the EU and in the Nordic countries, leading to the adoption of harmonising directives even in such a rather sensitive and wide-ranging area as unfair commercial practices.27 The Nordic countries seem to have evolved in a more individualistic direction, paying more attention to consumer choice and responsibility. The most obvious particular features of the Nordic model, however, are in the area of enforcement. Pragmatic and instrumentalist Nordic legal thinking has made it quite natural to address the issue of enforcement and access to justice as an essential part of consumer policy. A good law in the books was not enough if the rights of consumers were not sufficiently enforced in practice. As the citizens of the Nordic countries generally trust the state, it was natural to put some public authorities at the centre of the system. In other words, the institution of Consumer Ombudsman is a Nordic idea, based on a tradition of ombudsmen also used in other spheres of life. The Consumer Ombudsman

25 Later established in the Case C-210/96 Gut Springenheide GmbH and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt – Amt für Lebensmittelüberwachung [1998] ECR I-04657 formula, namely that the average consumer is supposed to be ‘reasonably well informed and reasonably observant and circumspect’. 26 See, eg Thomas Wilhelmsson, Social Contract Law and European Integration (Aldershot, Dartmouth Publishing Co Ltd, 1995) 194ff. 27 Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’) [2005] OJ L149/22.

178  Thomas Wilhelmsson was to be an authority with relatively broad competence in consumer matters and having as its special task to defend the consumer’s interest. This was a quite unique institution without direct counterparts in other countries. In the UK the Office of Fair Trading28 had similar tasks, but many other tasks as well, while other countries might have agencies for particular consumer matters, such as product safety. In addition to their very generally defined task, the Consumer Ombudsmen were also special in the sense that they were not expected to work as more or less neutral appliers of consumer law, but were given a biased or partial role, as active defenders of the consumer interest. They were to perform the same tasks that in other countries, such as Germany, were taken care of by consumer organisations. This feature also reflected strong confidence in the activities of the state in the Nordic countries. Some Nordic countries created special Market Courts29 or a Market Council,30 to which the Consumer Ombudsmen could bring at least their injunction cases. The originally strong position of these courts was later weakened, as was the position of the Consumer Ombudsmen. The main task of the Consumer Ombudsmen was to safeguard the collective consumer interest, even though they could exceptionally support individual consumers as well. The aim of providing sufficient access to justice for individual consumers was based on another novel institution: new informal complaints boards were created throughout the Nordic countries.31 These boards offered consumers a possibility to have their cases assessed cheaply and in relatively free form, without the need of professional legal support. By including representatives of consumer associations and business interests on these boards the views of market participants could be heard and they became committed to the protection system. A certain degree of corporatism was present in the original Nordic system. All these administrative and judicial structures – the Consumer Ombudsmen with their offices, the Market Courts and the complaints boards with their staff – created a fairly extensive group of relatively specialised consumer lawyers in the Nordic countries. These formed natural communities in their own countries, though cooperation and exchange of views between countries was quite active on many levels as well. In discussing the existence and impact of the Nordic consumer law community one should mention and even emphasise the emergence of this relatively large group of consumer law experts. This section of the Nordic consumer law community played an important role during the formative years when new practice was to be developed based on consumer protection legislation. The role of these lawyers was enhanced by the fact that many of the substantive rules were expressed in the form of broad general clauses, leaving much decision-making power to those applying legislation. The high profile of the new Consumer Ombudsmen, and their relatively close cooperation, was one factor that contributed to the image of Nordic consumer law as well-functioning and consumer-friendly. 28 In 2014 reorganised as The Competition and Markets Authority. 29 In Sweden and Finland Marknadsdomstolen. 30 In Norway Markedsrådet. In Denmark these cases were brought to the commercial court (Sø- og handelsretten) in Copenhagen. 31 Allmänna reklamationsnämnden (Sweden), Konsumentklagonämnden (Finland), Forbrukertvistutvalget (Norway) and Forbrukerklagenaevnet (Denmark).

The Emergence of Nordic Consumer Law  179 In this context there is no need to discuss further whether this image is exaggerated or not. What is clear, however, is that in a relatively short period of time the Nordic countries managed to develop fairly advanced consumer protection legislation including new administrative and judicial structures. At least two groups of reasons account for this success. First, the existence of favourable societal and political conditions: consumer law was understood as an integral part of the welfare state project, a project that had broad political support across the political spectrum. Second, the creation of consumer law was also facilitated by a relatively low grade of internal resistance from the legal profession, compared to the situation in some other countries. In the two following sections I will analyse these two groups of reasons.

IV.  National Politics and Nordic Consumer Law The main actors driving the development of consumer law were not necessarily the same across Europe and the world at large. Even though societal conditions – an emerging consumer society – were similar, the actors pushing for reform might vary. In some countries the consumer movement and consumer organisations played an important role. Perhaps with some exceptions32 this was not the case in the Nordic countries. Even though of course there were consumer associations in the Nordic countries as well, and these certainly backed the development, they were relatively weak and their impact was not decisive. The reforms were pushed forward in a top-down working modus rather than in a bottom-up modus. As mentioned before, citizens and consumers in the Nordic countries carry a relatively high level of trust in the state and the public authorities. For the Nordics it was therefore natural that the state took the initiative and a leading role in the development of consumer law. The community that propelled legislation was to a large extent a state-centred community. Political interest in developing consumer law existed across the political spectrum. The development of consumer law was applauded as a part of building the welfare state, a project that enjoyed broad support in the political sphere, but also as a tool for improving the market by responses to perceived market failures. In other words, positive opportunities existed both for the left and for the right, making this a quite political project. However, many public servants were heavily involved as driving actors in the process. Both openly political and more administrative actors were key drivers of the reforms. As described above, the development of consumer law in several Nordic countries was a piecemeal project with many new acts adopted in various forms and sequence during the formative years of consumer protection. A closer analysis of the depth and forms of political-administrative engagement in each legislative process cannot be made in this limited context. I will therefore just illustrate the claims I have made by a short description of the developments leading to adoption of the Finnish Consumer Protection Act in 1978. As Finland – not following the example of the other Nordic countries – attempted to collect most of the consumer protection rules in one piece of

32 The

Danish consumer movement seemed to have a stronger impact.

180  Thomas Wilhelmsson legislation, it is here possible to focus just on the making of one act. And, of course, this legislation is the one I am best acquainted with among the Nordic laws. First, the state-centred starting point was also very clear in the Finnish context. There was no strong consumer movement, and the two consumer associations working at that time33 were relatively weak – in fact, so weak that the law-drafting dialogue with civil society was conducted as much or even more with labour unions than with consumer organisations. One of these consumer organisations was also established and funded by the labour unions. So clearly in Finland, too, initiatives were taken and development was driven by the legislator. To describe the situation more concretely, the process was not so strongly driven by political parties, even though they were certainly interested, but rather by public servants, mainly in the Ministry of Justice. In that sense this was a project of the state administration. The Ministry of Justice took the lead and produced a proposal for a comprehensive consumer protection act at the beginning of the seventies.34 After that it produced a government Bill and the laws were adopted in 1977.35 In this process the driving force was the law-drafting department of the Ministry of Justice. But this does not mean that the drafting process was a-political. On the contrary: Finland had a quite politicised administration at that time (more so than today) and many public servants had membership in or a link to some political party. The law drafting department at the Ministry of Justice was led by a social democrat, Antti Kivivuori, and the department was considered relatively active and very radical. In fact sometimes the bourgeois press called it ‘the red drafting machine’. Within this law drafting department high priority was given to establishing modern consumer protection. The group that proposed the new consumer protection legislation consisted of three social democratic public servants: Antti Kivivuori himself, Jyrki Tala and Gerhard af Schultén, together with one person belonging to the centrist Swedish People’s Party, Leif Sevón.36 These drafters all had academic backgrounds and after adoption of the legislation they prepared the first commentary to it.37 Later they became central figures in the Finnish consumer law community.38 In particular one should mention that af Schultén became the first Consumer Ombudsman, managing to give the new institution a high profile. The preparatory work was started by an influential social democratic minister of justice.39 Looking at the persons closely involved, the drafting of consumer protection legislation very much looked like a social democratic project. Of course it was – like

33 Suomen Kuluttajaliitto and Kuluttajat-Konsumenterna. 34 Finnish Ministry of Justice, ‘Ehdotus kuluttajansuojalainsäädännöksi/Förslag till konsumentskyddslagstiftning’ (OLJ 12/1974). 35 Hallituksen esitys Eduskunnalle kuluttajansuojalainsäädännöksi/Regeringens proposition till Riksdagen med förslag till konsumentskyddslagstiftning (Government Bill 8/1977); Kuluttajansuojalaki/Konsumentskyddslag (1978/38). 36 Later judge at the European Court of Justice and President of the Supreme Court of Finland. 37 Antti Kivivuori, CG af Schultén, Leif Sevón and Jyrki Tala, Kuluttajansuoja (Helsinki, Kustannusosakeyhtiö Tammi, 1978). 38 In 1979 I joined ‘the drafting machine’ and had the opportunity to draft new rules on consumer credit and on some other consumer-related issues such as patient liability and drug liability as well as interest on delayed payments (including a provision on social force majeure). 39 Matti Louekoski, Minister of Justice 1972–1975. He had been Minister of Education since 1971 and returned to the position of Minister of Justice 1987–1990 and was Minister of Finance 1990–1991.

The Emergence of Nordic Consumer Law  181 several similar projects in the other Nordic countries – but by no means could it be considered purely or exclusively social democratic. A broad political consensus existed on the basic issues, and other parties were actively engaged as well. As the government led by the social democrats had resigned (on other issues) before the consumer protection Bill was brought to the Parliament, this was done by a centrist minority government that succeeded the social democratic one. In the Parliament there were diverging opinions on how to structure consumer law,40 but finally the Bill was passed almost unanimously, with the vote 172 to 4. The political consensus was also disrupted by some other debates on relatively minor details. For example, there was some debate concerning proposed rules on municipal consumer advice. According to the first proposal there should be consumer advice centres in each municipality. This obligation was made voluntary for the municipalities in the bill by the centrist government, but in the Parliament it was again made obligatory for the municipalities. Some other relatively small political issues were discussed as well,41 but the main parts of the legislation were finally accepted by (almost) all parties. This does not mean that the political constellations were the same throughout the Nordics. Some matters were considered more political than others, and in some cases issues were quite strongly connected to party politics. In particular the Swedish social democratic governments were eager to reform juridical structures without being delayed by Nordic cooperation and they were driving consumer protection and other reforms at high speed. At the Nordic lawyers’ meeting in 1972 the Swedish Minister of Justice, Carl Lidbom, expressly argued that the traditional policy of identical legislation was less appealing in contemporary society, as politically controversial issues were usually not suitable for law drafting cooperation aiming at far-reaching harmonisation.42 In such issues one country (read: Sweden) could act as a pioneer and others learn from its experience; Swedish marketing legislation that was studied – and to some extent followed – by the other Nordic countries was a good example.43 This speedy approach by the Swedish Government was one of the reasons why the old model of joint Nordic law drafting in important private law matters did not survive the wave of consumer protection. Political interest in the area, and its variations in the Nordic countries, was clearly an important reason behind the abandonment of the traditional striving towards structurally and substantively similar solutions in the Nordic countries in core areas of private law. The consumer law community was not only a community of legal scholars that could in a scholarly fashion have produced Nordic texts in the traditional way, but strong positions were also held by political actors, public servants and organisations pushing for quicker solutions. Even though the traditional strong harmonising mechanisms were not used, there was still much Nordic cooperation in the area, though in less ambitious 40 The right-wing party (Kansallinen kokoomus) proposed that the Consumer Protection Act be split into several acts that at least partially should protect both consumers and businesses. This proposal did not receive sufficient support. 41 For example, on the initiative of left-wing parties the proposed two-year limitation period for breach of contract by the seller was removed. 42 Carl Lidbom, in Förhandlingarna vid det tjugosjätte nordiska juristmötet i Helsingfors den 24–26 augusti 1972 (Lokalstyrelsen för Finland, 1972) 53–59. 43 Lidbom (n 42) 68–69.

182  Thomas Wilhelmsson forms. For example, a close informal exchange of information and drafts took place between the Nordic law drafting departments. Other actors cooperated as well: the Nordic Committee on Consumer Issues prepared a report on the coordination of Nordic consumer cooperation in 1973. This work was then continued within the Nordic Council of Ministers, which established the Nordic Committee of Senior Officials for Consumer Issues (Nordiska ämbetsmannakommittén för konsumentfrågor) in 1975.44 There were many channels through which the Nordic consumer law community could be established. Strong informal networks existed between the actors involved. Looking – again as an example – at the drafting of the Finnish Consumer Protection Act: this was clearly inspired by the Nordic community and the experience of the other Nordic countries. Most inspiration was taken from Sweden, which was indeed a few years ahead of Finland and the other Nordic countries in drafting new consumer law. Many of the basic solutions – such as the Consumer Ombudsman and the Market Court and the central position of broad general clauses – were taken from Swedish law. The Finnish drafters, after having noted the new legislation on marketing in Sweden and Norway, expressly referred to a recommendation by the Nordic Council according to which the Nordic countries should coordinate development of legislation on marketing so that consumer protection in some countries would not be less advanced than in the others.45 As part of professional law drafting, the laws of other countries were studied as well, but the impact was clearly less visible. Academic cooperation with consumer law circles outside the Nordic countries was also relatively limited. Such internationally important documents as the United Nations Guidelines for Consumer Protection46 were not yet available. Some inspiration was taken from the recommendations of the European Council and the discussion within the then European Community,47 but at that time European activities in the area were still quite limited. Generally speaking, the Nordic countries tended to learn from each other. They created a genuinely Nordic model of consumer protection with the Consumer Ombudsman at the centre, which was inspired by other ombudsman constructions of similar kinds in the Nordic countries rather than by consumer protection authorities in other countries. As to inspiration and results, it is plausible to speak of a particular Nordic consumer law community, efficiently exchanging experience across Nordic borders. In other words, the fact that the Nordic countries arranged their relations to the European Community/Union in a variety of ways – Denmark joined the Community already in 1973, Finland and Sweden became members of the Union in 1995, whilst Norway only joined the EEA – did not have any significant impact on the development of the Nordic model, even though there was a feeling that Denmark generally was somewhat less committed to Nordic cooperation projects after its entry into the European 44 Nordic Council of Ministers, Nordiska rådets verksamhet 1971–1986: Översikt över rådets rekommendationer och yttranden (Nordic Council of Ministers, 1988) 82. 45 Finnish Ministry of Justice, Förslag till konsumentskyddslagstiftning (OLJ 12/1974) 9. 46 See United Nations Guidelines for Consumer Protection (New York, Geneva, last revised in 2015) http:// unctad.org/en/PublicationsLibrary/ditccplpmisc2016d1_en.pdf. The first version was adopted in 1985. See David Harland, ‘The United Nations Guidelines for Consumer Protection’ (1987) 10 Journal of Consumer Policy 245–266. 47 Finnish Ministry of Justice, Förslag till konsumentskyddslagstiftning (n 45) 10–13.

The Emergence of Nordic Consumer Law  183 Community. The Nordic model was already created before the heyday of European consumer policy.48 Having developed its own model the Nordic consumer law community understandably was somewhat sceptical about the development of EU consumer law, supposing that Nordic consumer protection was on a higher level. This was the reason for the policy of the Nordic countries at that time to press for only minimum rules in the EU in order not to have to lower the level of Nordic consumer protection, for example with regard to the rules on unfair contract terms.49 As the consumer law community at that time was still fairly influential, this policy was successful. The later turn by the EU towards more frequent use of maximum, harmonising directives in the consumer law area, such as the Unfair Commercial Practices Directive,50 might be seen as an indication of the decreasing influence of the consumer law community. For example, as the Finnish Ministry of Economic Affairs and Employment, clearly having less interest in consumer protection than in market integration, strengthened its position as the driver of consumer policy in Finland,51 resistance against maximum directives or harmonisation directives was much less clear than was the case in the first years of consumer policy.52 One may sense a gradual weakening of the Nordic consumer law community in the strong sense of a community having common goals and enjoying close cooperation. But this is another story, requiring much deeper analysis than is possible to offer here.

V.  The Legal Establishment and Consumer Law The main drivers of consumer law were political-administrative actors, so one could have expected resistance from other quarters, such as the academic community or the court system. In many other countries the established legal community, and in particular the

48 In one field the European Community had advanced further than the Nordics, that is, concerning products liability. Rules based on the Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products [1985] OJ L210/29 were accordingly introduced in the Nordic countries even before accession, for Finland see Tuotevastuulaki/Produktansvarslag (694/1990). In fact the Finnish Act went further than the Directive, as it did not implement the illogical and unfair threshold (Art 9(b)). When Finland became a Member State the threshold had to be introduced. 49 Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L95/29, Art 8. The Nordic fairness rule was, and is, general and covers both consumer and other contracts, individual contracts as well as all parts of the agreement, including the price and the main subject-matter of the contract, see, eg Thomas Wilhelmsson and Chris Willett, ‘Unfair terms and standard form contracts’ in Geraint Howells, Iain Ramsay and Thomas Wilhelmsson (eds), Handbook of Research on International Consumer Law, 2nd edn (Cheltenham, Northampton, Edward Elgar Publishing, 2018) 148. 50 See, eg Hans-Wolfgang Micklitz, ‘Minimum/Maximum Harmonisation and the Internal Market Clause’ in Geraint Howells, Hans-Wolfgang Micklitz and Thomas Wilhelmsson, European Fair Trading Law: The Unfair Commercial Practices Directive (Farnham, Ashgate Publishing, 2006) 27–47. 51 The formerly independent office of the Consumer Ombudsman is now part of the Finnish Competition and Consumer Authority, formally subjected to the Ministry. 52 As the Consumer Sales Directive and the Unfair Contract Terms Directive fall within the competencies of the Ministry of Justice, there is still clearly resistance against maximum harmonisation concerning these parts of contract law. This is, however, not merely to avoid lowering the consumer protection level, but rather because having a maximum private law directive in the core areas of contract law without harmonising the rest of contract law would be a legal technical disaster.

184  Thomas Wilhelmsson private law community, was not very eager to welcome this intruder. The quite intense and even emotional German debate on Sonderprivatrecht versus the private law of the Code in the 1970s is a good example of such a reaction.53 However, in the Nordic countries it is difficult to register signs of a broader resistance. Of course there is certainly anecdotal evidence of influential lawyers disliking this area – for example a well-known Finnish private law professor used to say that consumer law is ‘private law for the proletariat’ – but this attitude fortunately did not seem to be widespread. One obvious explanation lies in the peculiar character of the Nordic private law system. The Nordic pragmatic and instrumentalist approach to law and the absence of a civil code that could lock legal thinking more firmly onto questions of systematics makes it much easier to introduce new approaches and new concepts. In the Nordic context, legal systematics does not offer any strong shield against politically and societally driven development of the law. Consumer protection legal engineering was therefore not considered to be in any deep conflict with the axioms of the private lawyer. The issue of the relationship between consumer law and the inherited systematics of general private law never reached any prominent place on the Nordic agenda. The question where to place the new rules therefore did not cause any deep controversy either. The placement of the rules is seen more as a question of practicality than of any deep structure of legal thinking. This lack of interest in legal systematics is in fact particularly well illustrated by the development of Nordic consumer law. As described above, the Nordic countries adopted quite different systematic solutions in this respect. In Finland most pieces were gathered in a general Consumer Protection Act – one could call it one of the first Consumer Codes even though it is seldom mentioned as such in comparative legal scholarship – whilst Sweden introduced different acts on various consumer law issues such as consumer sales and marketing. In Norway and Denmark, again the approach was similarly piecemeal, but here for example the rules on consumer sales were (first) made part of the general sales act. However, the fact that the Nordic countries in this way introduced similar rules in very different legislative settings did not lead to any systematic controversies or differences and probably cannot be explained in any deep sense either.54 One important group of actors was academic scholars. The fact that well-known and respected private law scholars recognised the development and wrote textbooks and commentaries on consumer law legislation paved the way for smooth introduction of consumer law in the established private law canon. In particular many highly appreciated Swedish scholars, such as the very well-known commercial lawyers Jan Ramberg and Johnny Herre, were actively writing in this area,55 but also in other Nordic legal

53 For an early discussion in Germany, see, eg Reinhard Damm, ‘Verbraucherrechtliche Sondergesetzgebung und Privatrechtssystem’ (1978) 33 Juristenzeitung 173; Peter Gilles, ‘Zur neueren Verbraucherschutzgesetzgebung in ihrem Verhältnis zum klassischen Privatrecht’ (1980) Juristische Arbeitsblätter 1. For the present situation, see Reinhard Zimmermann, ‘Consumer Contract Law and General Contract Law: The German Experience’ (2005) 58 Current Legal Problems 415. 54 The comprehensive approach in Finland is probably due to the very practical reason that Finland started developing consumer law a few years later, and therefore was in a position to assemble more comprehensive legislation. Some might argue, however, that it can be seen as an expression of the fact that Finnish legal thinking is probably a little more Germanic-systematic than legal thinking in the other Nordic countries. 55 See, eg Herre and Ramberg, Konsumentköplagen (n 17).

The Emergence of Nordic Consumer Law  185 literature material on consumer law was growing fast.56 The fact that consumer law was in this way visibly included in academic teaching and research played an important role in establishing it as a recognised legal discipline. For example, in Helsinki the vibrant school of young doctoral students writing their theses in this area57 contributed to success. Not all established academics writing on consumer law were engaged in active cooperation within the consumer law community. Their work rather illustrates the fact that there never evolved any strict and clear borderline between consumer lawyers and general private lawyers. The specialised administrative and legal structures also contributed to the smooth introduction of consumer law in the legal system. Of course one can assume that some divergences might occur in applying the law, for example, when comparing the numerous decisions by consumer complaints boards with what the ordinary courts would have done if such cases had been brought before them. The Market Courts also might make stricter assessments than might be expected from general courts. For example, it seems that the originally relatively radical Finnish Market Court, from which at first there was no appeal to higher courts, became somewhat domesticated after introduction of a right to appeal to the Supreme Court.58 However, these differences are minor, and decisions by consumer law bodies are generally considered respected parts of the legal system.59 Overall, integration of consumer law was relatively easy because the consumer law community in each of the Nordic countries was relatively well integrated with their national legal community. Many consumer law developers were actively engaged in other important areas of law as well.60 The consumer law community was not clearly delimited and did not evolve in any strong tension with the general private law community. At the same time, considerable cooperation occurred between consumer lawyers across Nordic borders: there was indeed a Nordic consumer law community, as shown above. This cooperation and both the intellectual and ideological capital it created

56 In this context I can also mention my book Konsumentskyddet i Finland (Helsinki, Juristförbundets förlag 1989), in Swedish, but later translated into Finnish: Suomen kuluttajansuojajärjestelmä (Helsinki, Lakimiesliiton kustannus 1991). 57 Resulting in studies such as those by Johan Bärlund, Reklamation i konsumentavtal (Helsinki, Juristförbundets Förlag, 2002) (summary in English: The Notice Rule in Consumer Contracts); Klaus Viitanen, Lautakuntamenettely kuluttajariitojen ratkaisukeinona (Helsinki, Suomalainen lakimiesyhdistys, 2003) (summary in English: Public Board as a Way to Settle Consumer Disputes); Frey Nybergh, Rätten till tjänster i informations- och kreditsamhället, en rättsdogmatisk undersökning om tillgången till ­infrastrukturen för handeln, särskilt banktjänster (Helsinki, Suomalainen lakimiesyhdistys, 2004) (summary in English: The Right to Services in the Information and Credit Society). 58 A good example is the Nokia case, Finnish Supreme Court Decision 2004:123, in which the Market Court had issued an injunction against a Nokia guarantee because it restricted the rights of the consumer to indirect damages, but the Supreme Court revoked the injunction on various grounds. 59 Examples include the prominent position of decisions by consumer complaint bodies in commentaries by Herre and Ramberg, Konsumentköplagen (n 17); Benedikte Holberg, Lene Pagter Kristensen, Peter Møgelvang-Hansen, Tina Morell Nielsen and Henrik Øe, Forbrugeraftaleloven med kommentarer (Jurist- og Økonomforbundets forlag, 2006). 60 Of the four main drafters of the Finnish Consumer Protection Act, one also published the leading commentary to the Finnish Act on Limited Companies, Pauli Koski and Gerhard af Schultén, Uusi osakeyhtiölaki selityksin I-II (Lakimiesliiton kustannus, 1978–1979), and another the most widely-used textbook in the law of transportation, Leif Sevón and Lena Sisula, Transporträtten i huvuddrag (Helsinki, Juristförbundets förlag, 1978).

186  Thomas Wilhelmsson helped bring down the barriers against the newcomer. Support across Nordic borders and the possibility to refer to examples and solutions from other Nordic countries made it easier to convince mainstream lawyers, who were used to appreciating Nordic legal cooperation.

VI.  Consumer Law and the Decline of the Nordic Legal Community The success of one community may imply the decline of another. In the case under scrutiny, the Nordic consumer law community – broadly defined – succeeded in achieving a Nordic model of consumer protection, which was introduced and established as described above. But this came at a cost. The development did not necessarily support a deepening of the Nordic legal community, as envisaged by the 1962 Helsinki agreement, but rather contributed – alongside many other legal reforms at that time – to turning development in the other direction. Instead of striving for a private law that was as similar as possible throughout the Nordic countries, each country rather wanted more leeway to implement its own national political policy. The traditional approach to private law harmonisation in the Nordic countries was to strive for solutions which were more or less identical both as to structure and content, the almost identical Nordic Contracts Acts being the best paradigmatic example. As noted above, cooperation within the Nordic consumer law community was far from this level of ambition. Indeed, the fact that consumer law drafters adopted very different systematic solutions, placing consumer law rules in different legislative contexts, showed a rather limited commitment to Nordic legal unity in the traditional sense. Not even this legal-technical issue – which as such should not carry strong political weight – could be resolved jointly. On a more substantive level there was also no striving for largely identical solutions, even though much inspiration and sharing of experience took place across Nordic borders. The level of consumer protection is fairly similar in the Nordic countries, and many details are regulated in a similar fashion or even identically. At the same time, however, it is very easy to enumerate examples of different solutions in the different Nordic countries as well.61 The piecemeal adoption of a Nordic model of consumer protection meant similarity in level and basic solutions, but not any strong legaltechnical and substantive similarity in detail. In this way, consumer law contributed to the decline of the traditional unification approach by the Nordic legal community. It should be noted that at that time a more unifying approach was still possible in areas that seemed politically less interesting. The new Nordic sales legislation, based on the CISG and on a perceived need for modernisation, was prepared in the 1980s by a joint Nordic expert group,62 and was later implemented in Finland,63 Sweden64



61 For

examples, see at nn 21–22.

62 Nordiska köplagar, Förslag av den nordiska arbetsgruppen för köplagstiftning (Nordiska rådet, NU, 1984:5). 63 Kauppalaki/köplag 64 Köplag

(1990:931).

(355/1987).

The Emergence of Nordic Consumer Law  187 and Norway.65 Some of the reasons for the decline of Nordic joint legislation that were later put forward related to mounting time pressures on national legislative procedures stemming from the EU, were not present at the time when consumer law was developed in the 1970s. Consumer law not only brought the development of the Nordic legal community to a stop. It even contributed to the break-up of established joint legal structures. The best example of such a development is the fate of the Nordic insurance contracts acts. Regulation of insurance contracts was one of the areas in which the Nordic legal community had been notably successful in creating Nordic legal unity. Based on close cooperation between Nordic national committees for drafting new insurance contracts legislation, in the years between 1927 and 1934 the Nordic countries were able to adopt insurance contracts acts which were almost identical both as to structure and numbering as well as to content.66 This close similarity in the area also made scholarly discussion on insurance contracts a Nordic discussion. Legal dogmatic analysis of the law was a Nordic endeavour, and well-known scholars from other Nordic countries67 were cited on an equal footing with national contributions. In the area of insurance contract law not only was legislation more or less identical, but also a common Nordic legal dogmatic research area existed. The Nordic insurance law community has now been shattered. In the 1980s and 1990s each of the Nordic countries introduced new insurance contracts legislation repealing the old joint legislation.68 Even though some cooperation occurred between the drafters, the resulting products were different, both as to structure and as to content. Nordic legal unity in this area had ceased to exist. This development was quite paradoxical in the sense that the disintegration of Nordic insurance contracts legislation happened almost in the same period as a wave of mergers between insurance companies across Nordic borders. At least one can blame the Nordic legislators for a stunning lack of foresight in that respect. The main reason for this development was the perceived need to strengthen consumer protection. During the formative years of consumer protection, improving consumer law was promoted by the consumer law community in multiple areas, and insurance was a natural target, even though existing laws included many mandatory provisions said to protect the insured.69 65 Lov om kjøp (1988/27). 66 In Sweden, Lag om försäkringsavtal (1927:77); in Denmark, Lov om forsikringsaftaler (1930/129); in Norway, Lov om forsikringsavtaler (1930/20); and in Finland, Vakuutussopimuslaki/Lag om försäkringsavtal (132/1933). 67 See, eg the much-used and -cited textbooks and commentaries by A Drachmann Bentzon and Knud Christensen, Lov om forsikringsaftaler nr 129 af 15 april 1930 med bemaerkninger og sagregister, 2nd edn (Copenhagen, Gad, 1954); Nicolay L Bugge, Lov om forsikringsavtaler av 6 juni 1930 med motiver og anmerkninger (Oslo, Aschehoug, 1930); Theodor Grundt, Laerebok i norsk forsikringsrett, forelesninger over forsikringsrettens alminnelige del (Oslo, Tanum, 1939); Jan Hellner, Försäkringsrätt, 2nd edn (Stockholm, Lund, 1965); Preben Lyngsö, Dansk forsikringsret (Copenhagen, Skjern, 1971); Knut Selmer, Laerebok i forsikringsrett (Norway 1973). 68 In Sweden by act 1980:38, in Norway by Act 1989/69, and in Finland by Act 543/1994. 69 The committees preparing the original laws emphasised both the need for protection of the insured and the need to protect ‘good insurers’ against competition from ‘bad’ ones, thereby protecting the reputation and attractiveness of the line of business, see, eg Fredrik Stang, ‘Utkastet til lov om forsikringsavtaler’ (1922) Nordisk försäkringstidskrift 197.

188  Thomas Wilhelmsson The original ambition was probably also to retain Nordic unity after the reforms. When Sweden informed the other Nordic countries at a meeting of the Nordic Ministries of Justice in 1974 that the time was ripe for a reform of insurance contracts legislation, the representatives of the other Nordic countries announced their interest in cooperating over the issue.70 All the Nordic countries appointed committees for reform of insurance contracts legislation,71 which were ordered to coordinate their work. However, Sweden was not prepared to wait for the others. The first rupture in the joint Nordic insurance contracts law came through the new Swedish Consumer Insurance Act in 1980.72 This paved the way for national experimentation in the other Nordic countries as well. The case of Nordic insurance law well illustrates the challenges that the Nordic legal community is facing in contemporary society. Whilst the original Nordic insurance contracts acts from the 1920s and 1930s were thoroughly prepared by four Nordic expert committees which started work in 1919, convening several week-long Nordic meetings together, and having many meetings of representatives of the committees in between,73 resulting in preliminary drafts in 1921 and final proposals in 1925,74 the working methods in the 1980s and 1990s were different. Drafting insurance contract legislation was no longer seen only as a matter for legal specialists, who could draft the best solutions in calm, intense and enjoyable meetings. By the 1980s consumer law had become much more societally geared and political, in the broad sense of the word. This created pressure for quicker solutions that was not easily compatible with the slow pace of drafting identical laws for several countries. It also opened up the playground for national political interests related to particular solutions. Strong Swedish political pressure to enact the Consumer Insurance Act despite its negative effect on Nordic unity is a good illustration. As far as the differences between the new Nordic laws on insurance contracts had rational grounds and were not only related to the personal preferences of the drafters, they seem to have been caused by different levels of political ambitions in the consumer law area in the relevant period of time. Insurance law is just an example, though perhaps the most obvious as one here witnesses a break-up of previously almost identical legislation. As mentioned before, other consumer law legislation did not contribute to Nordic legal unity either, at least in the meaning of almost identical legislation. The reasons were certainly the same. Developing the law, and in particular consumer law, was increasingly considered to be a societal and political project rather than a ‘pure’ legal one. Consumer law was not

70 This is noted in the decisions to appoint drafting committees by the Nordic ministries of justice, see, eg Bemyndigande att tillkalla sakkunniga för att se över försäkringsavtalslagen m.m. (Justitiedepartementet, Utdrag Statsrådsprotokoll, 1974-04-05) 5; Oppnevning av et utvalg til i nordisk lovsamarbeid å utrede spørsmålet om revisjon av forsikringsavtaleloven (Jnr 2836/74) 1; Komitean asettaminen selvittämään vakuutussopimussuhteita koskevien sääntöjen uudistamista (Oikeusministeriö, lainsäädäntöosasto, Lauri Valkonen, 3.1.1977) 2. 71 In Sweden in 1974, in Norway in 1974, in Denmark in 1975 and in Finland in 1977. 72 Konsumentförsäkringslag (1980:38). 73 See, eg the reports of the committees Förslag till lag om försäkringsavtal m.m. avgivna av den därför tillsatta kommittén (Helsingfors 1925:15) 4; Förslag till lag om försäkringsavtal m.m. avgivna av därtill utsedda kommitterade (Stockholm, Norstedt, SOU, 1925:21) 5; Udkast til lov om forsikringsaftaler med tilhørende bemaerkninger udarbejdet af den ved kgl resolution af 6 februar 1919 nedsatte kommission (Copenhagen, JH Schultz, 1925) IV. 74 See ibid.

The Emergence of Nordic Consumer Law  189 treated as ‘Professorenrecht’, but rather as a part of the law where the content is of interest both to political decision-makers and the public at large. Traditional forms of law drafting cooperation, relying on experts with a considerable amount of time at their disposal, do not work very well in such a context. The new societal context required room for national experimentation. It should be underlined, however, that this move away from the traditional Nordic vision aiming at unification of private law did not of course mean a radical breakdown in Nordic legal cooperation but rather changed its focus. Nordic legal cooperation is still important as an efficient field for sharing experience from national experiments. Intense cooperation within the Nordic consumer law community certainly provided many channels for such sharing of experience. And even today both telephone calls and emails on a daily basis connect the law drafting ministries in the Nordic countries.75 For example, the development of insurance contract law is quite understandable when viewed from this perspective. As a regulative novelty, the Swedish Consumer Insurance Act introduced a strong information duty on the insurer in all phases of the contractual relationship.76 From the point of view of other Nordic countries this worked as an experiment that enriched drafting in those countries with much useful regulatory knowledge. Of course, membership of Sweden and Finland in the EU in 1995, and the Norwegian partnership in the EEA also contributed to development towards less intense Nordic legal cooperation. As much energy had to be devoted to implementing EU law, in particular in the field of consumer law, little space was left for possible large Nordic cooperation projects. Implementing European directives usually also has a timeframe that is not conducive to time-consuming Nordic cooperation in the implementation phase. Even though this argument is often used in the debate on the future of Nordic legal cooperation,77 and it certainly has its merits, the insurance case shows that the change of focus cannot be attributed to the EU alone. It is, however, symptomatic that a new debate has arisen on the need to deepen Nordic legal cooperation, supported by the Nordic Council of Ministers,78 at the same time as the role and status of the EU seems to be weakening.79 Expressed in community terms the development of Nordic consumer law illustrates a kind of a tension between the more societally geared and perhaps also more ‘political’ consumer law community and the traditional Nordic legal community that was based on academic and professional legal expertise. I write ‘a kind of ’, as there were no clear-cut borderlines and many active researchers and lawyers in this area certainly could be included in both ‘communities’. In this tension the development of society and

75 Backer, ‘Nordisk lovsamarbeid’ (n 15) 95. 76 Konsumentförsäkringslag (n 72) ss 5–8. 77 See, eg Inge Lorange Backer, Styrket nordisk lovsamarbeid, Muligheter og utfordringer (Copenhagen, Nordic Council of Ministers, 2018:727) 37–39. 78 The Report on opportunities and challenges for Nordic legal cooperation, mentioned above in the previous note, was commissioned by the Nordic Council of Ministers. 79 In the first years of membership the Nordic countries seem to have thought that cooperation that could have been considered a kind of a ‘Nordic bloc’ within the EU would not have been legitimate, see, eg Backer, ‘Nordisk lovsamarbeid’ (n 15) 92. Nowadays, with several other blocs, this concern is no longer strongly voiced.

190  Thomas Wilhelmsson law supported the societal consumer law community at the expense of the traditional Nordic legal community. For Nordic legal cooperation to work well in the contemporary societally more open context, it probably has to focus more on measures that strengthen the role of experimentation and sharing of experience across borders, both within the consumer law community and within the legal community at large. Finally, it should be stressed that consumer law is by no means the only culprit when looking for reasons for the decline of the traditional unification goal of Nordic private law cooperation. Other fields of law that are equally politically or societally topical have been pushing towards more national experimentation as well. However, this is not the place to delve deeper into similar tensions in other areas of law.

VII.  Conclusions: Lessons for Europe? The questions posed at the beginning of this chapter concerned the emergence of a Nordic model of consumer protection and a Nordic consumer law community during the formative years of consumer protection. How did this community develop and what impact did it have on the general Nordic legal community? There are many reasons to speak of a Nordic consumer law community. Working within a common Nordic legal family, the drafters and developers of Nordic consumer law could make use of the traditionally strong legal cooperation between the Nordic countries, adding to it a new layer of consumer law expertise. The result of their cooperation was not, however, joint pieces of Nordic legislation, as in traditional private law drafting, but rather the production of what could be called a joint Nordic consumer protection model with the Consumer Ombudsmen at the heart of enforcement and development of the system. The Nordic element is also visible in the intense exchange of experience across borders both at the law drafting stage and in implementing and applying the law by the specialised authorities and boards that had become an important part of the Nordic consumer law community. The development of consumer law in the Nordic countries was clearly driven by the state, including both politicians and public servants. The Nordic consumer law community was much more societally geared than the traditional legal community. The task of developing the law was a political and societal task, not to be entrusted to legal experts alone. Traditional Nordic legal cooperation, in its most advanced form striving to achieve joint legislation on important matters, was considered too slow and was pushed aside by a more open national development, on a Nordic level supported by a relatively intense exchange of experience. In other words, the consumer law community achieved its successes partially at the expense of the traditional aims of the Nordic legal community. This may reflect a deeper change in power structures, indicating the shrinking influence of traditional private law expertise. The advent of consumer law also indicates an evolution of legal thinking in the direction of strengthening the instrumentalist features of law that earlier were already typical of Nordic law. This may even be a reason for the perceived success of the Nordic consumer protection model. The fact that drafting new consumer law was not tied to a cumbersome and system-oriented traditional joint Nordic drafting procedure allowed

The Emergence of Nordic Consumer Law  191 quick advancement and targeted solutions to topical problems. It supported experimentalism combined with both formal and informal close cooperation through exchange of experience across borders. In this sense Nordic consumer law was a learning law continuously developed on the basis of increasing experience. In a way, the Nordic situation during the formative years of consumer protection resembles the situation within the EU today. One may compare the tension between the traditional Nordic legal community, based on academic legal expertise, and the societally geared, instrumentalist consumer law community, as analysed above, with a similar contemporary strain between those representing systematic legal doctrine and those emphasising instrumentalist consumer protection goals in the European private law discourse. The history of Nordic consumer protection may offer some learning with regard to the contemporary European situation. As well-known, in EU private law discourse there is a tension between code-drafting (academic) legal expertise and a both EU-driven and national more or less instrumentalist approach to consumer protection, often administered by European and national politicians and public servants. Code-drafting academics have produced impressive and in many ways useful European draft codifications, such as the Principles of European Contract Law and the Draft Common Frame of Reference. However, the success of this work, if measured by the amount of legislation enacted, has been limited, even though for example the European Principles were used as inspiration when reforming contract law in some of the former socialist countries.80 On the other hand, European consumer law has been constantly evolving through instrumental directives with public servants and politicians in the driving seat. The development of such rules is often based on national experience. National law offers the experimental basis for new learning. In addition, national experimentation is still ongoing, within the rather wide space left to national law by the European directives, many of them minimum directives. It seems, indeed, that the European code-building academics have been less influential than the instrumentalist consumer law developers, in the same way as the traditional Nordic legal community has seen its influence shrink in favour of experimental consumer law drafters. Recognising that consumer law is a field with a clearly visible societal and political impact confronting quickly evolving challenges, one may pose the same questions on a European level as on the Nordic level: Has the time already passed for broad and systematic codifications driven by legal expertise alone, and is an experimental and learning law better equipped to respond to contemporary challenges? Is there a need to preserve opportunities for sufficient national experimentalism in the area by continuing the use of minimum rules in European instruments? Should the free movement of legal ideas across borders be cherished in Europe as a mechanism for learning and improving, as it is in the Nordic countries?

80 See, eg regarding Estonia, Paul Varul, ‘Legal Policy Decisions and Choices in the Creation of New Private Law in Estonia’ (2000) 5 Juridica International 104, 107.

192

8 Consumer Law in Poland: Or There and Back Again1 ANETA WIEWIÓROWSKA-DOMAGALSKA* AND MATEUSZ GROCHOWSKI**

I.  The (Non)Trivial Question At first sight, the process of developing consumer law in Poland might seem rather straightforward. As a post-communist, aspiring Member State of the EU, Poland adopted the existing European consumer acquis even before joining the EU in 2004.2 At present, as with every other Member State, Poland is involved in the further elaboration of the acquis through its participation in the EU legislative process, as well as through developing its own domestic case-law and referring preliminary questions to the Court of Justice of the European Union (CJEU). This picture rightly shows EU law to be the driving force behind consumer law in Poland. At the same time, however, it fails to reveal how consumer law really functions in Poland, and what the reasons and processes are that have shaped resistance towards consumeristic notions in the Polish legal system. In order to understand these, one needs to delve more deeply into the socio-political as well as economic transformations that repeatedly reshaped Polish society in the twentieth century,3 as well as * PhD, Akademische Rätin, European Legal Studies Institute, Osnabrück University. ** Ph.D., LL.M. (Yale), Senior Research Fellow at the Max Planck Institute for Comparative and International Private Law (Hamburg), Assistant Professor at the Institute of Law Studies of the Polish Academy of Sciences (Warsaw). 1 When working on this chapter, we had to address the problem traditionally faced by academics from legal systems that operate in less common languages, ie how to choose the literature we refer to. While the legal analysis published in easily comprehensible languages makes it easy for the reader to verify the sources, it normally presents an external view on what is happening within the legal system. It is, certainly, a valuable source of information, but it does not show how the system was perceived from the inside. For that reason, we have primarily based our analysis on Polish sources (especially for the socialist period) as they provide an insider’s view, and foreign sources play only a supplementary role (although they are also present in the analysis). 2 On the process of transposition, see Ewa Łętowska, Monika Jagielska, Katarzyna Lis, Przemysław Mikłaszewicz and Aneta Wiewiórowska-Domagalska, ‘Implementation of Consumer Law in Poland’ (2007) 15 European Review of Private Law 873. 3 The social and political premises of the Polish reality that emerged after the post-communist transformation were subject to numerous analyses of varying scope and conceptual framework. One of the most

194  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski in the compound development of Polish private law, which all resulted in a specific ­intertwining of consumer law, contract law and social ideology. Poland had been developing consumer protection concepts for several decades preceding its accession to the European Union. As a result, the EU consumer acquis was not introduced into a vacuum but had to be integrated within the conceptual framework already existing in contract law. At the same time, EU law was introduced after the drastic socio-political transformation of 1989, which changed a socialist,4 state-steered economy into a free market democracy. This inspired a turn towards a strongly libertarian approach to relations regulated by private law, at least partly based on the belief that an inadequate level of consumer protection was a consequence of inefficiencies in the functioning of the socialist market. Hence, the underlying political considerations and values (in Polish scholarship often referred to as ‘axiology’) of the EU consumer acquis stood in stark contradiction with the views generally accepted by Polish jurisprudence about how to regulate contractual relations in the market. They were (and to a considerable extent still are) based on a deeply libertarian view of the relation between the market and the state that acts through law-making, adjudication and administrative enforcement. This text begins with a brief presentation of certain legal structures that appeared in Polish contract law in the inter-war period, proceeds through formation of the notion of protecting those who acquire goods and services (in particular end-users) and the subsequent establishment of more compound protective instruments in the socialist period, until the economic and legal transformation of the 1990s. The next part focuses on the consequences of the transformation period for EU integration both during the pre-accession period and onwards, concluding with the general outcomes of these developments for the current shape of Polish consumer law.

II.  Consumer Law before 2001 A.  The Mass Contract Origins of Consumer Instruments: The Inter-War Period The inter-war period was the time when modern private law was born in Poland. After regaining independence in 1918, the Polish legal order consisted of elements of five legal systems (German, Austrian, modified French, Russian and Hungarian). Major efforts

compelling analytical frameworks – relevant also for legal and market attitudes of Polish society – has been provided by Jan Sowa, Fantomowe ciało króla. Peryferyjne zmagania z nowoczesną formą (Kraków, Universitas, 2011) in his deep historical deconstruction of the Polish identity and socio-political thought; see also Jan Sowa, ‘The King’s Phantom Body. A Peripheral Struggle with the Modern Form. Introduction (excerpts)’ in Marta Keil (ed), Identity. Move!: Dance, Process, Artistic Research. Contemporary Dance in the Political, Economic and Social Context of ‘Former East’ of Europe (Warsaw, Goethe-Institut Warsaw, The Centre for Culture in Lublin, East European Performing Arts Platform, Motus o.s./ Alfred ve dvoře in Prague and the State School of Dance and Authors, 2015). 4 The terms ‘socialist’ and ‘communist’ are used in this text interchangeably, as a label for the dominant political and economic regime in Poland in 1944–1989.

Consumer Law in Poland: Or There and Back Again  195 were paid to unifying the system, which in the area of private law led to enactment of the Code of Obligations in 1933 (the 1933 Code).5 While its general agenda subscribed to the classic approach of that time, strongly praising the liberal view of contract law, with freedom of contract as its main tenet,6 it also attempted to accommodate certain instruments that would reflect the reality of the mass-transaction market while introducing the first elements of the toolbox protecting the weaker party in a legal relationship.7 While none of these could be equated to consumer law in the modern sense of the word,8 as their axiology was oriented towards rectifying the consequences of the mass-transactional market (that is, the formalisation of consent, concluding contracts by adhesion), they did set out structures that could later be used for introducing consumer measures.9 In this regard, the 1933 Code10 contained provisions regulating standard contract terms (Articles 71 and 72), including the first proposal for state-provided review

5 Rozporządzenie Prezydenta Rzeczypospolitej z dnia 27 października 1933 r. Kodeks zobowiązań Dz.U. 1933 nr 82 poz. 598 (Degree of the President of the Republic of Poland of 27 October 1933, The Code of Obligations, Journal of Laws of 1933 No 82, Item 598). The Code was based on strongly informed comparative legal and economic studies, attempting to merge various legal systems in traditions that were in force in Poland after the First World War – cf Tomasz Giaro, ‘Westen im Osten: Modernisierung osteuropäischer Rechte bis zum Zweiten Weltkrieg’ (2003) 2 Rechtsgeschichte 123, 137; Maria Lewandowicz, ‘Is There a Polish Legal Tradition: On the Margins of Considerations regarding the 1933 Code of Obligations’ (2017) 8 Journal of European History of Law 72, 75–76; Zygmunt Nagórski, ‘Codification of Civil Law in Poland (1918–1939)’ in Polish Lawyers’ Association and Wacaw Komarnicki, Studies in Polish and Comparative Law, a Symposium of Twelve Articles (London, Stevens and Sons, 1945) 58–66. 6 The principle was expressed clearly in Art 55 of the 1933 Code (n 5)– cf Lewandowicz, ‘Is There a Polish Legal Tradition’ (n 5) 75. 7 cf Bronisław Hełczyński, ‘The Law in the Reborn State’ in Wenceslas J Wagner (ed), Polish Law Throughout the Ages (Stanford, Hoover Institute Press, 1970) 172, pointing at abandonment of the fully liberal approach in rules of the 1933 Code on employment contracts. Notably, the general attitude of contract law – freedomoriented or more ‘socially sensitive’ – was also a subject of broad policy debate in inter-war private law scholarship; cf Michał Derek, ‘Indywidualizm czy socjologizm? Zasada swobody umów w projektach polskiego kodeksu zobowiązań z 1933 roku na tle porównawczym’ (2015) 47 Czasopismo Prawno-Historyczne 169; Ignacy Koschembahr-Łyskowski, ‘Przepisy ustawy a prawo w prawie cywilnem. Studium z dziedziny prawa porównawczego’ (1935) 7 Rocznik Prawny Wileński 1, 18; Roman Longchamps de Bérier, ‘Zasada wolności umów w projektach polskiego prawa o zobowiązaniach’ in Księga pamiątkowa ku czci Władysława Abrahama (Lwów, Gubrynowicz i Syn, 1930) 364ff; Jan Korzonek and Ignacy Rosenblüth, Kodeks zobowiązań. Komentarz, vol I (Kraków, Księgarnia Powszechna, 1936) 141. All these publications referred to contract law as the sphere of potential inequalities between the parties, which should be remedied by the lawmaker or by the courts. Apart from the labour contract, the elements of this protective attitude were also present in rules on apartment rent, lease contract and partnership agreement – Derek, ‘Indywidualizm czy socjologizm?’ (n 7) 183–184. 8 The term ‘consumer’ was present in doctrine, but scarcely – typically, however, as a label for the economic concept of end users, without reference to any legal category – see, eg Antoni Górski, ‘Uzasadnienie wstępnych postanowień projektu ustawy handlowej’ (1921) 49 Gazeta Sądowa Warszawska 44. 9 The most explicit manifestation of protective intervention was certainly employee protection, as the employment contract constituted part of specific contracts regulation in the 1933 Code. The labour sector rules, however, rather quickly evolved into a separate branch of law; see also Udo Rukser, ‘Das neue polnische Obligationenrecht’ (1934) 8 Zeitschrift für ausländisches und internationales Privatrecht 342, 355. 10 The code was adopted as one of the first stages of unification of Polish law in the inter-war period. This process, which envisaged gradual unification of Polish substantive and procedural rules, was necessary due to the mosaic of legal systems that were in force in Polish territory after the First World War. Regarding private law, parts of inter-war Poland were subject to German, Austrian, Russian, French and Hungarian rules, which pleaded to be replaced by one, nation-wide set of rules. Unification, commenced in 1918, was interrupted midway by the Second World War and concluded in 1964 – in a new political reality, but to a great extent on the basis of the pre-war drafts.

196  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski of contract terms.11 The reasons for proposing the 1933 Code,12 explained in ­relation to Article 71 on the characteristic feature of standard contract terms – or by-laws ­(regulaminy), as they were called at the time – is that, while they are issued by one party, they bind both parties without the need for the other party to indicate acceptance. The law, therefore, must make sure that these standard contract terms would not harm the other party. Article 72, regulating mass contracts, was seen as another exception to the rule that a contract requires agreement by both parties. It was perceived not as a source of restrictions in terms of the freedom of the parties to shape the content of the contract, but as regulation of a special way to conclude a contract.13 According to this Article, standard contract terms issued or approved by a state body or local government were binding upon the parties that referred to it in the contract. Article 72 was aimed at preventing the situation whereby a contract would be concluded to harm ‘the public’, that is, the party that had no influence on the content of the contract.14 This feature of standardised agreements was recognised in particular for contracts characterised by the immanent inequality of the parties (such as labour agreements).15 Article 72 did not specify which administrative bodies could issue standard contract terms, nor the procedure for approval, so its impact in practice was rather limited; it did, however, inspire solutions adopted in the Polish Civil Code of 1964 (further: the 1964 Code)16 – on which see also section II.D. The 1933 Code also contained quite modern rules on buyer’s protection (Articles 306–336)17 and was accompanied by administrative provisions that dealt mostly with customer information for certain market sectors,18 as well as the quality and standardisation of goods and services on the end-user market.19 11 See also Nils Jansen in Nils Jansen and Reinhardt Zimmermann (eds), Commentaries on European Contract Laws (Oxford, Oxford University Press, 2018) 922. 12 Uzasadnienie projektu Kodeksu Zobowiązań z uwzględnieniem ostatecznego tekstu kodeksu: w opracowaniu głównego referenta projektu prof. Romana Longchamps de Bérier: Art. 1-167, Komisja Kodyfikacyjna. Podkomisja Prawa o Zobowiązaniach: z. 4 (Warszawa, Urzędowe Komisji Kodyfikacyjnej, 1934) 99–100. 13 See Ewa Łętowska, Wzorce umowne, ogólne warunki, wzory, regulaminy (Wrocław, Ossolineum, 1975) 73, referring to Roman Longchamps de Bérier, Zobowiązania (Poznań, Księgarnia Akademicka, 1948) 178–179 and Ludwik Domański, Instytucje kodeksu zobowiązań, vol 1 (Warszawa, Księgarnia Wydawnictw Prawniczych, 1936) 377. 14 The possibility of harming contractors was acknowledged explicitly in scholarship as a rationale for imposing disclosure duties onto a party that uses standard terms – Roman Longchamps de Bérier, Zobowiązania (n 13) 168. 15 Longchamps de Bérier, Zobowiązania (n 13) 168. 16 Łętowska, Wzorce umowne, ogólne warunki (n 13) 68–77. 17 The rules in question did not adopt a strictly consumer attitude. They aimed rather to balance the interests of the buyer and the seller. At the same time, however, part of this regulation was quite clearly underpinned by the assumption of unequal bargaining power between the parties to some sale agreements. For instance, under Art 308 of the 1933 Code, parties were allowed to exclude or limit the seller’s statutory responsibility for the low quality of a good, except for events where the seller had deceitfully hidden a defect from a buyer. On the content of the buyer’s protection rules in the 1933 Code, see especially Anna Falkowska, Odpowiedzialność sprzedawcy z tytułu rękojmi za wady fizyczne rzeczy (Warszawa, Wolters Kluwer, 2010) 122ff. 18 See, eg Rozporządzenie Prezydenta Rzeczypospolitej z dnia 27 października 1933 r. o sprzedaży wyrobów tytoniowych (Regulation of the Ministry of Treasury of 30 October 1933 on the sale of tobacco products, Journal of Laws of 1933 No 87, Item 676), which provided quite detailed rules on informing customers on prices and assortment in tobacco shops; Rozporządzenie Rady Ministrów z dnia 13 lipca 1938 r. o sprzedaży w wewnętrznym handlu detalicznym jaj kurzych na wagę i uwidocznianiu ich jakości (Regulation of the Council of Ministers of 13 July 1938 on the sale in the internal retail trade of chicken’s eggs by weight and on displaying their quality, Journal of Laws of 1938 No 43, Item 415), which specified the method of informing end buyers about the quality of eggs. 19 See, eg Rozporządzenie Prezydenta Rzeczypospolitej z dnia 22 marca 1928 r. o dozorze nad artykułami żywności i przedmiotami użytku (Regulation of the President of Poland of 22 March 1928 on supervision

Consumer Law in Poland: Or There and Back Again  197

B.  Consumer Market under the Socialist Regime – The Ideology After World War II, the Polish economy found itself in a state of profound disarray, and for a long time was not able to address many of the basic needs of citizens.20 The economic situation did not create much space even for discussing consumer interests.21 This debate could begin only after satisfying a certain minimal level of needs. Gradual development of the post-war economy eventually brought up a fundamental question: how could consumer protection even fit with the socialist concept of the market and society? The socialist agenda of economy and law was based on collectivistic reasoning and affirmation of state steering.22 Attention was focused on the needs of society (as defined by the Party) and on providing general economic stability and justice for society, perceived as a whole. The individual interests of consumers were secondary from this perspective and relevant only as a component of overall social welfare.23 For some decades (at least until the 1970s), consumer protection was considered to fall beyond the ambit of socialist law and socialist economy, and was perceived as a sign of a tendency towards capitalism and a free market economy.24 Consumer protection measures were inscribed into the market organisation scheme. The state was asserted as only navigating macroeconomic processes, but also as providing individual consumers with a sufficiently high level of welfare (as defined by the state). Consumer contracts were based on the relation between the individual and the state (acting through the administratively-governed enterprise as seller, provider of services or landlord).25 Hence, the state was responsible for organising production, as well as for distributing goods and services amongst end users. Enforcement of individual rights was meant to contribute to increasing the quality

over food products and items of use, Journal of Laws of 1928 No 36, Item 343). The act (which, notably, remained in force until 2003) introduced several requirements on the quality and safety of goods, eg on pre-examination, packaging and storage. 20 On the profound socio-historical account of the early post-war period in the Polish market and the spontaneous (bottom-up) emergence of the consumer economy see Marcin Zaremba, Wielka Trwoga. Polska 1944–1947. Ludowa reakcja na kryzys (Kraków, Znak, 2012) 540ff; on the historical roots of the postwar informal economy cf Jerzy Kochanowski, ‘Black Market in the General Government 1939–1945: Survival Strategy or (Un)Official Economy?’ in Tatjana Tönsmeyer, Peter Haslinger and Agnes Laba (eds), Coping with Hunger and Shortage under German Occupation in World War II (London, Palgrave Macmillan, 2018) 27–47. 21 Ewa Łętowska ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (1978) 33 Państwo i Prawo 16, 20; on the specifics of the consumer market (and consumer-related legal issues) in this period see also Barbara Pisana, ‘Powstanie i rozwój instytucjonalnych form ochrony interesów konsumenta w Polsce Ludowej’ (1971) 33 Ruch Prawniczy, Ekonomiczny i Socjologiczny 135, 139–140. 22 Norbert Reich, ‘Transformation of Contract Law and Civil Justice in the New EU Member Countries – The Example of the Baltic States, Hungary and Poland’ (2005) 23 Penn State International Law Review 587, 592–593. 23 See, eg Jan Drewnowski, ‘The Economic Theory of Socialism: A Suggestion for Reconsideration’ (1961) 69 Journal of Political Economy 341, 347, who observes that collective welfare preferences represented by a state ‘[are] not deduced from individual preference functions. To someone accustomed to the traditional way of thinking in terms of consumers’ sovereignty this may seem improper. But […] in some special (but not at all irrelevant) way the state preference function represents the wishes of consumers.’ 24 Ewa Łętowska, ‘Problematyka ochrony konsumeta w PRL’ (1978) 55 Studia Prawnicze 8. 25 On the same phenomenon, for East German consumer law, Inga Markovits, ‘Pursuing One’s Rights under Socialism’ (1986) 38 Stanford Law Review 689, 722ff.

198  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski of goods and services. This, however, could not be effectively governed in a centrally planned economy.26 Shortages in supply of quality consumer goods and services were perceived to be necessary and tentative concessions of individual interest. As observed by Łętowska, at the time of adopting the 1964 Code, the problem of consumer protection, as well as the need to use legislation to guarantee such protection, simply did not exist.27 In a longer-term perspective, it was expected that development of the socialist market would provide ultimate welfare for society as a whole, which would translate into the welfare of its particular members. Yet, for a long time, satisfying ‘egoistic’ consumerist needs was seen as contrary to socialist ideology.28 In the 1970s this approach began to evolve towards a higher appreciation of the private individual and their well-being.29 Even in its most liberal periods the pro-consumer orientation was strongly informed by ideological premises.30 It approved only meeting ‘the real needs’ of citizens, while needs exceeding this threshold (implicitly labelled as ‘bourgeois luxury’) did not deserve support.31 With rising consumer welfare, the market slowly evolved. The consumer economy, although not fully appreciated at the level of economic theory, still formed a part of the market.32 This process culminated in the 1970s, when the new economic policy 26 As Inga Markovits observes, the socialist state ‘propagates the enforcement of buyers’ rights as a means of checking the chronic situation in the state-owned consumer industry.’ – Inga Markovits, ‘Socialist vs. Bourgeois Rights: An East-West German Comparison’ (1978) 45 The University of Chicago Law Review 612, 635–636. 27 Ewa Łętowska, ‘Status prawny obywatela – konsumenta w stosunkach z jednostkami gospodarczymi’ in Remigiusz Krzyżewski (ed), Problemy ochrony konsumenta (Warszawa, Watra, 1980) 206. 28 Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21) 21; Łętowska, ‘Problematyka ochrony konsumeta’ (n 24) 9–10. 29 Further on development of instruments focused on providing proper quality of consumer products see Hans-Wolfgang Micklitz and Marcin Rogowski, ‘Länderbericht Polen’ in Hans-Wolfgang Micklitz and Thomas Roethe (eds), Produktsicherheit und Marktüberwachung im Ostseeraum: Rechtsrahmen und Vollzugspraxis (Baden-Baden, Nomos, 2008) 171ff. 30 At that period, the relation between the interest of the consumer and society (as an aggregate of individuals) under the socialist economy was framed in a more compound way. While the individual’s preferences were not neglected as such, they were considered to be part and parcel of the common welfare, not a self-standing goal of the economy: ‘[t]he principle of ‘consumer sovereignty’ cannot constitute, however, the exclusive basis for rational governance in socialism, which is decisive also for allocation of resources according to the needs expressed in effective demand by consumers on the market […]. By determining the proportions of production and conditions of exchange […] an important role is played not only by purely and directly economic premises, but also socio-political, socio-cultural or even military, which cannot be decided according to the wishes of individual consumers. The wishes of consumers as individuals are not always identical with their yearnings as members of society. Subordination of the preferences of individual consumers to the preferences of the entire society does not mean, though, ignoring the rational needs of the members of society. It is a prerequisite for realising the basic aim of the socialist economy, and within it also diversified and justified needs of the members of society’ – Zbigniew Romanow, ‘“Suwerenność konsumenta” jako problem teorii i ideologiki w rozwoju myśli ekonomicznej’ (1981) 43 Ruch Prawniczy, Ekonomiczny i Socjologiczny 35, 46. 31 ‘Under the motto ‘each according to one’s work’ the Communists rejected the idea of social justice relying on satisfaction of consumer needs, instead introducing the politics of privileging certain consumer groups over others, depending on their contribution and role in fulfilling the Six-Year Plan’ – Michał Mazurek, ‘Moralities of Consumption in Poland across the Short Twentieth Century’ (2013) 68 Annales. Historie, Sciences Sociales 393, 407. 32 According to one of the then economic accounts of the consumer market, in the socialist economy, ‘[t]he aim of the activity of the entire society […] is the maximum satisfaction of growing social needs, in the outcome of the rational use of the means of production. This aim reflects the essence of socialist productionrelated relations, where the growth and use of production power must be subordinated to the interest of the entire society. […] Within the social ownership of the means of production the natural aim of

Consumer Law in Poland: Or There and Back Again  199 of the Party33 placed strong emphasis on addressing individual consumptive needs and on opening the country up to new consumer products and services from the other side of the Iron Curtain.34 Although in the early years this approach resulted in a major spike in individual welfare and life quality, in the course of time the centrally-planned economy turned out to be too weak to maintain this trend. In the outcome, not only the array of goods and services, but also their availability, was decreasing over time.35 At the same time, 1970s market engineering ran alongside citizens’ rising expectations, ‘awakening consumer awareness’ in theoretical analysis. The process paralleled the overall rise of consumer thinking in the US and western Europe (symbolically benchmarked by the 1962 speech by J.F. Kennedy, echoed in Polish legal writing),36 which started to quite quickly proliferate in Central European countries.37

C.  The Reality of the Socialist Consumer Market The increasing volume of consumer transactions and incorporating consumer policy into the state regulatory agenda were confronted with several practical shortcomings characteristic of socialist regimes. Throughout the history of post-war Poland until the early 1990s,38 the socialist market was mostly a seller’s market, where consumer demand systematically outbalanced available supply.39 The consequences of the economy of production – maximization of consumption – becomes the direct aim of general economic activity.’ – Zbigniew Romanow, ‘Istota dobrobytu ekonomicznego w socjalizmie’ (1973) 35 Ruch Prawniczy, Ekonomiczny i Socjologiczny 105, 107–108. 33 As declared at the 6th Party Congress of 1971 and at the 7th Party Congress of 1975; see also Stanisław Sołtysiński and Jacek Trojanek, ‘Proces koncentracji produkcji i usług a zagadnienie ochrony konsumenta w PRL’ (1978) 55 Studia Prawnicze 19; Łętowska, ‘Problematyka ochrony konsumeta’ (n 24) 15–16. 34 cf Bogdan Mieczkowski, ‘The Relationship between Changes in Consumption and Politics in Poland’ (1978) 30 Soviet Studies 262, 264–265; Bogdan Mieczkowski, ‘The Political Economy of Consumption in Poland’ (1979) 24 The Polish Review 68. 35 Jerzy Kochanowski, Jenseits der Planwirtschaft: der Schwarzmarkt in Polen 1944–1989 (Göttingen, Wallstein Verlag, 2013) 113. 36 Łętowska, ‘Problematyka ochrony konsumeta’ (n 24) 5–18; Ewa Łętowska, ‘Ochrona ‘słabszych’ uczestników obrotu jako problem legislacyjny’ (1982) 29 Annales Universitatis Mariae Curie-Sklodowska 115; Ewa Łętowska, ‘Review of: Eike von Hippel, Der Schutz des Schwächeren, Tubingen 1982’ (1984) Ruch Prawniczy Ekonomiczny i Socjologiczny 327, 327–328; Ewa Łętowska, ‘Ochrona konsumenta a ekonomiczno-socjalne prawa człowieka’ in Janusz Łętowski (ed), Prawa obywatelskie i administracja państwowa. Polska–Austria (Ossolineum 1983) 140–152; Ewa Łętowska, ‘Kształtowanie się odrębności obrotu mieszanego’ in Ewa Łętowska (ed), Tendencje rozwoju prawa cywilnego (Wrocław, Ossolineum, 1983) 396. 37 Ernst A Kramer, ‘Zur Konzeption des Konsumentenschutzrechts: Ein Bericht über die Lage in Österreich und der Schweiz vor dem Hintergrund der aktuellen deutschen Diskussion’ (1986) 1 Kritische Vierteljahresschrift für Gesetzgebung und Rechtswissenschaft 270. 38 See, eg Jerzy Dietl, ‘Moral Consequences of a Seller’s Market: Polish Experience’ (1984) 1 International Journal of Research in Marketing 117; Małgorzata Fuszara, ‘Market Economy and Consumer Rights: The Impact on Women’s Everyday Lives and Employment’ (1994) 15 Economic and Industrial Democracy 75, 76–77; Jacek Trojanek, ‘Źródła uprzywilejowanej pozycji producenta w gospodarce uspołecznionej’ (1986) 48 Ruch Prawniczy, Ekonomiczny i Socjologiczny 1, 3–5. 39 As a result, the amount of money on the consumer market substantially exceeded available goods and services: ‘[t]here were persistent problems with poor quality and a general overhang of money, because wages normally increased more than planned, while consumer goods production did not reach plan targets’. (Anders Åslund, ‘The Functioning of Private Enterprise in Poland’ (1984) 36 Soviet Studies 427, 431); see also PJD Wiles, ‘Changing Economic Thought in Poland’ (1957) 9 Oxford Economic Papers, New Series 190, 206, who refers to permanent restrictions in satisfying consumers’ needs in the post-war centrally-planned economy as a form of violating consumer sovereignty.

200  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski shortages: low quality of goods and services (due to the typically inefficient organisation of state-owned enterprises), or simply a lack of goods in the market (due to the limited assortment of domestic production and inefficiencies of the import of goods) shaped consumer preferences. They valued actual performance, even if faulty or delayed, over any legal remedy available to them.40 State domination of the market resulted in establishing de facto monopolies or oligopolies of varying degrees.41 In some instances – such as rail transportation or electricity supply – competition was by definition excluded and the entire market sector was embraced by a single company. In other areas, where (at least in theory) there were a few competing enterprises, the actual scale of this rivalry was quite limited. Most ‘competitors’ were state-owned and subordinated to a common central plan,42 which almost entirely excluded rivalry in the strict sense and decreased its impact on consumer welfare. This further increased the market dominance of state-owned enterprises,43 but also led to substantive infringements of consumer interests. These manifested themselves in simple acts of ignoring and mistreating consumers in everyday market practice.44 Consumers were often approached in an arrogant and imperious manner, with constant attempts by shop staff to express their supreme position.45 As a result, the Polish consumer market was populated by frustrated individuals who did not see state structures as a vessel for protecting their rights. The constant shortages and inefficiencies of the state-governed market triggered intense growth of an ‘alternative’ economy, beyond state regulation. This was based mostly on establishing unofficial ways of satisfying consumptive needs (for example, exchange of goods in close-knit social circles and buying food directly from farmers) and an immense increase in the free market, mostly beyond state regulation.46 40 On the realities of the consumer market in Poland in the first decades of the socialist economy see, eg J Hart Walters, ‘Retailing in Poland: A First-Hand Report’ (1964) 28 Journal of Marketing 16, 17ff. 41 cf Stanisław Włodyka, ‘Kontrahierungszwang als Mittel der Wirtschaftslenkung im Polnischen Recht’ (1976) 40 Rabels Zeitschrift für ausländisches und internationales Privatrecht 84, 88; Ewa Łętowska, Stanisław Sołtysiński, Jacek Trojanek and Czesława Żuławska, ‘Die Problematik des Verbraucherschutzes in der Volksrepublik Polen’ (1978) 2 Journal of Consumer Policy 50, 54f, 57. 42 On this discrepancy also Janusz Łętowski, ‘Verbraucherschutz in Polen: Rechtslage, Wirklichkeit und Zukunft’ (1976) 40 Rabels Zeitschrift für ausländisches und internationales Privatrecht 654, 661. 43 As has been observed, ‘it is not difficult to observe that the dominance of demand over supply vests suppliers with marker power, and at the same time that this imbalance can be an independent source of this power or can strengthen the already existing power which results from a given organizational configuration of the economy that creates monopolistic structures’. – Trojanek, ‘Źródła uprzywilejowanej pozycji producenta’ (n 38) 9. 44 On the phenomenon of ‘producer dictatorship’, see Jan Szczepański, ‘Some Characteristics of Contemporary Polish Society’ (1964) 10 The Polish Socilogical Biulletine 5, 7. 45 See Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21) 24. One of the most vivid cultural depictions of this phenomenon was provided by the legendary Polish comedy film ‘Miś’ of 1981, directed by Stanisław Bareja. In one of the scenes, the main protagonist comes to a restaurant cloakroom to discover that the coat he left there is missing – and that the attendant offers him somebody else’s coat, as if nothing had happened. Finally, the attendant tells him brazenly: ‘We do not have your coat and what can you do to us?’ and shows him a board in the cloakroom saying ‘The attendant is not liable for clothes and items left in the cloakroom.’ 46 See, eg Andrzej Rychard, ‘Politics and Society after the Breakthrough: The Sources and Threats to Political Legitimacy in Post-Communist Poland’ in George Sanford (ed), Democratization in Poland, 1988–90: Polish Voices (Houndmills, Palgrave Macmillan, 1992) 158, along with a further source referred to by the author; David Lipton and Jeffrey J Sachs, ‘Creating a Market Economy in Eastern Europe: The Case of Poland’ (1990) 1 Brookings Papers on Economic Activity 75.

Consumer Law in Poland: Or There and Back Again  201 In the outcome, ‘proto-consumer’ transactions in the socialist economy were functioning in two p ­ arallel legal realms – as a system of state-enacted provisions and customary rules emerging spontaneously in the market.47 The importance of the ‘alternative’ consumer economy increased over time, reaching its peak during the economic crisis of the 1980s.48 Its emergence was not only symptomatic of the erosion of mainstream markets, but also led to extracting large parts of the consumer market beyond the system of state-created consumer law.

D.  Legal Framework of the Consumer Market: Between Individualism and the Collectivist Approach The Polish Civil Code of 1964 set the foundation of the legal framework applicable to consumer contracts.49 In its underlying ideological structure, the 1964 Code was a direct product of the socialist approach towards the market and law. The 1964 Code disregarded freedom of contract as a general principle50 and strongly emphasised the role of state steering in the economy. Likewise, it did not recognise the concept of consumer protection.51 Despite its general axiological matrix, the 1964 Code proved to be quite useful as a source of consumer protection tools. Its institutional framework was based mostly on inter-war contract law, which could be quite easily adapted to address consumer issues.52 As a result, while socialist in the axiological layer, the 1964 Code preserved concepts of the liberal economy53 in the classic laissez-faire sense, acquired via the interwar 1933 Code.54 The 1964 Code also sustained the pre-war approach, making broad use of open-ended standards (general clauses). Though under the socialist regime, the wording of many of these standards was altered, shifting focus onto collective, 47 In a similar context on the East German market, see also Inga Markovits, Justice in Lüritz: Experiencing Socialist Law in East Germany (Princeton, Princeton University Press, 2010) 198–201; on non-planned spheres of the market under the socialist regime see also Dennis O’Hearn, ‘The consumer second economy: Size and effects’ (2007) 32 Soviet Studies 218, who labels this sector of market in the socialist regime as ‘the second economy’ (as opposed to the ‘primary’ state-planned sectors of the market). 48 cf Kochanowski, Jenseits der Planwirtschaft: der Schwarzmarkt (n 35) 117–120. 49 Ustawa z dnia 23 kwietnia 1964 r. Kodeks cywilny Dz.U. 2018 (Act of 23 April 1964 Civil Code, consolidated text: Journal of Laws of 2020, Item 1740 with further amendments (in force since 1 January 1965)). 50 See, eg Aleksander W Rudziński ‘New Communist Civil Codes of Czechoslovakia and Poland: A General Appraisal’ (1965) 41 Indiana Law Journal 33, 42. 51 Neither the protocols of the Civil Law Codification Committee, nor the legal writing of this period reveal that consumer issues would be considered, Łętowska, ‘Kształtowanie’ (n 36) 418. 52 On the attempt to preserve the pre-war structures of the civil law system in the Polish socialist codification see also Kazimierz Grzybowski, ‘Reform and Codification of Polish Law’ (1958) 7 American Journal of Comparative Law 393, 401f. 53 In particular, the 1964 Code implicitly assumed – eg through broad use of non-mandatory rules – that parties should be apt to conclude just and balanced agreements without direct regulatory intervention. Even in the 1960s, this approach was rather obsolete and did not allow the regulatory concerns arising in the market economy to be addressed directly. 54 As a further result, the Civil Code of 1964 was able to remain in force – with only some necessary ­amendments – after the post-communist transformation. The change of underlying axiology did not outdate most of the existing statutory structures, which could still play their role in the changed socio-economic ­realities; see also Daniel T Ostas, ‘Institutional Reform in East-Central Europe: Hungarian and Polish Contract Law’ (1992) 26 Journal of Economic Issues 513, 515–521.

202  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski rather than individualist values, they still could be used by courts as a multifunctional source for deriving consumer protection rules.55 This approach allowed the notion of freedom of contract to be introduced, along with consumer protection. While before 1989 these concepts were not recognised at the level of rules, their function and effects were clearly understood by doctrine, and at least to some extent accepted by case law. In 1978, Łętowska wrote: The constructional rule of civil law is the principle of freedom of contract, which manifests itself in two areas. First, it is a sphere free from legal regulation in any form. Second, it is a sphere with default regulation. Both of these areas create ‘a freedom zone’ without which the civil law and the relations that it regulates would not be able to function, but at the same time its existence is associated with the danger of the stronger party (…) abusing its position (…) against the consumer.56

As she put it, ‘The absolutely default character of the provisions of law, where there is no equality of chances, turns against the weaker party to a contract.’57 The 1964 Code introduced a dichotomic distinction between public commerce (contracts concluded between ‘units of social economy’) and other types of market relations. The second group included, for example, contracts between social economy units and private individuals, concluded in order to supply goods and services for non-professional purposes.58 This type of transaction, labelled in doctrine as ‘mixed’ relations,59 was the conceptual predecessor to consumer contracts. ‘Mixed’ relations were subjected to various types of public ordering that not only set general economic goals,60 but also directly intervened in the content of contracts. Hence, consumers were concluding contracts with the state, which (acting through the administratively-governed enterprises) determined when and under what conditions goods and services would be provided to individuals.61 Doctrine, and subsequently the judiciary, began noticing shortcomings in these contracts and the protective needs 55 The most conspicuous example of this shift is the general clause referring to ‘the principles of social coexistence’ (zasady współżycia społecznego). It was introduced quite early (in 1950) to the general part of the Polish civil law, and since then has gradually replaced the earlier general clauses of ‘good usages’ (more or less equivalent to ‘good faith’). At the beginning, this clause was interpreted with a strong socialist-oriented agenda – mostly by emphasising the state’s economic interest and collective (instead of individual) interests. Later (since approximately the 1960s), its understanding has been evolving towards a more liberal one. This evolution was concluded after the 1989 transformation, when the clause started to be read similarly to ‘good faith’ or ‘fair dealing’ clauses; cf Mateusz Pilich, ‘Zasady współżycia społecznego, dobre obyczaje czy dobra wiara? Dylematy nowelizacji klauzul generalnych prawa cywilnego w perspektywie europejskiej’ in Maksymilian Pazdan, Wojciech Popiołek, Ewa Rott-Pietrzyk and Maciej Szpunar (eds), Europeizacja prawa prywatnego, vol II (Warszawa, Wolters Kluwer, 2008). 56 Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21) 25. 57 ibid 28. 58 Further on the basics of this differentiation see Norbert Reich, Sozlialismus und Zivilrecht. Eine Eine rechtstheoretisch-rechtshistorische Studie zur Zivilrechtstheorie und Kodifikationspraxis im sowjetischen Gesellschafts- und Rechtssystem (Frankfurt, Athenäum, 1972) 59–60. 59 See, eg Ewa Łętowska ‘Kodeks cywilny a obrót mieszany’ (1981) Państwo i Prawo 34. More generally on the typology of contracts under socialist law Wenceslas J Wagner, ‘The Interplay of Planned Economy and Traditional Contract Rules in Poland’ (1962) 11 American Journal of Comparative Law 348. 60 Valentin Petev, Sozialistisches Zivilrecht: Eine rechtsvergleichende Einführung unter Berücksichtigung der Rechte der Volksrepublik Bulgarien, der CSSR, der DDR, der Volksrepublik Polen, der Rumänischen Sozialistischen Republik, der Ungarischen Volksrepublik und der UdSSR (Berlin, De Gruyter, 1975) 177. 61 Łętowska, Sołtysiński, Trojanek and Żuławska, ‘Die Problematik des Verbraucherschutzes’ (n 41) 51; on the same phenomenon, for East German consumer law, Markovits, ‘Pursuing One’s Rights’ (n 25) 722ff.

Consumer Law in Poland: Or There and Back Again  203 of non-professional individuals in the 1960s and 1970s. These observations laid down the initial foundations for the future development of consumer-oriented thought in contract law (see section II.E). The general framework of the 1964 Code was gradually supplemented by a number of more detailed administrative regulations setting out standard terms for specific sectors of industry.62 They focused mostly on the quality of goods and services, awarding consumers protection against physical defects. The rules were normally set by the executive power and bound only the entities subordinated to a particular ministry. This phenomenon also encompassed enactment of standard terms for consumer contracts by state agencies and administrative bodies, on the basis of Article 385 § 163 of the 1964 Code.64 From a functional perspective, they were located between typical standard terms and legal rules in the strict sense, binding all contracting parties who concluded a particular type of contract. While the aim of Article 385 § 1 was to limit the possibility of the stronger party to the contract to impose the terms of the contract, by ensuring official state control over the content of the terms,65 the potential of this article was never fully used,66 and the general terms issued on its basis also limited the liability of sellers and service providers.67 Usually the rules provided protective mandatory provisions that varied from the default rules of the 1964 Code, often to the detriment of consumers.68 For example, an instruction of 12 February 198069 reintroduced hidden defects (a notion used in the 1933 Code, but abandoned in the 1964 Code), which was narrower than the traditional understanding of a hidden defect,70 along with the 62 See, eg Uchwała nr 137 Rady Ministrów z dnia 9 września 1977 r. w sprawie jednolitych zasad kwalifikacji jakości i oznaczania wyrobów (Resolution No 137 of the Council of Ministers of 9 September 1977 on uniform rules on qualification of quality and labelling of products, Polish Monitor of 1977 No 23, Item 120); Uchwała nr 71 Rady Ministrów z dnia 13 czerwca 1983 r. w sprawie ogólnych warunków umów sprzedaży detalicznej towarów oraz ogólnych warunków gwarancyjnych dotyczących towarów trwałego użytku, sprzedawanych przez jednostki handlu uspołecznionego (Resolution No 71 of the Council of Ministers of 13 June 1983 General conditions of retail contracts and general guarantee conditions pertinent to goods of permanent use, sold by units of socialized commerce, Polish Monitor of 1983 No 21, Item 118). These acts provided not only the regulatory scheme for sales contracts (supplementing the general framework of the Civil Code), but also contained elements intended to protect non-professional clients (eg by specifying the mandatory content of a guarantee); see also Wenceslas J Wagner in Dominik Lasok (ed), Polish Civil Law: Obligations in Polish Law, vol II (Leiden, Sijthoff, 1974) 47–48. They pertained only to a part of the consumer economy – ie to contracts between consumers and state-owned enterprises. Due to the ambit of this sector, the administrative acts in question had a substantial impact on the predominant part of the consumer economy in Poland of that era. 63 The article read: General contract terms (regulamin) issued by one party, authorised to do so by the relevant provisions of law and within the scope of these provisions, bind the other party if it was served on the conclusion of the contract, and if the use of general contract terms is customarily accepted in a given type of relationship, also when the other party could have easily found out about the content of the terms. 64 Łętowska, Sołtysiński, Trojanek and Żuławska, ‘Die Problematik des Verbraucherschutzes’ (n 41) 56; Ewa Łętowska, ‘Die Problematik der Allgemeinen Geschäftsbedingungen in der sozialistischen Rechtslehre’ (1976) 17 Jahrbuch für Ostrecht 25. 65 Łętowska, Wzorce umowne, ogólne warunki (n 13) 156–165, 199–211, 250–257. 66 Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21) 27. 67 Łętowska, ‘Problematyka ochrony konsumeta’ (n 24) 11. 68 Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21) 26. 69 Instrukcja Ministra Handlu Wewnętrznego i Usług z dnia 12 lutego 1980 r. w sprawie załatwiania w uspołecznionym handlu detalicznym reklamacji wadliwych towarów nieżywnościowych i wniosków o zamianę towarów niemających wad (Instruction of the Ministry of Internal Commerce and Services of 12 February 1980 on the handling of complaints concerning defective non-food products in socialized commerce and requests for replacement of non-defective products, Appendix 1). 70 Czesława Żuławska, ‘Sprzedaż konsumencka’ in Ewa Łętowska (ed), Obywatel – przedsiębiorstwo (Zagadnienia prawne świadczeń na rzecz konsumenta) (Wrocław, Ossolineum, 1982) 25.

204  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski obligation of the consumer to inspect goods upon delivery (contrary to Article 557 § 2 of the 1964 Code, which aimed at abolishing the general duty to inspect).71 A major part of consumer legislation focused on safeguarding the proper features of performance for the consumer,72 as this was the most frequent consumer problem in the market.73 It pertained in particular to the quality of goods in consumer sales. The public law rules (for example, on standardisation of goods) were co-applied in this regard with the general rules on sale contracts and guarantees.74 According to Żuławska, the leading expert in the field, neither traditional liability for a physical defect in goods sold, nor the guarantee of quality or the parallel regime of contractual liability effectively protected the buyer under socialist law.75 The rules were created as a way to shift liability for defective goods and services from the state onto the parties to particular contracts. By establishing a system of remedies, the state freed itself in part from responsibility for regulating the market and enforcing quality requirements over producers and sellers. In addition, a significant number of the rules enacted in this period created only ostensible protection for individual clients, being more favourable for producers. A good example of this tendency was the initial content of Article 579 CC, which prevented the exercise of statutory remedies for defects in a purchased good, as long as the buyer had not exhausted their entitlement under the guarantee.76 In this way, additional requirements under the guarantee could easily became a trap for consumers, who – if the seller decided to postpone or obstruct fulfilment of the guarantee – could be deprived of actual protection.77 A guarantee, however, was more favourable to the liable party than 71 ibid 26. 72 cf Łętowski, ‘Verbraucherschutz in Polen’ (n 42) 658–662; see aslo Mira Malczyńska-Biały, ‘Ochrona praw konsumenta w Polskiej Rzeczypospolitej Ludowej w latach 1952–1989’ (2020) 17 Politeja 303, 306–311. 73 This was also an issue that was actively commented on by the doctrine; as listed by Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21) 23, fn 27; Stanisław Sołtysiński, ‘Odpowiedzialność producenta wobec konsumenta za szkodę wyrządzoną wprowadzeniem do obrotu rzeczy z wadami’ (1970) 15 Studia Cywilistyczne 115; Czesława Żuławska, Gwarancja przy sprzedaży (Wydawca, Prawnicze, 1975); Czesława Żuławska, ‘Ochrona konsumenta przed niewłaściwą jakością świadczenia w prawie polskim’ (1978) 55 Studia Prawnicze 58; Czesława Żuławska, Ochrona interesów prawnych konsumenta w działalności spółdzielczości spożywców (Warszawa, Zakład Wydwniczy CZSR, 1977); Sołtysiński and Trojanek, ‘Proces koncentracji produkcji’ (n 33). 74 cf eg Łętowska, Sołtysiński, Trojanek and Żuławska, ‘Die Problematik des Verbraucherschutzes’ (n 41) 59–63; Łętowski, ‘Verbraucherschutz in Polen’ (n 42) 659–660. 75 Czesława Żuławska, ‘Ewolucja odpowiedzialności za jakość świadczenia’ in Ewa Łętowska (ed), Tendencje rozwoju prawa cywilnego (Wrocław, Ossolineum, 1983) 219. 76 See Anna Falkowska, ‘Ochrona konsumenta na przełomie epok – instytucja rękojmi w prawie najnowszym’ (2011) 11 Zeszyty Prawnicze Uniwersytetu Kardynała Stefana Wyszyńskiego 116–117. 77 Although after the amendment in 1996, Art 579 CC allowed for the alternative enforcement of a guarantee or a statutory regime, the previous ‘sequential’ way of achieving entitlements turned out to be surprisingly persistent in judicial reasoning. For a long time afterwards, the reform courts continued to exclude protection under the statutory regime when a consumer opted for a guarantee – cf Ewa Łętowska, Prawo umów konsumenckich (Warszawa, Państwowe Naukowe, 2002) 437. For a critique of the rules on guarantee see also Alfred Ohanowicz and Józef Górski, Zarys prawa zobowiązań (Warszawa, Państwowe Naukowe, 1970) 285; Józef Skąpski in Stefan Grzybowski (ed), System prawa cywilnego, vol III, part 2 (Wrocław, Ossolineum, 1976) 152; Ewa Łętowska, ‘Gwarancja i rękojmia. Główne tendencje w orzecznictwie Sądu Najwyższego’ (1987) 43 Nowe Prawo 33; Mieczysław Sośniak, ‘Czy instytucja rękojmi za wady fizyczne w k.c. zapewnia w dostatecznej mierze ochronę nabywcy towarów złej jakości’ in Maksymilian Pazdan (ed), Zagadnienia prawne obrotu towarowego (Katowice, Uniwersytetu Śląskiego, 1977) 93; Teofil Smarzyński, ‘Funkcjonowanie instytucji rękojmi za wady fizyczne i gwarancji w świetle badań empirycznych’ (1973) 35 Ruch Prawniczy, Ekonomiczny i Socjologiczny 153, 167; Mirosław Nesterowicz, ‘Gwarancja przy sprzedaży w kodeksie cywilnym, ocena i wnioski’ (1990) 104 Studia Prawnicze 251.

Consumer Law in Poland: Or There and Back Again  205 the statutory regime of liability, and producers – who were liable under guarantees and had to bear contractual penalties for defects in the products they introduced in the market – simply shifted the extra costs onto consumers, raising prices.78 Buyers were de facto paying for the decrease in quality, and producers had no incentives to increase it.

E.  The Initial Impulse – Doctrine The birth of Polish consumer law was administrated by academia, with the 1970s constituting a breakthrough point for developing consumerist thought in Poland. With the gradually developing market and increasing political willingness to recognise citizens as consumers, Polish legal writing began introducing consumerist ideas into the discussion on market mechanisms (how to ensure proper product quality) and private law (stressing the meaning and role of individual autonomy), step by step bringing these subjects together (with a limited and defective market offer, consumer autonomy could not be realised).79 Academics acted as cultural brokers, transferring ideas from Western legal systems onto Polish peripheral soil.80 This transfer was enabled as a result of the increased possibility of research stays abroad,81 and the greater availability of books82 and conferences,83 that followed the change in the political atmosphere in the 1970s, in particular the shift in relations with West Germany. During the 1970s, legal writing aimed at identifying and defining consumer problems specific to the Polish market, trying to establish terminology specific to consumer relations.84 While abuse of consumer rights was initially seen as characteristic of Western markets, in the 1970s Polish doctrine began to claim that it was the organisation of the market (in terms of concentration of production) rather than its political underpinning that caused disruptions.85 From a political point of view, this was a bold 78 Czesława Żuławska, ‘Uwarunkowania odpowiedzialności za odpowiedzialności za jakoś (ujęcie dynamiczne)’ (1990) 104 Studia Prawnicze 205. 79 See Łętowska, ‘Ochrona konsumenta a ekonomiczno-socjalne’ (n 36). 80 By peripheral we understand the social and legal experience of the countries of Central Europe (including Poland), which aspire to full-scale inclusion in the political and market structures of Western Europe, but were lacking equally deep institutional experience in operating rule of law and a pluralist society – cf Ewa Łętowska, trans by Elżbieta Matynia and Juliet Golden, ‘The Rule of Law on the Peripheries of Europe: A Keynote Address by Ewa Letowska’ (The New School, 24 July 2017) http://blogs.newschool.edu/tcds/2017/07/24/therule-of-law-on-the-peripheries-of-europe-a-keynote-address-by-ewa-letowska; with further references to the concept of peripheries by Sowa, Fantomowe ciało króla (n 3). 81 In particular the DAAD scholarships that became gradually more available to Polish scholars, and which had a very strong cultural impact on Polish academia. 82 See, eg review by Łętowska, ‘Review’ (n 36). 83 Witold Czachórski, ‘Contrat-type et contrat d’adhesion: droit capitaliste – droit socialiste’ in Borislav T Blagojević (ed), Rapport général au VIIIe Congrès international de Droit Comparé (Pescara, 1970); Łętowska, Sołtysiński, Trojanek and Żuławska, ‘Die Problematik des Verbraucherschutzes’ (n 41). 84 Czachórski, ‘Contrat-type’ (n 83); Stanisław Sołtysiński, Gwarancje instytucjonalne praw obywatela jako konsumenta (Warsaw, 1970, unpublished typescript); Ewa Łętowska ‘Regulaminy umowne w kodeksie cywilnym’ (1974) 30 Nowe Prawo 769; Łętowska, ‘Problematyka ochrony konsumeta’ (n 24); Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21); Ewa Łętowska (ed), Obywatel–przedsiębiorstwo: Zagadnienia prawne świadczeń na rzecz konsumenta (Wrocław, Ossolineum, 1982); Ewa Łętowska and Krystyna Wójcik, Poradnik konsumenta (Warszawa, Instytut Wydawniczy Związków Zawodowych, 1983); Łętowska, ‘Ochrona konsumenta a ekonomiczno-socjalne’ (n 36); Ewa Łętowska, ‘La publicite et consommateur’ (1983) 32 Travaux de l’Association Henri Capitant. 85 Sołtysiński and Trojanek, ‘Proces koncentracji produkcji’ (n 33) 19.

206  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski assertion, considering that socialist ideology had so far tried to distance itself from the ‘rotten’ West. The opportunistic approach of state-owned companies resulted in imposing exploitative arrangements on their clients, who did not know their own rights.86 Western concepts were therefore found to be compatible with the socialist market to a large extent. As Łętowska put it: ‘the violation of consumer interest and the negative consequences it brings about is not excluded in socialist countries just because similar tendencies take place in capitalist countries’.87 Therefore, as long as the distinctiveness of mixed contracts stems from the characteristics of the mass contract market, the evaluation and conclusions can be similar, regardless of whether the economy is socialist or capitalist.88 The phenomena characteristic of the mass contract market included frequent use of general terms and conditions, development of the ‘adhesive’ way of concluding contracts, formalisation of consent and freedom of contract, as well as developing new techniques for concluding contracts, changes in the contractual position of the parties and eliminating ‘contractual cooperation’ between the parties, and the rise and fall in popularity of the various types of contract.89 At the same time, the characteristics of the socialist market in Poland included features that clearly distinguished it from Western markets. These referred either to the organisation and functioning of the market or to the consequences this had for consumers. Awareness and understanding of consumer market specifics was mounting over time in academic discourse. It reached its ‘critical mass’ at the turn of the 1970s and the 1980s, when Polish scholarship drew growing attention to the consumer market as a field of legal study. At its dawn, consumer thought in Poland rested on a few clearly formulated assertions regarding the specificities of the Polish consumer market, vis-à-vis western European realities: 1. The market was a producer’s and seller’s market (see section II.C). Since it was the state that was in charge of production and distribution, before 1989 all market impulses that were to change the power balance between the market participants had an administrative character. At the same time, this was recognised as a characteristic that could allow for more effective market steering than free market processes.90 2. There was no market competition that could work towards elevating the quality of goods and services available on the market (see section II.C). Instead, only state administrative actions could be initiated, with a view to ensuring better quality production. These actions intensified as of 1976 when the government adopted Resolution No 206 on increasing the quality of industrial production,91 on

86 Łętowska, ‘Problematyka ochrony konsumeta’ (n 24) 11. 87 Łętowska, ‘Problematyka ochrony konsumeta’ (n 24) 9. 88 Łętowska, ‘Kształtowanie’ (n 36) 373. 89 ibid 375; see generally Łętowska, Sołtysiński, Trojanek and Żuławska, ‘Die Problematik des Verbraucherschutzes’ (n 41). 90 Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21) 21. 91 Uchwała nr 206 Rady Mnistrów z dnia 30 września 1976 r. w sprawie poprawy jakości wyrobów przemysłowych (Resolution No 206 of the Council of Ministers of 30 September 1976 on increasing the quality of industrial production, unpublished).

Consumer Law in Poland: Or There and Back Again  207 comprehensive action to increase the quality of production while ensuring the full liability of the producer, which started what was known as the ‘battle for quality’.92 As a part of this project, a significant number of regulatory instruments of varied character were adopted by several administrative bodies.93 Among them were instruments that aimed towards creating links between the quality of production, an evaluation of the company’s functioning, and the employees’ salary. As a followup to Resolution 206, the Ministry of Work, Salary and Social Matters issued guidelines. According to this document, bonuses for employees were to be higher when the company produced more goods of higher quality, with limits imposed as to the possibility of increasing the quantity of production at the cost of quality (for companies with automatic regulation of the production rate). The guidelines also stressed that Article 82 of the Labour Code – according to which a full salary was due only when the quality of goods or services provided by the employee was unquestionable, and if suboptimal quality resulted from the fault of the employee, the salary was to be reduced – should be observed in practice.94 3. As a result of market construction, a rather intense dispute ensued over qualifying consumer relations either as contract law or as administrative law relations.95 Initially, abuses of consumer rights were categorised as frauds or administrative/ criminal offences. Qualifying them as abuses of private (civil) law relations stressed the aspects of sovereignty of consumers and pushed the discourse into perceiving the rights of consumers as the rights of citizens.96 4. Another substantial problem of that time was the content of consumer law. With the state acting through its various agencies as a party contracting with end-users, the law that governed consumer contracts was in fact introduced by one party to a contract. While in theory the state should have acted in the best interest of its citizens, in practice the rules protected its own interests as a contractual party.97 This was manifested primarily in the rules that restricted the liability of sellers, producers and service providers, and was particularly noticeable with regard to the administrative regulations that supplemented the 1964 Code (see section II.D). Likewise, the protective potential of the general rules of the 1964 Code was not properly exploited. Doctrine tried to inspire amicable interpretation towards consumers, based on Article 4 of the Constitution.98 These attempts were, however,

92 Jacek Trojanek, ‘Idee przewodnie ustawy o jakości’ (1980) 42 Ruch Prawniczy, Ekonomiczny i Socjologiczny 15, 16. 93 ibid 16, fn 3 provides a list of these acts. 94 Łętowska, ‘Problematyka ochrony konsumeta’ (n 24) 16. 95 Łętowska, ‘Status prawny obywatela’ (n 27) 203–206; Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21) 24–25. 96 Sołtysiński, Gwarancje instytucjonalne (n 84) 57. 97 Łętowska, ‘Status prawny obywatela’ (n 27) 209 lists, for example: no liability of transport companies for delays, excluding or limiting liability for the quality of performance (postal services, municipal enterprises), disproportionately low compensation, considering damage sustained, burdensome complaint formalities. 98 Art 4 was introduced into the 1952 Constitution in 197 and provided: ‘In the Polish People’s Republic it shall be the primary objective of State activity to develop socialist society in all its aspects, to expand the creative forces of the Nation and of each person, and to meet the needs of the citizens more and more adequately.’, see Łętowska ‘Status prawny obywatela’ (n 27) 210; Łętowska, ‘Ochrona konsumenta a ekonomiczno-socjalne’ (n 36) 148–149.

208  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski never fully successful. In addition, a practical problem resulted from the insufficient number of administrative general terms and conditions that could be issued to make the general rules of the 1964 Code more practical on the basis of Article 385 § 1 (see also section II.D.). This was due, among other things, to the faulty construction of the Article, which did not specify the process of issuing general terms and conditions.99 Apart from that, when such general contract terms were issued, they often contained provisions limiting the liability of the seller or service provider (see section II.D). Some of the views presented in the legal discourse of that time have not lost their topicality. Right from the beginning there was a clear understanding of the crux of the problem, as Łętowska put it, stressing the dominance of demand over supply, the concentration of producers and sellers, the complexity of goods and services offered in the market and the expertise necessary to evaluate the content of contracts: ‘the equality of the parties to a contract is formal, not material’.100 Anchoring consumer rights in the constitutional dimension, she advocated for replacing the formal equality of consumers and their contractual partners with material equality that necessitated action to strengthen the position of consumers against their contractual partners.101 Representatives of academia have since strongly advocated for exploiting the protective potential of the general rules of the 1964 Code. In 1983, Żuławska described it as a tendency to support a party to a civil law relationship who, while formally equal, is weaker in reality. This tendency manifested itself in repeated attempts to extend the remedies available to a person who acquired defective goods and, in particular, to consumers. As Żuławska stressed, the legal instruments used in this process were not introduced in order to achieve such aims, nor were they traditionally used to protect a person who acquired goods.102 Legal scholarship tried to explore and promote the options offered by giving axiology a more prominent position in interpretation. It was also clear from the outset that, while the rules of Polish civil law had the potential to promote consumer welfare, the real problem rested in exercising rights in practice.103 Łętowska repeatedly underlined the low level of consumer awareness in terms of knowing what their rights are and how to exercise them,104 as well as lack of transparency on the consumer market.105 At that time, legal scholarship advanced a position that the loyalty principle requires that a party that is about to conclude a contract should be obliged to inform the other party of all the circumstances that might impact the decision by the other party to keep its promises, even if they would not, technically speaking, be binding, or to provide the other party with appropriate explanations.106

99 Łętowska, ‘Status prawny obywatela’ (n 27) 211. 100 ibid 205. 101 ibid 206. 102 Żuławska, ‘Ewolucja odpowiedzialności’ (n 75) 219. 103 Łętowska, ‘Problematyka ochrony konsumeta’ (n 24) 13–14. 104 Łętowska, ‘Status prawny obywatela’ (n 27) 213; Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21) 17, 29–30. 105 Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21) 16–17. 106 Stefan Grzybowski, System prawa cywilnego: Część ogólná, vol I (Wrocław, Ossolineum, 1974) 550.

Consumer Law in Poland: Or There and Back Again  209

F.  Consumer Protection from the Inside Out – The Role of Case-Law While the most important success of academic work was the impact it had on caselaw, only relatively few consumer cases reached the courts. A number of reasons were identified to explain this situation.107 First, filing a claim in court required the initiative of a party who very often did not know their own rights, and who, from an economic or intellectual point of view, did not enjoy equal opportunity as the monopolist against whom the claim was to be directed. Second, the value of the dispute was normally rather low and proceedings in court took time. Third, a judgment had only an inter partes effect, and only in relation to the particular contract indicated in the claim. In addition, cases that were initiated would normally not reach the Supreme Court. Hence, the effectiveness of procedural protection of consumer interests was questioned,108 and judgments given in consumer cases could not realistically fulfil the informational and preventive function, despite the protective potential of the 1964 Code provisions.109 Indeed, judicial decisions that introduced consumer notions in Poland were mostly based on general contract law instruments that offered a possibility to differentiate between the particular needs of market actors, and thereby to create standards of protection fit for consumers. This pertained especially to general clauses and other open-ended provisions that offered courts a considerable margin of flexibility in contemplating specific economic and axiological premises.110 The term ‘consumer’ (or ‘non-professional’), if referred to in judicial opinions,111 was used as a label for a segment of actors who participate in the market in order to satisfy their individual consumptive needs, but it did not convey much legal meaning.112 107 Łętowska, ‘Problematyka ochrony konsumeta’ (n 24) 13–14. 108 Łętowska, ‘Problematyka ochrony konsumeta’ (n 24) 14; Czesława Żuławska, ‘Nowe przepisy o sprzedaży detalicznej i gwarancji’ (1984) 39 Państwo i Prawo 18, 22. 109 Łętowska, ‘Status prawny obywatela’ (n 27) 214. 110 See, eg Supreme Court of Poland of 18 November 1983, I CR 336/83 ([1984] Judgments of the Supreme Court, Civil Chamber No 9, Item 159), where the court argued explicitly for the protection of consumers as structurally weaker participants in the market. In discussing the duty of a resale shop to disclose its degree of liability for defects in a good, the Court pointed out that such an obligation is directly required by the imbalance between the parties: ‘[b]etween the enterprise that runs a resale shop and an acquirer who is an average consumer there exists such a fundamental difference as regards their economic situation and the possibility to check for hidden defects in the good being sold, that shifting the risk of acquiring a defective good onto the buyer can be deemed to be justified only when the buyer consciously accepts this risk, and only when his attention is drawn to the possibility of acquiring a defective good. Only such an interpretation complies with the justified need for consumer protection.’ 111 See, in various contexts, Supreme Court of Poland of 22 November 1949, Wa.C. 124/49; Supreme Court of Poland of 9 April 1952, C 962/51 ([1954] Judgments of the Supreme Court, Civil and Criminal Chamber No 1, Item 2; Supreme Court of Poland of 14 June 1968, I CR 432/67 ([1969] Judgments of the Supreme Court, Civil Chamber No 7-8, Item 137); Resolution of the Supreme Court of Poland 16 December 1977, III CZP 94/77 (Judgments of the Supreme Court, Civil Chamber 1968, No 8, item 134). 112 cf however, Supreme Court of Poland of 4 January 1979, II CR 1/79 ([1979] Przegląd Ustawodawstwa Gospodarczego No 10), which stated directly that the provisions on seller’s responsibility aim to protect consumers; and Supreme Court of Poland of 18 November 1983, I CR 336/83 (see above n 110), which made the case for the intensified disclosure duty between a resale shop and a consumer. In both judgments, the term ‘consumer’ was used in a way that was very close to its modern understanding. It was invoked as a notion of a cluster of contractors who conclude agreements for non-professional purposes, and who (because of their contractual deprivilege towards a professional counterparty) deserve protective treatment from the lawmaker and in case-law.

210  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski In this way, confronted with typical consumer market problems (such as the imbalance of economic power, a tendency to deprive customers of the possibility to effectively claim their rights) case-law managed to recognise the core axiological and functional issues characteristic of consumer law as such. The case-law of the Supreme Court acknowledged generally that a segment of market participants are in a disadvantaged position towards their counterparts, and hence deserve some degree of protection.113 Moreover, the Court recognised that consumer protection can be provided to some extent by existing contract law schemes (rules of the 1964 Code). The Court ascertained that specific rules114 or constructions115 can have a protective nature and ought to be applied and interpreted116 accordingly, in particular with regard to individual, non-professional contracting parties (perceived as weaker and disadvantaged). Identifying whether a party was indeed weaker was built on a case-by-case pattern, without adopting any generalised schemes. In addition, the array of specific protective requirements was determined on a situation-related basis, without construing generalised categories. In the 1970s and 1980s, the case-law used several concepts and instruments of contract law in order to provide protection for non-professionals, and hence to solve the problem of distortion of market power between the parties. Some decisions dealt with the problem of fair allocation of risk between the parties. In this regard, the case-law prohibited clauses that shift onto consumers the economic burden of claiming remedies in the case of a good’s defectiveness (especially by obliging customers to pay off any difference in value between a new good, delivered as a replacement of a faulty one, or by repairing a good with second-hand components, not new ones).117 The case-law was also attentive to the stages of the parties’ relationship that precedes conclusion of a contract. When dealing with reliance damages in the case of postponed negotiations over a sale contract, the Supreme Court employed a concept whereby, if in the outcome of such delay the market price of a good increased and the postponement was caused unilaterally by the seller, the consumer was entitled to compensation for the excess cost of purchase.118 Case-law also placed emphasis on the quality of goods and services

113 See, eg Supreme Court of Poland of 18 November 1983, I CR 336/83 (n 110). 114 eg Judgment of the Supreme Court of Poland of 20 March 1978, II CR 47/78 ([1979] Judgments of the Supreme Court, Civil and Criminal Chamber No 1-2, Item 2), which ascertained that selling a car via a public tender does not exclude the seller’s liability for defects in a good. 115 eg Resolution of the Supreme Court of Poland of 21 March 1975, III CZP 10/75 ([1976] Judgments of the Supreme Court, Civil and Criminal Chamber No 3, Item 33), which recognised the protective character of the rules on consumer guarantee. 116 Along this line, see, eg the Supreme Court of Poland ascertained in resolution of 26 October 1984, III CZP 64/84 ([1985] Judgments of the Supreme Court, Civil and Criminal Chamber No 7, Item 87) that a narrow interpretation of the statutory provision that allowed rendering services for a customer should be denied due to ‘important reasons’. 117 Resolution of seven judges of the Supreme Court of Poland of 26 October 1972, III CZP 48/72 ([1973] Judgments of the Supreme Court, Civil and Criminal Chamber No 2, Item 23); see also Resolution of the Supreme Court of Poland of 30 December 1975, III CZP 88/75 ([1976] Judgments of the Supreme Court, Civil and Criminal Chamber No 6, Item 127) and judgment of the Supreme Court of Poland of 19 February 1976, II CR 24/76 ([1976] Judgments of the Supreme Court, Civil and Criminal Chamber No 12, Item 267). 118 Resolution of the entire Civil Chamber of the Supreme Court of Poland of 20 March 1978, III CZP 39/77 ([1979] Judgments of the Supreme Court, Civil and Criminal Chamber No 3, Item 40).

Consumer Law in Poland: Or There and Back Again  211 marketed to consumers by professionals – which at that time occupied a high position on the consumer market agenda.119 Following legal writing, early consumer case-law also emphasised the informationrelated dimension of consumer contracts. The Supreme Court developed a number of ‘targeted’ disclosure duties, for example professionals’ duty to draw the attention of the buyer to typical risks related to a good. It required the professional to actively reach out to the consumer with information, instead of merely displaying within business premises a notice available for consumers.120 While looking for a basis for informational duties, the Supreme Court referred not only to black letter law, but also – usually implicitly – to general standards, especially to loyalty between contracting parties.121 Finally, case-law also aimed to soothe general hurdles in exercising rights in favour of consumers. The most meaningful decisions tackled remedies under a sales contract and the formal premises for claiming them. The Supreme Court ruled in favour of extending the statutory prescription period for claiming a remedy for a defective good if a non-professional buyer was otherwise substantially harmed. As a typical instance, the Court indicated contracts of sale of valuable goods (such as cars or agricultural machinery).122 The gradual emergence of case-law created a system of isolated consumer rules and standards that enhanced a more efficient balancing of the economic position of the parties. The Polish legal order began hence to organically develop consumer protection without consumer law. The patterns of protection were rooted in the general principles of contract law, and not in a set of consumer-specific rules. Notably, many of the arguments referred to by Polish doctrine and later accepted by case-law and the protective doctrines developed on that basis turned out to extrapolate the concepts subsequently introduced by EU consumer law. In particular, this placed a strong emphasis on the inequality of bargaining power and information shortfalls characteristic of non-professionals. In developing these policies, the judiciary lacked both more structured economic and legal concepts of the consumer (in the current sense), as well as a specific protective toolbox. Therefore, both the rationale for protection and its instruments had to be developed ‘from the inside out’, using the available framework of contract law.

119 See also Łętowska, ‘Gwarancja’ (n 77). 120 Supreme Court of Poland of 18 November 1983, I CR 336/83 (n 110). 121 On the criterion of loyalty – in the context of a different consumer issue, ie quality of a good – see also Supreme Court of Poland of 12 December 1980, III CRN 275/80 ([1981] Judgments of the Supreme Court, Civil and Criminal Chamber No 9, Item 172). The case pertained to a state-run car salesroom that refused to sell a model of car or a car of similar quality that had already been promised to an individual consumer and pre-paid. The relevant provisions did not set out explicitly a requirement to maintain the comparable quality of a good supplied to a consumer instead of the good originally demanded. In the outcome, the Supreme Court had to seek another point of reference, partly outside black letter law. As the decision observes, the requirements for the one who is obliged to perform a contract ‘signify for her above all an obligation to care about the justified interest of the [counterparty] and observance of loyalty towards the partner. The degree of this loyalty increases when the one obliged to perform is a unit of the socialised economy [a state-owned market actor – AWD, MG] that enjoys special entitlements, eg while it is a de facto monopolist in trading deficit goods on the market.’ 122 Resolution of the entire Civil Chamber of the Supreme Court of Poland of 20 March 1978, III CZP 39/77 (n 118).

212  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski

III.  Consumer Law and Policy before EU Accession A.  Reframing the Landscape: The Libertarian Turn The fall of communism and the subsequent transformation of political and economic structures were pivotal moments in the process of developing modern consumer law in Poland. Not only did this time initiate a deep change in the instruments and methods of protection (inspired almost exclusively by integration with EU law), but more importantly it triggered long-lasting consequences for the conceptual background to protecting non-professional market actors. The process of transformation started in the late 1980s and lasted until approximately the mid-1990s. It was based on instantly reinforcing the liberal market and dismantling the system of state steering. Liberalisation of the economy resulted in an almost instantaneous switch from a seller’s to a consumer’s market. In the new economic order, consumers became the main protagonists of the market, whose trust and well-being (at least in theory) are essential for the entire economy.123 Recognising consumers as important market actors from an economical point of view did not, however, resonate well in law, where the libertarian approach based on party autonomy and freedom of contract prevailed.124 The new economy did bring new market patterns. The former problems of low quality or unavailability of goods and services eventually became obsolete. However, the transformation was neither instant nor smooth. In its first years, the liberal economy had to reclaim a market devastated in the last years of communism by immense shortages and inefficiency. The availability of goods and services in this period was gradually improving, mostly through imports (due to opening free transborder trade) and rapid increase of the domestic manufacturing and services sector.125 At the same time, however, inflation rates in this period skyrocketed and the actual worth of consumers’ funds nosedived. As a result, in the mid-1990s almost half of the population declared that its standard of living had decreased.126 Only within the following years did average incomes start to increase substantially and inflation was effectively quashed.127 123 See also Jan Sowa, ‘An Unexpected Twist of Ideology. Neoliberalism and the Collapse of the Soviet Bloc’ (2012) 5 Praktyka Teoretyczna 153, 167. 124 This attitude may be illustrated by the remark of Leszek Balcerowicz, the first post-communist minister of finance and one of the founders of the market economy in Poland. Explaining his concept of market freedom and freedom of contract, he observed the decline of these principles, claiming that ‘[t]he main ideological basis of the aforesaid erosion is a paternalistic assumption that in certain kinds of transactions one of the parties is immanently weaker than the other and hence, that the law should protect this party by limiting freedom of contract. This legal paternalism, associated with expanding the concept of coercion, is perhaps most visible in the case of labour contracts, ie in labour law.’ As a result, ‘[i]n this case the concept of a weak party reflects clearly the influence of Marxism’. (Leszek Balcerowicz, ‘Wstęp’ in Leszek Balcerowicz (ed), Odkrywając wolność: Przeciw zniewoleniu umysłów (Warszawa, Zysk i S-ka, 2012) 26. 125 One of the most vivid outcomes of liberalisation and opening of the consumer market was the phenomenon of the ‘bazaar’ – a vast, partly spontaneously-arising marketplace, gathering individual sellers of consumer goods (often second-hand or imported from other countries) – see also Danielle Meuwly, ‘Consumer Policy in Poland: Institutional and Legal Features’ (1998) 24 Review of Central and East European Law 9, 10. 126 Urszula Grzega, ‘Zmiany w konsumenckich zachowaniach gospodarstw domowych’ (2001) 63 Ruch Prawniczy, Ekonomiczny i Socjologiczny 221. 127 cf eg Grażyna Adamczyk, ‘Analiza dochodowych uwarunkowań konsumpcji w gospodarstwach domowych w latach dziewięćdziesiątych’ (2002) 363 Roczniki Akademii Rolniczej w Poznaniu 3, 5–8.

Consumer Law in Poland: Or There and Back Again  213 This allowed matching, over time, consumer needs, available products and services and the actual economic power of individuals in the market. As a further result, performance of a contract in natura became less substantial for consumers. In turn, this opened up the way for the practical application of a more diverse set of remedies. The liberal economic model also provided new justification for deficiencies in the consumer market. Instead of non-profit related opportunism of professionals, as emphasised in the socialist regime, post-transformation theoretical analysis pointed to a general striving to maximise profit (hence in line with the general conceptual background of EU consumer law). These market changes unveiled themselves together with new assertions about the relationship between the market and the state. The transformation was based on the laissez-faire concept of the economy, heavily emphasising the independence of individuals and belief in the self-regulatory aptitude of the market.128 Although this approach initially offered a feasible alternative to communist market theory, and provided a theory that fuelled the exceptionally successful emergence of a market economy in Poland,129 it became increasingly trivialised. This inflicted consequences for the concept of consumer protection in Polish law. The new concept of a consumer economy rested on general optimism about the self-remedying capability of the market, combined with an intrinsic aversion towards pro-consumer intervention in consumer contracts. Any sort of legal intervention favouring one of the contracting parties over the other was seen as an expression of paternalism from this perspective – at least suspicious, often unwanted.130 Awarding consumers institutional protection was also perceived as a potential source of abuse on the side of consumers, placing businesses at a disadvantage.131

128 See, eg Naomi Klein, The shock doctrine: the rise of disaster capitalism (New York, Picador, 2008) 191, 227–228. 129 Out of numerous attempts to analyse this process, its origins and ramifications see, eg Stanisław Gomułka, ‘Poland’s Economic and Social Transformation 1989–2014 and Contemporary Challenges’ (2016) 16 Central Bank Review 19. 130 General caution in adopting consumer law (especially in its EU model) was expressed soon after the demise of communism in Central and Eastern Europe: ‘In all cases a preliminary economic analysis of costs and benefits implied by the adoption of a ‘new’ rule would be advisable, as EU solutions contain operative rules that generally reflect a preference for mass protection (of consumers and buyers) over the needs of pure economic development.’ – Gianmaria Ajani, ‘By Chance and Prestige: Legal Transplants in Russia and Eastern Europe’ (1995) 43 The American Journal of Comparative Law 93, 115. 131 Such opinions were voiced, for example, during discussions on extending the scope of the definition of consumer in 2014, held by the Civil Law Codification Commission, when transposing the Consumer Rights Directive, in which one the authors of this Article (AW-D) participated. The definition was (and still is) based on the concept of an act in law, which is definitely too restrictive and does not properly transpose for example the Unfair Practices Directive, which also covers situations where a private person does not perform an act in law. Yet, extending the definition to cover private persons that remain in legal relations with traders (a much wider category that does not require any action on the side of consumers) was seen as excessive, and giving consumers too much of a privilege. Similarly, Arkadiusz Michalak expressed the opinion that the liberal approach to the question when consumers might sue when it comes to unfair commercial practices (not only when the interests of consumers are violated but also when they are endangered) combined with the fact that there is no sanction for abusing these entitlements might lead to endangering the rights of traders. Therefore, the courts should mitigate such actions by applying Art 5 of the 1964 Civil Code (on abuse of rights). See Arkadiusz Michalak, Przeciwdziałanie nieuczciwym praktykom rynkowym: Komentarz (Warszawa, C.H. Beck, 2008) commentary to Art 5, Nb 5. This, however, never happened in practice; on the contrary, the number of cases initiated by consumers is very low.

214  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski Accordingly, it was widely agreed that consumers who willingly engaged in market dealings should, in principle, bear all the risks and benefits arising therefrom. One of the most illustrative embodiments of this approach is the volenti non fit iniuria principle, often referred to in post-transformational legal discourse. This captures the essence of trust in the market, as well as the power and rationality of the individual, and at the same time distrust in the effectiveness of the state’s regulatory attempts. This approach (which is still very much present in legal discourse) does not completely ignore market failures – especially those resulting in the limited economic and legal capacity of c­ onsumers – but it does diminish their impact.132 It was built upon strong reliance that market mechanisms are able to automatically diminish market failures and guarantee fair dealings for all parties involved. Equating the ‘free market’ with a ‘perfect market’ served as an argument against paternalism in contract law and undermined its classic principles, especially the sacrosanct dogma of (formally perceived) freedom of contract.133 This approach, which has dominated the Polish perception of the market-contract intersection for the last three decades, is rooted in the history of Polish contract law in the twentieth century. During the communist era, Polish contract law existed in an inherent identity split.134 On a theoretical level, the law endorsed socialist concepts based on state intervention and profound limitations of party autonomy. At the same time, many parts of the socialist economy (both in commercial activity and in relations between citizens) were subject to freedom of contract.135 The latter encompassed areas that had been either beyond direct regulation or that had been framed through non-mandatory rules only.136 At the same time, notwithstanding the existence of these enclaves of autonomy, Polish law of the socialist era did not develop any modern theoretical account of freedom of contract. The concept of freedom of contract hence became petrified in its 1930s shape, developed on the basis of the 1933 Code. As a result, after 1989 contract law faced introduction of the free market and lacked a modern conceptual agenda that 132 See, eg Leszek Pawłowicz, ‘Moral hazard’ w pośrednictwie finansowym’ in Redakcja Naukowa and Jakub Górka (eds), System finansowy w multiperspektywie: Księga jubileuszowa z okazji siedemdziesiątych urodzin Profesora Mariana Górskiego (Warszawa, Naukowe Wydziału Zarządzania Uniwersytetu Warszawskiego, 2018) 57, who argues that in financial intermediation agreements, if concluded with awareness of possible costly outcomes and assuming the risk, they should be qualified as ‘volentes’); similarly on this rule (in the context of insurance agreements offered to consumers as investment tools); see also Michał Romanowski, ‘Odstąpienie / wystąpienia z umowy ubezpieczenia na życie z elementem inwestycyjnym – kilka refleksji na tle nowej ustawy o działalności ubezpieczeniowej i reasekuracyjnej’ (2016) 68 Wiadomości Ubezpieczeniowe 103, 110. 133 cf Mateusz Grochowski, ‘Freedom of Contract on Crossroads: The Struggle over the Concept of Contract Liberty in 20th Century Poland’ (2020) 66 Osteuropa Recht 34, 45–51. 134 On the inherent tension between two concepts of contract: a freedom-based instrument of exchange and an intensely-regulated instrument of social steering broadly, see Andrzej Stelmachowski, ‘Czy kryzys prawa cywilnego?’ (1974) 36 Ruch Prawniczy, Ekonomiczny i Socjologiczny 271. 135 Freedom of contract then persisted in two spheres. First, it existed to the full extent in everyday transactions between individuals, which did not involve industry or larger-scale market exchange. These contracts were predominantly beyond the scope of the state’s interest (and of state governance) and remained subject to the general rules of the 1964 Code (which mostly had a non-mandatory character and were underpinned by relatively liberal axiology). Second, a part of the state-steered economy also involved concluding agreements, which in most instances could be labelled as contracts and (at least to some extent) rested on the implicit principle of contractual freedom. On the persistence of freedom of contract in socialist law in Poland see, eg Grzybowski, ‘Reform and Codification’ (n 52) 401–402; Stefan Buczkowski, ‘Zasada wolności umów’ (1961) 16 Państwo i Prawo 430. 136 Łętowska, ‘Ochrona konsumenta z punktu widzenia polityki prawa’ (n 21) 25.

Consumer Law in Poland: Or There and Back Again  215 would suffice to encompass liberal economic concepts. In particular, Polish law in the post-transformational period had a limited understanding of the disparity between the contracting parties and the grounds for introducing protective measures. The inter-war version of market liberalism was too superficial and ill-fitting in terms of the consumer perils that occurred after the shift to a free-market economy. This mismatch entailed profound consequences for the subsequent development of consumer law in Poland. An outdated view of market liberalism – epitomised by a neoliberal view of freedom of contract (in its superficial form) – created hurdles for transposing EU consumer law properly. The consequences of this misunderstanding exert an impact to the present day.

B.  Legislative Reforms and Implementation of European Law The post-transformation period resulted in several substantial challenges to the regulatory and institutional design of Polish consumer law. Many of the former instruments of protection, in particular standard contract terms, were enacted as quasi-legislative acts by administrative bodies. As a result, in the first years after the transformation, Polish consumer law was supplemented with a number of sectoral acts tackling mostly competition issues (underpinned by the idea of consumer welfare)137 and the quality of consumer goods and services.138 The institutional structure of protection was significantly amended in 1996 by establishing the Office of Competition and Consumer Protection (Urząd Ochrony Konkurencji i Konsumentów – hereinafter: UOKiK) as the principal consumer protection authority. Very soon after the transformation, Poland commenced preparations for its ­accession to the European Communities. After signing the association agreement (1991),139 Polish authorities almost immediately began work on transposing EU rules.140 Within a decade, this resulted in the transposition of all the existing European consumer legislation.141 The opening step on this path was adopting the General 137 Ustawa z dnia 24 lutego 1990 r. o przeciwdziałaniu praktykom monopolistycznym (Act of 24 February 1990 on counteracting monopolistic practices, Journal of Laws of 1990, No 14, Item 88); ustawa z dnia 26 kwietnia 1993 r. o zwalczaniu nieuczciwej konkurencji (Act of 16 April 1993 on combating unfair competition, Journal of Laws of 1993, No 47, Item 211). Both statutes mention ‘consumers’ interests’ as one of the core goals of their regulation; see also Carolyn Brezezinski, ‘Competition and Antitrust Law in Central Europe: Poland, the Czech Republic, Slovakia, and Hungary’ (1994) 15 Michigan Journal of International Law 1129, 1146. 138 Ustawa z dnia 3 kwietnia 1993 r. o badaniach i certyfikacji (Act of 3 April 1993 on Research and Certification, Journal of Laws No 55, Item 250); rozporządzenie Rady Ministrów z dnia 30 maja 1995 r. w sprawie szczegółowych warunków zawierania i wykonywania umów sprzedaży rzeczy ruchomych z udziałem konsumentów (regulation of the Council of Ministers of 30 May 1995 on specific rules on concluding and performing contracts of sale of movables with involvement of consumers, Journal of Laws of 1995, No 64, Item 328); see also Meuwly, ‘Consumer Policy’ (n 125) 25–34. 139 The Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Republic of Poland, of the other part, signed in Brussels on 16 December 1991 (in force since 1 February 1994). 140 See also Jerzy Rajski. ‘Progressive Harmonization of Polish Civil Law with European Rules: Product Liability’ in Liber Amicorum Guy Horsmans (Brussels, Bruylant, 2004) 971ff.; Meuwly, ‘Consumer Policy’ (n 125) 23–34. 141 On the legislation adopted in this period, see also Jerzy Rajski, ‘European Initiatives and Reform of Civil Law in Poland’ (2008) 14 Juridica International 151, 152–153.

216  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski Consumer Protection Act in 2000,142 which transposed rules on: distance contracts, contracts concluded outside of business premises, unfair contract terms and product liability. Apart from specific protective instruments, the new legislation laid the conceptual foundations for consumer protection in Poland (for example, by defining, for the first time in Polish history, the notion of consumer in Article 221 of the 1964 Code). The Act was followed by other legislation, transposing the EU directives on timeshare,143 consumer credit144 and consumer sales145 among others. The early stages of transposition of European consumer law were influenced by the specific nature of the pre-accession period that required prompt incorporation into the existing system of a robust set of consumer acquis. This task was quite complex not only from the technical, but also from the conceptual perspective.146 The main assumption of the Polish model of implementation was that, as far as possible, the consumer acquis should be incorporated within the 1964 Code. Transposition was to be outside the 1964 Code only when it was deemed otherwise impossible, or establishing what was required in order to assure proper transposition was too uncertain. Therefore, unfair contract terms, product liability and the definition of consumer were transposed within the 1964 Code,147 while distance and off-premises contracts, and later timeshare and consumer credit were enacted separately. In the case of consumer sales rules, the initial transposition was done in a separate act, with the assumption that it should eventually be moved to the 1964 Code, which took place in 2014 together with transposition of the Consumer Rights Directive.148 The problem of where to place the rules was also discussed then, but in relation to distance and off-premises contracts.149 Protection of collective consumer interests has been ascribed mostly to administrative enforcement (by UOKiK).150

142 Ustawa z dnia 2 marca 2000 r. o ochronie niektórych praw konsumentów oraz o odpowiedzialności za szkodę wyrządzoną przez produkt niebezpieczny (Act of 2 March 2000 on the protection of certain consumer rights and liability for damage caused by dangerous products, Journal of Laws of 2000, No 22, Item 271). 143 Ustawa z dnia 13 lipca 2000 r. o ochronie nabywców prawa korzystania z budynku lub pomieszczenia mieszkalnego w oznaczonym czasie w każdym roku oraz o zmianie ustaw Kodeks cywilny, Kodeks wykroczeń i ustawy o księgach wieczystych i hipotece (Act of 13 July 2000 on the protection of purchasers’ right to use a building or residential premises at a specified time each year and amending the Civil Code, the Code of Offences and the Land and Mortgage Register Act, Journal of Laws of 2000, No 74, Item 855). 144 Ustawa z dnia 20 lipca 2001 r. o kredycie konsumenckim (Act of 20 July 2001 on consumer credit, Journal of Laws No 100, Item 1081). 145 Ustawa z dnia 27 lipca 2002 r. o szczególnych warunkach sprzedaży konsumenckiej oraz o zmianie Kodeksu cywilnego (Act of 27 July 2002 on Special Terms of Consumer Sales and on the Amendment to the Code, Journal of Laws No 141, item 1176). 146 cf Łętowska, Jagielska, Lis, Mikłaszewicz, Wiewiórowska-Domagalska, ‘Implementation of Consumer Law’ (n 2) 881–884. 147 On partial criticism of Polish implementation of the 93/13/EEC directive (underlining mostly its overcomplexity and lack of conceptual coherence) see Reich, ‘Transformation of Contract Law’ (n 22) 607; Rafał Mańko, ‘Resistance towards the Unfair Terms Directive in Poland: The Interaction between the Consumer Acquis and a Post-Socialist Legal Culture’ in James Devenney and Mel Kenny (eds), European Consumer Protection: Theory and Practice (Cambridge, Cambridge University Press, 2012). 148 More generally on the dilemma of infra- and extra-Code implementation of EU consumer law cf Łętowska et al. (n 2) 879–881; Aneta Wiewiórowska–Domagalska, ‘O celu i metodzie transpozycji dyrektyw unijnych – na przykładzie ustawy o prawach konsumenta’ (2014) 23 Kwartalnik Prawa Prywatnego 127. 149 ibid. 150 cf eg Fabrizio Cafaggi and Stephanie Law, ‘Judicial Dialogue in European Private Law: Introductory Remarks’ in Fabrizio Cafaggi and Stephanie Law (eds), Judicial Cooperation in European Private Law (Cheltenham, Edward Elgar, 2017) 22–26.

Consumer Law in Poland: Or There and Back Again  217 This pertained both to implementation of EU Directive 98/27 on injunctions for the protection of consumer interests and Regulation 2006/2004.151 As regards protection against unfair contract terms, enforcement was initially divided between UOKiK and a civil court (the Court of Protection of Competition and Consumers – a division of the District Court in Warsaw). While UOKiK was in charge of imposing sanctions for use of unfair terms and holding the register of unfair contract terms, the Court of Protection of Competition and Consumers provided control of terms as such, being competent to declare a term unfair with effect for all consumers who conclude a contract using a particular clause.152 As it turned out, this system was flawed, with overlapping enforcement competences153 and very limited efficiency,154 which also manifested itself in the actions of the court frequently reducing the penalties imposed by UOKiK on businesses. As a result, in 2015155 the system of abstract control underwent substantial reform that shifted the entire competence for review of clauses and imposition of remedies onto UOKiK. Apart from this, contract terms can be controlled on a concrete (ad casum) basis, referring to a particular contract and a particular set of interests, and the vulnerabilities of the parties (Articles 3851–3853 1964 Code).156 Consumer protection was also elevated to the constitutional level, along with other clusters of parties considered to be in a weaker position in the market. Under Article 76 of the 1997 Polish Constitution, ‘[p]ublic authorities shall protect consumers, customers, hirers or lessees against activities threatening their health, privacy and safety, as well 151 See also Marek Safjan, Łukasz Gorywoda and Agnieszka Jańczuk-Gorywoda, ‘Taking Collective Interest of Consumers Seriously: A View from Poland’ (2008) EUI LAW Working Paper 2008/26 http://cadmus.eui. eu//handle/1814/9567 accessed 15 March 2021. 152 The scope of effects of this control against professionals was the subject of deeper controversy in doctrine and case-law, which led to Case C-119/15 Biuro podróży ‘Partner’ Sp. z o.o, Sp. komandytowa w Dąbrowie Górniczej v Prezes Urzędu Ochrony Konkurencji i Konsumentów [2016]. 153 In particular, it was not entirely clear how adjudicatory competences should be delimited between the courts and UOKiK. This pertained especially to the question of the extent to which decisions of the former were binding on the latter. Particularly puzzling in this regard was the question of the extent to which a judgment declaring the unfairness of a clause with regard to a particular professional is also effective against other professionals who use the same clause (or a clause with the same content). The issue was addressed in Case C-119/15 Biuro Podróży Partner (n 152), which also sketches the broader background of the issue in Polish legislation and case-law. Further on the context and consequences of the Biuro Podróży Partner case see, eg Joasia Luzak, ‘You too will be judged: erga omnes effect of registered unfair contract terms in Poland’ (2017) 6 Journal of European Consumer and Market Law 120. The application of the Partner case was, however, rejected by the Supreme Court of Poland of 7 March 2017, III SK 13/15 www.sn.pl/sites/orzecznictwo/orzeczenia3/ iii%20sk%2013-15-1.pdf. 154 Apart from the visible mismatch between two parallel enforcement modes (as described in the previous footnote), this also pertained to a general failure of the foundational idea of in abstracto review – the efficient exclusion of a clause from all contracts concluded on the market and, hence, protection of the collective consumer interest. The cornerstone of that system was a public register of clauses found to be unfair in abstracto, maintained by UOKiK and available publicly. The data available in the register were, however, not sufficient to provide full clarity about the content of a clause that had been found abusive (the register provided only the exact wording of the clause, without its context in the contract, and without indicating the reasons that led the court to declare its unfairness). While it operated, the register was becoming overwhelmed with data on particular judgments. At the same time, however, it was turning out to be mostly useless as a source of knowledge and point of reference in enforcing consumer law. 155 Under the ustawa z dnia 5 sierpnia 2015 r. o zmianie ustawy o ochronie konkurencji i konsumentów oraz niektórych innych ustaw (Act of 5 August 2015 Amending the Act on Competition and Consumer Protection and Selected Other Acts of 5 August 2015, Journal of Laws of 2015, Item 1634). 156 Further on the operation of in concreto review of consumer contracts in Polish case-law, see text at section IV.D and accompanying notes.

218  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski as against dishonest market practices. The scope of such protection shall be specified by statute.’ The provision is not considered to have a direct horizontal impact in that it cannot provide grounds for developing specific rights for consumers. It nevertheless contributed to entrenching the general standard of consumer protection, a basis for constitutional review of statutory provisions in the case-law of the Constitutional Tribunal and as a point of axiological reference in interpretation by ordinary courts.157

C.  Frictions in Transposition of EU Rules (Or: Even the Most Difficult Transposition is Less Difficult than Proper Implementation) The understanding of European law, the technique of integrating it with the domestic system and awareness of the peculiarities of EC consumer protection axiology and policy were quite vague at that time. Polish consumer law simply lacked profound theoretical foundations, which was particularly cumbersome during the initial transposition period. At the same time, in the mid- and late 1990s, when the bulk of legislative and conceptual effort over transposition was made, Polish contract law was in a state of substantial conceptual disintegration. The libertarian turn, both at an academic level and in the case-law, was reflected in legislation, which meant that Polish contract law was unprepared to absorb and govern the new concept of market regulation advanced by the EU.158 As a result, the standards of consumer protection created turned out to be insufficient to address existing market problems and emerging consumer self-awareness.159 The intervening period between the post-socialist transformation and the implementation of EU law was somewhat nebulous in terms of the axiology of consumer protection and legal concepts.160 At the pre-accession stage, transposition of the European consumer acquis was carried out under pressure of time,161 which necessitated certain simplifications in order to meet the transposition deadlines.162 As a result of adopting the assumption that consumer rules, as far as possible, should be implemented directly within the 1964 Code,163 the process of transposition was faced 157 cf eg Monika Jagielska and Mariusz Jagielski, ‘‘Constitutionalisation’ of Consumer Rights in European and Polish Law’ (2010) 2 Silesian Journal of Legal Studies 71. 158 The classic tools of contract law were applied directly or used as a source of inspiration when dealing with novel consumer problems and newly-enacted legislation (especially one rooted in EU law) – see, eg Ewa Łętowska, Prawo umów konsumenckich (Warszawa, C.H. Beck, 1999). This was a characteristic occurrence in the pre-accession period, but it very much resonates in the approach of the courts until this day. 159 See also Reich, ‘Transformation of Contract Law’ (n 22) 598–599. 160 cf also Ewa Łętowska, ‘Between Knowledge and Skill: Obstacles to Efficient Implementation of the Community Consumer Law in Poland’ in Marian Kępiński (ed), The Evaluation of the New Polish Legislation in the Matter of Consumer Protection from the European Perspective (Conference Proceedings, Zakrzewo, 21–23 June 2001). 161 See also Ewa Łętowska, Monika Jagielska, Aneta Wiewiórowska-Domagalska, Przemysław Mikłaszewicz and Katarzyna Lis, ‘Consumer Contracts’ in Zbigniew Radwański (ed), Green Paper: An Optimal Vision of the Civil Code of the Republic of Poland (Warsaw, Ministry of Justice, 2006) 77–82. 162 Beata Gessel-Kalinowska Vel Kalisz, ‘Mixing Legal Systems in Europe; the Role of Common Law Transplants (Polish Law Example)’ (2017) 25 European Review of Private Law 789, 798. 163 Łętowska et al. (n 2) 875; generally on the place of consumer provisions within the Polish legal system, see also Piotr Machnikowski in Piotr Machnikowski, Justyna Balcarczyk and Monika Drela, Contract Law in Poland, 3rd edn (The Netherlands, Kluwer Law International, 2017) 27.

Consumer Law in Poland: Or There and Back Again  219 with the inherent tension between existing schemes of contract law and EU-grounded concepts at the conceptual level.164 Problems related first of all to structural differences between the consumer acquis and the 1964 Code. For example: off-premises and distance contracts were distinguished on the basis of criteria that were not relevant in the context of the 1964 Code. The EU parameters for distinguishing specific contracts did not fit with the criteria for distinguishing nominate contracts in Polish private law. The EU rules are casuistic and sometimes highly technical, which contradicts the style of the 1964 Code (which was a very important argument against introducing them into the structure of the 1964 Code). One of the most vivid consequences of these constraints is the history of the transposition of EU consumer sales regulation. Initially (in 2002), the Consumer Sales Directive was implemented as a self-standing act.165 Dividing the sale contract regime between B2B, P2P (addressed by the general provisions of the 1964 Code) and B2C relations (regulated in a separate consumer act) resulted mostly from time pressure preceding the accession to the EU, combined with lack of experience in transposing EU law. It was unclear how far a national legislator can preserve the national structure of regulation when introducing EU law into the national legal system. In 2002, for example, the Polish legislator was wrongly convinced that the aim of the Consumer Sales Directive was to eliminate the traditional regime of liability in sales contract (rękojmia).166 Accepting that EU solutions concerning liability for goods sold led to diminishing the standard of consumer protection (introducing a hierarchy of remedies, excluding application of the guarantee rules to consumer sales), and created inconsistencies and gaps in the sales liability regime. That in turn led to creating a heavily criticised solution167 whereby remedies in the case of a good’s non-conformity were more favourable under general sales contract law than remedies under a consumer sales contract.168 Leaving B2C sales

164 See also Tim Haughton, ‘When Does the EU Make a Difference? Conditionality and the Accession Process in Central and Eastern Europe’ (2007) 5 Political Studies Review 233, 240: ‘[t]he impact of the EU in bringing about policy change was mitigated or bolstered by several factors. Firstly, it was affected by whether EU institutions and its member states were singing in unison, harmony or discordantly. Where accession states received mixed signals they tended to opt for the most domestically palatable. Secondly, the nature of the acquis mattered […]. In some fields, such as health care and consumer protection the EU acquis density was low, providing much more scope for choosing or ignoring prevailing Western models […]. What also mattered was not just the density of the acquis, but its clarity and degree of implementation in existing member states.’ 165 Ustawa o szczególnych warunkach sprzedaży konsumenckiej oraz o zmianie Kodeksu cywilnego (n 145); see also Magdalena Sengayen, ‘Consumer Sales Law in Poland: Changing the Law, Changing Attitudes’ (2002) 25 Journal of Consumer Policy 403. 166 Uzasadnienie do projektu rządowego ustawy o szczególnych warunkach sprzedaży konsumenckiej oraz o zmianie kodeksu cywilnego (Explanatory Memorandum to the Government Bill on Specific Terms of Consumer Sales and on Amendments to the Civil Code, Sejm Print No 465 of 30 April 2002) 14; see also Wiewiórowska–Domagalska, ‘O celu i metodzie transpozycji’ (n 148). 167 See Jerzy Pisuliński in Jerzy Rajski (ed), Prawo zobowiązań – część szczegółowa, System prawa prywatnego, 2nd edn (Warszawa, C.H. Beck, 2004) 162–163; Robert Stefanicki, Ochrona konsumenta w świetle ustawy o szczególnych warunkach sprzedaży konsumenckiej (Kraków, Wolters Kluwer, 2006) 395ff; Marlena Pecyna, Ustawa o sprzedaży konsumenckiej. Komentarz (Zakamycze, Wolters Kluwer Polska, 2004) 14; Resolution of the Supreme Court of Poland of 14 October 2011, III CZP 50/11 ([2012] Judgments of the Supreme Court, Civil and Criminal Chamber No 4, Item 54); Judgment of the Supreme Court of Poland of 3 December 2008, V CSK 293/08 (unpublished). 168 Łętowska et al. (n 2) 878.

220  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski outside the 1964 Code was adopted as a temporary solution, based on the assumption that, over the course of time, when regulation of a consumer sale ‘gains enough theoretical and practical maturity in Polish law’, it would be reintroduced into the Code.169 This moment was postponed for 12 years, until 2014.170 During that time it became clear how difficult it is for the courts to distinguish between national regulation, based on the defect concept, and European non-conformity, applicable in consumer sales cases. The courts would simply not recognise the difference between the rules on non-conformity, as they would apply the rules on defects of goods sold. As the conceptual difference between defect-based liability and non-conformity is discrete and relates to a different relationship between sales liability rules and general liability rules,171 the courts faced severe difficulties in realising it. In addition, the axiology of the consumer acquis did not appeal to judges, who would normally ignore the need to interpret the rules so as to ensure effective consumer protection, not to mention the proper effectiveness of EU law.172 Following national traits when applying the EU consumer acquis did not lead to flagrant violations of EU law in the case of sales law, as not only were the liability regimes similar, but also the national regime was more favourable to consumers in some respects than the European one. In other areas, however, where the difference was more substantial and required an approach contrary to the classic paradigms of civil law, one could observe severe infringements of EU law (see section IV.D). The 2014 sales reform, as it seems, might not have a very long life expectancy. In the process of transposing the 2019/771 Directive, the Ministry of Justice173 prepared a draft,174 which assumes that consumer sales would be regulated in a separate act. This proposal, if enacted as envisaged in the draft, would lead to complete decomposition of Polish sales contract regulation and would trigger inevitable problems with its practical application.175 The transposition process, however, turned out to be relatively easy as compared with the need to ensure proper implementation of EU law, which proved to be a real challenge. This was due to practical causes: the available instruments were not used to ensure a proper level of consumer protection. As noted by Łętowska, in the midst of this intervening period (and which remains true to a certain degree to this day): The Polish Civil Code makes it possible to protect the interest of consumers in a way analogous to that of the European Communities. There is only one problem – the scheme of consumer protection to be constructed on the basis of the Civil Code has merely ostensible character. It is still a scheme of not actual but only potential consumer protection. The practice is less advantageous to consumers, as the courts still lack an adequate

169 Ewa Łętowska and Aneta Wiewiórowska-Domagalska, ‘The Common Frame of Reference – The Perspective of a new Member State’ (2007) 3 European Review of Contract Law 277, 287. 170 For a detailed analysis of the reintroduction process see Wiewiórowska–Domagalska, ‘O celu i metodzie transpozycji’ (n 148) 127. 171 Aneta Wiewiórowska–Domagalska, ‘Refleksje na tle orzecznictwa sądów powszechnych w zakresie sprzedaży konsumenckiej’ (2014) 20 Prawo w Działaniu 206, 217. 172 ibid 229–242. 173 Normally such drafts would be prepared by the Civil Law Codification Commission. However, the last Commission was dissolved by the Minister of Justice in 2015. 174 http://legislacja.rcl.gov.pl/projekt/12341810/katalog/12752750#12752750. 175 See Akademicki Projekt Zmiany Kodeksu Cywilnego (2021) 30 Kwartalink Prawa Prywatneg 309.

Consumer Law in Poland: Or There and Back Again  221 understanding of their interests. What is more, they lack hermeneutic skill with regard to provisions that could, as such, be beneficial to consumers.176

The problems with judicial application of consumer law arose principally from the hyperlibertarian approach of Polish courts, which (either purposefully or instinctively) have tended to see consumer law as intervention that limits ‘natural’ contractual autonomy and, as such, should be applied as narrowly as possible. The conflict between the EU consumer acquis and classic civil law was, hence, for a long time usually resolved in favour of the latter. As a result, the courts struggled with accepting the axiological differences between Polish and EU law at a conceptual level.

IV.  European Revolution and European Delusion A.  Inhibitors and Barriers The development of Polish consumer law after 1 May 2004 (when Poland became a member of the EU) was largely overshadowed by the heritage of socialism and the posttransformation period. The impact of the transition turned out to be much greater than a mere residue of legal provisions and policy assumptions. The social and economic changes of consumer reality found themselves, over time, in mismatch with the actual operation of consumer rules. The law turned out to be unsuitable for providing consumers with the expected protection in the free market reality. The political revolution found Polish law unwilling to recognise the newly-arising economic phenomena triggered by the rapid liberalisation of the economy and the ­consequences it brought about for the weaker parties in the market. The rather naïve version of neoliberalism formed in that period177 turned out to last for the following decades, shaping the perception of consumer law in clear contradiction to the ­foundations of the EU consumer acquis. It emphasised mostly the libertarian view of the economy, with an assumption that market competition, unrestricted by consumer rules, would provide a satisfying degree of consumer welfare.178 This approach was accompanied by a strong belief in the decision-making ability and economic power of single individuals, who are able to effectively protect their interest, provided that they make an effort. Such a laissez faire focus is not only contradictory to the essence of the EU consumer acquis, but it also fails to address the substantial flaws in Polish society in 176 Ewa Łętowska, ‘The Barriers of Polish Legal Thinking in the Perspective of European Integration’ (1997) 1 Yearbook of Polish European Studies 55, 58. 177 See text at section III.C and accompanying notes. 178 On the identification of competition and consumer protection see Safjan, Gorywoda, and Jańczuk, ‘Taking Collective Interest’ (n 151) 20: ‘In legal doctrine, a claim that undistorted market competition is the best way to achieve a high level of consumer satisfaction emerged. Accordingly, any arguments justifying the need to protect the ‘weaker’ contractual party tended to be rejected and associated with the former socialist system. At the same time, individual and not public (or collective) interest turned to be emphasised as an overriding value in contractual relationships. However, as far as jurisprudence is concerned, its approach to consumer protection remained ambiguous. On the one hand, one could observe judgments denying any protection and promoting a formalistic understanding of freedom of contract; on the other, many judicial decisions acknowledged the need to protect the ‘weaker’ party.’

222  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski the post-communist era. As of 2000, Polish sociologists ran an interdisciplinary project called ‘Social diagnosis’.179 It provided information on the conditions and quality of life in society, measuring a broad array of factors. The results repeatedly confirmed a very low level of trust among Polish people, who not only mistrust each other, but also do not trust their state and its institutional framework.180 As was observed in the literature, this is a self-perpetuating process of creating a spiral of distrust that leads to decay of the social fabric.181 This, of course, reflects in law, in particular in those areas of law where there is a need to sacrifice one’s particular interests to the support interests of other parties, or the common good; in other words – where cooperation is needed. To be able to do so effectively, one must trust that the other parties really do need support, or that the common good is a just and a decent cause. At this point Polish consumer law undoubtedly falls short. The willingness of contracting parties to cooperate in executing the contract and resolving controversies is generally very low,182 which reflects generally weak social bonds and collaboration in Polish society as such. As a result, in consumer cases both sides prefer to ‘get’ or ‘wrench’ their entitlements, rather than to agree on settling them.183

B.  The Fall and Rise of Rule of Law for Consumers The conceptual limitation of the idea of protecting ‘the weaker’ in Polish contract law, combined with the simplified concept of market liberalism (as described in section III.A), 179 www.torun.pl/sites/default/files/pictures/diagnoza_raport_2015.pdf. 180 In recent literature, this phenomenon has been observed in the consumer loans sector, which has been flourishing over recent years in Poland. It rests mostly on the financial needs of consumers, who – due to their poor economic standing – were rejected by the bank credit system. As a result, consumers of these services not only become excluded from access to cheaper consumptive capital, but also from the general sense of security that they could have expected from the state: ‘it cannot be ignored that loan companies constitute the only available source of financial security to people excluded from the banking sector of financial services when they find themselves in a critical situation. […] there is no denying that the most functional solution from the perspective of the democratic state would be to introduce a mechanism that does not exclude entire social groups from the banking sector. Implementation of the principles of a neoliberal economy, which often fails to take into account the rights of individuals, thus excluding entire groups from the fundamental areas of social life, is extremely dysfunctional for modern liberal democracies. Persons with a high level of anxiety, without a sense of security, including economic security, will always run away from freedom and seek shelter in an authoritarian or even totalitarian state.’ – Iwona Jakubowska-Branicka, ‘On democracy and social exclusion’ in Iwona Jakubowska-Branicka (ed), Loan companies in Poland. Theory and practice (Warsaw, Institute of Applied Social Sciences, University of Warsaw, 2018) 218. 181 http://wiadomosci.onet.pl/tylko-w-onecie/nieufnosc-najwiekszy-problem-polskiego-spoleczenstwa/ k8szk. 182 The phenomenon of fading trust in contractual dealings has been described in sociological literature: ‘Complicated contracts allow accomplishment of great joint projects – building highways, nationwide computer networks or energy systems – these are multi-level systems of trust and responsibility. Their condition is doing justice to the other by naming the truth about ourselves. When trust is lacking, when each of the parties thinks that the others want to deceive them, even the most detailed clauses devised by lawyers will not be helpful. The subsequent undertakings are finished with mutual accusations, are watered down before inoperative courts, whose judgments nobody wants to respect anyway.’ – Andrzej Leder, Prześniona rewolucja. Ćwiczenia z logiki historycznej (Warszawa, Krytyka Polityczna, 2014) 94. 183 This is not only a consumer law problem, it is reflected in other areas like refugee policy, support for disabled people, or the concept of a democratic state of law, the crisis of which can be witnessed currently.

Consumer Law in Poland: Or There and Back Again  223 opened a broad way for exercising economic power by private firms. Business has managed to create strong argumentative pressure on lawmakers, administrative enforcers and courts to broaden the limits of market freedom, rather than to adopt a pro-consumer approach.184 As a result, the system of protection has been incrementally watered down by private actors, who implicitly exercise a combination of economic and social power on the legal system and state institutions.185 One of the most vivid examples of this tendency were the legal and economic occurrences that preceded the economic crisis in Poland that started in 2008. One of its principal causes was the crisis of the financial instruments market. In the pre-crisis period, banks and other financial institutions offered various investment products on a massive scale, typically of a quasi-gambling character and, therefore, based on a high level of risk (both to business and consumer clients). Similarly, while the banks were perfectly aware of the risks related to offering credits to consumers indexed or denominated in a foreign currency,186 the legislator did not find it appropriate to prohibit such contracts. The ‘privatisation’ of legal narratives over market and consumer law led to diverse dysfunctionalities of consumer law in Poland (see also sections IV.C and IV.D), but also had an impact on the perception of the state and social legitimisation of the constitutional rule of law. In the outcome of this institutional failure, individuals were deprived of protection that they could legitimately expect from the state.187 The proliferation of private power exercised beyond (or against) the state order led to undermining social trust in law as an efficient way of protecting against market abuses. At the same time, however, the state and its specialised branches (such as courts and market supervisory bodies) turned out to be quite permissive towards these practices and reluctant to take any more direct regulatory action (both in terms of setting general rules and in dealing with individual disputes).188 Initially, adoption of the EU consumer acquis did not really change this picture – and Polish case law remained mostly within the libertarian paradigm. The situation remained relatively constant at least until 2010. In the outcome of the overly liberal attitude of courts and regulatory

184 See, eg the majority of multi-authored contributions in the publication Michał Romanowski (ed) Życie umowy konsumenckiej po uznaniu jej postanowienia za nieuczciwe na tle orzecznictwa Trybunału Sprawiedliwości UE (Warszawa, C.H. Beck, 2017). 185 See also Ewa Łętowska, ‘Kto kogo deprawuje: prawo – rynek czy rynek – prawo? (albo co uchodzi uwadze ekonomistów i prawników)’ in Elżbieta Mączyńska (ed), Ekonomia i polityka. Wokół teorii Grzegorza W. Kołodko, (Warszawa, Naukowe PWN, 2019). 186 In 2005, the Polish Association of Banks (Związek Banków Polskich) requested a legislative prohibition of such credits in consumer relations. The Office did not act on the request, and the banks (not all, though) began to offer such a contract to consumers on a large scale; Związek Banków Polskich, Biała księga kredytów frankowych w Polsce (Warszawa, 2015) 4-6 www.zbp.pl/getmedia/583d24ee-450e-4a97-a9bc-4c71b85f7749/0 6-Biala-ksiega-kredytow-frankowych-w-Polsce_marzec_2015. 187 On the infringement of constitutional requirements in this regard, see also Grażyna Szustak, ‘Consumer Protection as a Premise to Build Trust in the Financial Service Market’ (2014) 16 Journal of Economics and Management 114, 128. The reaction of society is illustrated by an action organised by an association that gathers people who concluded credit contracts denominated or indexed in Swiss francs. The association organised a demonstration in front of a court in Warsaw and published banners demanding that the court ‘observe EU law’ kredytywalutowe.com/pikieta-dyrektywa-9313-30-i-2019-r/. 188 On political and institutional failure in handling this problem, see, eg Paweł Reszka, Chciwość: Jak nas oszukują wielkie firmy (Czerwone i Czarne, 2016).

224  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski authorities, combined with the 2008 financial crisis, the Polish consumer market was struck by a few grave scandals189 and systemic crises.190 These in turn unlocked a generally higher awareness of consumer problems, which over time proliferated in society, as well as amongst judges and regulators. This led to the general growth of a pro-European interpretation of consumer law and more frequent referring of preliminary questions to the CJEU (see section IV.C). It is, however, too early to say whether at this point a critical mass has been reached to reverse the laissez faire tide.

C.  Case-Law: An Uneasy Dialogue Deficiencies at the level of transposition of EU law into the domestic system have been a stepping stone for a far more important and detrimental occurrence: lack of proper implementation of EU law. Here, too, practical problems have been entailed by a clash between the classic axiology of civil law (which to a great extent had been informing the perception of consumer rules in Poland) and specific EU values. The most important factor in this respect is probably an insufficient understanding of the specific EU law method by Polish courts: ‘[t]he implementation of the European consumer protection system within the Polish legal framework has shaken up the courts’ mindset’.191 While significant improvements resulting from rule-of-law struggles as well as an enormous number of consumer CHF credit cases cannot be denied; nevertheless the outcome is still insufficient to provide the level of consumer protection envisaged by EU law. This deficiency for a very long time manifested itself in the lack of a well-functioning dialogue between Polish courts and the CJEU.192 First, Polish courts do not very often relate to EU case-law as a point of reference for understanding and interpreting domestic rules. This problem is rooted in a low level of knowledge of the actual relevance of CJEU decisions and the methodology of interpreting EU law. Polish judges seem, on average, quite strongly inclined to seek points of reference in domestic sources (provisions, case-law and travaux preparatoires materials), rather than refer to the relevant EU background.193 As a result, some of the rules, originally rooted in EU directives, function

189 This pertained, especially, to various assets offered to consumers as investment products before and after the 2008 crisis: insurance agreements (‘polisolokaty’), corporate obligations and gold. In all these cases, due to misselling, exploitive contract clauses or simple fraud, consumers usually lost most of their investment. 190 A particularly vivid example of these was the collapse of the Swiss Francs credits sector (cf text at section  IV.D and accompanying notes). In recent years other sectors of consumer financial services also turned out to have caused massive injustice and abuse of consumers. This pertained, especially, to microloans, which over time rose to one of the most powerful spheres of the consumer economy in Poland. 191 Łętowska, Jagielska, Lis, Mikłaszewicz and Wiewiórowska-Domagalska, ‘Implementation’ (n 2) 884. 192 Further on judicial dialogue in Central European Member States see, eg Hans-Wolfgang Micklitz, ‘Prologue: The Westernisation of the East and the Easternisation of the West’ in Michal Bobek (ed), Central European Judges under the European Influence: The Transformative Power of the EU Revisited (Oxford, Hart Publishing, 2015) 1–12; Anna Czaplińska, ‘The Preliminary Reference Procedure as an Instrument of Judicial Dialogue in the EU – the CEE Perspective’ in Anna Wyrozumska (ed), Transnational Judicial Dialogue on International Law in Central and Eastern Europe (Łódź, Uniwersytetu Łódzkiego, 2017) 297–332. 193 Focus on legal texts, disregarding the background, has particularly meaningful consequences in fields harmonised by use of EU law. As has been observed in doctrine, ‘[t]extocentrism’ is a false premise, and conclusions based on it are of no value. If it is to serve as the point of departure for evaluation of harmonisation (adaptation) of laws, the result of such an evaluation is not reliable. It is not sufficient to ask whether a given internal law instrument is not contrary to the letter of European instruments (this question being the

Consumer Law in Poland: Or There and Back Again  225 in almost utter separation from the EU context.194 This approach functionally disables the effectiveness of EU law – especially by depriving it of its protective character.195 Instead, rules that originated from the EU legal order are subjected to the classic values of private law, especially to the (libertarian) freedom of contract and parties’ parity,196 which effectively supports the stronger and the more capable party. Second, for a very long time the Polish judiciary has been deeply reluctant to refer preliminary questions to the CJEU in consumer matters. Empirical research on preliminary references (covering the period until 2014) identified several reasons for the low activity of Polish courts in asking preliminary questions: problems with the proper identification of EU-related problems in the cases involved; limited activity by the parties to proceedings and other entities (for example, possible amici curiae) in triggering preliminary procedures; limited command by the Polish courts of the preliminary procedure as such; lack of an ingrained self-perception of Polish courts as EU courts; the institutional system of assessing judges’ efficiency, based predominantly on the number of cases decided (which may lead to attempts to avoid the prolongation of proceedings entailed by awaiting a CJEU ruling); and the relatively short period of Polish membership in the EU.197 This problem relates, at least in part, to the approach to consumer law, in the shape of attempts to categorise it within the the classic values and intellectual paradigms of general contract law, instead of creating an axiological pluralism of private law. One can observe the consequences of this approach at the level of (perhaps quite deeply embedded and to some extent intuitive) schemes for identifying the problems in a case and selective perception of the EU institutional system. As concluded in the literature: Polish courts do not feel sufficiently like EU courts, and thus do not feel bound by the duty to implement the institutional obligation of asking legal questions in order to ensure uniform interpretation and application of EU law across the Community.198 most typical in this field). The answer may be that though there is no conflict between the two texts, mere enactment of a proposed internal law instrument will not, in any case, bring us nearer to European standards. Such a situation may be possible due to several institutional or procedural loopholes. We can also imagine a situation in which the identity of the objectives is not reflected in the identity of the means for their realisation (consumer law being the best example, as the range of protection in Poland and in the Community are ­different) – Łętowska, ‘The Barriers’ (n 176) 61. 194 See a set of empirical studies on judicial practice in adjudicating claims in consumer contracts: credit, loans and sale, carried out in Poland in 2014–2018; respectively: Tomasz Czech, ‘Efektywność instrumentów prawnych ochrony kredytobiorcy konsumenta w świetle orzecznictwa sądowego’ (2014) 20 Prawo w Działaniu 280; Mateusz Grochowski (ed), Umowa pożyczki w orzecznictwie sądów powszechnych (Warszawa, Instytut Wymiaru Sprawiedliwości, 2018) http://iws.gov.pl/wp-content/uploads/2019/04/ IWS_Grochowski-M._Umowa-po%C5%BCyczki-w-orzecznictwie-s%C4%85d%C3%B3w-powszechnych-1. pdf; Wiewiórowska-Domagalska, ‘Refleksje’ (n 171) 206. 195 cf the empirical studies by Czech, Grochowski and Wiewiórowska-Domagalska referred to in n 194. 196 See, eg judicial practice in special types of civil procedure, which denied ex officio review of contract terms – and which was concluded in a series of preliminary questions referred to in n 201; see also judicial practice regarding gap-filling of consumer contracts after quashing an unfair term as described in section IV.D, questioned in its entirety in Case C-260/18 Kamil Dziubak and Justyna Dziubak v Raiffeisen Bank International AG, prowadzący działalność w Polsce w formie oddziału pod nazwą Raiffeisen Bank International AG Oddział w Polsce, anciennement Raiffeisen Bank Polska SA [2019]. 197 Jacek Sadomski, ‘Pytania prejudycjalne polskich sądów powszechnych’ (2014) 20 Prawo w Działaniu 26. The article was based on empirical analysis of all cases (to 2014), where Polish ordinary courts (ie all courts except for the administrative judiciary) referred preliminary questions to the CJEU, including their factual background and accompanying files. 198 ibid 93.

226  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski Only recently has the number of preliminary questions started to grow noticeably. The increased activity by Polish courts results, on the one hand, from a steady stream of cases relating to (Swiss) franc-denominated consumer credits (and more generally: review of unfair terms),199 and, on the other, the rule-of-law crisis.200 With few exceptions,201 the Polish courts seem to be still constructing a conceptual basis for approaching the Court of Justice. In numerous cases, courts have decided to interpret consumer provisions on their own, ignoring the apparent presence of EU-related issues and a clear obligation to refer for interpretation in a preliminary question. Strikingly, this is often the position of the Supreme Court, which has often failed to address the Court of Justice with preliminary referrals, but instead interpreting the rules of EU in a way that contradicts EU law values and policies (see also section IV.D).202 199 Case C-119/15 Biuro Podróży Partner (n 152); C-537/15 Euro Bank SA v Marek Łopaciński [2016]; Case C-176/17 Profi Credit Polska S.A. w Bielsku Białej v Mariusz Wawrzosek [2018]; Case C-632/17 Powszechna Kasa Oszczędności (PKO) Bank Polski S.A. w Warszawie v Jacek Michalski [2018]; Case C-260/18 Dziubak (n 196); Case C-266/18 Aqua Med sp. z o.o. v Irena Skóra [2019]; Case C-383/18 Lexitor Sp. z o.o v Spółdzielcza Kasa Oszczędnościowo-Kredytowa im. Franciszka Stefczyka and Others [2019]; Joined Cases C-419 and 483/18 Profi Credit Polska S.A. v Bogumiła Włostowska and Others and Profi Credit Polska S.A. v OH [2019]; Joined Cases C-84, 222 and 252/19 Profi Credit Polska S.A. and Others v QJ and Others [2020]; see also pending cases: Case C-19/20 Bank BPH, Case C-220/12 Pacia, Case C-198/20 X Bank, Case C-82/21 M. 200 Joined Cases C-585, 624 and 625/18 A. K. and Others v Sąd Najwyższy, CP v Sąd Najwyższy and DO v Sąd Najwyższy [2019]; Case C-537/18 YV v Krajowa Rada Sądownictwa [2020]; Joined Cases C-558 and 563/18 Miasto Łowicz and Prokurator Generalny zastępowany przez Prokuraturę Krajową, formerly Prokuratura Okręgowa w Płocku v Skarb Państwa – Wojewoda Łódzki and Others [2020]; as well as in cases (still with docket numbers of the Polish Supreme Court): III CZP 25/19 and II PO 3/19. 201 See, in particular, three subsequent preliminary questions referred to the CJEU by the District Court in Siemianowice Śląskie that aim to systematically scrutinise procedural constraints in enforcing claims under promissory notes for their compliance with the Unfair Contract Terms Directive. This pertains, in particular, to possible excessive limitations to the ex officio duties of a court. One of these cases has been already decided: Case C-176/17 Profi Credit Polska S.A. w Bielsku Białej v Mariusz Wawrzosek (n 199) and in Joined Cases C-84, 222 and 252/19 Profi Credit (n 199). 202 See, eg Resolution of the Supreme Court of 11 December 2015, III CZP 94/15 ([2017] Judgments of the Supreme Court, Civil and Criminal Chamber No 1, Item 5) where the Supreme Court extensively interpreted the provisions of 2011/7/EU Directive and established limits to its application. In a few instances, Polish courts asked preliminary questions after longer development of domestic case law, which tackled the same EU law issue. In other words, a preliminary question was following on existing interpretations of EU law, which had been developed on a solely domestic footing. This was the case for the vast body of the Polish courts’ interpretations of erga omnes effect in review of unfair contract terms, which preceded Case C-119/15 Biuro Podróży Partner (n 152). On the case-law in question, see, eg Karolina Rokita-Kornasiewicz, ‘The effects of abstract review of contract clauses – legislative and judicial framework’ (Polish Private Law, 5 September 2016) http:// polishprivatelaw.pl/the-effects-of-abstract-review-of-contract-clauses-legislative-and-judicial-framework/; Mateusz Grochowski, ‘The effects of abstract review of contract clauses – resolution of the Supreme Court (III CZP 17/15) (Polish Private Law, 5 November 2016) http://polishprivatelaw.pl/the-effects-of-abstractreview-of-contract-clauses-the-resolution-of-the-supreme-court-iii-czp-1715/. The same attitude is taken in Case C-367/15 Stowarzyszenie ‘Oławska Telewizja Kablowa’ w Oławie v Stowarzyszenie Filmowców Polskich w Warszawie [2017], which dealt with punitive damages in IP law. Notably, the CJEU judgment was issued after a previous decision of the Polish Constitutional Tribunal, which also interpreted provisions of EU law, as a part of constitutional review of domestic provisions that implemented the EU Act (judgment of 23 June 2015, SK 32/14 [2015] Judgments of The Constitutional Tribunal. ‘A’ Series, No 6, Item 84; further on domestic caselaw on this issue, see the motivation for this decision). In a judgment of 18 September 2019, IV CSK 334/18 ([2020] Judgments of the Supreme Court, Civil and Criminal Chamber No 5, Item 52) the Supreme Court clearly disregarded the approach of the CJEU in terms of establishing whether or not a given person in a given contract should be regarded as a consumer, and decided on a much more restrictive approach – on that see Konrad Osjada, ‘Ochrona Inwestora na rynku kapitałowym instrumentów finansowych (rynku kapitałowym)’ (2021) 76 Państwo i Prawo 22.

Consumer Law in Poland: Or There and Back Again  227

D.  Unfair Contract Terms as an Example After the metaphoric cusp of the year 2001, some of the premises previously steering case-law lost their relevance for consumer matters. With the transposition of EU law into the domestic system, some of the crucial spheres of consumer dealings gained their own, autonomous regulation. As a result, the focus of the judiciary has shifted, from seeking protective potential in general constructions of contract law, to applying specific consumer rules. While changes in the normative sphere were beneficial for consumers, since they declared (on the level of the provisions’ wording) effective consumer protection, the rejection of EU axiology and lack of the proper know-how in terms of applying EU law have sometimes led to quite opposite effects. Implementation of the Unfair Contract Terms Directive gives a good illustration of this axiological clash between classic contract law underpinned by a ‘neoliberal’ attitude and the EU approach to consumer matters that delimited the scope of the Directive.203 During the last few years, the Polish legal system has been massively testing the effectiveness of EU law in relation to consumer credit contracts denominated or indexed in Swiss francs,204 almost a million (985,700) of which were concluded before 2017 (of which almost half 476,000 were concluded between 2006 and 2008).205 With a substantial change in value of the Swiss franc,206 these credits became onerously expensive for a group of consumers, who sued the banks, referring to the unfairness of clauses contained in the contracts. The number of court proceedings in these cases has been increasing exponentially: while 2019 saw 11,560 new cases, the figure for 2020 was 37,200 new cases.207 Initially, application of the Unfair Contract Terms Directive was quite a challenge for the lower instance courts. However, as time passed more and more cases were decided according to EU law.208 The problems with application mostly resulted from differences concerning the approach to the contract parties (the need to protect a party that voluntarily concluded a contract) and the need to ensure the dissuasive effect of a sanction imposed on businesses that use unfair contract terms (establishing that the clause was unfair and the consequences of that unfairness).

203 cf Marek Safjan, Aneta Wiewiórowska-Domagalska, ‘Political Foundations of European Private Law: Rethinking the East-West Division Lines’ in Roger Brownsword, Hans-Wolfgang Micklitz, Leone Niglia and Stephen Weatherill (eds), The Foundations of European Private Law (Oxford, Hart Publishing, 2011) 284. 204 For a thorough analysis see Aneta Wiewiórowska-Domagalska, ‘How Does the Unfair Contract Terms Directive Penetrate National Legal Systems? – A Case Study Based on Mortgage-Secured Loans for Housing Purposes, Indexed or Denominated in CHF in Poland’ (2020) 66 Osteuropa Recht 54; Aneta Wiewiórowska-Domagalska, ‘Potential and Hurdles for the CJEU’s jurisprudence in Domestic Legal Orders’ in Stefan Grundmann and Mateusz Grochowski (eds), European contract law and the creation of norms, European Contract Law and Theory 5 (Cambridge, Intersentia, 2021). 205 Najwyższa Izba Kontroli, Informacja o wynikach kontroli: Ochrona Praw konsumentów korzystających z kredytów objętych ryzykiem walutowym (Warszawa, 2018) 33–34. 206 Between 2007 and 2016 the average CHF/PLN exchange rate increased by 90.5%, from 2.1614 to 4.1137. 207 www.rp.pl/Banki/303079919-Emocje-wokol-batalii-o-kredyty-walutowe-siegaja-zenitu.html. 208 Data, published by attorney Jacek Czabański, on the basis of judgments known to lawyers engaged in Swiss franc cases (no official database exists), indicates that while in 2016 25.93% of cases were won by consumers (74.07 by banks), in 2019 87.50% were won by consumers and 12.50% by banks, see http://pomocfrankowiczom.pl/?p=1206. For 2021 the estimate is that more than 90% of cases are decided in favour of consumers www.rp.pl/Banki/303079919-Emocje-wokol-batalii-o-kredyty-walutowe-siegaja-zenitu.html.

228  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski An illustrative instance of this phenomenon has been the problem of whether ex post circumstances can ‘cure’ an unfair clause in a contract. Although the matter has been indicated quite explicitly in the Unfair Contract Terms Directive,209 and further confirmed in several decisions by the CJEU,210 some Polish courts opted for a counter-EU approach, claiming that circumstances occurring after the contract has been concluded can remove unfairness. Only after quite a long time was the problem settled by the Supreme Court, which determined that unfairness is to be established at the moment of concluding a contract, and the clause cannot be rescued by subsequent events.211 Another example is the controversy over filling gaps in contract content left by removing an unfair term. In 2015, the Polish Supreme Court issued a judgment212 (in a class action case) completely ignoring the interpretative line established by the CJEU, in particular the Banco Español case.213 The Supreme Court opted to divide the contract term in order to extract the fair part and reinterpret the unfair part. The Court reasoned that a contract cannot change in any way after the collapse of the unfair clause. This view was corrected in a judgment given in 2019,214 where the Supreme Court repeated that while the collapse of a term cannot lead to a change in the contract, the boundary that cannot be exceeded is the nature of the legal relationship (Article 3531 of the 1964 Code). The Supreme Court also explained that establishing the value of performance in Polish zloty when the mechanism of calculating the credit costs collapses remains within these limits.215 In a later judgment, however, given by another panel of judges, the Supreme Court decided that a credit contract indexed to CHF cannot continue in existence after removing the unfair indexing clause from it, incorrectly claiming that this is what the case law of the CJEU requires.216 In short, while between 2015 and 2021 the Supreme Court has issued several judgments relating to CHF consumer credits, it has not established a coherent interpretation line. Furthermore, the Supreme Court, despite the skyrocketing rise in the number of cases and direct requests in this regard,217 kept abstaining from issuing a resolution that 209 See Art 4 (1): ‘the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent’. 210 See Case C-186/16 Ruxandra Paula Andriciuc and Others v Banca Românească SA ECR General report, along with the earlier CJEU decision referred to in para 53. 211 Resolution of seven judges of the Supreme Court of Poland of 20 June 2018, III CZP 29/17 ([2019] Judgments of the Supreme Court, Civil and Criminal Chamber No 1, Item 2). 212 Judgment of the Supreme Court of Poland of 14 May 2015, II CSK 768/14 ([2015] Judgments of the Supreme Court, Civil and Criminal Chamber No 11, Item 132). 213 Case C-618/10 Banco Español de Crédito, SA v Joaquín Calderón Camino [2012]. 214 Judgments of the Supreme Court of Poland of 4 April 2019, III CSK 159/17 ([2019] Orzecznictwo Sądów Polskich No 12, Item 115); and of 9 May 2019, I CSK 242/18 www.sn.pl/sites/orzecznictwo/Orzeczenia3/I%20 CSK%20242-18-2.pdf. 215 Judgment of the Supreme Court of Poland of 4 April 2019, III CSK 159/17 (n 214). 216 Judgment of the Supreme Court of Poland of 11 December 2019, V CSK 382/18 www.sn.pl/sites/orzecznictwo/Orzeczenia3/V%20CSK%20382-18-1.pdf. 217 Resolutions of the Supreme Court of Poland of 15 September 2020, III CZP 87/19 ([2021] Judgments of the Supreme Court, Civil and Criminal Chamber No 2, Item 11) and of 16 February 2021, III CZP 11/20 www. sn.pl/sprawy/SitePages/zagadnienia_prawne.aspx?ItemSID=1349-301f4741-66aa-4980-b9fa-873e90506a11 &ListName=Zagadnienia_prawne&Rok=2020; see also a question referred to the Supreme Court under

Consumer Law in Poland: Or There and Back Again  229 would have a harmonising effect for adjudication by lower instance courts (either in a panel of at least seven judges, or in a full composition of the Civil Chamber). Questions for resolution by the full Civil Chamber were formulated in January 2021, and a resolution, initially awaited on 13 April 2021, was already postponed several times. The resolution is supposed to address the most pressing issues in the area, including the possibility of supplementing the contract with a provision of law after deleting the unfair indexation clause, the possibility of the contract continuing in existence after elimination of the unfair contract term, settlement of performance as between the parties, as well as claims for use of capital by consumers after a court declares a credit contract null and void. It is difficult to predict the outcome of the resolution, yet it is impossible not to notice that part of the reasons that accompany the questions which the Supreme Court is going to address in its resolution disregard the case law of the CJEU. The position of the Supreme Court, that is, frequent adherence to classic civil law concepts that contradict EU axiology instead of the consumer acquis, omitting the case law of the CJEU and lack of engagement in an active dialogue with the CJEU (lack of Supreme Court preliminary referrals to the CJEU in relation to consumer cases) has seriously hindered the process of implementing the Unfair Contract Terms Directive in Poland. It seems that the Supreme Court is gradually aligning its judgments with the case law of the CJEU, but it also seems that the change of position was somehow forced upon it, once the CJEU judgment of 3 October 2019, C-260/18 in the Dziubak case218 rendered the earlier position of the Supreme Court expressed in several cases clearly incorrect. Additionally, the position of the Supreme Court has incentivised the lower courts towards approaching the CJEU. The result is that the courts refer to the CJEU with questions that could probably very well be settled at the national level. Similarly, consumers (or rather their professional representatives) have begun to appreciate the effectiveness of sanctions offered by EU law. Referrals to the CJEU have become the escape route for parties and courts trapped by the unstable case-line of the Supreme Court. While it is too early to say that the EU’s axiology has been accepted as a part of the domestic legal system, the bottom-up process of accepting the consumer acquis as a part of the Polish legal system has definitely been fired up by the CHF consumer credits problem. Due to the number of cases, the amount of money involved and the determination of consumers it is probably safe to say that over time Polish practice in this area will be brought into line with EU law. It is beyond any doubt that the CJEU’s position taken in a ‘Polish’ case (ie Dziubak)219 had an enormous impact on the Polish courts of lower instance. Almost all courts220 began to adjudicate along the lines indicated by the CJEU, in favour of higher effectiveness of consumer protection. Characteristically, docket number III CZP 41/20, as well as a question referred by the Financial Ombudsman under docket number III CZP 6/21 (the latter resolution is expected on 15 April 2021). 218 Case C-260/18 Dziubak (n 199). 219 ibid. 220 One of the exceptions is the Appeal Court in Wrocław, which still adjudicates in a way contrary to EU law, see Jolanta Ojczyk, ‘Kto rozwiąże problemy frankowiczów – Unia, Sąd Najwyższy czy państwo’ (Prawo.pl, 19 November 2020) www.prawo.pl/biznes/kredyty-frankowe-ws-rozbieznosci-w-orzecznictwieinterweniuje,504601.html. This led an association of debtors to issue a warning against filing appeals in this court.

230  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski while the CJEU only declared that annulling a credit contract, according to national law, after deleting an unfair indexing clause is in accordance with the Unfair Contract Terms Directive, this position of the CJEU managed to change the case-law trend. Although the Supreme Court has several times declared that a contract may continue to exist in such a case,221 the courts of lower instance have begun to declare contracts null and void (as requested by consumers). At the same time, it is difficult to find a judgment that would elaborate, for example, on the informational duties that the CJEU imposes on national courts that perform unfairness control and that would elucidate the consequences of the unfairness of the term. However, it is difficult to predict how far and how fast the reasoning from the Swiss franc conflict zone will penetrate other areas of consumer law application. The position that the Supreme Court has presented so far does not give reasons to be overly positive. Repetitive rejection of the Partner judgment,222 the application of which in Polish reality would provide effective tools to solve the Swiss francs crisis, is highly symptomatic in this regard. In this case (the referral was made by a Polish court) the Court of Justice formulated the criteria, application of which would have made it possible to extend the effectiveness of abstract control of unfair terms against traders which did not participate in the proceedings in which abstract control was made. The criteria were custom-made to fit the Polish legal system. If accepted, it would allow UOKiK to hold banks effectively liable for use of unfair contract terms in CHF consumer credits (the UOKiK may impose penalties up to 10 per cent of the traders’ turnover from the previous year). This would probably also have impacted on banks’ willingness to deal with consumers in out-of-court proceedings. Yet the Supreme Court stated that the Partner judgment only gives the option to extend the effectiveness of abstract control but does not require the Member States to accept it (which, indeed, is the case). Therefore, the Court decided to follow its own position expressed in an earlier judgment which limited the effectiveness of abstract control only to a trader which participated in the proceedings. Rejecting the potential offered by the Partner case, the Supreme Court did not consider at all the adverse effect that it will have on the effectiveness of consumer protection. Another illustrative example is a judgment of 18 September 2019 (IV CSK 334/18), in which the Supreme Court simply ignored the case law of the CJEU when establishing whether or not a person acting with a view to securing a profit is a consumer. The Supreme Court disregarded rather clear criteria established by the CJEU.223 Paradoxically, the rule of law crisis, of which the Polish judicial system is a victim, might provide incentives to accept EU consumer law axiology with more open hands. If the Supreme Court seeks relief referring preliminary referrals to the CJEU in cases that deal with its own status, there should be no obstacles to doing so in consumer cases as well.

221 The Supreme Court has also said that the contract cannot continue to exist, but this conclusion was less frequent than a ruling in favour of the existence of a credit agreement. 222 Supreme Court of Poland of 7 March 2017, III SK 13/15 (n 153); Supreme Court of Poland of 11 January 2019, I NSK 29/18 www.sn.pl/sites/orzecznictwo/Orzeczenia3/I%20NSK%2029-18.pdf. 223 Osajda, ‘Ochrona Inwestora’ (n 202).

Consumer Law in Poland: Or There and Back Again  231

E.  ‘Weaker Party’ Constricting On the margin of the uneasy transposition of EU law, the Polish version of market libertarianism also triggered another phenomenon: narrowing down the ambit of contractual relations that deserve protective treatment. The clearly defined concept of a ‘weaker’ participant in a market, embedded in the notion of the consumer, started to function as a counter reason for seeking protection outside this sphere.224 This tendency became particularly apparent in business-to-business disputes that involved a clear and substantial imbalance between the parties. The courts in many cases fail to respond to this issue properly, quite often assuming (directly or implicitly) that the only group of market participants who deserve a protective approach are consumers. A vivid symptom of this problem is a judgment of one of the first instance courts, tackling a business-to-business leasing agreement. One of the contract clauses – drafted unilaterally by the lessor – imposed on the lessee a clearly excessive payment. In defending its rights, the lessee claimed that the clause was unfair in the sense of the Unfair Contract Terms Directive. The court dismissed this claim, pointing out that the unfairness of a clause cannot be declared beyond consumer relations.225 At the same time, however, it clearly refrained from applying any other provisions of the 1964 Civil Code that would allow for verification of a pre-formulated clause in such a contract.226 The case shows not only that consumer law has transformed the landscape of contract law. It also reveals an unfortunate split between consumer law and the classic framework of contract law. It evidently disregarded certain possibilities created by classic contract law, even in the case of the evident unfairness of a contract clause. Not only has consumer law in Poland lost its link with relatively advanced ‘protective’ doctrines derived in the case law before 1989, but the post-transformation period has also rejected the protective dimension of contract law as such. Contract law is, at the moment, missing socially oriented and protective components, and not only in the area of consumer law.

V.  Polish Consumer Law at a Crossroads Polish consumer law nowadays remains in apparent disharmony. Although at the level of legal structures it mostly implements the EU acquis properly (or at least is not improper 224 This outcome is in generally opposite to the values and policy aims of EU law, which tend to even out the position of contracting parties including in selected areas beyond the consumer context; see especially commercial agency (Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents [1986] OJ L382/17), as well as the ongoing debate over protective measures in B2B supply chains [Proposal for a Directive of the European Parliament and of the Council on unfair trading practices in business-to-business relationships in the food supply chain, COM/2018/0173 final – 2018/082 (COD)]. 225 District Court in Sieradz of 27 June 2014, I C 441/13 discussed in: Mateusz Grochowski, in Witold Borysiak, Mateusz Grochowski and Jacek Sadomski, Umowy o korzystanie z rzeczy: Najem – dzierżawa – leasing (Warszawa, Instytut Wymiaru Sprawiedliwości, 2016) 224, 281f. 226 In particular, by referring to standards of good faith and fair dealing that are incorporated in the general clauses of ‘principles of social coexistence’ (zasady współżycia społecznego). Under Arts 58 § 2 and 3531 CC noncompliance of a contract clause with these criteria may result in its invalidity.

232  Aneta Wiewiórowska-Domagalska and Mateusz Grochowski beyond the average level of deficiencies found in other Member States), it can be found to be unharmonious in practical application in many instances. The application of consumer law in Poland is very often detached from its EU context. The transposition of EU directives needs to be accompanied by appropriate changes in judicial and administrative practice, which has turned out to be much more challenging, and at the moment – quite deficient.227 As a result, the standard of consumer protection is in many instances lower than might be expected regarding the general premises of EU law.228 The Polish legal order is struggling with absorbing consumer axiology and regulatory schemes. The strong emphasis placed on the laissez-faire version of freedom of contract results in dysfunctional interpretation and application of consumer law. Polish consumer law is also experiencing severe enforcement constraints.229 The problem is deeply rooted in the institutional weakness of consumer protection. The state-organised system of professional legal aid available for the consumer is decidedly insufficient. Apart from a limited cohort of state-appointed consumer advisors (­rzecznik praw konsumenta), the number of other entities that might provide legal or logistic aid for enforcing rights by consumers is rather limited. This applies, in particular, to the non-governmental sector, with only two major consumer organisations (one established in 1981 and one in 1995), both in fact government-sponsored.230 For this reason, in many instances consumers have to invest substantial effort and resources to struggle for justice.231 The weakness of enforcement mechanisms has particularly profound consequences for the failure of collective redress in consumer cases. For a very long time group proceedings were almost non-existent in consumer disputes, though the legal framework is well-developed and mostly compliant with European standards.232 Here, too, the Swiss franc cases might play the role of a catalyst for change, as in one of the most publicised group cases, after 10 years of proceedings (and cassation decided by the Supreme Court in favour of the bank), the bank decided to withdraw its appeal.233

227 Łętowska, Jagielska, Lis, Mikłaszewicz and Wiewiórowska-Domagalska, ‘Implementation’ (n 2) 887–888. 228 See, eg Łętowska, ‘The Barriers’ (n 176) 58, fn 2: ‘[w]e can see a complete lack of sensitivity of the courts to the problems of consumers. The breaches of their rights are believed to be one of the unavoidable costs of the economic transformation, as was the case a few years earlier when their interests were not protected in order not to harm state enterprises.’ 229 Łętowska, Jagielska, Lis, Mikłaszewicz and Wiewiórowska-Domagalska, ‘Implementation’ (n 2) 884–886. 230 Hans-Wolfgang Micklitz explains this problem by the existence of strong administrative protection of consumers in the socialist regime, which survived after the transformation – and which left limited space for representation of consumer interests by non-governmental organisations – Micklitz, ‘Prologue’ (n 192) 4; on the ineffectiveness of out-of-court settlements in Polish consumer law practice see also Łętowska, Jagielska, Lis, Mikłaszewicz and Wiewiórowska-Domagalska, ‘Implementation’ (n 2) 886, 888–889; see also Małgorzata Mazurek and Matthew Hilton, ‘Consumerism, Solidarity and Communism: Consumer Protection and the Consumer Movement in Poland’ (2007) 42 Journal of Contemporary History 315, 317ff. 231 On this phenomenon, see, eg (for enforcement of consumer loans) Iwona Jakubowska-Branicka and Mateusz Grochowski, ‘Małe pożyczki, wielkie dramaty’ (2019) Polityka 36. 232 Collective redress in the Member States of the European Union, www.europarl.europa.eu/RegData/etudes/ STUD/2018/608829/IPOL_STU(2018)608829_EN.pdf. 233 Maciej Rudke, ‘Zaskakujący ruch mBanku w sprawie frankowej’ (Rzeczpospolita, 15 July 2020) www.rp.pl/Banki/200719569-Zaskakujacy-ruch-mBanku-w-sprawie-frankowej.html.

Consumer Law in Poland: Or There and Back Again  233 An even larger (5,000 members) case is taking place in a court of first instance.234 The same applies to consumer ADR procedures, also rarely applied in practice.235 Implementation of EU consumer law has provided Polish consumer law with a well-established institutional framework of protection, which may be supplemented by general instruments of contract law (as has already been proven in the case-law before 1989). The tools for protection are therefore developed and ready. The principal problem, however, rests in the general aversion towards the concept of consumer protection, understood as market intervention contrary to the simplified neoliberal ideal. Until this attitude changes generally – which still seems to be a long evolutionary process – Polish consumer protection is likely to remain present, but skin deep.

234 Decision of the Court of Appeal in Warsaw of 27 August 2019, I ACz 618/19 (unpublished). 235 This seems to constitute one of the long-lasting problems of Polish law – cf Meuwly, ‘Consumer Policy’ (n 125) 36–37 – as well as other consumer jurisdictions of the region – Fabrizio Cafaggi, Olha O Cherednychenko, Katalin Cseres, Łukasz Gorywoda, Rozeta Karova, Hans-Wolfgang Micklitz, ‘The Europeanization of Private Law in Central and Eastern Europe Countries (CEECs): Preliminary Findings and Research Agenda’ (2013) EUI LAW Working Paper 2013/07 90.

234

9 Ordoliberalism and Opportunism? The Making of Consumer Law in the UK IAIN RAMSAY*

I. Introduction The consumer society is associated with the trente glorieuses, the period of the growth of affluence in western Europe after the Second World War.1 In the UK the 1960s was also a period of legal modernisation,2 and critiques of traditional legal doctrines. Consumer law became a distinct subject in the English legal academy in the 1970s, a part of the first wave of the influential ‘Law in Context’ series of texts, intended to ‘broaden the study of law by proceeding beyond the exposition of legal doctrine to consider critically the law-in-action in its social and economic context.‘3 As an instrumental form of law it provided a critique of black-letter and formalist approaches to law, questioned existing legal categories, and underlined the need for understanding the relation of law to

* Kent Law School, University of Kent, UK. 1 Historians now suggest that this period reflected earlier trends and that the very concept of the consumer society has a much older pedigree. See generally Frank Trentmann, Empire of Things: How We became a World of Consumers, from the Fifteenth Century to the Twenty-First (New York, Harper, an imprint of HarperCollins Publishers, 2016) 1–18. 2 See, eg the essays collected in Gerald Gardiner and Andrew Martin (eds), Law Reform Now (London, V Gollancz, 1965). Gardiner became Lord Chancellor in the Labour government of 1964 and was instrumental in the creation of the Law Commission established in 1965 with a wide remit for reform of the law. For a recent history see Shona Wilson Stark, The Work of the British Law Commissions: Law Reform … Now? (Oxford, Hart Publishing, 2017). Gardiner was influenced by the work of Benjamin Cardozo who was instrumental in establishing the New York Law Commission. See Gerald Gardiner, ‘Comparative Law Reform’ (1966) 52 American Bar Association Journal 1021. 3 From back cover Ross Cranston, Consumers and the Law (London, Weidenfeld and Nicolson, 1979). An earlier work on consumer law by Gordon Borrie and Aubrey Diamond had been influenced by legal realism and a functionalist approach, see Gordon Borrie and Aubrey L Diamond, The Consumer, Society and the Law, 1st edn (Harmondsworth, Pelican/Penguin Books, 1964) and discussion below at section II.D. Other more traditional doctrinal texts also appeared around this period. These include Robert Lowe and Geoffrey Woodroffe, Consumer Law and Practice (London, Sweet and Maxwell, 1979); John Mickleburgh, Consumer Protection (Abingdon, Professional Books, 1979); Brian W Harvey, The Law of Consumer Protection and Fair Trading, 1st edn (London, Butterworths, 1978). My own initial text was a second generation analysis of consumer protection as a form of regulation. See Iain Ramsay, Consumer Protection: Text and Materials (London, Weidenfeld and Nicolson, 1989).

236  Iain Ramsay society. Early socio-legal research in the UK focused on aspects of consumer law.4 The access to justice ‘movement’ of the 1970s and 80s focused on consumer issues, such as the problems of small claims and the inability of ordinary consumers to access the English court system.5 An assumption in early consumer law writing was that it was a progressive form of law, although some did worry that consumer rights would be primarily used by more affluent consumers. Indeed, in 1967 David Caplovitz published his influential study, The Poor Pay More which exposed the extent to which the poor in New York were exploited through high credit prices and exploitative practices.6 Consumer law is now an established field of law, represented in practitioners’ handbooks such as Benjamin on Sale, and Chitty on Contracts.7 Consumer law was constructed as a progressive form of law in the 1960s, protecting ‘weaker parties’ but now seems to embody contrasting ideas – represented by the twin images of the rational informed consumer and the vulnerable or behavioural consumer.8 This chapter discusses the relationship between the development of consumer law in the UK, and ideas about regulation of the economy, and the role of interest groups and political parties in its development. Central aspects of UK consumer law and policy established in the 1970s fit the precepts of ordoliberalism with the state establishing the ground rules for a competitive market economy.9 Influential politicians who introduced measures such as the Fair Trading Act 1973 identified consumer regulation with a ‘social market’ approach,10 a concept associated with Ordoliberalism. Political opportunism, primarily by the Conservative party, also played a role. The consumer law initiatives of the early 1970s were an amuse-bouche before the entrée of neo-liberalism in the 1980s and 90s. Consumer protection was linked to consumer sovereignty and competition policy during this period. In the market for consumer credit, this involved reducing the fragmentation of consumer credit markets and promoting vigorous competition in credit provision within a level playing field of ground rules preventing unfairness and treating fairly the casualties of the credit system. This would, it was thought, maximise access and consumer welfare. This narrative was shared by both mainstream consumer groups and the financial industry.11 4 See, eg Maureen Cain, ’Rich Man’s Law or Poor Man’s Law?’ (1975) 2 British Journal of Law and Society 61, where the author notes at 64 the predominance of welfare, housing and consumer protection in the research topics of graduate students. See, eg Ross Cranston, Regulating Business: Law and Consumer Agencies (London, Palgrave Macmillan, 1979), which studied the change in local authorities to consumer agencies in the early 1970s and their distinct strategies for enforcing consumer law. 5 See Consumer Council, ‘Justice out of Reach: a case for small claims courts’ (London, H.M.S.O, 1970); See also Terence G Ison, ‘Small Claims’ (1972) 35 The Modern Law Review 18; Ken Foster, ‘Problems with Small Claims’ (1975) 2 Journal of Law and Society 75; Gabrielle Appleby, ‘Small Claims in England and Wales’ in Mauro Cappelletti and John Weisner (eds), Access to Justice, vol II, book 1 (Milano, Giuffrè Editore/Alphen aan den Rijn, Sijthoff/Noordhoff, 1978) 683. 6 David Caplovitz, The Poor Pay More, 4th edn (New York, Free Press, 1967). 7 See Hugh Beale, Chitty on Contracts, 33rd edn (Sweet and Maxwell, 2020) ch 38. 8 See, eg in medical law, Montgomery v Lanarkshire Health Board [2015] UKSC 11. 9 See discussion in Werner Bonefeld, ‘Freedom and the Strong State: On German Ordoliberalism’ (2012) 17 New Political Economy 633 and see below text at section III.A and accompanying notes. 10 See Geoffrey Howe n 117 below. 11 Gunnar Trumbull underlines the importance of coalition-building around shared narratives of public values as central to political success for groups such as consumers. Gunnar Trumbull, Strength in Numbers: The Political Power of Weak Interests (Cambridge, MA, Harvard University Press, 2012).

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  237 The National Consumer Council, established in 1975, with a wide remit to protect ‘the inarticulate and disadvantaged’ did undertake important initiatives in relation to issues affecting poorer consumers and promoted fairness and equity. It was however most successful in promoting a consumer empowerment model, particularly in relation to financial services and the courts. The success of these mechanisms such as the Banking Ombudsman (1983) depended on individuals asserting their rights, which meant in practice that, at least during this period, these mechanisms were the preserve of more affluent, middle class consumers. The focus is primarily on the protection of consumer economic interests rather than product safety. In terms of periodisation the article loosely tracks Hepple and Veneziani’s periodisation of post-war labour law.12 Section II briefly outlines key developments in consumer law and policy from the early 1950s until the election of the Conservative Government of Edward Heath in 1970. It documents the limited role of the courts in developing consumer law norms, and documents the emergence of advertising ‘self-regulation’. Section III examines the key period of the early 1970s. Narratives of post-second world war UK history often refer to the 1970s as a critical turning point:13 a crisis moment in UK labour law and relations,14 ideas about management of the economy (Keynesianism/monetarism), the role of social policy,15 and the social construction of the role of producers and consumers in the economy. Consumer law was institutionalised by a Conservative Government in the ‘big burst’ of legislation between 1970–74. This included creation of the office of Director General of Fair Trading, and the introduction of the Consumer Credit Bill in 1973, subsequently enacted by the Labour Government as the Consumer Credit Act 1974. The institutional structure of UK consumer regulation established in the early 1970s would not change fundamentally until the 2000s with implementation of the UCPD, which repealed the Trade Descriptions Act 1968 in its application to consumers. Section IV focuses on the role of consumer law in establishing and legitimising a contemporary consumer credit market in the Consumer Credit Act 1974. A history of concern for fairness and class inequalities in access to credit existed prior to the 1970s, and historical patterns of regulation exerted an influence over the 1974 Act. Consumer credit regulation also raised macro-economic issues of economic management, which concerned both the powerful English Treasury department and the Board of Trade. Credit is central to the consumer society so that its modern transformation

12 cf Bob Hepple and Bruno Veneziani (eds), The Transformation of Labour Law in Europe: A comparative study of 15 countries 1945–2004, 1st edn (Oxford, Hart Publishing, 2009). Hepple and Veneziani identify the following periods: 1945–50 (reconstruction); 1950–72 (welfare state); 1973–79 (economic crisis); 1980–89 restructuring and deregulation; 1990–2004 European response to global capitalism. 13 Emily Robinson, Camilla Schofield, Florence Sutcliffe-Braithwaite and Natalie Tomlinson, ‘Telling Stories about Post-War Britain: Popular Individualism and the ‘Crisis’ of the 1970s’ (2017) 28 Twentieth Century British History 268; See also Lawrence Black, Hugh Pemberton and Pat Thane (eds), Reassessing 1970s Britain (Manchester, Manchester University Press, 2013). 14 See Paul Davies and Mark Freedland, Labour Legislation and Public Policy: A Contemporary History (Oxford, Oxford University Press, 1993) 275. 15 See Howard Glennerster, ‘New Beginnings and Old Continuities’ in Howard Glennerster and John Hills (eds), The State of Welfare: The Economics of Social Spending (Oxford, Oxford University Press, 2003).

238  Iain Ramsay and accompanying ideologies are of particular interest since the UK was an influential actor in the development of EU approaches to credit regulation. Consumer reforms of the late 1960s and 1970s also represented significant path dependency. The Trade Descriptions Act 1968 updated for the consumer era the earlier Merchandise Marks legislation. The Consumer Credit Act 1974 continued many of the earlier hire-purchase protections and approaches to regulation which dated from the 1930s. During the period under discussion, the UK joined the EEC. The EEC’s modest development of consumer policy in the 1970s16 included promoting links with consumer organisations.17 The main English consumer lobby group, the Consumers Association, viewed itself as having successfully achieved a high level of consumer protection in the UK18 and was active in the development of the European Consumer Group BEUC. During the 1970s several Directives were initiated in consumer policy relating to door-to-door selling,19 misleading and unfair advertising,20 information labelling, consumer credit,21 and products liability.22 UK groups were both active in fashioning these Directives and distrustful of the transplantation of ‘alien’ European concepts into English law.

A. Ideas Ordoliberalism was influential in post-Second-World War Germany and its tenets seeped into the UK in the 1960s, providing one foundation for a ‘third way’ approach to regulating the economy. Conservative politicians in the early 1970s drew on ordoliberal theory, proposing greater reliance on market forces, competition and consumer sovereignty.23 Individuals were invited increasingly to view themselves as consumers rather than workers and adopt a consumerist rather than producerist lens on the world.24 16 See discussion by Ludwig Krämer, ‘The Origins of Consumer Law and Policy at EU Level’ ch 2 in this volume. 17 The Times claimed in 1972 that this move had been prompted by the interest of UK consumer organisations in the effects of British membership on consumers and the cost of living. See ‘EEC plans to have closer links with consumers’ The Times (London, 30 June 1972). 18 See below text at section II.E and accompanying notes. 19 Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises [1985] OJ L372/31. 20 Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising [1984] OJ L250/17. 21 Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L42/48. 22 Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products [1985] OJ L210/29. 23 See discussion below at section III.A. 24 See Avner Offer, ‘British Manual Workers: From producers to Consumers, c. 1950–2000’ (2008) 22 Contemporary British History 4; See also James Whitman, ‘Consumerism versus Producerism: A Study in Comparative Law’ (2007–2008) 117 Yale Law Journal 340. On the development of the concept of consumer sovereignty see Niklas Olsen, The Sovereign Consumer A New Intellectual History of Neoliberalism (London, Springer International Publishing, Palgrave Macmillan, 2019).

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  239 If consumer sovereignty was the God that failed in the 1950s and 1960s, reasserting it became a goal of consumer policy in the early 1970s, the period of the ‘big burst’ of consumer legislation between 1970–74 (see Table 1). Its influence drew strength from both left and right of the political spectrum. The radical movements of the late 1960s, including left libertarianism, promised individuals greater autonomy and choice, while the right saw the decline of deference and unwillingness of individuals to have their lives determined by others, whether large businesses or government, as compatible with traditional defences of private property and markets.25 The idea of consumer sovereignty changed gradually from the 1970s from the simple idea of the market responding to the consumer so that they could satisfy whatever preferences they had (‘pushpin or poetry’) – with the law establishing ground rules for a buyers’ rather than a sellers’ market – to consumer empowerment in the 1980s, a conception of consumer sovereignty as involving an active responsible subject, asserting rights, switching providers, driving innovation and competitiveness. When New Labour came to power in 1997 it embraced the concept of the ‘confident consumer’ as central to improving the global competitiveness of British industry.26 Individuals were now regulatory subjects to be harnessed to achieve national objectives.

B. Actors In terms of influential actors, consumer groups did influence the development of UK consumer law. The primary consumer pressure group, the Consumers Association, overcame the problems of collective action on behalf of a large diffuse group such as consumers by using selective incentives (the sale of its magazine) to fund its collective goods activity.27 The state also financed consumer representation in the 1960s and 70s through the Consumer Council created in 1963 and National Consumer Council (1975). The Consumers Association adopted a market failure approach to regulation, and the importance of information and protection against unfair practices. This narrative chimed well with the rise in the early 70s of a narrative which increasingly focused on competition and the importance of consumer sovereignty and choice. Consumer law reforms in the area of credit represented a conjuncture of interests between consumer and industry groups where both sought modernisation and reform which would provide improved access to credit and a more competitive credit marketplace.

C.  Institutional Frameworks The UK majoritarian political system, dominated by two parties, may create incentives for politicians to favour diffuse consumer groups over sectoral groups. Votes were 25 See Robinson, Schofield, Sutcliffe-Braithwaite and Tomlinson, ‘Telling Stories about Post-War Britain’ (n 13) 276. 26 See Department of Trade and Industry, Modern Markets, Confident Consumers (Stationery Office Books, Cm 4410, 1999). 27 Addressing the problem of the free rider highlighted in Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups, 1st edn (Cambridge, Harvard University Press, 1965).

240  Iain Ramsay decreasingly cast along class lines during the 1970s and with increased voter volatility, consumer issues might appeal to the floating voter, a crucial figure in the first-past-thepost UK parliamentary system. A second factor is the Private Members Bill procedure in Parliament. A significant amount of consumer legislation resulted from consumer pressure groups using this procedure (See Appendix). The creation of the Law Commissions in 1965 provided a further institutional resource to consumer law reformers, in a context where the courts were reluctant to articulate consumer law norms. Unlike France or Germany,28 consumer associations did not have standing to bring legal actions on behalf of consumers and severe limits existed on class and public interest actions in the UK during this period.

II. 1951–197029 Austerity followed by affluence disrupted by the rediscovery of poverty in the mid-1960s.30

Collective consumption dominated this period, with many industries owned by the state and the National Health Service providing a universal health service. Most individuals classified themselves as working class. The continued growth of mass consumer markets which had developed during the inter-war years stimulated reflection that the UK might become a more classless ‘consumer society’ similar to the US31 with ‘class based on production … slowly giving way to status based on consumption’.32 Studies of the ‘affluent worker’ gave some support to this argument, while others indicated the continuity of class distinctions.33 In 1956 Anthony Crosland, an eminent intellectual of the Labour party, published the Future of Socialism which argued that the Labour party should come to terms with the new ‘post industrial’ age of affluence heralding greater equality and opportunities for leisure. The potential power of advertising had been highlighted in Vance Packard’s 1957 bestseller, The Hidden Persuaders and in 1958 John Kenneth Galbraith 28 eg in France under loi n° 73-1193 du 27 décembre 1973 d’orientation du commerce et de l’artisanat or in Germany the possibility of injunctive actions by consumer groups under the 1965 Amendments to the Act against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb (UWG) and the 1976 Standard Terms Act (Gesetz über Allgemeinen Geschäftsbedingungen) (FRG). According to Trumbull, ‘approximately 1,000 UWG cases were brought by consumer groups between 1965 and 1977’; see Gunnar Trumbull, Consumer Capitalism: Politics, Product Markets, and Firm Strategy in France and Germany (Ithaca, Cornell University Press, 2006) 63. 29 Matthew Hilton, Consumerism in Twentieth-Century Britain: The Search for a Historical Movement (Cambridge University Press, 2003) ch 5 documents the earlier post Second World War developments. 30 See Selina Todd, ‘Affluence, Class and Crown Street: Reinvigorating the Post-War Working Class’ (2008) 22 Contemporary British History 501, 502. 31 See Albert Henry Halsey, Change in British Society, 3rd edn (Oxford, Oxford University Press, 1986). 32 Michael Dunlop Young, The Chipped White Cups of Dover: A Discussion of the Possibility of a New Progressive Party (London, Unit 2, 1960). 33 See John Goldthorpe, David Lockwood, Frank Bechhofer and Jennifer Platt, The Affluent Worker: Political Attitudes and Behaviour (London, Cambridge University Press, 1968). This study of car workers argued that class remained central in the consumer society. For a critical analysis of Goldthorpe see Mike Savage, ‘Working Class Identities in the 1960s: Revisiting the Affluent Worker Study’ (2006) 39 Sociology 929; See also Jon Lawrence, Me Me Me?: The Search for Community in post-war England (Oxford, Oxford University Press, 2019).

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  241 published his influential book The Affluent Society34 which argued that extensive and sophisticated advertising and marketing had reversed the conventional wisdom that production responds to consumer demand. Modern advertising increasingly created new wants which previously did not exist and which could be met by the availability of easy consumer credit for white males in the US, promoting a privatised consumer society of ‘private affluence and public squalor’.35 Galbraith undoubtedly had an influence on elite public opinion in the UK.36 Crosland agreed with Galbraith on the increase in affluence but did not think that public squalor was an inevitable accompaniment. Crosland viewed an increasing material standard of living as a desirable development since it expanded choices for workers. He justified it also as ‘democratic anti-paternalism’, since this was clearly what workers desired: And anyone who tells them they are wrong and that in fact they are simply becoming vulgarized, or Americanised, will be given rather short shrift, especially if he himself appears to have a good deal of material fat which might be melted off.37

These ideas formed the backdrop to the creation of the Consumers Association in 1956. Michael Young, a polymath who had been closely involved with the Labour party since the 1940s,38 and had argued for greater attention to consumer issues, was a founding member. This group initially survived by selling magazines to members. It represented a middle class ‘value for money’ approach to consumption but its members were also motivated by concerns about the power of advertising and the need for unbiased information.39

A.  Molony and its Progeny The Conservative Government of 1951–64 focused on the role of product standards as a mechanism for promoting quality products for export but the Board of Trade department did not allocate a high priority to the direct defence of the consumer interest,40 although it did focus on promoting greater competition in UK industry. 34 Trentmann for example argues that ‘no single book has cast as long a shadow as John K Galbraith’s The Affluent Society’; Trentmann, Empire of Things (n 1) 7. 35 See John Kenneth Galbraith, The Affluent Society, 40th edn (New York, Houghton Mifflin, 1998) 127. For empirical support of Galbraith’s arguments see Douglas J Lamdin, ‘‘Galbraith on Advertising, Credit and Consumption: A Retrospective and Empirical Investigation with Policy Implications’ (2008) Review of Political Economy 595. 36 See, eg Noel Thompson, ‘Socialist Political Economy in an Age of Affluence: The Reception of J K Galbraith by the British Social Democratic Left in the 1950s and 60s’ (2010) 21 Twentieth Century British History 50; Noel Thompson, ‘Conceptualising the Consumer: British Socialist Democratic Political Economy in the Golden Age of Capitalisms’ (2011) 25 Contemporary British History 297. 37 Anthony Crosland, The Future of Socialism, 1st edn (London, Jonathan Cape, 1956) 292. 38 For an outline of the many activities and contributions of Michael Young see Asa Briggs, Michael Young: Social Entrepreneur (London, Palgrave Macmillan, 2001). 39 Young, The Chipped White Cups (n 32) arguing that the Labour party needed to take into account the interests of consumers as opposed to solely workers; See Matthew Hilton, ‘Michael Young and the Consumer Movement’ (2005) 19 Contemporary British History 311; A fuller history of the Consumers Association can be found in Hilton, Consumerism in Twentieth-Century Britain (n 29) ch 7. 40 See W Roberts, The Formation of Consumer Protection Policy 1945–73 (PhD thesis, University of Kent, 1975).

242  Iain Ramsay Aggressive entrepreneurs, such as John Bloom, challenged resale price maintenance by cutting out the middle person, and selling washing machines directly to the consumer (albeit financed by high hire-purchase costs). The Restrictive Trade Practices Act 1956 addressed cartelisation, and was a modest move towards greater competition in UK markets. The Resale Prices Act 1964 effectively abolished resale price maintenance. Justified in terms of price reductions for consumers, its long term significance included the increased concentration of large retailers as a countervailing power to manufacturers. It was one aspect of the government’s preparation for the possibility of entry to the Common Market, as decolonisation would over time reduce the significance of the protected markets of the declining British empire. The Act also represented the influence of the Institute of Economic Affairs, a free market think tank.41 The government established the Molony Committee in 1959, in response to increasing interest in consumption, and criticisms of inaction by Labour MPs. The creation of the Committee may have represented a classic reason for establishing Commissions in the UK, namely to avoid taking immediate action. Its mandate was ‘to review Merchandise Marks legislation and trade marks and to consider and report what changes if any in the law and what other measures, if any are desirable for the further protection of the consuming public’. The Merchandise Marks Act of 1953 was essentially unfair competition law and the Board of Trade rarely brought prosecutions under this legislation. The Molony Committee concluded that the ‘idea of a consumers’ sovereignty’ was fallacious in the economy of that time,42 because of the changed nature of consumer markets, dominated by large manufacturers. Inequality of bargaining power between consumer and producer was the norm, represented by the ubiquitous exclusion clauses in standard form contracts. For Molony, the system needed redesign to provide greater consumer representation, inalienable consumer rights in sales law and better access to advice. The Report, although described as ‘unimaginative and insular’,43 provided a template of reform proposals for the 1960s. Its recommendations included: prohibition on contracting out of implied conditions and warranties of quality; extension of redress through more funding for the Citizens Advice Bureaux established during the war; reform of hire-purchase law including the introduction of a cooling-off period in door-to-door hire-purchase sales;44 reform of the Merchandise Marks Act to include advertising and better enforcement; and creation of a Consumer Council to provide consumer representation. Foreign approaches were looked at, primarily the US experience, but the Committee did not ‘derive much help’ from foreign examples.45

41 See Helen Mercer, ‘The Abolition of Resale Price Maintenance in Britain in 1964: A Turning Point for British Manufacturers?’ (1998) LSE Working Paper in Economic History 39/1998. The IEA paper was Basil Selig Yamey, Resale price maintenance and Shoppers’ Choice, Institute of Economic Affairs: Hobart Papers 1 (London, Barrie and Rockliff, 1960). 42 Final Report of the Committee on Consumer Protection (Molony Committee) BT 258/1432 (1962) para 821. 43 See Aubrey L Diamond, ‘The Molony Committee Final Report of the Committee on Consumer Protection’ (1963) 26 The Modern Law Review 66. 44 See Molony Committee (n 42) paras 526, 741, 742. The Molony Committee proposals were the first government proposals in Europe to introduce a cooling-off period in credit transactions. See Byron D Sher, ‘The Cooling-Off Period in Door-to-Door Sales’ (1968) 15 UCLA Law Review 717. 45 Molony Committee (n 42) para 17.

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  243 Consumer credit issues were a significant concern in the Molony Report. The lifting of post-war controls on minimum deposits and repayment periods during the period 1958–60 had resulted in a credit boom and a perception of increasingly reckless lending.46 Pressure for reform increased with the introduction of several private members bills to update hire-purchase law. In the dying days of the conservative government, perhaps as an election ploy, it enacted The Hire Purchase Act 1964. The newly elected Labour Government in 1964 was committed to ‘modernisation’, and introduced a Bill in 1964 to transform the Merchandise Marks Act into a consumer protection statute. This ultimately became the Trade Descriptions Act 1968. Originally entitled the Protection of Consumers (Trade Descriptions) Bill, lobbying by the CBI (Confederation of British Industry) and trade groups, who argued that such a title represented a slur on British industry, resulted in a Lords amendment to the Bill to substitute the more anodyne title of the Trade Descriptions Act. Discussing the amendment Lord Drumalbyn, a Conservative ex-minister at the Board of Trade, thought that the word ‘consumer’ would be ‘to slant the bill and influence magistrates in favour of the consumer’.47 The Consumer Council acting through their parliamentary contact, Baroness Elliot, failed to secure a general clause on false and misleading claims or a private damages action for breach of the Act. Business interests (the CBI, the advertising industry and the National Chamber of Trade) were successful in their lobbying, reflecting the relative weakness of consumer interests during this period. Notwithstanding the limitations of the Act, the enactment of the Trade Descriptions Act 1968 was a significant event. It created a duty on local authorities to enforce the legislation, highlighting consumer law as a topic of public concern. The enactment coincided with changes and expansion in local government which transformed ‘Weights and Measures’ committees into Consumer Protection Authorities. These authorities in some cases took high profile cases.48 Some local councils established Consumer Advice Centres and the Consumers Association established a shop front Consumer Advice Centre in 1970. The publicity given to the Act may also have stimulated greater public awareness with local authorities receiving large numbers of complaints in the initial years after its implementation.49 The TDA became the workhorse of local authority enforcement. It used the historic English approach to public welfare offences of strict criminal liability with a due diligence defence where the most common sanction is a fine rather than imprisonment. Enforcement of the Act focused on particular sectors, such as the sales practices of used car dealers.50 In determining whether individuals would be misled by a trade description, some early interpretations of the Act appeared to adopt a credulous consumer test,51 46 But see the publication of the free market think tank the Institute of Economic Affairs which in Ralph Harris, Margot Naylor and Arthur Seldon, Hire Purchase in a Free Society (London, Institute of Economic Affairs, Hutchinson of London, 1958) argued for the expansion of hire purchase. 47 Lord Drumalbyn. See Parliament (Monday, 1 February 1968) as reported in ‘Parliament, The Lords: Bill Renamed’ The Times (London, 6 February 1968) 5. 48 See, eg Tesco v Nattrass [1971] AC 152, HL; Nattrass v Timpson Shoes Divisional Court [1973] Crim LR 197; Nattrass v Brereton Divisional Court [1969] 133 JP 317; MFI Warehouses v Nattrass Divisional Court [1973] 1 WLR 307. 49 See P Tisdall, ‘Act that got a big public response’ The Times (London, 23 June 1971) 24. 50 See Cranston, Regulating Business (n 4) on early enforcement practices. 51 See Robertson v DiCicco [1972] RTR 431.

244  Iain Ramsay but later cases suggested that the test was whether a reasonable consumer would be misled.52 An early interpretation of the due diligence defence53 substantially increased the costs of prosecuting large corporations which may have channelled resources to more simple prosecutions of small traders. The TDA was anachronistic in its continued use of concepts from the Merchandise Marks Acts, and its absence of a general prohibition on misleading claims. Such a general clause was deemed in the 1970s to be inappropriate in a criminal statute.54 The Act survived with modest reforms until it was repealed in relation to consumers with the implementation of the 2005 UCPD Directive.

B.  The Emergence of Advertising ‘Self-regulation’ The ripples from Packard and Galbraith’s critiques of advertising undoubtedly reached the Molony Committee: ‘much disquiet was expressed to us about modern methods of advertising’.55 These methods included playing on emotions, persuasive not factual claims, and meaningless claims. Other Committees at this time documented concerns about the influence of advertising on broadcasting and the extent to which it played on human weakness.56 If opinion in the late 1950s and early 60s was generally critical of the influence of advertising,57 there were also dissenters. The Institute of Economic Affairs, a free market think tank created in 1955, published Advertising in a free society in 1959.58 This criticised economists’ lack of attention to advertising and put forward a positive view of the role of advertising in mass market economies, contributing to consumer sovereignty. In a concluding chapter ‘Sovereign or puppet’ the authors argued that consumer sovereignty was ultimately based on freedom, which included the ‘freedom to choose badly as a means of learning to choose well’.59 The Advertising Association established a self-regulatory system in 1961 as a response to the possibility of proposals for legal controls by the Molony committee. The Committee did consider the possibility of a Federal Trade Commission model of an independent agency policing advertising, but concluded that it was not appropriate in the English context. The Committee decided to give the advertising self-regulatory system an opportunity to prove itself.60

52 See, eg British Airways Board v Taylor [1976] 1 WLR 13, HL; Lewin v Purity Soft Drinks [2004] EWHC Admin 3119 (QB). 53 See Tesco v Nattrass (n 48). 54 See Director General of Fair Trading, Review of the Trade Descriptions Act 1968 (Cmnd 6628, 1968) (TSO, 1976) para 12. A general offence of misleading claims in relation to prices was introduced by the Consumer Protection Act 1987. 55 Molony Committee (n 42) para 727. 56 Report of the Committee on Broadcasting 1960 (Cmnd 1753, 1962) (The Pilkington Committee). 57 See, eg W Taplin, ‘Editorial, Call it Serious Business’ Financial Times (1 June 1959) 3 who refers to the recent ‘public controversy over advertising notes that ‘many, perhaps most, educated and cultured people are highly sceptical about advertising’. 58 Ralph Harris and Arthur Seldon, Advertising in a Free Society, 1st edn (London, The Institute of Economic Affairs, 1959). The authors indicate their debt to the work of several authors including Frank Knight and WH Hutt. 59 ibid 138. 60 Molony Committee (n 42) para 794.

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  245 The original idea behind the self-regulatory system was that it would address cases where claims might not be objectively true or false and advertising claims which played on emotional weakness. The subsequent story of the ASA is one of politicians periodically threatening the implementation of legal regulation, and the self-regulatory system responding by making the system more rigorous.61 In the early 1970s several consumer groups criticised the operation of the self-regulatory system62 and in 1974 Shirley Williams, Labour Minister for Consumer Affairs, threatened regulation of the industry, causing the body to treble its staff and quadruple its budget through a levy on print advertising.63 By 1978, however, the UK Government was lobbying the European Commission for recognition of self-regulation in its misleading advertising Directive. This early EC Directive, based on the German model, envisaged control through a judicial model. The UK Government, acting in response to strong lobbying by the advertising industry, strenuously opposed almost all substantive and procedural aspects of the Directive64 and adoption of the Directive was in doubt because of fierce opposition on the part of the advertising lobby.65 The UK succeeded in amending the proposal to include recourse to administrative agencies as well as courts. It then complied with the proposal by the introduction of a back-up injunctive power for the Office of Fair Trading in exceptional cases when the ASA was unable to secure compliance.66 Implementation of the EU Misleading Advertising Directive in the UK therefore increased the administrative powers of the Office of Fair Trading. UK governments continued to lobby successfully for the recognition of self-regulation in later EU Directives as exemplified by the provisions in the Unfair Commercial Practices Directive.67 Gordon Borrie, then Director General of Fair Trading, championed the English self-regulatory system in his Hamlyn lectures in 1984 arguing that a ‘fully legalized system of control would have strangled the excellent system of self-regulation governed by the Advertising Standards Authority that has grown up in Britain’.68 Borrie subsequently became chair of the ASA from 2001–2007 during the period leading up to enactment of the Unfair Commercial Practices Directive. The Labour party had indicated in 1986 that it would substitute legal regulation for the ASA and the Consumers Association criticised the operation of the self-regulatory system in the mid-1990s, perhaps anticipating more robust regulation from New Labour coming to power in 1997. The ASA responded by further reform and it has increasingly 61 The history as told through the lens of the current ASA www.asa.org.uk/about-asa-and-cap/our-history. html#1961 onwards. 62 Documented in Ross Cranston, Consumers and the Law (London, Weidenfeld and Nicolson, 1978) 51. 63 See A Raphael, ‘Adverse and Worse’ The Guardian (London, 13 December 1974). 64 ‘British advertisers fought every foot of the way.’ See Avner Offer, The Challenge of Affluence: Self-Control and Well-Being in the United States and Britain since 1950 (Oxford, Oxford University Press, 2006) 135. 65 Sidney Freedman, ‘A short history of consumer policy in the EU’ in Dorota Leczykiewicz and Stephen Weatherill (eds), Images of the Consumer in EU law: Legislation, Free Movement and Competition Law, 1st edn (Oxford, Hart Publishing, 2016) 454–455. Freedman was head of EEC consumer policy during this period. 66 See Director General of Fair Trading v Tobyward [1989] 1 WLR 517 Hoffman J ‘The proper working of the self-regulatory system is essential to the overall scheme of control, which contemplates that the director will only deal with exceptional cases in which for one reason or another self-regulation has proved inadequate’. 67 See further discussion Iain Ramsay, Consumer Law and Policy: Text and Materials on Regulating Consumer Markets, 3rd edn (Oxford, Hart Publishing, 2012) 276–288. 68 See Gordon Borrie, The Development of Consumer Law and Policy: Bold Spirits and Timorous Souls (London, Stevens and Sons, 1984) 113.

246  Iain Ramsay become embedded in a public/private mixture of regulation. Contemporary UK advertising regulation is hard to describe as ‘self-regulation’. The ASA is subject to judicial review, includes an independent adjudicator to whom parties may appeal, has introduced a consumer panel in code development, and has day to day responsibility for television advertising regulation under a contract with the regulator, OFCOM. The ASA is now the largest advertising self-regulatory system in the world.69 The EU through directives secured the first international regulation of cross-border advertising, but the UK advertising industry succeeded in preserving self-regulation. Sidney Freedman claims that the EC Commission ‘was taking a long view’ foreseeing that the ASA would become increasingly part of a legalised administrative system.70 Whatever the views of its current effectiveness, an element of contingency surrounded its development. In the early years, it might have been replaced by statutory regulation in a climate of opinion which often viewed advertising as a powerful mechanism in moulding consumer tastes. Changing ideas about advertising and its role must also be taken into account. In 1976 the US Supreme Court, in a reversal of earlier precedents,71 decided in Virginia State Board of Pharmacy et al v. Virginia Citizens Consumer Council72 that commercial speech, ‘which does no more than propose a commercial transaction’ was entitled to some First Amendment Protection. A consumer group, Public Citizen, brought this case to challenge state restrictions on the advertising of pharmaceutical prices. The rationale for striking down the restriction was consumerist: price advertising restrictions reduce competition, preventing consumers from shopping around for the best buy and reducing pressure on prices. The hardest hit by this absence of competition would be the poor, sick and aged who may face high search costs. The majority opinion stressed the importance of advertising ‘however tasteless and excessive in contributing to a free enterprise economy and intelligent and informed decision making’.73 The opinion of the majority of the Supreme Court in Virginia Pharmacy on advertising echoes the views of Harris and Seldon’s 1959 paper. These views seem now to represent conventional wisdom about the role of advertising. Once out of the box the commercial speech doctrine became a hurdle to regulation. In 1984 a UK industry spokesperson stated that ‘the industry now has, if not its secret weapon, then at least a powerful and persuasive argument to use against these bureaucrats and pressure groups who want to restrict advertising freedom’.74 The European Court of Human Rights would extend the coverage of Article 10 of the ECHR to commercial expression in 1989,75 and the European Court of Justice emphasised the importance of advertising in promoting the free movement of goods.76 69 Christopher Hodges, Law and Corporate Behaviour: Integrating Theories of Regulation, Enforcement Compliance and Ethics, 1st edn (Hart Publishing, Beck, Nomos, 2015) 482. 70 See Freedman, ‘A short history’ (n 65) 456. 71 Valentine v Christensen 316 US 52 (1942), ‘The Constitution imposes no such restraint on government as respects commercial advertising’. 72 Virginia State Board of Pharmacy et al v Virginia Citizens Consumer Council 425 US 748 (1976). 73 ibid 765. 74 See P Circus, ‘Freedom, Commercial Speech and the Advertising Industries’ (1984) 1 Advertising and Marketing Law Practice 68. 75 See Markt Intern Verlag v Germany A no 195 (1989) 12 EHRR 161; Roger A Shiner, Freedom of Commercial Expression (Oxford, Oxford University Press, 2003) 107. 76 Case C-362/88 GB-INNO-BM v Confédération du commerce luxembourgeois [1990] ECR I-667.

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  247

C.  The Limits of the English Courts and Law Reform: Exemption Clauses Exclusion of liability in standard form consumer contracts, and the limits of the doctrine of privity of contract as applied to mass manufactured goods, stimulated consumer law reform in the UK, resulting in the Supply of Goods (Implied Terms) Act 1973, the Unfair Contract Terms Act 1977 and the Consumer Transactions (Restrictions on Statements) Order 1976. The Molony Committee had concluded that the practice of contracting out was detrimental to consumers and that the consumer had no bargaining power to object to this practice. In 1964 Gordon Borrie and Aubrey Diamond77 published the ground-breaking The Consumer Society and the Law78 where they identified the use of exemption and exclusion clauses, justified in terms of freedom of contract, as a major stimulus for the development of consumer protection. Although they praised the ability of the common law to adapt to changes in contracting through, for example, the doctrine of fundamental breach of contract, they criticised the formalistic approach of the English courts, concluding that legislation was necessary to ensure a functional and modern approach to consumer law. The intellectual influence of American realism and sociological jurisprudence is evident throughout Borrie and Diamond’s work. They praise the ‘fresh and unfettered attitude’ of the American Uniform Commercial Code.79 Roy Goode, architect of the legal aspects of the Crowther Report on Consumer Credit, also admired US developments in commercial and consumer credit law.80 The unconscionability doctrine, embodied in Article 2-302 of the Uniform Commercial Code, seemed to provide an escape from the ‘tortuous’ interpretations adopted by the English courts to strike down contracts without undermining freedom of contract. As an overt tool of regulation it might provide greater clarity than the covert techniques adopted by the courts.81 The US courts seemed to be at the forefront of consumer law developments with cases such as Henningsen v Bloomfield Motors,82 which extended the implied warranty 77 Both authors played significant roles in consumer policy making. Gordon Borrie sat on the Consumer Council in the 1960s, was Director General of Fair Trading and later chair of the Advertising Standards Authority. Aubrey Diamond was a member of the Consumer Council from 1963, President of the National Federation of Consumer Groups and Vice-President of the Institute of Trading Standards Administration and was a member of the Law Commission from 1971. 78 This book was reviewed very favourably. Lord Chorley, then editor of the Modern Law Review commented that ‘if the standard achieved in this first essay can be maintained the publisher will have done a better job to familiarise the general educated public with the elementary rules of law than any lawyer has achieved since Blackstone’. Lord Chorley, ‘Review: The Consumer, Society and the Law. By Gordon Borrie, Barrister-at-Law, and Aubrey L Diamond, Solicitor. Harmondsworth: Penguin Books, Ltd. 1964. 304 pp. (with index)‘ (1964) 27 Modern Law Review 748. 79 See Gordon Borrie and Aubrey L Diamond, The Consumer, Society and the Law, 3rd edn (Harmondsworth, Penguin Books, 1973). 80 See below text at section IV and accompanying notes. In particular, the functional approach to secured transactions adopted in Article 9 of the UCC, which derived from the work of the US law professor Grant Gilmore; See Grant Gilmore, ‘The Secured Transactions Article of the Commercial Code’ (1951) 16 Law and Contemporary Problems 27. 81 Karl Llewellyn identified this as a rationale for the doctrine of unconscionability. ‘Covert tools are never reliable tools’. Karl N Llewellyn, The Common Law Tradition: Deciding Appeals (Boston, Little, Brown and Co., 1960) 327. 82 Francis J, Henningsen v Bloomfield Motors Inc 161 A 2d 69 (NJ 1960).

248  Iain Ramsay of a manufacturer to the ultimate consumer based on the reality of modern production where the manufacturer was the dominant actor in the production chain. The judgment in this case endorsed Friedrich Kessler’s conclusion in 1943 that standard form contracts resulted in the exploitation of weaker parties, permitting businesses to legislate by contract.83 The introduction of strict liability in US products liability law84 provided an important reference point for commentators in the UK,85 although early path-breaking work in the UK had proposed the introduction of accident compensation insurance as a substitute for the flawed tort law system.86 The English courts undoubtedly engaged in tortuous interpretations during the 1950s and 60s to cut down the effects of exemption clauses in consumer cases, without openly challenging the idea of freedom of contract and formal equality, just as they had provided sub rosa consumerist interpretations in sales law in the inter-war years.87 The  result orientation of this covert strategy meant legal incoherence. Many cases concerned aspects of consumer credit law, where financiers in hire-purchase transactions attempted to insulate themselves from a motor dealer’s representations and consumer defences, structured contracts to avoid the bite of legislation, and inserted clauses to maximise recovery in the event of default. The courts did attempt to address these issues through inventive interpretations of common law doctrines but provided limited clarity.88 English courts viewed the development of substantive rules for policing exclusion clauses as a political decision to be taken by the legislature, and indeed exhorted the legislature to intervene.89 Common law cases provided a signal of problems to be 83 ‘The traditional contract is the result of free bargaining of parties who are brought together by the play of the market, and who meet each other on a footing of approximate economic equality. In such a society there is no danger that freedom of contract will be a threat to the social order as a whole. But in present day commercial life the standardized mass contract has appeared. It is used primarily by enterprises with strong bargaining power and position.’ Friedrich Kessler, ‘The Contracts of Adhesion: Some Thoughts about Freedom of Contract Role of Compulsion in Economic Transactions’ (1943) 43 Columbia Law Review 629, 632. 84 Starting with the realist opinion of Traynor J, Escola v Coca-Cola Bottling Co. 24 Cal.2d 453, 150 P.2d 436 (1944). 85 See Wolfgang Wiegand, ‘The Reception of American Law in Europe’ (1991) 39 The American Journal of Comparative Law 229, 241 (discussing products liability). 86 See Terence G Ison, The Forensic Lottery: A Critique of Tort Liability as a System of Personal Injury Compensation (London, Staples Press, 1962) which foreshadowed the later Patrick S Atiyah, Accidents Compensation and the Law (London, Weidenfeld and Nicolson, 1970). 87 See, eg Baldry v Marshall [1925] 1 KB 260; Andrew Brothers (Bournemouth) Ltd v Singer [1934] 1 KB 17 and the extension of the concept of ‘sale by description’ in cases such as Varley v Whipp [1900] 1 QB 513 and Beale v Taylor [1967] 3 All ER 253 in order to provide protection to the purchaser. 88 eg through the doctrines of agency, the use of collateral warranties, and the penalty doctrine. See Kenneth William Wedderburn, ‘Collateral Contracts’ (1959) 17 Cambridge Law Journal 58. 89 See Lord Reid, Suisse Atlantique Société d’Armement Maritime S.A. Appellants v N.V. Rotterdamsche Kolen Centrale Respondents [1967] 1 AC 361, 406 discussing exemption clauses: ‘Exemption clauses differ greatly in many respects … This is a complex problem which intimately affects millions of people and it appears to me that its solution should be left to Parliament. If your Lordships reject this new rule there will certainly be a need for urgent legislative action but that is not beyond reasonable expectation.‘; See also Galbraith v Mitchenhall Estates [1965] 2 QB 474, 474 per curiam ‘There is a tendency for hire-purchase companies to try to use contracts of simple hire in order to ensure that the hirer does not have the protection of the Hire Purchase Acts. These contracts of hire are simple only in the sense that they are not technically contracts of hire-purchase. The sooner the legislature is apprised of this tendency and the sooner it takes in hand the problem, the fewer will be the occasions when finance companies are able to inflict on an unwary hirer hardship of the type that have become manifest in the present case’.

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  249 addressed by the legislature.90 This was a period of the decline (with exceptions such as Lord Denning) of judicial innovation. It was only in 1966 that the House of Lords indicated the possibility of departing from its own precedents. Judges were increasingly viewed as out of touch, and the common law a haphazard method of bringing about reform.91 Lord Denning’s articulation in Lloyds Bank v Bundy92 of a general concept of unconscionability, representing a combination of unfair terms and unequal bargaining power, was not taken up in later English cases although it had substantial influence in Commonwealth jurisdictions. Given the limits of courts and the costs of access to litigation, consumer groups in the UK focused their lobbying efforts on the legislature and regulators. Test cases initiated by such groups were rare.93

D.  The Law Commissions The English and Scottish Law Commissions were created in 1965 to modernise and reform the legal system.94 Gerald Gardiner, the first chair of the Commission, had been the legal advisor to the Consumers Association in the 1950s. The Commissions would play a significant role in consumer law reform, undertaking several projects on consumer contracts and products liability. Exemption clauses were part of the first programme of research in 1965 and the Commission recommended a ban on excluding the implied terms in consumer sales contracts in 1969,95 subsequently implemented by the Supply of Goods (Implied Terms) Act 1973. Protection of third party users was considered a revolutionary step, given the existence of privity of contract, and although such liability was recognised in the US, this topic was shelved for further study. The Law Commissions’ reports on exemption clauses were thorough documents, based on solid doctrinal research, and included consultation with both business and consumer interests. The Commission adopted the assumption of inequality of bargaining power between consumer and producer as the framework for reform but did not undertake any systematic empirical analysis of the use of exclusion clauses. The main foreign sources in this report and other Commission reports in this area were from the Commonwealth, in particular Canada and Australia. These sources often took a more radical approach than the English Commission on topics such as

90 See, eg Jarvis v Swans Tours [1972] EWCA 8 which signalled the potential problems faced by individuals on package holidays and introduced the idea of consumer damages for lost enjoyment. However, given the limits of litigation, regulation of this area was necessary through more detailed codes and regulations. 91 See Norman Marsh, ‘Law Reform in the United Kingdom: A New Institutional Approach’ (1971) 13 William and Mary Law Review 263, quoted in Stark, The Work of the British Law Commissions (n 2) 22. 92 Lloyds Bank v Bundy [1975] QB 326. 93 But not unknown. See Woodman v Photo Trade Processing Ltd (unreported) available at Ramsay, Consumer Protection (n 3) 308. 94 Under the Law Commissions Act 1965, s 3(1) the Commissions’ duties are to ‘take and keep under review all the law with which they are respectively concerned with a view to its systematic development and reform, including in particular the codification of such law, the elimination of anomalies, the repeal of obsolete and unnecessary enactments, the reduction of the number of separate enactments and generally the simplification and modernisation of the law’. 95 Law Commission and Scottish Law Commission, Exemption Clauses in Contracts First Report: Amendments to the Sale of Goods Act 1893 (Law Com No 24, 1969; Scot Law Corn No 12, 1969).

250  Iain Ramsay manufacturers’ liability96 and recognised the limits of traditional private law remedies in providing redress for consumers with defective products.97 The Commission, which operated outside the traditional departmental structure of UK government, was not always successful in converting its recommendations into statutes,98 and its civil servants could not run public campaigns for legislative reform. However, enterprising policy entrepreneurs such as David Tench of the Consumers Association and Richard Thomas of the National Consumer Council piggy-backed on its solid research to campaign and promote reform through the private members bill procedure in Parliament. The consumer groups could point to the work of the Law Commission to defuse opposition that ‘further research’ was necessary. The nonpartisan nature of the Commission also gave authority to its findings. Absent the solid background work of the Commission these political initiatives might not have succeeded.

E.  Legitimation of the Consumers Association as a Representative of the Consumer Interest and the Role of the Private Members Bill Procedure Mancur Olson in The Logic of Collective Action, drew attention to the difficulties large diffuse groups face in organising around the provision of collective goods. He argued that the problem of free-riders, who would benefit from the provision of collective goods even though they did not contribute to their achievement, could be overcome through two techniques: coercion through government provision or the use of selective incentives which individuals would be willing to pay for. The Consumers Association in the UK followed the latter model. It could only perform its campaigning, ‘collective good’ activities by providing selective incentives to members through selling information to its members in its magazine Which? Government departments, given the generalist nature of the English civil service, consult with ‘responsible’ or ‘established’ interest groups who might provide information and assist in implementation. During the 1960s the Consumer Council, a governmentsubsidised body, had contributed to the development of the Trade Descriptions Bill. The Consumers Association began to act as a lobbyist for change in 1966 with the creation of

96 See, eg Ontario Law Reform Commission, Report on Consumer Warranties and Guarantees in the Sale of Goods (1972) at 23; The Law Commission did acknowledge in The Law Commission, ‘Law Contract: Implied Terms in Contracts for the Supply of Goods’ (1977) Working paper 71/1977 that ‘we have found this report very helpful’. 97 ‘Finally, our Sales Law is private law and it has failed to provide any meaningful machinery for the redress of consumer grievances. This last weakness is perhaps the most serious of all weaknesses for as has been frequently observed, a right is only as strong as the remedy available to enforce it.’ Ontario Law Reform Commission (n 96) 166. See further Iain Ramsay, ‘Consumer Redress Mechanisms for Defective and Poor Quality Products’ (1981) 31 University of Toronto Law Journal 117. 98 Stark, The Work of the British Law Commissions (n 2) ch 4 notes the various reasons for non-implementation: governmental and parliamentary lack of interest in law reform; lack of leadership in Parliament: institutional rivalries with government departments.

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  251 its Consumer Representation Unit. It had connections with backbench MPs, including the conservative Philip Goodhart, who was on the board of the Council. In 1969, along with the Consumer Council, it promoted a private members Bill to regulate the problem of unsolicited goods and services. Given the dominance of the executive in the UK parliamentary system, the private members bill procedure provides an opportunity for MPs to author a Bill. MPs can enter a ballot for proposing a private members Bill (although they may have no particular proposal in mind). If they are in the top 10 or so in the ballot then they may propose a Bill. Moran indicates that these members will be ‘inundated with draft bills from pressure groups’.99 Bills that are relatively technical or uncontroversial may succeed: those on more contentious topics are only likely to succeed with the implicit support of the government. Important Acts of social reform including decriminalising homosexuality, legalising abortion and the abolition of capital punishment were private members bills which had the implicit support of the government. Although the 1969 Bill did not succeed it generated significant publicity and was reintroduced in 1971. The Board of Trade had not initially shown an interest in legislating on this topic but the Consumers Association managed to get cross-party backbencher support for the Bill and further publicity was given to it in the media. The Ministry was happy to go along with it and provide drafting advice. The Ministry was impressed by the professionalism and research of the Consumers Association and its legal officer David Tench. The Consumers Association’s success with this Act established its legitimacy in the eyes of bureaucrats and politicians.100 Henceforth, the Consumers Association would be consulted formally and informally on issues by departments and no longer needed to work through backbench MPs. David Tench became adept at using the private members Bill procedure to promote consumer law reform and also used the parliamentary amendment process to insert consumer friendly clauses. The best known example is the Unfair Contract Terms Act 1977 which also illustrates the important role of the Law Commission in reform. The Law Commission undertook substantial research on exemption clauses but had difficulty in getting its recommendations into law, because of limits on parliamentary time. In 1976 a private members Bill was introduced in Parliament based on work by the Law Commission. Entitled The Avoidance of Liability (England and Wales) Bill, this worthy but technical title was changed with the assistance of Tench and the Consumers Association to the Unfair Contract Terms Act 1977, a very misleading101 (ironically for a consumer protection measure!), but more politically appealing title. Tench was a significant political entrepreneur in getting issues highlighted in the media,102 working with MPs from both the labour and conservative benches to promote consumer law reform and leverage the more technical approach of the law commissions into legislation. These reforms

99 See Michael Moran, Politics and Governance in the UK (Basingstoke, Palgrave, 2005) 198. 100 See J Gray, ‘Unsolicited Goods and Services Acts 1971 and 1975: A Case study of the Process leading to the enactment of Private Members Bills’ (1978) Public Law 242. 101 Because it only applied to exclusion, limitation of liability and indemnity clauses. 102 See, eg J Ezard, ‘Scandal’ of no-liability clause’ The Guardian (London, 12 December 1973); P Smith, ‘Small Print tilt at TV firms’ Daily Mail (London, 25 April 1972) 9.

252  Iain Ramsay would not have been possible without the heavy lifting done by the Law Commission.103 Tench also provided a model of policy entrepreneurship which would be used by the National Consumer Council to promote reform. The abolition of the Consumer Council in 1970 left the Consumers Association as the primary consumer pressure group during the big burst of consumer legislation in the early 1970s.104 According to The Times in the late 1970s it could ‘claim to have filled more pages of the statute book than any other pressure group this century’.105 The Consumers Association was also an early active member in the development of the European consumer movement.

F.  The Rediscovery of Poverty The 1960s also witnessed the ‘rediscovery’ of poverty among comparative affluence in the UK.106 One consequence was the call for greater legal rights and services for the poor. Influenced by the US development of law centres as part of the war on poverty in that country, the first full-time Law Centre was established in 1970.107 These developments promoted discussion of the value of different models of delivery of legal services for lower income individuals and the relative role of lawyers and community workers. These issues overlapped with general questions of consumer access to justice, for example, the inaccessibility of the court system to consumers and the introduction of Consumer Advice Centres. Citizens Advice Bureaux provided evidence to MPs of exploitation of poor consumers by door-to-door sellers on credit,108 and both the Payne Committee (1969) and the Crowther Committee (1970) raised concerns about the lower courts as administrative cogs in debt collection against lower income consumers. Crowther noted that poverty remained a major social problem, but thought that the lowest income groups could still benefit from modest amounts of credit. It would not be until the mid 1970s that UK studies would replicate Caplovitz’s pathbreaking study.

103 Introducing the UCTA Bill in the House of Lords on 9 Nov 1977 Lord Elwyn-Jones commented that: ‘[T]he Bill … would not have been possible were it not for the years of work that the two Law Commissions have put into the Bill. We are most grateful indeed for the splendid and continuing work of the Law Commissions … Reform of the law of exemption clauses is one, I believe, of the major reforms to have emerged from the Law Commissions.’ 104 Elisabeth Dunn noted in January 1973 that the Consumers Association ‘in its brief lifetime … lays claim to the Unsolicited Goods and Services Act 1971, the Supply of Goods Bill 1973 and amendment to the Criminal Justice Act which allows for compensation to be paid to an aggrieved consumer when a trader breaks the Trade Descriptions Act. With eyelids modestly lowered they also feel that they had quite a bit to do with the setting up of the Ministry of Trade and Consumer Affairs.’ in Elisabeth Dunn, ‘Consuming Passions’ The Guardian (London, 8 January 1973) 9B. 105 See Hilton, Consumerism (n 29) 254. 106 See Brian Abel-Smith and Peter Townsend, The Poor and the Poorest: A New Analysis of the Ministry of Labour’s Family Expenditure Surveys of 1953–54 and 1960 (London, Bell, 1965). 107 See the history as told by a participant in Cyril Glasser, ‘LAG’s early days: some reflections’ Legal Action (6 October 1997). 108 See, eg Citizens Advice Bureau, ‘The story of influence: 70years of life-changing advice’ (London, 2009) 7 assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/225910/09_Story_ of_influence.pdf.

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  253

III.  1970–74: The ‘Big Burst’ – An Amuse-Bouche for Neo-liberalism? The 1970s are often represented as crisis years in the UK ‘between social democracy and neo-liberalism’.109 The early 1970s included: the three-day week, a national miners strike, an economic bubble which burst after the oil crisis of 1974, the gradual disintegration of corporatist policy-making, going cap in hand to the IMF in 1976, and the increasing breakdown of the post-war Keynesian consensus on management of the economy. Political scientists pointed to the increasing class de-alignment of voters in the 1960s and 70s.110 The early 1970s put in place central aspects of the UK consumer law infrastructure. The office of Director General of Fair Trading was created in 1973 and the Consumer Credit Act of 1974 conferred further powers on the Director General in relation to credit licensing. A Minister for Consumer Affairs was appointed in 1972. The Consumers Association secured the passage of the Unsolicited Goods and Services Act 1971 and the Supply of Goods (Implied Terms) Act 1972 prohibited contracting out of implied terms of quality and description in supply of goods contracts. The Conservative Government111 of Edward Heath (1970–74) initiated or enacted this legislation. The Conservatives had campaigned in 1970 as a stark alternative to Labour and the post-war consensus, embracing competition, and opposed to bailing out ‘lame ducks’. Heath had claimed in 1969 that he would ‘banish the regulation and control of business activities’ and was committed to a market economy where consumers would put pressures on producers in competitive markets. Neo-liberal ideas were hardly dominant in the early 1970s. However, the rightwing Institute of Economic Affairs (IEA) promoted free markets through its books and pamphlets. Established in 1955, its goals were ‘threefold: first to propagandise for market economics; second to apply its insights to post-war Britain’s problems; and third to make converts’.112 Several members of the future conservative cabinet (Keith Joseph, Geoffrey Howe and Margaret Thatcher) attended the Institute of Economic Affairs’ lunches which ‘propagandised market economics’: less government, lower taxes, more freedom for business and consumers.113 No plans for consumer legislation appeared in the Conservative manifesto of 1970. One of their first measures was to terminate a swathe of Labour-created institutions,

109 See, eg Avner Offer, ‘The Market Turn: From Social Democracy to Market Liberalism’ (2017) 70 The Economic History Review 1051. 110 See, eg Ivor Crewe, ‘The Electorate: Partisan De-Alignment Ten Years On’ in Hugh Berrington (eds), Change in British Politics (London, Frank Cass, 1984) 183. 111 The Conservative Consumer Credit Bill 1973 was enacted with a few modifications by the Labour Government in 1974. 112 Andy Beckett, When the Lights Went Out: Britain in the Seventies (London, Faber and Faber, 2010) 272; It argued for more competition, ‘less government, lower taxes, more freedom for business and consumers’. It currently states on its website that ‘[T]he IEA is the UK’s original free-market think-tank, founded in 1955. Our mission is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.’ http://iea.org.uk/about-us. 113 See Christopher Payne, The Consumer, Credit and Neoliberalism: Governing the Modern Economy, 1st edn (London, Routledge, 2012).

254  Iain Ramsay including the National Board for Prices and Incomes, the Shipbuilding Industry Board, the Industrial Reorganisation Council and the Consumer Council. The axing of the Consumer Council was not a popular move, resulting in a political backlash. Heath did a volte-face in what James Margach114 describes as an ‘astonishing reversal’, announcing in 1972 a new Minister for Consumer Affairs, promising reform of consumer credit and also a new Commissioner for Competition.115 Pressure for consumer initiatives came from within the party including a Conservative Office Consumer protection committee under the chairmanship of Edward Taylor MP, which also included Nicholas Ridley MP and Phillip Goodhart MP, who was a member of the Council of the Consumers Association. Both Taylor and Ridley were free marketeers and Ridley later was one of the ‘dry’ Ministers in the Thatcher cabinet.

A.  The Fair Trading Act 1973 and the Director General of Fair Trading The Fair Trading Act 1973 coupled competition policy and consumer protection under the aegis of a new independent Director General of Fair Trading. Geoffrey Howe, then Minister of Consumer Affairs, summarised the objectives of this Act on its introduction to Parliament: The Bill has two principal purposes – first the promotion of increased economic efficiency and secondly the protection of the consumer against unfair trading practices. It is as well that there should be no misunderstanding about the way in which these two purposes are complimentary to each other … [T]he sovereignty of the consumer which is the most important element in the operation of the free competition market is not to be taken for granted. Consumer sovereignty requires that the consumer should be adequately and accurately informed and adequately protected against unfair or misleading marketing techniques, and adequately protected, finally, against abuse of market power, monopoly or aspects of imperfect competition … Consumer protection is itself an integral part of the market economy …. The Government have concluded that, given the specialist and detailed nature of the work and the need for continuity in its performance, it could best be done by an independent official body. In most other countries that have an active competition policy, this task is already performed by a separate Government agency-for example, the Federal Cartel Office in Western Germany …. The Bill will indeed make an important contribution to the fair and open operation of the free market system, by means of which consumer, producer and distributor are conducted by an invisible hand in the service of each other’s needs.116 (emphasis added)

Howe later described this approach as a ‘social market’ approach.117 The idea of a social market economy draws on ordoliberalism.118 Ideas about a social market economy 114 A columnist for The Times who knew Heath well. 115 James Margach, ‘Heath plans Shoppers Minister’ Sunday Times (London, 6 August 1972). 116 Fair Trading Bill (1972–73) 2nd Reading Official Reports HC vol 848 cols 453–457. 117 Geoffrey Howe, Speech 1992 (on file with author). The Observer viewed the Fair Trading Bill as weaving together ‘two traditional strands of conservatism---competition and paternalism. ‘Prime Minister’s Better Buy’ The Observer (3 December 1972) 14. 118 Bonefeld, ‘Freedom and the Strong State’ (n 9).

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  255 circulated within sections of the conservative party during this period.119 Ordoliberalism promised an alternative between laissez-faire and socialism, with a strong state, not captured by sectional interests, which would establish and maintain a clear framework of rules for the market and ensure stable prices through an independent central bank beyond political control. Ordoliberalism also proposed that the state should influence the social and economic atmosphere of the market, promoting the entrepreneurial spirit and individual responsibility. The Fair Trading Act 1973 recognised that ensuring that an individual is able to act as a self-determining consumer in the marketplace requires significant government action: the ordoliberal state is not a minimal state.120 Construction of a strong active consumer as a central agent in the economy and one who needed continuing education and nudging to act appropriately becomes an important aspect of state activity. The creation of an independent Director General of Fair Trading reflected the ideas of taking market regulation and competition policy out of political involvement, permitting continuity and expertise in policy development. Independent rule-making powers were conferred on the DG to regulate trade practices and injunctive powers to halt continuing unfair trade practices. The Director General of Fair Trading had a watching brief over business practices with the power to make recommendations for reform to the relevant minister.121 It would be misleading, however, to view the Fair Trading Act as a coherent ordoliberal plan. It reflected a combination of long awaited reforms to competition law with consumer policy, meeting the political need to quickly develop a vote-catching consumer policy. No White or Green papers were published on the Fair Trading Bill. The Central Policy Review Staff, a new think tank in the Cabinet Office, brought to the attention of the relevant interdepartmental committee the models of the Swedish Market Court, the US Federal Trade Commission and the Canadian Competition Act where the Director General of Competition had responsibility for policing misleading advertising. The appointment of Geoffrey Howe,122 a lawyer, as Minister of Consumer Affairs in late 1972, maintained momentum and he pressed ahead with the central sections of the Fair Trading Bill (Parts 2 and 3). Although the consumer aspects were bolted on to reforms of competition law, the consumer aspects were highlighted for the media. The explanatory notes to the Fair Trading Bill commenced: ‘This Bill creates a new office, that of Director General of Fair Trading, and confers upon the holder duties in connection with the protection of consumers.’ The OFT had a general monitoring and law reform role under Part 2 of the Act, along with rulemaking and injunctive powers (Part 3) where traders persisted in breaching consumer laws. The rulemaking process, intended to be a ‘reasonably swift and sensitive 119 The Centre for Policy Studies published a paper Centre for Policy Studies ‘Why Britain needs a Social Market Economy’ with a preface by Sir Keith Joseph. This paper drew directly on ideas of German Ordoliberalism; See Centre for Policy Studies, ‘Why Britain needs a social market economy’ (Chichester, Barry Rose Ltd, 1975) www.cps.org.uk/files/reports/original/111028103106-WhyBritainneedsaSocialMarket Economy.pdf. 120 See, eg Pierre Dardot and Christian Laval, The New Way of the World: On Neoliberal Society (London, Verso, 2014). 121 See Iain Ramsay, ‘The Office of Fair Trading’ in Robert Baldwin and Christopher McCrudden (eds), Regulation and Public Law (London, Weidenfeld and Nicolson, 1987). 122 The other name who had been put forward to the Prime Minister for the post was Margaret Thatcher.

256  Iain Ramsay piece of machinery’ turned out to be cumbersome and difficult to implement. It did not fit well within the traditional parliamentary Ministerial model. By 1976 it was clear that Part 2 was a broken reed. Part 3 of the Act probably owed much to Howe who drew inspiration for it from the historical power of the Attorney General in English law to seek an injunction against persistent breaches of the criminal law. However, Part 3 was essentially misconceived since it envisaged seeking voluntary assurances against essentially ‘hard core violators’, whereas similar powers in other jurisdictions acted as an initial warning rather than a longstop. The Labour Government in 1974 added to the mandate of the Director General the licensing powers and role of Credit Commissioner proposed by the Crowther Committee. This meant that in the early years substantial resources of the Office were involved in establishing the credit licensing system. A primary output of the Office during the 1970s and 80s were codes of practice drawn up by trade associations in consultation with the OFT. This duty to encourage codes of practice was very much a legislative afterthought, inserted as an amendment during the House of Lords consideration of the Fair Trading Bill. Approval of codes became a major output of the Agency. Almost 20 were drawn up in the early years of the Office. Trade associations had an incentive to propose them to avoid potential legal regulation. Although they promised to clarify consumer rights and provide easy redress for consumers, on balance the verdict on most codes is that they were a lukewarm method of protection. They had a minimal impact on non-members of a trade association and were even difficult to enforce against members.123 Unlike the apparent success of ‘soft law’ approaches in Nordic countries,124 they did not seem effective in the UK, outside the high profile area of advertising. A symbol of changing approaches to regulation was the Price Marking (Bargain Offers) Order 1979125 which set out in detail permitted forms of price claims, proscribing all other forms of claim. The complexity of the Order made it difficult for local Trading Standards Officers to enforce,126 and businesses attempted to circumvent it through claims which were even more meaningless than those proscribed. It became a symbol of ‘unnecessary burdens’ on business.127 Reviewed in 1984,128 it was ultimately replaced by a more broad-brush general prohibition in the Consumer Protection Act 1987, supplemented by a comprehensive code of practice. During the 1980s, the OFT embraced the idea of consumers driving market competition, the importance of information in markets and the role of the informed consumer. The competition wing of the agency was increasingly influential and micro-economic analysis, along with cost-benefit analysis, became a central part of policy making.129 123 See Ramsay, Consumer Protection (n 3) 287. 124 See Thomas Wilhelmsson, ‘Administrative Procedures for the Control of Marketing Practices – Theoretical Rationale and Perspectives’ (1992) 15 Journal of Consumer Policy 159. 125 Although now repealed, Prices, The Price Marking (Bargain Offers) Order 1979 www.legislation.gov.uk/ uksi/1979/364/pdfs/uksi_19790364_en.pdf. 126 ‘The feeling … is that we have been lumbered with enforcing something nobody understands.’ ‘Price Regulations may be unenforceable, trading officer says’ The Times (London, 17 January 1980) 5. 127 See the various letters to The Times, eg Philip Circus, ‘Bargain offers’ order must go’ The Times (London, 31 January 1980) 18. Circus was legal advisor to the Institute of Practitioners in Advertising. 128 See Review of Legislation on False and Misleading Price Information: Report of the Interdepartmental Working Party from the Department of Trade and Industry (DEP 705, 1984). 129 See Ramsay, Rationales for Intervention (n 96).

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  257 The Office attacked professional restrictions on advertising and competition, and demonstrated interest in lifting barriers to the free operation of markets. In its Annual Reports it repeatedly stressed the importance of consumers taking control by asserting their sovereignty.130 Between 1979 and the 1990s the only source for new consumer powers emanated from the necessity to implement European Directives on misleading advertising and unfair contract terms. The Office, although independent, had limited resources, was significantly underfunded during this period131 and its recommendations for consumer reforms not adopted.132 It was only in 1999, with the new Labour Government committed to championing consumers and attacking ‘rip-off ’ Britain, that the resources of the Office were substantially increased along with more extensive powers in the Enterprise Act 2002. In retrospect, the creation of the OFT was most significant in terms of creating a high profile Director General of Fair Trading. Although this could be regarded as a politically symbolic response to a diffuse constituency – a clever public relations exercise since most consumers would not be aware of the details of the Director-General’s powers – the Act created a new political player. The Director-General could only be removed by statute. It provided a focus for the consumer protection community and a potential partner for consumer groups. It became the obvious site for taking on increased enforcement powers emanating from Brussels. The Office was a ‘non-departmental government agency’, staffed almost exclusively by civil servants, and was therefore sensitive to changing political ideologies and the necessity to frame its policies in accordance with these changes.

B.  Protection for the ‘Inarticulate and Disadvantaged’: The National Consumer Council Corporatism influenced UK governance during the 1970s with policy often being negotiated between representatives of government, business and labour. The National Consumer Council was established to act as a counterpart to these influences and also to promote the interests of ‘all consumers, including the least articulate’,133 who most need a body to speak for them. The Council’s functions included issues of both collective and private consumption, the relationship between the individual and the state and public utilities as well as private enterprise. Michael Young was appointed as the first chair. His primary concern was that the same pressures which were being developed through, for example, comparative testing 130 See this in Office of Fair trading, Annual Report (1980) 6; Annual Report (1986) 10; Annual Report (1988)18. 131 See Office of Fair Trading, Annual Report (1999) where the outgoing DG referred to the ‘remarkably limited powers and resources available to me. I had at my disposal £10 million to spend on consumer affairs a year. Much of this went on the operation of a licensing regime under the Consumer Credit Act. My legal powers to tackle rogue traders were woefully inadequate.’ 132 ibid, ‘There are many demands on parliamentary time and I have always acknowledged that only the elected government can decide its priorities. But, in reviewing the recommendations for reform … it is lamentable how little priority has been given to ensuring effective consumer protection.’ 133 Department of Prices and Consumer Protection, National Consumers’ Agency 1974 (Cmnd 5726, 1974).

258  Iain Ramsay in the private sector should be applied to the public sector.134 Although consumer councils had existed for nationalised industries for some time they had not been viewed as effective. Its first inquiry concerned the price of poverty135 across a range of services from housing, legal services, education, health services and savings insurance and credit resulting in the publication Why The Poor Pay More edited by Frances Williams.136 Inspired by Caplovitz’s study in the US, the UK report examined a much wider range of public and private services, systematically cataloguing consumer detriment in the provision of private and public goods and services in the UK. One outcome was promotion by the NCC of credit union legislation enacted in the Credit Unions Act 1979 intended to stimulate greater self-help among groups in addressing credit and making credit available at reasonable prices to lower income consumers. Although this Act was not successful in promoting the development of credit unions in the UK, it represented the co-operative influence on consumer policy making. Another early publication concerned Means Tested Benefits, addressing such questions as why individuals did not take up social benefits, the extent to which the process was consumer friendly and comparative analysis of means testing in the EU. Other publications during the 1970s also focused on the public sector137 as well as consumer concerns with access to justice,138 which it pursued throughout the 1980s in the promotion of financial ombudsmen,139 reforms to the civil justice system and debt enforcement. It also published one of the first consumer reports on the EU Common Agricultural Policy. In the 1980s the NCC promoted a consumer empowerment model of the active consumer policing markets, demanding choice in public services, and access to justice with consumers acting as a policing mechanism in an increasingly deregulated economy. The NCC campaigned for lifting regulation on Sunday Trading based on freedom of choice and consumer demand. It commissioned surveys which demonstrated strong public support for more shopping on Sunday,140 and supported the unsuccessful Shops Bill of 1983, which was defeated by an organised coalition of labour and religious groups.141 The approach of the NCC could be viewed as a progressive and pragmatic precursor of the ‘Third Way’ approach by New Labour after 1997. In 1984 the NCC outlined its six principles of consumer protection: access, choice, information, redress and safety, 134 Hilton, Consumerism (n 29) 279–297 provides a good picture of the work of the NCC. 135 ‘Inquiry into Price of Poverty’ The Guardian (London, 5 May 1975) 24. 136 Frances Williams, Why the Poor Pay More (London, Palgrave Macmillan, 1977). 137 National Consumer Council, Soonest Mended: A review of the repair, maintenance and improvement of council housing (1979); The Consumer and the State: Getting Value for Money (1979); Post Office Special Agent; The Report of a Working Party on the social service brief of the Post Office (1979); Rural Rides: Experiments in rural public transport – a consumer view (1978); Real Money, Real Choice: Consumer Priorities in economic policy (1978). 138 National Consumer Council, Simple Justice (1978) investigated the role of the small claims procedure in the County Court, and see later work in the 1980s in relation to the Civil Justice Review. Richard Thomas from the NCC sat on the Civil Justice Review established in 1984. 139 National Consumer Council, Banking Services and the Consumer (London, Methuen, 1983). 140 See Paul Regan, ‘The 1986 Shops Bill’ (1988) 41 Parliamentary Affairs 218, 222. 141 The defeat of this government Bill was only the second time since 1924 that a government was defeated on a second reading of a Bill. Compromise legislation was introduced in 1994 which limits the opening hours of larger stores on Sunday. An amendment to relax this limit was defeated in 2015.

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  259 fairness, and equity. The NCC often brought together academic and international ideas into the policy process and took a wider view of the concept of consumer than the ‘value for money’ approach of the Consumers Association.

IV.  Consumer Credit Regulation A.  Establishing the Post War Ground Rules of Consumer Lending When the Prime Minister said ‘you have never had it so good’ did he imply that it would be on a ‘never–never’ basis? Parliamentary question, Mr Lipton 3 March 1960.

Post-war consumer credit regulation in the UK represented a complex and irrational structure of regulation. Hire-purchase, itself a legal fiction, represented in substance the primary method for many consumers of obtaining goods on credit. Retail dealers assigned the hire-purchase contract to a finance company which became the creditor of the debtor. The Hire Purchase Act 1938, a private members Bill, agreed in substance between the Hire Purchase Trade Association and social activists, provided some protections for consumers in relation to the quality of goods sold and protection against repossession.142 The major reasons for the dominance of the hire-purchase model were the Bills of Sale Act of 1882, with its strict formalities, which limited provision of direct secured loans to consumers, and the Moneylenders Acts of 1900 and 1927, which treated lending as a commodity of ‘unstimulated demand’ with restrictions on advertising loans. The Moneylenders Acts applied a strict formalism to lending contracts with a sanction of nullity applying to any contravention of the required formalities. Banks were exempt from the Acts, but provided loans and overdrafts to a very small section of the population who had bank accounts (see Table 2). By the mid-1960s regulation of consumer credit was complex, and open to regulatory arbitrage, for example, evasion of the hirepurchase protections for consumers through the use of fictitious contracts of hire.143 In some cases forms of trading existed in a legal limbo. ‘Check Trading’, a working class form of credit where individuals were provided with vouchers which they could redeem at designated stores, had become more popular as a means of avoiding controls on hirepurchase, but it was not clear whether this form of trading fell within the scope of the Moneylenders Acts. Government controlled the availability of hire-purchase for consumption as part of macro-economic policy to manage demand, with the first peacetime use of controls in 1952,144 intended to reduce home demand for metal products during a worldwide 142 See Peter Scott, ‘The Twilight World of Interwar Hire Purchase’ (2002) 177 Past and Present 195. The Act required the provision of information on the cash price, amount of instalments, a copy of the agreement to be provided to the hirer, statutory implied conditions concerning title, quality and fitness, a limitation on the hirer’s liability on termination (make payments up to 50% of the purchase price) and required a court order for the seizure of goods where one-third of the purchase price had been paid. Judges were given a broad discretion in these circumstances to postpone seizure and order payments in any manner it thought just. 143 See the comments in Galbraith v Mitchenhall Estates [1965] 2 QB 473. 144 The Crowther Committee provides a useful chronology. See Crowther Committee (Chairman Lord Crowther), Consumer Credit (Cmnd 4596, 1971) ch 8.1.

260  Iain Ramsay shortage. These measures included terms controls with required down payments of up to 33 per cent of the purchase price and a maximum repayment period of 18 months, capital controls on funds available to finance companies for consumer finance, and Bank of England limits on credit available for consumption. Even in the absence of legal terms control, credit trade associations discouraged competition on terms, preferring to follow a ‘gentleman’s agreement’ on deposits, discouraging firms from reckless lending which might bring the trade into disrepute.145 The Labour party criticised the use of terms control as discriminating against working class consumers who did not have bank accounts and could not access overdrafts. Clement Attlee (leader of the Labour party) described hire-purchase controls in 1952 as a ‘vicious piece of class legislation’.146 Members of Parliament raised concerns during the 1950s about the high costs of hire-purchase, sometimes concealed by colourable cash prices and inflated by insurance fees.147 They also questioned whether too much hire-purchase debt existed, and challenged the practices of doorstep sellers of credit in working class neighbourhoods and new housing estates where the media claimed that they preyed on lonely young wives.148 The media highlighted the limits of legal protections for individuals in the finance company-hirer-purchaser triangle, where dealers assigned the contract or sold the car to the finance company, which then entered into an h-p agreement with the consumer, free of any defences which the individual might have against the dealer.149 The Hire Purchase (Amendment) Act 1954 updated the monetary limits of the 1938 Act, and in 1957 the Hire Purchase (Advertisements) Act introduced ‘triggered’ disclosure of costs in credit advertising. From 1958 to 1960 the government lifted controls on hire-purchase lending which resulted in more aggressive competition for business by some finance houses, a lowering of credit standards, and significant losses from bad debts.150 The Finance Houses Association subsequently entered into an agreement to require 20 per cent down payments and a maximum repayment period of three years.151 When these controls were challenged before the Restrictive Practices Court, the Association attempted to justify them partly on the grounds that they protected consumers from making improvident contracts. The Molony Committee recommended the introduction of a cooling-off period for door-to-door credit sales, but in general took a conservative approach to fundamental reforms of the structure of consumer lending law. The Hire Purchase Act 1964, enacted as an election ploy in the dying days of the conservative government, did add further consumer protections, such as imposing liability on finance companies for representations made by dealers in relation to goods.152 Detailed regulations under this Act specified the form of the contract including the size of the signature box.153 The financial 145 See ‘Brief ‘Boom’ Expected: Traders Uncertain on HP terms’ The Times (London, 15 July 1954) 5. 146 See, eg HC Debates vol 495, col 378 (Mr C Attlee, January 31, 1952). 147 See ‘Exploitation by Hire Purchase: MP gives examples’ The Manchester Guardian (Manchester, 5 June 1957) 2. 148 See James Marshall, ‘How We Tick over on Tick’ Daily Mail (3 April 1956) 6. 149 See ‘Hire Purchase ‘Scandalous’ Criticism by Judge’ The Guardian (London, 2 November 1960) 18. 150 See ‘New Thinking in Hire Purchase’ Financial Times (London, 21 December 1961), referring to the ‘pure recklessness of some of the 1959 deals’. 151 See In re Finance Houses Association Ltd.‘s Agreement [1965] 1 WLR 1419. 152 See generally JWA Thornely and JS Ziegel, ‘Hire-Purchase Reformed’ (1965) 23 Cambridge Law Journal 59. 153 The Hire-Purchase (Documents) (Legibility and Statutory Statements) Regulations 1964.

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  261 press described the Act as ‘feeble’ and nothing more than tinkering with the 1938 Act.154 Failure to bring about reform was not because of industry or consumer opposition. Indeed the industry favoured reform. By the late 1960s access to different forms of credit in the UK remained heavily structured by class, gender and race. Women had difficulties accessing credit without a guarantor for any substantial purchases.155 Table 2, taken from research conducted for the Crowther Committee, indicates the class nature of the consumer credit market in 1969. Hire-purchase, a relatively costly form of credit,156 dominated credit among the skilled working class (C2s). These costs meant that although workers may have had a higher standard of living during this period, this masked significant household debt.157 Women, primarily working class, used mail-order extensively. Marketed through local agents it provided an accessible alternative form of credit purchase.158 Bank overdrafts were available only to a very small, primarily male, population with bank accounts. Only six per cent of consumers had ever used a bank overdraft; only about 50 per cent of individuals had bank accounts. Overdrafts were a flexible form of borrowing not subject to terms control, which permitted the borrower to claim a tax deduction on borrowing, similar to the tax deduction on mortgage interest. Both these measures were regressive. The first credit card, Barclaycard, appeared in 1966 but represented a very small slice of the market in the late 1960s. During the 1960s finance houses (many of which were now owned by banks) began to develop personal loans but this initiative was almost prevented by a legal challenge that they were acting as unlicensed moneylenders.159 Larger players in the industry therefore had an interest in rationalisation of the law which might also contribute to greater public confidence in the industry. The finance companies, which financed hire-purchase, had a slightly disreputable reputation in the media and among lawyers at this time. In the late 1960s Aubrey Diamond quoted an experienced lower court judge who stated that ‘Where a finance company is involved, I very readily find fraud.’160 Racial discrimination in credit granting undoubtedly existed during this period. Sean O’Connell suggests that many West Indian migrants were exploited by unscrupulous credit traders, and Paul Rock indicates in his study of 1960s debt collection that stereotypes such as ‘doctors: good risks’, ‘negroes: bad risks’ were used in assessing credit risks.161 The financial exclusion of many black immigrants did stimulate the development of credit unions, and migrants from the Caribbean were prominent in the credit union movement.162 154 See Lombard, ‘Lost Opportunity to Promote Some Real Hire Purchase Reform’ Financial Times (London, 6 July 1974) 7; Lombard, ‘He Could Become the Darling of the Hire Purchase World’ Financial Times (London, 30 October 1964) 11. 155 See ‘Discrimination in Money Lending’ The Times (London, 23 January 1966) 15. 156 Costs included those for opening a credit account, charges for clerical costs, and fixed charges for mandatory insurance in addition to interest. 157 See Selina Todd, ‘Affluence, Class and Crown Street: Re-investigating the Post-War Working Class’ 22 Contemporary British History 501, 506. 158 See discussion in Sean O’Connell, Credit and Community: Working Class Debt in the UK since 1880 (Oxford, Oxford University Press, 2009) ch 3. 159 See United Dominions Trust v Kirkwood [1966] 1 AER 968 (CA). 160 Aubrey L Diamond (ed), Instalment Credit (London, Stevens, 1970) 6. 161 See O’Connell, Credit and Community (n 158) 45–46; Paul Rock, Making People Pay, 1st edn (London, Routledge, 1973) 29. 162 See Stuart Aveyard, Paul Corthorn, Sean Ornveyard, The Politics of Consumer Credit in the UK, 1938–1992 (Oxford, Oxford University Press, 2018) 185.

262  Iain Ramsay During this period increasing attention was given to the dark side of credit, the process of debt collection. Wage attachment of a debtor was not possible in England and Wales, given the historical labour law protections for the integrity of the wage packet. Recovery was often therefore through the threat of imprisonment for debt, which was not effectively abolished in England and Wales until 1970. Labour unions had traditionally opposed changes in the law to permit attachment of wages.163 The most significant feature of debt collection during this period was its ‘low visibility’.164 The public had little knowledge of the process and viewed debtors as primarily incompetent but did not associate debt with poverty or unemployment.165 In 1969 the Payne Committee on the Enforcement of Judgment Debts recommended creation of a state enforcement office for debts which would include as an ancillary aspect a ‘Social Service Office’ for debtors, staffed by trained social workers to assist debtors who were often ‘inadequate personalities or irresponsible in managing their affairs’.166 The Committee concluded that there was a great need for social workers to perform ‘for financially incompetent or inadequate or irresponsible debtors, the functions which are discharged for more successful members of the community by bank managers, accountants and solicitors’.167 The Social Service office was never implemented but debt advice developed in the early 1970s in a few locations.168

B.  The Crowther Committee and the Consumer Credit Act 1974: Legitimating Consumer Credit The Labour Government established the Crowther Committee in 1968 to undertake a ‘wide ranging review of consumer credit’. Its terms of reference included a general inquiry into the present law and practice of consumer credit, and consideration of whether amendments should be made to the Moneylenders Acts. The Board of Trade and Treasury hoped that it would address concerns about the high cost of credit, inequities between groups in the relative cost of credit, and the role of credit controls as a form of macroeconomic control.169 The Treasury was concerned that the Committee should be aware of the importance of terms controls as a lever of economic policy. 163 See discussion in Committee on the Enforcement of Judgment Debts (The Payne Committee), Report (Cmnd 3909, 1969) paras 589 ff. 164 See Rock, Making People (n 161) 4. 165 ibid 17. 166 Committee on the Enforcement of Judgment Debts (The Payne Committee), Report (London, HMSO. 1969, reprinted, 1977) para 1210. 167 ibid para 1216. 168 In particular the Money Advice Settlement in Birmingham. See Teresa Hinton and Richard Berthoud, Money Advice Services (London, Policy Studies Institute, 1988). 169 In a note submitted jointly by the Board of Trade and Treasury the departments noted ‘the variations in the cost of credit’ with some people paying a simple interest rate of 20% or more on hire-purchase while others paid 13% through a personal loan ‘and enjoy the further benefit of tax relief on the interest. It is not always clear that these differences always reflect differences in creditworthiness or … where they reflect the cost, that it is not unnecessarily inflated (for example by the payment of excessive commissions to dealers for introducing clients) … If and to the extent that current law and practice were found to inflate the cost of credit or to cause or exaggerate variations in the cost as between different types of consumers, there might be a case for reform on grounds of social justice …‘[I]n considering any recommendations for changes in the law and practice affecting personal consumer credit, the Committee will no doubt wish to bear in mind the Government’s

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  263 Geoffrey Crowther was a mercurial individual, a former editor of the Economist, who chaired two Royal Commissions at the same time. Roy Goode, who subsequently became an eminent legal academic, wrote the legal aspects of the report. Goode had been a partner at Mishcon solicitors, which represented Lombard finance, one of the large finance companies. Goode was familiar with US and Canadian developments170 and was impressed by the functional rather than formal approach to security interests adopted by Article 9 of the US Uniform Commercial Code.171 The Committee proposed the introduction in the UK of a general Lending and Security Act based on Article 9, and a Consumer Sale and Loan Act. The Act would abolish the legal fiction of hire-purchase, treating it as in substance a security interest to be regulated in a similar fashion to a loan with security. The Bills of Sale Act would be abolished along with artificial distinctions in the treatment of lender and vendor credit. In 1969 Goode obtained the support of the Law Commission for this broad scale reform172 and in the same year Crowther proposed to the Committee that the report should recommend the appointment of a Consumer Credit Commissioner with broad powers to monitor and regulate all credit providers, replacing the existing licensing scheme for Moneylenders.173 Achievement of a competitive market for consumer credit with common market ground rules was a central objective of the Committee. The new disclosure requirement of a standardised Annual Percentage Rate (APR), again inspired by Canadian and US approaches, would drive a more competitive market. The Committee believed that competition would result in more careful lending.174 A premise of the report was that consumer credit could be as productive a form of credit as credit directed towards business investment, requiring liberation of the credit market from historically complex regulation which seemed to be based on a model of credit as a ‘dangerous business’.175 The Committee adopted the lifecycle theory of credit where credit could be a useful method for consumers to build up capital goods and labour-saving devices such as washing machines during periods of household formation when they might anticipate rises in future income but be at present liquidity-constrained.176 Its starting-point in

need to have adequate economic regulators.’ See Committee on Consumer Credit, The Background to the Committee’s Work, Note submitted jointly by HM Treasury and the Board of Trade 17th September 1968, CCC (68) 1. 170 Particularly through his work with the eminent Canadian commercial law scholar, Jacob Ziegel. Both Goode and Crowther conducted research visits to the US and Canada. 171 And may have been influenced by arguments for rationalisation of consumer credit law in the US. See Barbara A Curran, ‘Legislative Controls as a Response to Consumer-Credit Problems’ (1967) 8 Boston College Law Review 409. 172 The Commission was ‘wholeheartedly in favour of a general legal framework on the lines which you suggest … a rationalization of the position is long overdue and, we would think, basically non-controversial’. Letter from LCB Gower (Chair Law Commission) to Roy Goode (13 August 1969) (BT Archives) (on file with author). 173 Committee on Consumer Credit, Notes by the Chairman 21st April 1969. 174 ‘The more competitive the market, the less likely are credit grantors to find it profitable to lend to borrowers in excess of their ability to pay, since they will find it less easy to recoup losses through bad debts from high charges on the rest of their business’ Crowther (n 144) para 3.9.5. 175 Lord Loreburn describing moneylending in Kirkwood v Gadd [1910] AC 422. 176 See Franco Modigliani, ‘The Life Cycle Hypothesis of Saving, the Demand for Wealth and the Supply of Capital’ (1966) 33 Social Research 160.

264  Iain Ramsay terms of social policy on credit granting was that ‘the state should interfere as little as possible with the consumer’s freedom to use his knowledge of the consumer credit market to the best of his ability and according to his judgment of what constitutes his best interests’.177 The basic principle of social policy should be to ‘reduce the number of defaulting debtors’ which could be achieved through improved credit rating, a more competitive market and better social supports for debtors. Crowther did not, however, simply propose an information model of consumer protection. It viewed consumer protection legislation in credit transactions as redressing unequal bargaining power through information and protection against unfair terms, prohibiting trading malpractices and regulating default remedies. The requirement of licensing of all lenders would assure a minimum floor of ex ante protection, designed particularly to protect lower income consumers who would be unlikely to initiate private actions against lenders who contravened the Act. Its recommendations for law reform represented both path dependence and novelty. More expanded Truth in Lending provisions using a standardised presentation of interest (the Annual Percentage Rate or APR) followed the US approach, but also built on existing protections in the 1967 regulations. Protections for individuals in default tracked the provisions of the 1938 Act. A prohibition on canvassing of loans off-premises followed the prohibition in the Moneylenders Acts, as did the prohibition on increased default interest and the requirement to sue the debtor in the County Court. The proposal for a ‘connected lender’ provision, was novel. This would hold a lender jointly and severally liable with a supplier where ‘pre-existing arrangements’ had been made between the lender and supplier.178 This section was designed to ensure that finance companies monitored more closely the dealers whom they financed, but it also included the nascent credit card industry within its scope. Crowther briefly noted that credit cards were similar to check trading, in that a close business relationship often existed between the credit card company and supplier and that there was no reason to treat credit cards differently from other connected lenders.179 The connected lender provision, which became Section 75 of the Consumer Credit Act 1974, represents the most extensive protection for credit consumers in the world and has been used primarily in relation to credit card purchases. Banks and financial institutions have repeatedly attempted to reduce its scope since the 1970s, and unsuccessfully challenged its application to overseas purchases.180 The Committee was sensitive to the fact that the law least protected low income consumers who were ‘particularly open to oppression’181 It argued that it was necessary

177 ibid para 3.9.1. 178 This may have owed its development partly to the US and Canadian developments of connected lending. See, eg Federal Discount v St Pierre [1962] 32 DLR (2d) 86 which discussed the liability of financiers where there were ‘pre-existing arrangements’ and a close business relationship between a financier and a supplier. 179 Crowther (n 144) para 6.12.10. 180 See Office of Fair Trading v Lloyds TSB Bank plc [2007] UKHL 48. For a critique of section 75 see Christopher Bisping, ‘The Case against Section 75 of the Consumer Credit Act 1974 in Credit Card Transactions’ (2011) 5 Journal of Business Law 457. 181 Crowther (n 144) para 6.1.19.

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  265 to keep the position of the ‘low-income consumer continuously under review so as to ensure that in the midst of affluence his difficulties are not overlooked’.182 This might be achieved through greater education and consumer advice and promotion of credit unions.183 In their discussion of interest rate ceilings the Committee also concluded that individuals should not have to borrow at interest rates of more than 100 per cent, but that such problems should be ‘solved through social welfare services’.184 The Committee’s proposals were made against the background of an extensive welfare state. In 1970 the UK had the lowest level of inequality in western Europe (as measured by the Gini co-efficient). In framing recommendations for consumer protections, the Committee recognised that credit providers were generally better able to bear risks and spread losses than consumers but the Committee was concerned that it ‘did not bend too far in its efforts to protect the consumer because in certain situations the creditor was equally in need of protection’.185 The Committee was forthright in its condemnation of terms control as regressive and unlikely to achieve their goals. The assumption of the Committee was that the North American experience of credit would be the future for the UK. Few references in the report cite regulation in other European jurisdictions. Initial carping by civil servants that the report reflected too much American influence elicited the response from the secretary of the Committee that ‘Britain appears to be on the way to the US and Canadian position as far as the economics of consumer credit goes, rather than the European one’.186 The Committee’s recommendations were supported by the Consumers Association, the middle-class consumer group that had campaigned strongly for truth in lending.187 The Association was lukewarm in support for interest-rate ceilings as a method of consumer protection.188 The credit industry ‘warmly welcomed’ the findings of the Committee.189 The finance houses were not enthusiastic about the new method of

182 ibid para 9.1.5. 183 ibid para 9.3.5. 184 ibid paras 6.6.7, 3.7.12. 185 Minutes of the Crowther Committee (18 September 1969) CCC 69(11) (National BT Archives) BT 250/49 BT 250/12. 186 Letter from NH Nail (Secretary to Committee) to Hyde (DTI) (21 April 1971) (National BT Archives) BT 250/5. 187 The Association submitted a written brief outlining the extent to which the lack of standardised calculation of interest could mislead consumers as to the cost of credit. In 1973 they claimed success for many of their suggestions to the Committee. See A Day, ‘Credit where it’s due: the Last Word’ The Observer (30 September 1973) 22. 188 See the Consumers Association’s submission to the Crowther Committee: ‘Maximum rates were dangerous because they could lead to a clustering of all rates close to the maximum. In certain cases it might be right to say that there should be an upper limit and perhaps the Credit Commissioner … could be given reserve power to impose such a limit’: CCC (69) 9th meeting, (National BT Archives) BT 250/123, Section B, Oral Evidence Consumers’ Association; The Citizens Advice Bureau, in their evidence, noted that ‘[i]t was suggested that it might be possible to control instalment charges but it was agreed that this was not a good idea as any legally enforced maximum would probably become the standard rate’: Oral Evidence, National Citizens Advice Bureau Council to Crowther Committee CCC (69) 6th Meeting, (National BT Archives) BT 250/49, Section A, para 22. 189 ‘Editorial’ The Times (London, 25 March 1971) 17.

266  Iain Ramsay disclosing the costs of borrowing – the APR – since it would result in quotation of much higher rates. However, they were willing to accept it as the price of reform, as long as all lenders were subject to the same regulation. An editorial in The Times entitled ‘New Look at Consumer Credit’ welcomed the report’s positive message about credit, concluding that the Committee’s approach should ‘command greater acceptance than it does at present’.190 In terms of ideas about credit, the Crowther Committee established the ‘post-war orthodoxy’ on credit.191 Implementation of the Crowther recommendations would require substantial legislative time. Initially it was not clear that priority would be given to implementing its recommendations, given the many other potential bills (including proposals to join the EU).192 Consumer credit regulation, however, became part of the Conservative Heath Government’s volte face on consumer policy. On 29 March 1971 The Prime Minister’s Office sent a note to the DTI that: The Prime Minister thinks that there may be a strong political case for introducing a Bill next session to implement those recommendations of the Crowther Report on Credit which would be of benefit to the consumer. He has commented that Lord Crowther appeared to have gone into these matters very fully so that it ought to be sufficiently clear what needs to be done. Moreover, urgent action in this field would enable the government to demonstrate that the consumer was not being neglected.193

Heath had piloted the Hire Purchase Act 1964 through Parliament and would be aware of the concerns expressed at that time for more thorough reform. Legislation would allow the Conservatives to take advantage of Labour’s Crowther Committee to demonstrate concern for the consumer in a period when the Conservatives had a slim majority and sought the support of the swing voter. In November 1973 a White Paper promised a ‘new era’ in consumer credit through a Consumer Credit Bill. The Consumer Credit Bill did not implement the more technical but important general reform of secured transactions. As a consequence contemporary consumer credit law in the UK retains the legal fiction of hire-purchase and the Bills of Sale Acts of 1878 and 1882. Some media commentary saw its introduction as an election ploy since much of it would not come into effect until implementing regulations were introduced. It was not fully implemented until the mid1980s. The victorious Labour Government of 1974 carried forward much of the Consumer Credit Bill in the Consumer Credit Act 1974. The Act contributed to legitimisation of the growth of consumer credit. It limited some consumer risks in credit through rules such as a cap on the limitation of liability of consumers for lost or stolen cards, which before the Act was often achieved through the sale of insurance by credit grantors.

190 ‘New Look at Consumer Credit’ The Times (London, 25 March 1971) 17. 191 See Gordon Borrie, ‘The Credit Society: Its Benefits and Burdens’ (1986) Journal of Business Law 181. 192 The Department of Trade expected ‘complex negotiation with the commercial interests’ and that the ‘main complaint against the Crowther recommendations will be that thousands of retailers and the banks will be required to seek licences’. 193 Letter from Peter Gregson (Private Secretary for Economic and Home Affairs, 10 Downing Street) to Ivor Manley DTI (29 March 1971).

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  267 By the end of the 1970s the National Consumer Council concluded in a report on the implementation of the Consumer Credit Act that ‘any traditional mistrust of credit as such which may have inclined people towards its close regulation must be dissociated from a practical concern about genuine risks of abuse, exploitation or harmful confusion’.194 The Consumer Credit Act 1974 provided a new framework for credit but expansion of credit depended on the abolition of terms controls and quantitative controls on lending. The Competition and Credit Control order 1971195 removed existing quantitative and qualitative controls over bank lending, leaving the level of credit for companies and individuals to be determined by the market through the price mechanism. Dissatisfaction with existing lending controls and a desire to promote competition and efficiency in place of the existing banking cartel drove these changes. This policy resulted in a sharp increase in the ratio of household debt to GDP between 1971 and 1973 (29 to 33 per cent). Inflation increased substantially with pressures on prices and wages. A secondary banking crisis occurred and individual bankruptcies surged. By autumn 1973 and the global oil shock ‘the country was … facing the gravest economic crisis since the Second World War’.196 Hire-purchase terms controls were reintroduced in December 1973 and not removed until 1982. The Consumer Credit Act 1974 attempted to provide a comprehensive framework for consumer credit with the legislation fleshed out by detailed regulations. The detail was often intended to anticipate avoidance techniques by credit grantors, a characteristic of the history of credit regulation. By the end of the 1970s deregulatory suggestions were being made. The requirement of licensing all credit grantors was attacked as over-inclusive, and even the National Consumer Council in 1980 concluded that ‘the principles of the Act were simple. But in practice many of its detailed requirements are complex … such detailed concern with consumer regulation and protection … puts an unmistakable stamp on the 1970s (…) and the Consumer Credit Act is very much a monument to that approach.’197 By 1984 a judge in a test case described it as ‘an Act of extraordinary length and complexity’.198

C.  Unleashing Household Credit A series of measures in the early 1980s unleashed mortgage and consumer credit. The ‘corset’ on lending which the Bank of England used to limit the quantity of lending

194 National Consumer Council, Consumers and Credit (London, National Consumer Council, 1979) 19. However, research for the report indicated that 29% of consumers thought that credit was never a good thing. 195 See Duncan Needham, ‘Britain’s Money Supply Experiment, 1971–73’ (2015) 130 English Historical Review 89, who quotes EH Capie as stating that it was ‘the biggest change in monetary policy since the Second World War’. Needham suggests that the CCC owed its introduction partly to ideas provided by the IMF to English policy makers in 1968. 196 See Beckett, When the Lights Went Out (n 112). 197 National Consumer Council, Consumers and Credit (London, National Consumer Council, 1980) 18–19. 198 Goff L, J Jenkins v. Lombard North Central [1984] 1 WLR 307 (CA).

268  Iain Ramsay by banks, was abolished in 1980. This permitted the aggressive entry of the banks to the mortgage market, traditionally dominated by Building Societies. Terms controls on hire-purchase were abolished in 1982. The Housing Act 1980 conferred on tenants the right to buy council housing, adding to the demand. The Building Societies Act 1986 freed them to compete with commercial banks and permitted them to grant second mortgages (which might be used for a variety of purposes including consumer purchases)199 and unsecured loans. Household debt to GDP increased from 29 to 55 per cent during the 1980s. Much of this debt was first mortgage debt, most of which was unregulated by the Consumer Credit Act 1974. Household debt became a form of ‘privatised Keynesianism’,200 where individuals borrowed against rising house prices, sustaining continuing demand in the economy but ultimately creating a bubble which burst in the early 90s. Deregulation was a theme during the 1980s. The Consumer Credit Act was a relatively complex Act to master, utilised new technical terms, and was unpopular with many smaller institutions which required licences. The OFT published a discussion paper in 1994 entitled Consumer Credit Deregulation. However, in the wake of the early 1990s recession and the growth of sub-prime lending, increasingly cases came before the courts exposing high costs and seemingly unfair terms in sub-prime lending markets. The absence of price ceilings and the unwillingness of the courts to use the ‘extortionate bargain’ test,201 which had replaced price controls in the 1974 Act, resulted in indirect challenges to high costs through the application of the sanction of nullity where formalities were not complied with. Higher court judges complained continuously of the complexity of the Act, with one judge commenting that ‘one looks at that [the Act] and goes a little bog-eyed’202 Over-indebtedness increasingly became an important issue of public policy and concerns developed about credit card debt. The UK Government initially viewed European initiatives in credit regulation in the 1970s and 80s as irrelevant since the UK already had a developed system of regulation. But the Crowther report and the Consumer Credit Act influenced early work by the EU on consumer credit.203 The idea that a more developed credit system existed in the UK than many other European countries may have developed. In 2004 a policy report for the UK Government claimed that restrictive German consumer credit legislation had

199 See National Consumer Council, Security Risks: Personal Loans Secured on Homes (London, National Consumer Council, 1986) 16. 200 Colin Crouch, ‘Privatised Keynesianism: An Unacknowledged Policy Regime’ (2009) 11 British Journal of Political and International Relations 382. 201 See, eg Office of Fair Trading, Report on Unjust Credit Transactions (1991). 202 Howarth J, London North Securities v Meadows (Southport County Court, 2004, unreported on file with author). 203 See Patrick Latham, ‘Consumer Credit and the EEC’ in Royston Miles Goode (ed), Consumer Credit (Leiden, Sijthoff, 1978) 342 ‘The UK consumer credit bill … [was] of great interest to DG XI partly because they were prepared against the background of the most thorough and far reaching analysis (ie the Crowther report) of consumer credit that had been undertaken in any member state, partly because the Crowther report itself took account of the consumer credit scene in the United States … It was for this reason that the first working paper issued by the Commission for discussion to government experts and interested bodies outside the Community institutions and governmental ministries borrowed very freely from the UK bills.’ Gordon Borrie described the EU initiative as ‘irrelevant and irritating’ because cross border credit

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  269 contributed to the sluggish growth of the German economy.204 The Anglo-Saxon model of successful economies driven by the democratisation of consumer credit seemed the model of the future.205 The Consumer Credit Act 1974 abolished the previous presumption of unconscionability if the interest rate exceeded 48 per cent. Roy Goode in the first draft of the Crowther Report had recommended the abolition of interest rate ceilings and the Committee was not wholly convinced of the value of ceilings. This scepticism about the effectiveness of ceilings seemed to be shared by influential actors (consumer groups, regulators) in UK credit policy making. Gordon Borrie, writing as Director General of Fair Trading, feared that price restrictions might lead individuals ‘into the arms of a criminal or near criminal fringe of lenders’.206 It was only the financial crisis and its consequences which stimulated a rethinking both of the role of ceilings and the influential ideology of credit access as necessarily welfare-improving.

V. Analysis Ideas about the role of the state and the market undoubtedly influenced the making of UK consumer law in the 1970s. Both the Fair Trading Act 1973 and the Consumer Credit Act 1974 were framework Acts attempting to establish the ground rules for a competitive consumer market and resurgent consumer sovereignty. To that extent they represent the influence of ordoliberal ideas. Consumer credit reform was partly marketconstituting, intended to create confidence in the increased use of credit. Viviana Zelizer argues that in certain markets consumers must become convinced about the value and legitimacy of products. She uses the example of life insurance in the nineteenth century, where the idea of profiting from the death of a relative was initially regarded as immoral.207 Her thesis has some relevance to the 1970s legitimation and promotion of consumer credit.208 Along with soft law regulation of advertising and the rise of commercial speech, consumer regulation in the UK seems primarily to have been aimed at market expansion, while recognising the need to protect the deserving poor and avoid social exclusion. These changes reflected deeper changes in the UK from producer to consumer capitalism, legitimated through ideas of consumer sovereignty. The concept of consumer sovereignty became increasingly influential in the early 1970s and in the 1980s and 90s changed from the simple idea of the market responding to the consumer to a conception

was extremely rare and the proposals went no further than the CCA 1974; See Borrie, The Development of Consumer Law (n 68). 204 See Policis report for the DTI, The effect of interest rate controls in other countries (2004). 205 See Iain Ramsay, ‘‘To Heap Distress upon Distress?’ Comparative Reflections on Interest Rate Ceilings’ (2010) 60 University of Toronto Law Journal 707, fn 85. 206 Office of Fair Trading, Overindebtedness (1989) 3–4. 207 See Neil Fligstein and Luk Dauter, ‘The Sociology of Markets’ (2007) 33 Annual Review of Sociology 105, 119 (discussing Zelizer’s book, Viviana A Rotman Zelizer, Morals and Markets: The Development of Life Insurance in the United States (New Brunswick, NJ, Transaction Books, 1983). 208 Diamond, Instalment Credit (n 160) 6.

270  Iain Ramsay of consumer sovereignty as involving an active responsible subject, switching providers, driving innovation and competitiveness. When New Labour came to power in 1997, it embraced the concept of the ‘confident consumer’ as central to improving the global competitiveness of British industry.209 Consumer law could make markets more competitive. At the same time political opportunism played a significant role. The Conservative party has often stolen ideas first developed by the Labour party or other groups and this was certainly the case with central aspects of consumer law in the 1970s. Edward Heath’s Government sought to seduce the consumer vote in a tight electoral battle with the Labour party, set within the institutional framework of the first-past-the-post UK parliamentary system. The cherry-picking of the Crowther Committee proposals by Heath represents an example of the dominance of politics over principle. The institutional structure of law-making in the UK facilitated consumer legislation. The majoritarian nature of the UK parliamentary system, and the perceived de-alignment of voters in the early 1970s, meant that a government with a slim majority might view consumer issues as appealing to the swing voter. This may explain the Conservative Government’s implementation of the consumer aspects of credit reform, but its failure to reform the general principles of lending law. The Law Commission played a cardinal backroom role. Its reports and draft legislation on exemption clauses provided the legal basis for policy entrepreneurs such as David Tench and Richard Thomas to convince Private Members to introduce Bills based on Law Commission proposals. If a legitimate consumer group could get a private members Bill through the initial parliamentary hurdles, then it benefited from the executive dominance of parliament which would ensure its passage. Unlike Federal systems such as Germany or those where the executive does not dominate, such as the US, fewer veto points exist in the UK parliamentary system. Influential opinion in the UK during this period was sceptical of the significance of cross-border shopping. Lord Borrie probably represented elite opinion in 1983 when he opined that the EU had contributed little to UK consumer protection and that one of the most obvious reasons is that Brussels has too often sought to impose on Britain alien concepts (as in their initiatives on insurance and advertising) or to legislate for the harmonization of national laws without even attempting to argue the case for harmonization in terms of promoting greater competition within the Community.210

The UK did, however, influence the content and approach of the Directives on misleading advertising, consumer credit, products liability and doorstep selling. If the UK had not joined the EEC it is unlikely that the OFT would have developed into a major consumer agency, control of unfair terms would not have proceeded beyond the UCTA, and a general duty to trade fairly would not have been introduced. The EU was the motor of reform in UK consumer law from the 1980s, forcing policymakers to turn away from their traditional comparative references to Britain’s white settler ex-colonies of Australia, New Zealand and Canada, and the US as benchmarks.



209 See

Department of Trade and Industry, Modern Markets (n 26). The Development of Consumer Law (n 68) 121.

210 Borrie,

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  271

APPENDIX Table 1  Consumer Law and Regulation 1959–1985 Legislation and significant initiatives by party in government Conservative Government 1959–64 (Macmillan, Douglas-Home)

Molony Report, 1959–62, Consumer Protection Act 1961 Advertising Standards Authority 1961 Consumer Council 1963 Weights and Measures Act 1963 Resale Price Maintenance Act 1964 Hire Purchase Act 1964

Labour Government (Wilson) 1964–70

Hire-Purchase Act 1965 Law Commissions Act 1965 Trade Descriptions Act 1968 1966 Reference to Law Commission on Exemption Clauses: Report 1969 recommends ban on exclusion clauses in consumer sales of goods. Crowther Commission, 1968 1970 Justice out of Reach Consumer Council

Conservative Government 1970–74 (Heath)

Abolition of Consumer Council 1970 Unsolicited Goods and Services Act 1971 Competition and Credit Control Order 1971 Supply of Goods (Implied Terms) Act 1973 Fair Trading Act 1973 (creation of Director General of Fair Trading) Consumer Credit Bill 1973 Counter Inflation Act 1973 Small Claims, Arbitration procedure introduced in County Court 1973 Criminal Justice Act 1973 (compensation orders eg, in Trade Descriptions prosecutions)

Labour Government 1974–79 (Wilson, Callaghan)

Consumer Credit Act 1974 National Consumer Council 1975 Air Travel Reserve Fund Act 1975 Unsolicited Goods and Services Act 1975 Prices Act 1975 Unfair Contract Terms Act 1977 Consumer Safety Act 1978 Royal Commission on Civil Liability and Compensation for Personal Injury (Pearson) 1978 Credit Union Act 1979 Estate Agents Act 1979 (continued)

272  Iain Ramsay Table 1  (Continued) Conservative Government 1979- (Thatcher)

Housing Act 1980 (right to buy) Consumer Protection Act 1987 (safety/price regulation) Finance Act 1983 (abolition of cheque cartel) HP controls abolished 1983 Building Societies Act 1986

Private Members Bills resulting in legislation (and amendments to Bills) related to consumer protection Advertisements (Hire Purchase) Act 1957 Unsolicited Goods and Services Act 1971,75 (Consumers Association) Hire Purchase Act 1938 (Hire Purchase Trade Association/ Toynbee Hall) Hire Purchase (Amendment) Act 1954 Hire Purchase (Advertisements) Act 1957 Unfair Contract Terms Act 1977 (Consumers Association) Credit Unions Act 1979 (National Consumer Council) Supply of Goods and Services Act 1983 (National Consumer Council) Amendment to Building Societies Act 1985 (National Consumer Council) Companies Directors Disqualification Act 1986 (addition of section on disqualification in relation to handling of consumer deposits) (National Consumer Council) Table 2  Use of Credit Forms in 1969: NOP study for Crowther Committee Credit form

Ever used (%)

Hire-purchase

49

The young, C2 group of above average means and household possessions

TV Rental

37

Somewhat older more ‘average’ sort of person

Mail Order

28

Predominantly women; income being no barrier

Check Trading

12

Predominantly the lower social groups, women, those living in the north, and the less well off

Credit Sale

8

Much the same as for hp

Bank overdraft

6

Predictably geared towards ‘better-off ’ men of the middle class

Personal loan from bank

5

..

Personal loan from finance company

4

Even more biased towards men than bank loans. O/wise fairly similar

Loan from a moneylender

1

The poorer sector

Second mortgage

1

The richer middle class sector

C2 = skilled manual worker.

What sort of person uses this type of credit?

Ordoliberalism and Opportunism? The Making of Consumer Law in the UK  273 Table 3  Credit regulation statutory chronology Bills of Sale Acts 1878, 1882 Moneylenders Acts 1900, 1927

‘Unstimulated demand’ regulation, licensing, no compound interest, or default interest at rate exceeding contract rate, presumption of unconscionability if above 48%.

Pawnbrokers Acts 1872–1960

Licensing, interest rate ceilings.

HP Act 1938

Documentation of contract, statement of cash price, amount and number of instalments, controls on repossession, implied terms, prevention of ‘add on’ contracts, controls on process of repossession and amount recoverable by creditor.

Defence (General) Regulations 1939

Wartime controls on instalment credit – limit demand for non-essential goods.

1952–58

Statutory controls on minimum deposits and maximum repayment periods for specified goods purchased on hire-purchase.

1960

Re-imposition of controls

Hire Purchase Act 1954

Increases monetary limits on h-p regulation under 1938 Act

Advertisements (HP) Act 1957

• Triggered disclosures in ads • Cash price, deposit, number and amount of instalments

Emergency Laws (Reenactment and Repeal Act) 1964

Board of Trade power to restrict excessive credit through restrictions on hp, credit sale and hiring.

HP Acts 1964/65

• True rate of interest must be stated in ad according to formula (but only where rate stated in ad) • Cooling-off period in door to door credit sales. • Finance company liable for statements of seller

Advertisements (HP) Act 1967

Consolidation of 1957 Act and 1964 amendments

1970

Committal to imprisonment for debt abolished

1971

Attachment of wages permitted. Administration of Justice Act 1971

Competition and Credit Control Order 1971–73

Credit allocation through price mechanism rather than Bank of England guidance. (continued)

274  Iain Ramsay Table 3  (Continued) Consumer Credit Act 1974

• • • • • • • • • • • • • •

Exchange Controls abolished 1980 HP Controls abolished 1982

APR required by triggers in ads Disclosure of terms with sanction of nullity Cooling-off for off premises credit No canvassing of loans off premises No canvassing of credit to minors Prohibition on negotiable instruments in consumer credit Regulation of acceleration clauses Licensing of all credit grantors, debt collectors etc Default interest cannot exceed contract rate Power to reopen extortionate credit bargains Connected lender liability under section 75. Regulation of colourable cash price Judicial controls on repossession in hp and credit sales where one-third paid Time orders for repayments possible

part iii Post War History and the Sociology of Consumption

276

10 Consumer Imaginaries, Political Visions and the Ordering of Modern Society NIKLAS OLSEN

I. Prologue The economy is, of course, inhabited by real consumers going about their day-to-day business. But it is also inhabited by imaginary consumers. These imaginary consumers are not real individuals in flesh and blood, but they are very real in theoretical thought, legislation and institutional practices. They are produced at various levels and in different spheres to give meaning and coherence to our economic practices and decisions, collectively and individually. Political institutions, business, and scholars not only create imaginary consumers to make sense of the world but also use them as tools or weapons to order modern society according to their political visions. In other words, imaginary consumers are constructed with particular ideological aspirations, which rely on various assumptions concerning how consumer interests, needs and capabilities are best protected and promoted. The aim of this chapter is to exemplify how imaginary consumers, or consumer imaginaries, have been constructed, disseminated, and used in attempts to order modern society, its economy and political institutions. The chapter begins with a section on the prehistory of the idea of the consumer from 1700 until around 1945. It then presents five consumer imaginaries, which were constructed, and have formed part of distinct political agendas, in the period after 1945.1 The five imaginaries to be described below have been constructed in different contexts, assigned different meanings and served different purposes. For example, political forces have ascribed divergent degrees of sovereignty and rationality to the imagined consumers and held heterogeneous views concerning the appropriate role of the state in the societal order inhabited and driven by consumers. Moreover, there are certain overlaps between many of the imaginaries, and political orders have often legitimised their visions with reference to more than one consumer ideal.

1 The chapter draws extensively on material from my monograph Niklas Olsen, The Sovereign Consumer: A New Intellectual History of Neoliberalism (New York, Palgrave Macmillan, 2018).

278  Niklas Olsen More generally, the chapter argues that, since 1945, most consumer imaginaries have come to share a discourse stating that the consumer is harmed by state regulations and best protected by individual rationality and the efficiency of the market. As such, they have pushed a new understanding of state institutions, markets and individuals, and of the desired relations between them. In this understanding, the consumer is often conceptualised as an agent who guarantees not only economic efficiency, but also democratic institutions, where choosing between available ‘products’ became a central approach to political activity. This conceptualisation, so the chapter argues, hinged on the idea of democracy as a method of choosing and is thus a re-invention of the market as the democratic forum par excellence. In other words, the consumer imaginaries to be described embody a relatively new (neoliberal) political economy of consumer choice that aims to marketise the political. One note on the geographical focus: most examples stem from the American context. However, as pointed out by James Q Whitman, there is still a basic difference between the US and the EU in how markets are organised (producerism versus consumerism), and Duncan Kennedy is surely right in arguing that the US shows much deeper fluctuations of upcoming and vanishing ideologies.2 In the EU, the context is flatter. In line with this, none of the five imaginaries below have been taken over tel quel in the EU. There are also major differences between the EU and the Member States.3 Yet developments in the US and the EU/Europe are nevertheless related, as many European consumer policies have developed in light of American experience, with delays of ten years or more. In this chapter, however, focus is not exclusively on American or European integration consumer imaginaries, or on a comparison between these two imaginaries. The aim is rather to outline stylised imaginaries that have evolved, and informed consumer discourses, policies and organisations, in and across diverse geographical settings and since 1945.

II.  The Emergence of the Consumer as a Socio-Political Figure To speak of human beings as consumers is in fact a rather new habit. As Frank Trentmann has demonstrated, the consumer was virtually absent from societal discourse in most countries until around 1800. Even in the context of what is today understood as acts of consumerism, few defined themselves or others as consumers or referred to the concept in societal debates.4 2 James Q Whitman, ‘Consumerism Versus Producerism: A Study in Comparative Law’ (2007) 117 Yale Law Journal 340, 340–406; Duncan Kennedy, ‘The Stages of the Decline of the Public/Private Distinction’ (1982) 130 University of Pennsylvania Law Review 1349, 1349–1357. 3 Sven Steinmo, The Evolution of Modern States: Sweden, Japan, and the United States (New York, Cambridge University Press, 2010). 4 The following draws extensively on Frank Trentmann, ‘The Modern Genealogy of the Consumer: Meanings, Identities and Political Synapses’ in John Brewer and Frank Trentmann (eds), Consuming Cultures, Global Perspectives: Historical Trajectories, Transnational Exchanges (New York, Berg Publishers, 2006) 19–69; Frank Trentmann, Empire of Things : How We Became a World of Consumers, from the Fifteenth Century to the Twenty-First (New York, Harper Collins, 2016).

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  279 This situation changed during the nineteenth century. Here, the consumer began to be referred to as a persona with legal and personal rights, for example when citizens mobilised in the pursuit of collective interests related to consumption (for example, provision of utilities such as water, gas and coal). In many countries, such as England, in the late nineteenth century this development linked the consumer to a model of citizenship, referring to ideals of accountability, representation and protection, and saw citizens uniting in organisations such as consumer defence leagues. Moreover, in a growing number of societal contexts, consumers were equated with the general public.5 The late nineteenth century also saw the beginning of a broad intellectual search for and debate of the consumer-figure, led by public intellectuals, reformers and academics, who began to ponder what characterised consumers and their behaviour, including how modern society could be reformed in ways that protected and enhanced consumer interests. For example, reformist economists such as J A Hobson (Great Britain), Simon Patten (US) and Charles Gide (France) made efforts to theorise and politicise consumer needs within larger debates of the social, political and economic organisation of society. Some of these economists were active in political matters related to consumers and consumption. Gide, for example, was deeply involved in attempts to advance consumer interests through collective action in cooperatives.6 Similarly, at the turn of the twentieth century, governments and civil society institutions increasingly attempted to construct and instrumentalise consumer ideals in the pursuit of larger national economic-political aims. For example, in Sweden, from the early twentieth century onwards the cooperative movement launched a large educational campaign that pictured Swedish women as rational consumers whose correct and disciplined consumption at home (which involved paying with cash and not by credit) would raise the moral and economic level of the populace and make government intervention in the economy superfluous.7 At this point, civil society and commerce in Great Britain had successfully created a new identity of a morally aware and civic-minded consumer to legitimise the agenda of an open global economy.8 Consumer politics and rhetoric was given a new scale and a more state-focused dimension during World War I, where governments called on consumers to act in accord with and support the regulated economies of the national political communities. However, inflation and scarcity of products also led to consumer boycotts and demands for representation in government politics. This was, for example, the case in Germany, where state and civil society intensely debated how consumers could contribute to a more productive nation, which in turn would allow for greater public spending.9 In the interwar period, the figure of the consumer was irrevocably pushed to the centre of public and political discourse in countries around the world. In this process, previously separate discourses about the consumer, for example within social politics

5 Trentmann, ‘The Modern Genealogy’ (n 4) 26–37. 6 Trentmann ‘The Modern Genealogy’ (n 4) 29; Trentmann (n 4) 155–156. 7 Peder Alex, Den rationella konsumenten: KF som folkuppfostrare 1899–1939 (Stockholm, Brutus Östlings bokf Symposion, 1994). 8 Frank Trentmann, Free Trade Nation: Commerce, Consumption and Civil Society in Modern Britain (Oxford, Oxford University Press, 2008). 9 Trentmann ‘The Modern Genealogy’ (n 4) 43; Trentmann (n 4) 274–276.

280  Niklas Olsen and economic thought, were joined in debates on issues such as the nature of human behaviour, questions of citizenship, dynamics of economic growth and modes of societal organisation. This created a more universal category of the consumer, a figure now imbued with a plurality of societal practices and virtues and elevated into a key figure in modern society.10 Moreover, in many countries, consumers organised on a hitherto unmatched scale. For example, the US saw the creation of the world’s first consumer protection agency, Consumers Research Inc., in 1929.11 In this context, from the interwar period onwards it became impossible for political actors to communicate a societal vision without including a vision of the role of consumers and consumption in matters economic and political. Against this background, and in response to the turmoil of the time, political regimes sought to legitimise new societal orders by reference to new consumer-ideals in the interwar period. These ideals varied according to national traditions and contexts. To mention some examples: in the US, the citizen consumer was launched by New Deal reformers as an ideal that would secure the rights of individual consumers in the face of unsafe products, unfair pricing and misleading advertising. The citizen consumer invoked a vision of the new American democracy as based on the popular mobilisation of consumers in cooperatives and movements, with consumers also represented in federal advisory boards and agencies and supported by a state-regulated welfare economy.12 In Germany, recognising that consolidating support for the regime required providing Germans with the products they desired, National Socialists collaborated with consumer researchers, business companies and advertising agencies to construct a community-oriented and racist consumer who bought German consumer products, thereby reinforcing the dictatorship and its policies.13 In Russia, communist efforts in the 1920s to create a proletarian individual, who sacrificed personal comfort for the socialist good, were in the 1930s replaced by attempts to bring about a new consumer who could participate in a state-driven politics of productivity and drive forward communism as a new and materially superior civilisation.14 More generally, according to Frank Trentmann, there was no strong link between the rise of consumer-languages and the rise of liberal ideologies based on ideas of markets, exchange and individualist consumers, which are widespread today. Instead, collective identities, purposes and practices remained the central features of most consumerlanguages until the interwar period. Nevertheless, since the eighteenth century, various languages had portrayed the individual consumer as a key agent of the market economy. Three such languages will be mentioned here, as they are central to an understanding of consumer-ideals constructed after 1945.

10 Trentmann ‘The Modern Genealogy’ (n 4) 43–53. 11 Lawrence Glickmann, Buying Power: A History of Consumer Activism in America (Chicago, The University of Chicago Press, 2009) 189–218. 12 Lizabeth Cohen, A Consumers’ Republic: The Politics of Mass Consumption in Postwar America (New York, Random House, 2003) 17–61. 13 Pamela E Sweet, Selling under the Swastika: Advertising and Commercial Culture in Nazi Germany (Stanford, Stanford University Press, 2013). 14 Trentmann (n 4) 292–296.

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  281 First, in the period between 1700 and 1850, liberal political economists such as Adam Smith, Frédéric Bastiat and Jean-Baptiste Say had outlined the idea that consumer preferences determine the production of goods and services.15 These liberal political economists initiated a tradition of merging a descriptive practice of stating that all economic processes are ultimately focused towards satisfying the wants of the final consumer with a normative principle of asserting that economic activity should be evaluated in terms of how well it fulfils consumer wants. This tradition involved a societal vision that (in different ways and to different degrees) highlighted individual freedom, free competition, and limits to state control and regulation of the economy. It also included a critique of any organisation, public or private, that has monopolistic control of an area of business. However, while this tradition became an important reference point for market liberals in the twentieth century, its contemporary extent and significance was limited, as classical political economy focused mainly on production costs as the basic determinant of market decisions. Second, the marginal revolution in economics in the late nineteenth century contributed to a more decisive shift of focus from production to consumption in thinking about the economy. Here, as economics became specialised as a discipline, scholars such as William S Jevons, Leon Walras, Alfred Marshall and Carl Menger began to explain the value of a good in terms of its value to the consumer instead of in terms of its cost of production.16 This shift involved a new conceptualisation of the economy as a collection of (selfish) individuals rather than as a collection of distinct classes. It also entailed a new analytical vocabulary designed to explain what motivates how individuals, understood as consumers, value and choose between commodities and thus drive the economy. Most importantly, the concept of utility was used to explain consumer choices, referring to the satisfaction or benefit derived by consuming a product, while the notion of marginal utility of a good or service was applied to describe a change in utility from an increase in consumption of that good or service. As such, the marginal revolution unfolded to a considerable extent as a scientific quest to settle the laws of value and prices, to determine how and why consumers choose to use their money. Moreover, some (but not all) marginalists such as William S Jevons used mathematical methods to measure the utility of an idealised figure of an economic agent, who acted with full information, complete rationality and without obstacles in a market of perfect competition. However, it should be stressed that the marginal revolution had many varieties. For example, Carl Menger – a contemporary of William S Jevons and known as the father of so-called Austrian economics – discussed individual evaluation without the mathematical tools, the utilitarian calculus or the notion of rationality found in Jevons. In fact, seeing human rationality as severely limited, he sought to analyse subjective behaviour through problems of uncertainty, imperfect knowledge, and the open-endedness

15 Peter Meyer-Dohm, Sozialökonomische Aspekte der Konsumfreiheit (Freiburg im Breisgau, Verlag Rombach Freiburg, 1965) 40–90; Mary Jean Bowman, ‘The Consumer in the History of Economic Doctrine’ (1951) 41 The American Economic Review 1, 1–18; Trentmann (n 4) 151; Trentmann ‘The Modern Genealogy’ (n 4) 26–31. 16 Roger E Backhouse, The Penguin History of Economics (London, Penguin, 2002) 166–184.

282  Niklas Olsen of the world, as well as to link these phenomena to discussions of economic growth and innovation. For him, markets were never in equilibrium, but characterised by competition between dynamic, entrepreneurial, and profit-seeking individuals. Third, in the early twentieth century, re-launching liberalism as a positive programme that stressed the powers of the free market, Austrian economist Ludwig von Mises invented the ideal of the sovereign consumer as the nexus of an efficient and democratic liberal society. Framed as a critique of socialism, Mises’s programme provided liberal capitalism with a new democratic legitimacy by drawing a direct parallel between choice in the marketplace and at the ballot box. It also introduced a new symbol of authority, the sovereign consumer, who was seen to decide what is produced through their daily voting, in the market, thus representing the personification of democratic action. As such, Mises created a new way of thinking about the relation between capitalism, consumers and democracy that rendered socialist planning inefficient and undemocratic, due to the fact that its production is directed by a central authority and not by consumer demand, and a regime run by sovereign consumers in the market as a truly efficient and democratic societal order. Aiming to replace the devices of traditional political democracy with the workings of the market, this new idea of politics as choosing between products in the market was elaborated upon by other liberal economists, such as Friedrich Hayek, Lionel Robbins and Wilhelm Röpke, in the 1930s.17 Austrian-inspired free market thinkers were not alone in embracing the sovereign consumer in the interwar era. In marketing, which had its epicentre in the US, the figure was often portrayed as ‘Voter,’ ‘Judge,’ and ‘Jury,’ dictating what is produced on the market by their choices.18 American businesses also advocated this ideal.19 Still, few outside the circles of free market thinkers and the realm of advertising and business embraced the ideal of the sovereign consumer. Already in the late nineteenth century, many scholars and debaters voiced criticism of the consumer-ideals that classical political economists and marginal economists had outlined and which came to co-exist in the late nineteenth century and gained prominence around 1900. The Norwegian-American economist and sociologist Thorstein Veblen offered one of the most powerful critiques of the discursive features of the sovereign consumer. It was as a part of this critique, which was aimed at both classical political economy and the marginalist analytical framework, that Veblen coined the term ‘neoclassical’ economics. His criticism of neoclassical economics was partly directed towards its assumption of harmony in the system; the idea that the economy would always reach a form of equilibrium that was socially beneficial. Against this assumption, Veblen claimed that capitalism’s self-interested striving for profits had harmful effects on the economy and society. More exactly, he described the capitalist economy as defined by large corporations that did not aim to increase efficiency or the common good but to maximise profits, which meant striving for monopoly power and spending large amounts of

17 Niklas Olsen, The Sovereign Consumer A New Intellectual History of Neoliberalism (Springer International Publishing, Imprint: Palgrave Macmillan, 2019) 37–49. 18 Stefan Schwarzkopf, ‘The Political Theology of Consumer Sovereignty: Towards an Ontology of Consumer Society’ (2011) 28 Theory, Culture and Society 119. 19 Lizabeth Cohen, A Consumers’ Republic: The Politics of Mass Consumption in Postwar America, 1st edn (New York, Vintage Books 2004) 56–61.

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  283 money on advertising, at the expense of the community.20 Against this background, Veblen developed his famous notion of conspicuous consumption in his book The Theory of the Leisure Class published in 1899.21 With this notion, Veblen took issue with the assumption that human beings are merely driven by the desire to maximise pleasure and minimise pain found in the work of prominent marginal economists. Instead, he argued that people as consumers bought expensive items to display wealth and income, seeking to emulate the behaviour of other classes and gain higher social status, rather than to cover their real needs. As such, he portrayed modern consumer society as characterised by a waste of time and money. Likewise, in the 1920s, Hazel Kyrk, a home economist at the University of Chicago, criticised William S Jevons’s view of economics as based on a notion of rational individuals exercising their free choices on the market place. In A Theory of Consumption from 1923, Kyrk argued that many contexts influence consumer behaviour, including social environments, industrial organisation, income distribution and cultural norms. Rejecting the idea that consumers are sovereign by nature, Kyrk also contended that individuals had to be educated to form their own judgements and desires as a way to secure higher levels of safety and comfort and to develop higher ideals and purposes.22 To educate consumers was also the aim of Stuart Chase, the American economist and consumer activist, who, together with Frederick J Schlink, created Consumers Research, Inc., the world’s first consumer-protection organisation. This initiative followed their joint publication Your Money’s Worth from 1927, which attacked what they described as false and misleading advertising and unreasonable pricing by manufacturers of consumer products.23 Consumers Research, Inc. advocated a form of technocratic individualism, which saw consumption as a personal matter (and not a tool for eg class politics) and sought to counter what was considered to be the individual consumer’s lack of wisdom through education and product testing. These efforts, it should be stressed, did not entail a critique of capitalism. In fact, the directors of Consumers Research, Inc. found capitalism indispensable to secure production of a variety of high-quality goods for consumers to choose between. Moreover, they considered capitalism and consumerism as being linked to democracy.24 More generally, in places such as the interwar US and Great Britain, it was common to portray the consumer as an agent capable of ensuring and enhancing economic growth and political democracy. However, the issue of how consumers could best contribute to economic growth and democratic development within society was strongly contested.

20 Roger Backhouse, The Penguin History of Economics (London, Penguin, 2002) 195–198. 21 Thorstein Veblen, The Theory of the Leisure Class, An Economic Study in the Evolution of Institutions (London, Macmillan, 1899). 22 Through her work for government agencies, and as chief economist of the Bureau of Home Economics, Kyrk linked her scholarly analysis to political work in the 1930s and 1940s. Robert A Dimand and Richard Lobwell, ‘Kyrk, Hazel, 1886–1957’ in Steven N Durlauf and Lawrence E Blume (eds), The New Palgrave Dictionary of Economics, 2nd edn (London, Palgrave, 2008) 776; Trentmann ‘The Modern Genealogy’ (n 4) 48–49. 23 Stuart Chase and Frederick J Schlink, Your Money’s Worth: A Study in the Waste of the Consumer’s Dollar (London, Macmillan, 1927). 24 Lawrence B Glickman, Buying Power: A History of Consumer Activism in America (Chicago, University of Chicago Press 2009) 189–218.

284  Niklas Olsen The contestation to a great extent concerned the question whether consumers tended to thrive within free markets, or benefit from a regulatory framework aimed at protecting the consumer from market forces. At the time, the regulation framework – and the perspective on consumers as forming part of collective purposes and practices – was far more prominent in practical politics than the ideas of individual consumers operating in free markets, as formulated by Ludwig von Mises and other free market thinkers. A focus on the interest of the political community also characterised emerging Keynesianism, which also used a distinct consumer-imaginary to legitimise a managed economy that endorsed higher government expenditures and lower taxes to stimulate demand and pull the global economy out of the Great Depression. Referring to a ‘worker-saver’ as way to describe the psychological propensities of individual human agents in the economy, John M Keynes identified the insufficiency of the propensity to consume as the cause of the evils of unemployment. Moreover, he argued that the ‘worker-saver’ spent more of any extra income they received on immediate consumption rather than savings, and that government should accordingly aim to stimulate popular demand by boosting overall economic activity. On that premise, Keynes made a key contribution to the positioning of consumers and consumption at the crux of economic-political thought.25 The clash between the consumer imaginaries that emphasised individuals and markets and those stressing collectives and government regulation and protection continued in the post-war era, fuelled by new societal contexts, academic theories and political visions.

III.  The Weak Consumer The first of our five consumer imaginaries is the weak consumer. The weak consumer connotes the idea that the individual consumer is vulnerable, susceptible and in need of state protection from a malfunctioning marketplace and manipulative advertising. This imaginary draws on critiques of consumption culture reaching (at least) back to Thorstein Veblen and came to inform various community-oriented societal orders in the interwar era, such as the New Deal. Steeped in the American traditions of consumer activism and government consumer-protection regulation, the earlier mentioned citizen consumer was launched by New Deal reformers as a vision that would secure the rights of individual consumers in the face of unsafe products, unfair pricing, and misleading advertising. The citizen consumer invoked a vision of the new American democracy as based on the popular mobilisation of consumers in cooperatives and movements, with consumers also represented in federal advisory boards and agencies and supported by a state-regulated welfare economy.26

25 The above builds on Christopher Payne, The Consumer, Credit and Neoliberalism: Governing the Modern Economy (New York, Routledge, 2012) 21–43; Peter Guerney, The Making of Modern Consumer Culture in Modern Britain (London, Bloomsbury Publishing PLC, 2017) 155. 26 Cohen (n 19).

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  285 The post-war American political economy was characterised by reinforcement of the socially embedded managed capitalism and regulatory framework, which had been created in the 1930s, in the name of the citizen consumer. This was, we should add, a consumer seen as powerful with, but weak without, the support of a regulatory system protecting its needs and promoting its capacities. Accordingly, in the 1950s and 1960s this regulatory framework developed into a comprehensive system of independent federal commissions and agencies that oversaw the nation’s crucial infrastructure industries and set price, quality and quantity standards, thus determining which firms could enter or leave a market, what goods and services could be offered, and how those goods and services were to be sold. These institutions, together with other industryspecific and economy-wide agencies, amounted to a far-reaching regulatory system that imposed conditions on market transactions between producers and consumers and between firms and workers.27 The scope of the American regulatory system peaked in the 1960s and early 1970s, aided by consumer advocates such as Ralph Nader, who became famous for demanding aggressive state intervention to protect Americans from unsafe consumer products.28 Nader and other supporters of the regulatory framework drew on the image of a weak, highly vulnerable and susceptible consumer that had been conceptualised in the flood of literature on consumption appearing in the post-war period. This literature heavily criticised the contemporary purchaser-consumerist culture for being individualistic, socially divisive and wasteful, and claimed that consumer choice was in fact deeply manipulated by the power of advertising. Some of the best-known contributions came from social critics such as journalist Vance Packard and economist John Kenneth Galbraith, both of whom sounded an alarm bell at post-war consumption culture and politics in their books The Hidden Persuaders (1957) and The Affluent Society (1958).29 Both argued that certain actors in the market (consumer research and advertising) were attempting to manipulate consumer desires and needs, as corporations spent enormous sums on advertising to manipulate susceptible consumers into buying things they neither wanted nor needed. Claiming that producer sovereignty and not consumer sovereignty constituted the key feature of industrial economies, Galbraith also contended that the new demands created by advertising were leading to exuberance in private production and to consumption that was pushing out public spending and investment. The result, according to Galbraith, would be private affluence and public poverty. Along with government protection for the consumer, he therefore called for comprehensive economic regulation and redistribution. Nader, Packard and Galbraith were widely read and undoubtedly influenced how members of the general public thought about consumption in the post-war US. They also earned a wider audience among policy makers as well as in government agencies and in consumer movements. For example, The Affluent Society had a considerable

27 Eduardo Canedo, The Rise of the Deregulation Movement in Modern America, 1957–1980 (New York, Columbia University, 2010) 1–2. 28 Canedo (n 27) 134–156. 29 Daniel Horowitz, Vance Packard and American Social Criticism (Chapel Hill, The University of North Carolina Press, 2000); Daniel Horowitz, The Anxieties of Affluence Critiques of American Consumer Culture, 1939–1979 (Amherst, University of Massachusetts Press, 2004).

286  Niklas Olsen impact on national debates and national social policy in the US and in many other western countries, where Galbraith’s books were translated, discussed and used by politicians, scholars and activists as arguments for government regulation that protected the supposedly weak consumer against harmful market forces. This was also the case in the Scandinavian countries of Sweden, Norway and Denmark, where Social Democratic politicians and consumer organisations introduced Galbraith’s writings to push for new legislation, institutions and policies that offered market solutions, which allegedly protected and benefited the weak consumer.30 In general terms, the state was assigned a prominent role as a provider of market solutions benefiting the weak consumer in the US and elsewhere. By breaking up monopolies, restricting advertising, and ensuring a range of social-welfare activities, the state was to guarantee free and fair competition as well as basic economic, political, and social consumer rights. Moreover, in viewing consumers as a group sharing collective interests and responsibilities, governments sought to advance their interests through both private and public institutions. It should be mentioned that the 1960s and 1970s also saw the rise of a variant of the weak consumer imaginary, which expressed a far more critical attitude towards consumption, namely the so-called alienated consumer. This ideal drew on Marx’s theory of alienation in the workplace and on Theodor Adorno and Max Horkheimer’s Dialectics of the Enlightenment (1944), which argued the capitalist employer’s need for submissive workers created a need for submissive consumers, and that cultural goods, shaped by popular culture and made available by the mass media, were used to manipulate individuals into passivity. In this perspective, which was not only picked up by a new generation of leftist sociologists but also shared by conservative sociologists such as Helmut Schelsky, Arnold Gehlen, and Hans Freyer, mass consumption involved not only degradation of culture but also a loss of political freedom. In the eyes of these sociologists, the ‘freedom’ of choice offered by modern consumerism – in the context of the increasing bureaucratisation, institutionalisation, and centralisation of the welfare state – drained individuals of their personality, destroyed their social relations, and alienated them from authentic modes of existence.31 Herbert Marcuse elaborated upon this theme in his One Dimensional Man (1964), which provided one of many neo-Marxist critiques of the affluent society that were picked up by student activists in many countries. In contrast to the vulnerable consumer, which involved a wish to tame, regulate and reform capitalism, the alienated consumer implied that individuals had to either overthrow or liberate themselves from the capitalist consumer society. Anti-consumerism and notions of the weak consumer also informed the double movement of Marxist critiques of the reification of social relations 30 Olsen (n 17) 203–204. For the reception of Galbraith’s book in Scandinavia, see Björn Lundberg, ‘The Galbraithian moment: Affluence and critique of growth in Scandinavia, 1958–1972’ in Johan Östling, Niklas Olsen and David Larsson Heidenblad (eds), Histories of Knowledge in Postwar Scandinavia: Actors, Arenas, and Aspirations (New York, Routledge, 2020) 93–110. 31 For examples of – and overlaps between – criticism of the consumer and of consumption launched by scholars and intellectuals from the left and right wing, see Andreas Wirsching, ‘From Work to Consumption: Transatlantic Visions of Individuality in Modern Society’ (2011) 20 Contemporary European History 1, 1–26; Nepomuk Gasteiger, Der Konsument: Verbraucherbilder in Werbung, Konsumkritik und Verbraucherschutz, 1945–1989 (Frankfurt am Main, Campus Verlag, 2010).

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  287 and environmental concerns that informed the wide range of stable state economy (or even de-growth) literature originating from ‘Limits to growth’ and the Stockholm summit of 1972, such as E F Schumacher’s Small is beautiful (1973) and Paul and Anne Ehrlich’s The End of Affluence (1974). To sum up: imaginaries of the weak consumer were crucial to the construction and consolidation of the welfare state systems after 1945 and gave birth to a long range of (more or less influential) political debates, movements and organisations in the following decades. The weak consumer was also present when the consumer-figure entered the vocabulary of the European integration project in the early 1970s.32 This happened in the context of efforts launched by the European Court of Justice to harmonise national measures on safety and quality. These efforts responded to a situation in which there had been no talk of special protection for consumers, as, citing Frank Trentmann, lawyers and economists had simply relied on the idea that ‘the consumer was naturally “sovereign” in the marketplace’.33 Hence, the new focus on consumers in relation to European integration acknowledged that they could also be vulnerable and in need of protection and information on the market. This perspective corresponded to consumer laws and policies pursued in individual European countries in the 1970s, where the influence of the vulnerable consumer peaked and suddenly waned.

IV.  The Liberated Consumer Our second ideal type, the liberated consumer, has roots in, among other places, the West German Soziale Marktwirtschaft (social market economy) of the postwar era. The social market economy is known as the model behind the quick and successful reconstruction of the West German economy that began with the currency reform in 1948 and culminated in the so-called Wirtschaftswunder (economic miracle) taking place in the 1950s. Researchers have shown how a group of German ordoliberals was influential in shaping and implementing the West German social market economy under the auspices of Ludwig Erhard, who served as Minister of Economics in a government led by Chancellor Konrad Adenauer from the Christian Democratic Union (CDU) from 1949 until 1963.34 Promoters of the social market economy mobilised the liberated consumer as a pivot of the social market economy and as a legitimising figure in the making of the Federal Republic. More precisely, they positioned the liberated consumer as a person exercising

32 Jim Davies, The European Consumer Citizen in Law and Policy (Basingstoke, Palgrave Macmillan 2011) 22–67. 33 Trentmann (n 4) 559; Stephen Weatherill, EU Consumer Law and Policy, 2nd edn (Cheltenham, Edward Elgar Publishing, 2005); Michelle Everson and Christian Joerges, Consumer Citizenship in Postnational Constellations? (Florence, EUI Working Law paper, 2006) 1–30; Davies (n 32). 34 The literature on German ordoliberalism is vast. Ralf Ptak, Vom Ordoliberalismus zur Sozialen Marktwirtschaft: Stationen des Neoliberalismus in Deutschland (Wiesbaden, Springer Fachmedien, 2004) remains authoritative as does Dieter Haselbach, Autoritärer Liberalismus und soziale Marktwirtschaft. Gesellschaft und Politik im Ordoliberalismus (Baden-Baden, Nomos Verlag, 1991). The most recent contribution to the field is Werner Bonefeld, The Strong State and the Free Economy (London, Rowman & Littlefield, 2017).

288  Niklas Olsen free choice in the market, and as the symbol of the democratic citizen responsible for rebuilding the German economy and society. Indeed, policy makers, headed by Minister of Economics Ludwig Erhard, justified the making of the Federal Republic by depicting it as a new societal order that liberated the German people as free consumers. A focus on the consumer formed part of the economic theory of ordoliberalism: a strong state guaranteeing competition and the rule of law. Against this background, the social market economy aimed to use state power, as embedded in a strong legal framework, to eliminate cartels, monopolies and other forces that strove to undermine the principles of competition and free consumer choice, in search of benefits and privileged treatment in the state apparatus. Tellingly, Ludwig Erhard spoke of the determination to eradicate ‘the enemies of the consumer’ as a key feature of the social market economy.35 In this perspective, consumers were not necessarily weak, but in permanent danger of being dominated by a monopolist business structure that threatened to undermine the virtues relating to free competition by forcing consumers to overpay for goods and reduce their choices in the marketplace, thereby also impairing their social rights and political liberties. Positioning the consumer as the supreme economic subject actor of the market order, Erhard said: ‘I have time and again stated that there is only one measure of judgement in my concept of the economy, and this is the consumer: there is only one judge over good and evil in the economy, over the useful and the useless: the consumer.’36 Moreover, Erhard described the individual consumer’s participation as a fundamental and inviolable right. He repeatedly claimed that the ‘free choice of consumption (…) must be considered inviolable freedoms of human beings’ and spoke of ‘the basic democratic right of consumer freedom’.37 Indeed, in Erhard’s view, it was impossible to talk of democracy without freedom of consumer choice.38 Erhard’s social market economy, in which the liberated consumer was embedded, further advanced the argument embraced by all German ordoliberal economists that the market economy, if allowed to function without distortions, was far more socially just than any system of planning. ‘The freer an economy is the more social it is,’ he often announced.39 More generally, he spoke of the social market economy as a force that ensured both wealth and social levelling for all members of society through the price mechanism: ‘Competition alone secures that all human beings profit from economic progress, in particular as consumers, and that all advantages that are not the result of a higher performance are eliminated.’40 According to Erhard, it was the common person as consumer who benefited from competition – not special interest groups such as business associations. Using state power, the social market economy aimed to establish a

35 Ludwig Erhard, Wohlstand für Alle (Düsseldorf, ECON Verlag, 1957) 164. 36 Ludwig Erhard, ‘Die Prinzipien der deutschen Wirtschaftspolitik [Auszüge aus einem Vortrag vor der Deutsch-Belgisch-Luxemburgischen Handelskammer am 31. Mai 1954 in Antwerpen]‘ (2005) 104 Orienterierungen zur Wirtschafts- und Gesellschaftspolitik 17. 37 Erhard, ‘Die Prinzipien der deutschen Wirtschaftspolitik‘ (n 36). 38 Ludwig Erhard, ‘Zur Kritik an der neuen Ordnung [Rundfunkansprache, 6. August 1948]‘ in Ludwig Erhard, Gedanken aus fünf Jahrzehnten. Reden und Schriften. Herausgegeben von Karl Hohmann (Düsseldorf, ECON Verlag, 1988) 133. 39 See, eg Erhard, Wohlstand für Alle (n 35) 67. 40 ibid 7–8.

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  289 competitive order in which consumers allegedly depended only on themselves – and were liberated to be masters of their own fate. Against this background, the social market economy and the image of the liberated consumer connoted a profound optimism in respect to consumption, which was somewhat unusual for the time. Among other things, Erhard often conveyed the material advantages of a consumer society. In this sense, he re-enchanted the idea of the market as a place that can fulfil peoples’ wishes and demands, thereby offering them a better life. Moreover, Erhard placed faith in consumer rationality by holding that individuals were able to obtain satisfaction when making purchases. While he agreed that consumers were weak in the sense that they sometimes bought things they did not want or need or which seemed to be of low cultural value, he nevertheless regarded free consumption as an act that allowed people to develop their personalities and as a human right should be respected.41 Instead of making it a state obligation to educate and protect the consumer, Erhard commended an increased level of product information to assist consumers in making the right choices in the market place. In reality, Erhard’s social market economy and its image of the liberated consumer had a complex relation to the non-interventionist and democratic stance described above. On the one hand, the concept of the social market economy obviously complied with the basic features of a modern liberal democratic system, characterised as it was by its commitment to the principles of human rights, parliamentarianism, the separation of powers into different branches of government, and a free press. As such, it broke with early German ordoliberalism, whose proponents aimed to shield the market order from democratic politics. On the other hand, the transition to the post-war market economy was affected by the authoritative use of state power to set up a competitive order and shape a specific consumer citizen and collective consumption pattern. In this process, the social market economy, to a certain extent, reproduced the contradiction between the roles assigned to the authoritative state and the free consumer that characterised early German ordoliberalism. This involved using community-oriented, existential, and activist notions such as ‘will,’ ‘courage,’ and ‘battle’ that had been central to National Socialist language. More generally, to provide a level of societal stability and material comfort that secured support for the political system, the consumption politics of the new German state sought to neutralise class conflict, de-politicise the population, and minimise its role in decision-making. Indeed, efforts to mobilise the Germans as ‘democratic’ citizens in the market far overshadowed the attempt to activate them via the channels of traditional democratic institutions. These features were key to what was, overall, a deeply technocratic and paternalistic attempt to modernise German society that took place in association with the founding of the German Federal Republic in 1949.42

41 ibid 74. 42 See, eg Jan-Werner Müller, Contesting Democracy: Political Ideas in Twentieth Century Europe (New Haven, Yale University Press, 2011), 145. For the deeply anti-democratic roots of German ordoliberalism, see Ralf Ptak, Vom Ordoliberalismus zur Sozialen Marktwirtschaft: Stationen des Neoliberalismus in Deutschland (VS Verlag für Sozialwissenschaften, 2004); Dieter Haselbach, Autoritärer Liberalismus und soziale Marktwirtschaft: Gesellschaft und Politik im Ordoliberalismus (Baden-Baden, Nomos, 1991); Werner Bonefeld, The Strong State and the Free Economy (London, Rowman & Littlefield Publishers, 2017).

290  Niklas Olsen To this, we might add that while West Germany’s post-war political economy certainly included elements from the social market economy, the socio-economic agenda outlined by Ludwig Erhard and his fellow neoliberal economists was far from realised in a comprehensive manner. Political developments thus resulted in a more tightly regulated market, a lower degree of private consumption, and a higher level of public spending than Ludwig Erhard had hoped for. Still, the construction of the liberated consumer is important in a larger context. First, it contributed to the re-invention of the market as the democratic forum par excellence through its association with the freely choosing consumer. The attempt to liberate this consumer in the market certainly went hand in hand with, but, as indicated above, also overshadowed the attempt to activate German citizens via traditional democratic institutions. Second, the German model of the social market economy and its liberated consumer was exported to other political geographies and contexts. Most importantly, it played a key role in the attempt to create, uphold and reinforce a single European market space from the 1980s onwards, when the European Commission dispensed of its earlier social outlook in favour of a focus on markets, competition, efficiency, and consumer choice. Crucial to this attempt has been the idea of a market democracy through the construction of a particular market citizen, based on the assumption that individual choice and competitive markets ensured the best defence of the consumer interest.43 However, in line with the discourse associated with the West German liberated consumer, the EU not only associates the single market with freedom and choice for the consumer, but also with a form of European protection of consumers against multinational and American companies. Only through supranational collaboration – so the argument goes – are the individual nations able to resist pressure from those companies that threaten to undermine competition and lure the consumer into buying things they neither want nor need. In this account, the EU represents a fair market and not a laissez faire economy.

V.  The Sovereign Consumer Our third imaginary is the sovereign consumer (or what in legal-political language is labelled the circumspect, responsible consumer, who decides on informed choices). Invented by Ludwig von Mises in the early twentieth century (as earlier described), this imaginary type was given new features and energies in the 1970s American deregulation movement, founded by business groups, free-market think tanks, and conservative politicians, who aimed to roll back the regulatory state. It was spearheaded by scholars from the Chicago School of Economics such as Milton Friedman. Friedman and his colleagues from Chicago directly challenged the views on regulation and consumers associated with John Kenneth Galbraith and Ralph Nader, turning their ideal of the weak consumer imaginary upside down, including the idea that markets and consumers must be created and protected by the state. More specifically,

43 Trentmann,

Empire of Things (n 4) 559–560.

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  291 they expressed a high degree of trust in the efficiency and self-protective mechanisms of markets and of consumers, who they saw as sovereign, rational, and utility-maximising agents. Moreover, they expressed deep scepticism towards governmental regulation, claiming that business monopoly was no real problem for a competitive economy. Next to reacting against reinforcement of socially embedded managed ­capitalism and the regulatory state that had been created in the 1930s, the discourse of the sovereign consumer unfolded against a background of the profound transformation of the discipline of economics that was taking place in the 1950s and 1960s and was also shaped by new political contexts such as the Cold War. In the economics departments of American universities, neoclassicism emerged in the 1950s and 1960s as the dominant framework characterising the discipline of economics, replacing the plurality of approaches that had characterised the interwar years.44 One of the changes that were vital in this transformation from pluralism to neoclassicism was a new focus in the discipline on the utility-maximising economic agent. Many economists thus worked with an idealised figure of the economic agent who would act with full information and complete rationality so as to maximise individual utility in a market of perfect competition. Another new feature was agreement on the primacy of economic efficiency as the guiding value. Scholars from the Chicago School such as Milton Friedman and George Stigler were key figures in transforming the American economics discipline to post-war neoclassicism. During the 1950s, both Friedman and Stigler began to embrace deregulation.45 In so doing, they elevated the consumer to the key actor in the marketplace, introducing the figure of the consumer into new societal contexts and thus energising and expanding the deregulation discourse associated with the Chicago School. It was above all in his writings as a public intellectual that Friedman mobilised the consumer. Most important here were his books Capitalism and Freedom and Free to Choose, published respectively in 1962 and 1980 (co-authored with his wife, Rose Friedman, Free to Choose summarised in popular fashion the arguments for deregulation that Milton Friedman had promoted since the early 1960s). Aiming to convince both decision-makers and the public of the virtues of a free market economy, these books portrayed consumers as the key drivers of capitalism and of liberal democracy, in line with the figure of the sovereign consumer launched in the interwar period. One example is found in a passage in the opening chapter of Capitalism and Freedom. This describes the market as an open, competitive, and democratic order that reflects people’s preferences because consumers can choose to accept and reject its offerings: The consumer is protected from coercion by the seller because of the presence of other sellers with whom he can deal. The seller is protected from coercion by the consumer because 44 Mary S Morgan and Malcolm Rutherford, ‘The Character of the Transformation’ in Mary S Morgan and Malcolm Rutherford (eds), From Interwar Pluralism to Postwar Neoclassicism (Durham, NC, Duke University Press, 1998) 1–28. 45 Robert Van Horn, ‘Jacob Viner’s Critique of Chicago Neoliberalism’ in Robert Van Horn, Phillip Mirowski, and Thomas A Stapleford (eds), Building Chicago Economics: New Perspectives on the History of America’s Most Powerful Economics Program (Cambridge, Cambridge University Press, 2011) 279–300; Robert Van Horn, ‘Reinventing Monopoly and the Role of Corporations: The Roots of Chicago Law and Economics’ in Phillip Mirowski and Dieter Plehwe (eds), The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective (Cambridge, Cambridge University Press 2009) 204–237: Robert Van Horn and Phillip Mirowski,

292  Niklas Olsen of other consumers to whom he can sell. The employee is protected from coercion by the employer because of other employers for whom he can work, and so on. And the market does this impersonally and without centralised authority. Indeed, a major source of objection to a free economy is precisely that it does this task so well. It gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.46

Arguing that consumers’ freedom to choose was fully protected by market efficiency, Friedman saw no need to constrain this freedom through paternalistic state regulation. Moreover, he portrayed government intervention in the economy as ineffective, inferior to the dynamics of consumer choice on the free market. As well as being inefficient, he claimed, state intervention paved the way for a system in which power- and profit-seeking bureaucrats and vested interests might dominate and suppress individuals economically as well as politically. Indeed, once in control of the system, these forces would use it as a means to their own ends, heedless or ignorant of the costs of such actions for other members of society, including individuals as consumers. While the regulatory system and welfare state developments in post-war America offered the specific contexts for Friedman’s attack on the state, the political context of the Cold War was key to his particular portrayal of the consumer as the agent of capitalism and democracy. This portrayal was predicated on a worldview infused with Cold War dualisms and embedded in a dichotomist, linear, and irreversible notion of historical development as an existential struggle between the opposing forces of socialism and free market liberalism, leading either to decay and destruction or to a perfect world. In this worldview, the discourse of choice was linked to the struggle for democratic over totalitarian values; the consumer emerged as the paradigmatic actor who was to be given priority over other actors in the marketplace This discourse included a reconfiguration of the worker into a consumer and was silent on issues like right-to-work laws because of a focus on consumption rights that seemed palatable in light of the economic and political contest of the age with the Eastern Bloc. The Cold War context thus meant that contemporary economic debates came to be about much more than just theoretical discussion; they gave birth to a bold, hardened, narrower understanding of liberal democracy that revolved around the idea of consumer choice.47 Friedman did not see sovereign consumers as agents always making the right choices for themselves. However, he expressed sympathy for their choices, and argued that they generally act wisely based on available information and are quick to learn from their mistakes. And while he linked a system of state regulation to economic stagnation, political suppression, and exploitation, he viewed an economy in which the many and changing wants of consumers continuously force producers to invent new and better ‘The Rise of the Chicago School of Economics and the Birth of Neoliberalism’ in Phillip Mirowski and Dieter Plehwe (eds), The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective (Cambridge, Cambridge University Press, 2009) 139–180. 46 Milton Friedman, Capitalism and Freedom (Chicago, University of Chicago Press, 1962) 14–15. 47 For perspectives on the contemporary connections made between liberal democracy, the discourse of choice, and the Cold War, see Hunter Heyck, ‘Producing Reason’ in Mark Solovey and Hamilton Cravens (eds), Cold War Social Science: Knowledge Production, Liberal Democracy, and Human Nature (Basingstoke, Palgrave, 2012) 99–116; Sonja M Amadea, Rationalizing Capitalist Democracy: The Cold War Origins of Rational Choice Liberalism (Chicago, The University of Chicago Press, 2003).

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  293 things as a free, efficient, entrepreneurial, and, as such, rational system. Moreover, Friedman suggested that the free market is more democratic than any traditional political institutions in terms of expressing the true will of the people and promoting individual wants and demands in modern society. Alongside critiques of regulation, Friedman stated that the extent of monopoly was not a serious problem for the American economy. More specifically, he argued that the importance of monopolies had been greatly overestimated because competition rendered them minor and transitory, and, as he wrote in Free to Choose, that ‘market competition, when it is permitted to work, protects the consumer better than do the alternative government mechanisms that have been increasingly superimposed on the market’.48 Along these lines, Friedman sought to convince people that their own values are best met through realisation of the policies he promoted. He thus described the market as a progressive order fostering such virtues as self-reliance, responsibility and commitment, and ensuring the best possible outcome for society’s uneducated, poor, and average individuals. Against this background, Friedman linked capitalism inextricably to consumer choice, as well as expressing concern about the wellbeing of the poor and a wish for broad-based prosperity. But in contrast to John Kenneth Galbraith and others he argued that free markets are capable of ensuring free choice, as well as basic political, social, and economic consumer rights in modern society, and took a more critical stance towards government intervention. And even if he believed that the public could be convinced to support and vote for free markets, Friedman was persistently sceptical about democratic politics in situations in which the resulting policies might displace market prerogatives. In other words, similar to Mises, he was inclined to grant choice in the marketplace primacy over choice in the political sphere. With the sovereign consumer-ideal, Friedman and other scholars from the Chicago School of Economics invested the demands launched by the deregulation movement with a certain popular aura and appeal. At first associated with business groups, freemarket think tanks, and conservative politicians, during the 1970s this movement eventually also came to include consumer advocates and New Left intellectuals, who likewise argued that it was necessary to scale back supposedly inefficient and repressive federal agencies, to restrain allegedly self-interested corporate powers, and to restore economic efficiency by deregulating the market and liberating the consumer. That even Ralph Nader emerged as an advocate for deregulation in the 1970s is telling of how the antibureaucratic, antiregulatory stance also became widespread within the New Left in this decade.49 Moreover, the increased tendency of American consumer language to appeal to individual economic self-interest coincided with a new drift among left-wing intellectuals in North America (such as Tom Wolfe, Marshall McLuhan, and Susan Sontag) and Europe (such as Jürgen Habermas, Roland Barthes, and Umberto Eco) to view

48 Milton Friedman and Rose Friedman, Free to Choose: A Personal Statement (Harmondsworth, Penguin, 1980) 264. 49 See Canedo, The Rise of the Deregulation Movement (n 27) 134–156 and Reuel Schiller, ‘The Curious Origins of Airline Deregulation and the American Left (2019) 93 Business History Review 729, 729–753.

294  Niklas Olsen the dynamics of the market, including mass consumption, in a more positive light.50 Rather than worrying about the deleterious effects of consumption or about consumer vulnerability, they began to emphasise individual consumers’ capacity for rationality and autonomy, as well as to emphasise elements of pleasure, playfulness, and symbolic exchange as the essence of a vibrant and potentially liberating and individualising consumer culture. Likewise, centre-left politicians and academics also took a less critical stance on consumption in this period.51 The changed position toward consumer culture on the Left made the argument launched by scholars such as Friedman that consumers would see lower prices and more product choice if markets were deregulated seem less bellicose.52 As this unusual coalition gained momentum, the views on deregulation of members of the Chicago School and its ideal type of the sovereign consumer became more accepted, if not mainstream, in American public debate during the late 1970s and early 1980s. Moreover, the idea of the sovereign consumer is arguably one that has spread into various other geographies, political contexts and institutions. In fact, in basically all attempts to promote societal orders based on free markets and individual freedom, political actors have referred extensively to the capabilities and interests of the sovereign consumer. This has also been the case in other geographical contexts, including the EU. In constructing the internal market in the 1980s, consumer law and policy pursued by the European Commission dispensed with its earlier social outlook in favour of a focus on markets, competition, efficiency, and consumer choice. According to Frank Trentmann, in this internal market agenda a figure similar to the sovereign consumer was given centre stage: ‘The consumer would be the locomotive; choice and competition the fuel. A new European citizen was born: the “market citizen.”’53 The invention of the market citizen joined with the neoliberal project of what Bo Stråth and Hagen Schulz-Forberg have labelled ‘democracy through market.’54 This project, which took place in the 1980s and 1990s through the Single European Act and the Maastricht Treaty and adoption of the euro, promoted a rhetoric based on the idea of a democratic Europe that would follow with market integration. As Trentmann has observed, the (neoliberal) rationale was based on the idea that individual choice and competitive markets ensured the best defence of consumer interest: choice would empower consumers.55

VI.  The Efficient Consumer Our fourth imaginary, the efficient consumer, also has roots in the Chicago School of Economics and is related to the sovereign consumer. However, efficiency and 50 Daniel Horowitz, Consuming Pleasures: Intellectuals and Popular Culture in the Postwar World (Philadelphia, University of Pennsylvania Press, 2012). 51 For the British case, see Noel Thompson, ‘Conceptualizing the Consumer: British Socialist Democratic Political Economy in the Golden Age of Capitalism’ (2011) 25 Contemporary British History 297, 297–321. 52 On the convergence in the societal–political thinking on the left and right wing in this period, see Daniel T Rodgers, The Age of Fracture (Cambridge, Ma., Harvard University Press, 2011). 53 Trentmann, Empire of Things (n 4) 559. 54 Bo Stråth and Hagen Schulz-Forberg, The Political History of European Integration, the Hypocrisy of Democracy-through-Market (London, Routledge, 2010). 55 Trentmann, Empire of Things (n 4) 559–560.

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  295 growth, rather than sovereignty and choice, stand at the centre of the imaginary of the efficient consumer. Moreover, it was inspired more by Georg Stigler rather than Milton Friedman. Expecting individuals to always maximise their own utility, Stigler was working from the assumption that they generate more efficiency and wealth as consumers in the market than as agents entering and capturing regulatory systems for individual utility. For this reason, Stigler used the new figure of the efficient consumer to shape and justify his call for deregulation. In other words, Stigler treated consumers as tools to bring about economic efficiency rather than vehicles for enhancing democracy and freedom.56 However, the efficient consumer had deeper roots in the efforts made by Chicago economists to bridge law and economics as a way to reshape American antitrust thought and practice in the early postwar period. A decisive step in this direction was taken in 1946, when economist Aaron Director began teaching classes on microeconomic price theory and antitrust at the Law School with legal scholar Edward Levi. Director also led the Chicago Antitrust Project (1953–1957), which gathered students, researchers, and visiting scholars with the task of exploring areas of antitrust law from an economics perspective. Additionally, he set up the nation’s first law and economics programme at the Law School. Finally, in 1958 he founded and became co-editor of the Journal of Law and Economics.57 One outcome of this merger of law and economics at the University of Chicago was a distinctive economic approach to legal thought, and especially to the analysis of monopolies and antitrust, building on arguments that Director had developed in his seminar on antitrust with Edward Levi. In the seminar, Director claimed (as had Milton Friedman and George Stigler from the 1950s onwards) that monopolies were often products of natural developments and, as competition rendered them minor and transitory, were not a real problem for the American economy. Moreover, he questioned the dominant legal thought and practice with respect to antitrust at the time, which held that the presence of many competitors in the market would ensure fair competition and efficiency.58 According to Director, who was a firm believer in the positive forces of competition and adhered to the neoclassical idea of efficiency as the key value of economic activity, monopolistic practices were often more efficient than markets of ten or more competing producers in terms of measured output, low prices, and creation of societal wealth. Against this background, he recommended a relaxed attitude toward monopolies and large corporations, allowing markets to be dominated by only a few firms, and he

56 Olsen (n 17) 125–131. 57 Steven G Medema, ‘Chicago Law and Economics’ in Ross B Emmett (ed), The Elgar Companion to the Chicago School of Economics (Cheltenham, Edward Elgar, 2010) 160–164. For an account of the American law and economics movement that arose from the 1960s onwards, see Steven Teles, The Rise of the Conservative Law and Economics Movement: The Battle for Control of the Law (Princeton, N. J., Princeton University Press, 2008). 58 Rob Van Horn, ‘Reinventing Monopoly and the Role of Corporations: The Roots of Chicago Law and Economics’ in Philip Mirowski and Dieter Plehwe (eds), The Road from Mont Pèlerin (Harvard University Press 2009); Van Horn, ‘Jacob Viner’s Critique of Chicago Neoliberalism’ (n 45). In common with Friedman and Stigler, Director was critical of monopolies until the early 1950s.

296  Niklas Olsen launched a language of cost and efficiency in the field of antitrust that placed economic concerns above ethical notions of democracy, participation, and choice.59 Director’s ideas served as a great source of inspiration to many of the law students who took his seminar. Among these was legal scholar (and later Supreme Court nominee) Robert H Bork, who would later describe his meeting with Director as a ‘religious conversion’.60 Together with Richard Posner, who became a professor at the Law School at Chicago in 1969 (and served as Chief Judge of the US Court of Appeals for the Seventh Circuit from 1993 until 2000),61 Bork eventually developed a more unified and sustained critique of antitrust law, revolving around a new concept with a strong rhetorical and analytical power: that of ‘consumer welfare.’62 The concept of consumer welfare was popularised with the publication of Bork’s enormously influential book The Antitrust Paradox in 1978, where the features characterising George Stigler’s work had become prominent in the writings on deregulation emanating from the Chicago School. This book synthesised work in the field that Bork and Posner had developed since the 1960s. In a much-quoted sentence in the introduction of the book, Bork famously stated: ‘the only legitimate goal of antitrust is the maximisation of consumer welfare’.63 By positioning consumer welfare as the guiding principle of antitrust analysis, Bork continued a long-standing tradition of portraying consumer needs and benefits as the key object of regulation. But his use of the concept was arguably confusing, since what he saw as consumer welfare was in fact total welfare, which is the same as economic efficiency. More exactly, with consumer welfare, Bork aimed at a model of practicing antitrust law that focused on distinguishing between efficient and inefficient markets. In other words, this model sought to maximise efficiency and aggregate wealth in society – or what Bork spoke of, alluding to Adam Smith, as ‘the wealth of the nation’.64 In line with this, while positioning consumer needs as the object of regulation, The Antitrust Paradox referred neither to choice nor to broad-based prosperity as desired outcomes of deregulation, as Milton Friedman’s work had done. Bork’s aim was not a system in which consumers might choose freely between different goods in the market, or influence what kinds of products were available in the first place. In the same vein,

59 For how Director prioritised the efficiency of the competitive order over what he regarded as inherently irrational and disputatious democratic action, see Robert Van Horn and Ross B Emmett, ‘Two Trajectories of Democratic Capitalism in the Postwar Chicago School: Frank Knight Versus Aaron Director’ (2005) 39 Cambridge Journal of Economics 1443, 1443–1455. 60 Edmund Kitch, ‘The Fire of Truth: A Remembrance of Law and Economics at Chicago, 1932–1970’ (1983) 26 Journal of Law and Economics 163. 61 Posner had served as judge of the Court from 1981 to 1993. 62 The literature (authored by legal scholars) on Bork’s writings on consumer welfare is extensive. For some appraisals, ranging from high praise to fierce criticism, see Kenneth Heyer, ‘Consumer Welfare and the Legacy of Robert Bork’ (2014) 57 Journal of Law and Economics 19, 19–32; Herbert J. Hovenkamp, Federal Antitrust Policy: The Law of Competition and Its Practice, 4th edn (St. Paul, MN, West Academic Publishing, 2011); Barak Y Orbach, ‘The Antitrust Consumer Welfare Paradox’ (2010) 7 Journal of Competition Law & Economics 133, 133–164; George L Priest, ‘The Abiding Influence of The Antitrust Paradox: An Essay in the Honor of Robert H. Bork’ (2008) 643 Faculty Scholarship Series. Yale Law School 455, 455–463; William Davies, The Limits of Neoliberalism: Authority, Sovereignty and the Logic of Competition (London, Sage, 2014); Colin Crouch, The Strange Non-Death of Neoliberalism (Cambridge, Polity Press, 2011). 63 Robert H Bork, The Antitrust Paradox: A Policy at War with Itself (New York, Basic Books, 1978) 7. 64 ibid 90.

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  297 he did not portray consumers as oppressed individuals who, if only allowed freely to express their choices in a competitive market based on the price mechanism, would emerge as democratic reformers and champions of freedom, working for the benefit of all members of society. On the contrary, like George Stigler, but more forcefully he entirely separated the spheres of capitalism and democracy. In line with the scarcitybased definition of economics first outlined by Lionel Robbins, he thus emphasised that antitrust as consumer welfare ‘has nothing to say about the ways in which prosperity is distributed or used […] and no sumptuary or ethical component’.65 The roles assigned by The Antitrust Paradox to antitrust law and consumers in the economic organisation of society were narrow and limited. The role of antitrust law was exclusively to ‘preserve, improve, and reinstate the powerful economic mechanisms that compel businesses to respond to consumers’. The role of consumers was ‘to define by their expression of wants in the marketplace what things they regard as wealth’.66 While these standards allowed few and powerful firms to dominate the market (given that they provided lawful products and increased aggregate wealth), they limited and instrumentalised consumer action to that of reacting to price signals in the market, thus maximising the value of the goods produced and securing efficiency and growth.67 In other words, consumers in The Antitrust Paradox were described as tools for bringing about economic efficiency, as an abstract, uniform, and mechanical mass that constituted merely one among several digits making up the marketplace. Likewise, The Antitrust Paradox stated that it aimed to create a market in which the mass of consumers would rule with the sole purpose of creating efficiency, without regard to what others saw as basic economic, social, and political rights of individual consumers.68 It is in this context that the so-called efficient consumer was born. In practice, consumer welfare, understood as efficient markets, provided a single measure to antitrust law. This measure, it should be added, became extremely influential not only within academia, but also in legal practice, as the US Supreme Court referred to and applied it in its rulings from the 1980s onwards.69 More generally, by the 1980s the expansion of regulatory bodies had come to a halt, and Congress had begun to pass legislation introducing deregulation in many sectors of the American economy. This broad dismantling of the post-war consensus in respect of regulation theory and practice was influenced by the earlier mentioned deregulation movement, which gained momentum in American politics during the 1970s, aided by the work and activities of Chicago School scholars. In a larger perspective, the efficient consumer inspired academic and political change in many places beyond the US, including in the EU. Hans-W Micklitz has thus argued that, in pursuit of a market state, the European integration project is now completing a paradigm shift from a European tradition of promoting consumer protection to an

65 ibid. 66 Bork, The Antitrust Paradox (n 63) 90, 91. 67 See also Colin Crouch, The Strange Non-Death of Neoliberalism, 1st edn (Cambridge, Polity Press, 2011) 55–57. 68 See also the discussion of the normative implications of The Antitrust Paradox in Davies, The Limits of Neoliberalism (n 63) 70–107. 69 See the references in n 62.

298  Niklas Olsen American approach that promotes ‘consumer welfare through market efficiency’.70 Scholars are currently discussing the extent to which the EU is in a process of realigning its competition and consumer law with economic thinking on efficiency and welfare that informs American antitrust theory.71 However, there is no doubt about the general direction in which European integration is moving, or that imaginaries about consumer efficiency have replaced those of consumer vulnerability in the project.

VII.  The Marketised Consumer The fifth imaginary, the marketised consumer, has its roots in economic theory from the 1950s. It was further developed during welfare state debates in the 1970s and became crucial to public sector reforms carried out from the 1980s onwards. Similar to the sovereign (and the efficient) consumer, the marketised consumer is imagined as an individual who can ensure democracy and efficiency if only allowed to move within a free market economy or in marketised institutions. The difference is that the interests and capabilities of the marketised consumer are related mainly to the arena of government politics and particularly the public sector and its provision of goods. Hence, the marketised consumer has been used to transform, and re-enchant, the public sector through modelling it in the mirror of the market and by portraying the citizen as its customer and captain. Public choice scholars such as Anthony Downs began the tradition of thematising the role of individuals as marketised consumers in relation to the political realm with a focus on the public sector. Important here is first of all Downs’s An Economic Theory of Democracy (1957) that stands out as one of the most influential social science books of the entire twentieth century.72 Citing mainstream neoclassical economics, Downs proceeded in the book from ‘a generalized yet realistic behaviour rule traditionally used for rational consumers and producers’ in neoclassical economic theory, which involved viewing all political actors as individuals maximising utility.73 On that basis, he built a model for describing the political behaviour of people in a parliamentary democracy, based on the assumption that the only goal of politicians and voters is the rewards of office and private benefits from government, respectively. In re-conceptualising political democracy as a market place dominated by individual interests, Downs made frequent reference to the consumer. On a general level, Downs transferred the language of neoclassical economics into his analysis of parliamentary democracy by speaking of political parties as entrepreneurs and of voters 70 Hans-W Micklitz, ‘The Consumer: Marketized, Fragmentized, Constitutionalized’ in Dorota Leczykiewicz and Stephen Weatherill (eds), The Images of the Consumer in EU Law: Legislation, Free Movement and Competition Law (Oxford, Hart Publishing, 2016) 21–41; Hans-W Micklitz, ‘European Consumer Law’ in Erik Jones, Anand Menon and Stephen Weatherhill (eds), The Oxford Handbook of the European Union (Oxford, Oxford University Press, 2012) 526–541. 71 See, eg Paul Nihoul, Nicolas Charbit and Elisa Ramundo (eds), Choice? A New Standard for Competition Law Analysis (New York, Concurrences, 2017); Anne Witt, The More Economic Approach to EU Antitrust Law (Oxford, Hart Publishing, 2016). 72 Anthony Downs, An Economic Theory of Democracy (New York, Harper & Brothers, 1957). 73 ibid 3.

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  299 as utility-maximising consumers.74 As such, modelling politics on the idea of the market place, he rendered governing as the act of coordinating production and consumption.75 Moreover, Downs portrayed consumers as weak and vulnerable beings, who lost out to more organised powers in the allocation of societal resources. Concluding on what he saw as consumers’ disadvantaged position in politics, in one of the 25 testable hypotheses that Downs derived from his analysis in An Economic Theory of Democracy, he wrote: ‘Democratic governments tend to favour producers more than consumers in their actions.’76 In his 1971 article ‘Public Goods and Private Status’ co-authored with economist R Joseph Monsen,77 Downs offered a set of concrete policy proposals about how the functions of government could better serve its citizens as consumers by adjusting its provision of public goods.78 In fact, ‘Public Goods and Private Status’ was framed as a contribution to the ongoing debate among economists of the societal role of the consumer. It began by assessing John Kenneth Galbraith’s claim that present-day society was ‘privately rich but publicly poor’, since the advertising machines of big business manipulated individuals into buying things they did not want or need, thereby effecting a misallocation of resources. Disagreeing with Galbraith – while elaborating on Veblen – Downs and Monsen instead argued that ‘consumer behaviour is motivated by the desire for emulation and differentiation, and (…) consumers want to create visible distinctions between large social groups or classes, and, within such groups subtler distinctions of individuality’.79 According to Downs and Monsen, the problem with the system of government provision of goods was that it did not allow citizens as consumers to express their need for differentiation: ‘Most government goods, whether distributed equally or discriminatingly are ineffective in satisfying consumers’ desire to distinguish themselves through consumption.’80 Therefore, the authors explained, consumers felt that they gained more benefit from dollars spend on private goods than on government goods. On that premise, they argued that ‘designing government goods to accommodate this basic desire of differentiation would significantly increase investment in those goods and would help the criticism of a “privately rich but publicly poor economy”’.81 Moreover, they listed specific policy suggestions to increase public support for provision of government goods. More generally, the visions of the marketised consumer outlined by Downs and others aimed at controlling and changing the dynamics of the state, its bureaucracy, and its public services. 74 ibid 5, 16, 45, 165. 75 See particularly Downs, An Economic Theory of Democracy (n 72) 169, note 4. 76 ibid 297. 77 R Joseph Monsen received his Ph.D. from the University of California in 1960 and became associate professor in the Department of Business, Government, and Society at the University of Washington in 1963. He remained at the University of Washington, serving as acting chair of the Department of Business, Government and Society from 1965 to 1968 and chair from 1973–1981. The biographical info is taken from the entry ‘Archives West: R. Joseph Monsen Papers, 1954–2003’ http://archiveswest.orbiscascade.org/ark:/80444/ xv19163 accessed 4 January 2018. 78 Anthony Downs and R Joseph Monsen, ‘Public Goods and Private Status’ (1971) 23 The Public Interest 64, 64–77. 79 ibid 64. 80 ibid 68. 81 ibid.

300  Niklas Olsen The imaginary of the marketised consumer, as developed by Downs, reflected another set of changes related to the advance of neoclassicism in economics after 1945.82 Economists of different orientations, including centre-left American economists, such as Anthony Downs and Kenneth Arrow, and neoliberal economists such as Friedman and Stigler, devised a mode of economic analysis that reframed the traditional understanding of the relation between the state, the individual, and the market in mainstream economics. This analysis elevated consumer sovereignty into the only norm according to which societal well-being can be measured, reworked the ideal of traditional political democracy by interpreting it through market metaphors, and questioned the role of the state as a collective decision-maker and social planner. This shift in economics established a more positive conception of the market as a place that is better designed to meet consumer preferences than government agencies. Moreover, in the form of public choice analysis, it also involved suggestions to make government offices and public services more business-like and to improve their efficiency through implementing quasi-market production structures that focused on free consumer choice, decentralisation, and cooperation with private companies among other things. The imaginary of the marketised consumer entered political debates in the context of the welfare state crisis in the 1960s and 1970s, where politicians, societal debaters and scholars began to depict the welfare state as an efficient and un-democratic enterprise run by a new ruling class, in the shape of public employees in control of the public sector, against the interests of the majority of the population. Here, across the political spectrum, it was argued that turning individuals into sovereign consumers by subjecting the functions of the public sector to their demands would turn the welfare state into a more efficient and democratic society.83 For example, in Capitalism and Freedom, Milton Friedman proposed letting consumers co-run the state by subjecting the public sector to their demands. The logic was as follows: if consumers were allowed to decide for what purposes funds should be spent, the public sector would be infused with competition and would be forced to produce new and better goods. The result would be a more efficient, more productive, and more innovative system. Most famously, Friedman sought to introduce a system of vouchers for school education so as to enable parents to choose freely between public and private schools, thus forcing schools to compete for students: ‘Here, as in other fields, competitive enterprise is likely to be far more efficient in meeting consumer demand than either nationalised enterprises or enterprises run to serve other purposes.’84 The marketised consumer achieved its political breakthrough with the turn towards New Public Management (NPM) in the 1980s and 1990s. While NPM was often spearheaded by economically liberal forces, centre-left parties, for example in the US, the UK and Scandinavia soon came to share the ambition of liberating the consumer from the authoritative powers of the state through the mechanisms of the market, which involved the aspiration to reform the public sector. In other words, this aspiration became mainstream. Centre-left parties elaborated in a number of ways on the marketised consumer.



82 See

Olsen (n 17) 141–185. was for example the case in the Scandinavian welfare states. See Olsen (n 17) 185–226. Friedman, Capitalism and Freedom, 40th edn (Chicago, University of Chicago Press, 2003) 91.

83 This

84 Milton

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  301 Most importantly, by connecting this consumer ideal to traditionally leftist and progressive concepts such as ‘reinvention’ and ‘reform’, they re-enchanted the public sector as a place that was capable of responding to individual desires and help people fulfil their dreams. As such, centre-left parties reinvented the public sector as a constructive and positive force in modern society, thus reclaiming a political terrain they had lost in the 1970s and 1980s. Sociologist Anthony Giddens, chief theoretician of Labour’s third way agenda, was among the scholars providing a theoretical foundation of the marketised consumer by coining what he labelled the citizen consumer. He saw this consumer ideal as essential to the update of traditional statist programmes in the new globalised epoch in which the old class-based divisions of left and right were supposedly obsolete. In his theory of modern politics, Giddens portrayed choosing as an existential and unavoidable activity through which human beings create and develop themselves. Moreover, he argued that in the global era the market was far better equipped to accommodate individual selfmaking and self-fashioning than the state. Holding that states still had an important task in governing society democratically, he nevertheless argued that ‘[c]onsumer choice is real choice’ and avidly defended big corporations from the critique of the construction and use of consumption rationalities that a long line of critics from Theodor Adorno and Max Horkheimer to Michel Foucault, Nicholas Rose and Naomi Klein have offered in their academic work.85 In contrast to these critics, in his synthesis of centre-left and centre-right policies, Giddens obviously embraced a figure that was marketised and much closer to the sovereign consumer than to any traditional consumer-ideal formulated by scholars or politicians associated with the centre-left. Against this background, in the 1990s, centre-left political forces in Great Britain (under Blair), the US (under Clinton) and elsewhere, sought to make to make government offices and public services more business-like and to improve their efficiency through implementing quasi-market production structures that focused on free consumer choice, decentralisation, and cooperation with private companies among other things. As Al Gore stated in his famous 1993 report on the National Performance Review, established by Clinton, with the title From Red Tape to Results: Creating a Government That Works Better and Costs Less: We are going to rationalize the way the federal government relates to the American people, and we are going to make the Federal government customer friendly. A lot of people don’t realize that the Federal government has customers. We have customers. The American people.

Imaginaries of the marketised consumer were mobilised during what Thomas Frank has labelled the era of ‘market populism’.86 According to Frank, market populism is defined by the notion that markets are, in some transcendent way, identifiable with democracy and the will of the people. As such, it resembled the idea of the tight link between capitalism, democracy, and free consumer choice that Ludwig von Mises outlined in the

85 See ‘An Interview with Anthony Giddens’ (2003) 3 Journal of Consumer Culture 387. A more critical view on consumption is unfolded in Anthony Giddens, Modernity and Self-Identity: Self and Society in the Late Modern Age (Oxford, Polity Press, 1991) 197–201. 86 Thomas Frank, One Market under God, Extreme Capitalism, Market Populism, and the End of Economic Democracy (London, Vintage, 2000).

302  Niklas Olsen early 1920s in his renewal of liberalism. In many countries, a wide range of academics, executives, and politicians shared the idea that markets were a popular system across ideological divides. They held the optimistic belief that challenges in the transition from the manufacturing-based economy to a service-based economy were best left to market forces, which would allocate resources in the most efficient and democratic way, also leaving the common man as a winner of wealth creation. Against this background, in the economically prosperous 1990s, centre-left governments not only implemented vast reforms that privatised and marketised public administration and services with reference to imaginaries of the sovereign and marketised consumer, but also supported the financial deregulations that had hitherto been promoted by free markets economists, think tanks and politicians. For example, centre-left governments in the US and the UK pushed the weakening of consumer credit. With reference to the imaginary of the sovereign consumer in respect to securing economic growth and political democracy, they allowed and encouraged banks to liberalise their lending practices to meet consumer demands.87

VIII. Epilogue Since 1945, market-friendly consumer imaginaries have gained ground in many contexts. Consumers are often conceptualised as strong, independent, and ultimately sovereign individuals, and consumer policies are rarely designed to protect individuals from market mechanisms through state (or institutional) powers but to protect consumers from state powers through markets or market-like mechanisms. Economists and politicians have thus come to believe that challenges to the good society are located in the flaws of state institutions and the actions of people in charge of them rather than in capitalism. Accordingly, they want to push political decisions onto the market, which they portray as a site of social interaction that will bring us what the state cannot deliver – efficiency, freedom, and entrepreneurship. In this context, the consumer is imagined as a figure who guarantees economic efficiency and democracy be choosing freely on the market or in market-like institutions. Consumer choice, then, is at the core of the current economic paradigm, which aims to marketise the political. Market-friendly consumer imaginaries arguably suffer from a range of deep-rooted problems and contradictions that are inherent to the societal orders they underpin. Some of the problematic aspects of this paradigm are evident in the attempt to construct the new European ‘market citizen’. In European integration, ‘internal market rationality’ has restricted the space of traditional democratic politics, as associated with public deliberation and majority voting, on behalf of securing access to markets by reducing EU citizens as customers (and paying little attention to traditional consumer protection legislation). Moreover, in response to the financial crisis, the EU has as mentioned relied 87 Payne, The Consumer (n 25); Paul Langley, The Everyday Life of Global Finance: Saving and Borrowing in Anglo-America (New York, Oxford, 2008); Colin Crouch, ‘Privatized Keynesianism: An Unacknowledged Policy Regime’ (2009) 11 The British Journal of Politics and International Relations 382, 382–399; Gunnar Trumbull, Consumer Lending in France and America, Credit and Welfare (Cambridge, MA, Cambridge University Press, 2014).

Consumer Imaginaries, Political Visions and the Ordering of Modern Society  303 on institutions of unelected bureaucrats (the decision group formed by the European Commission, the European Central Bank and the International Monetary Fund) to enforce tough austerity measures on a number of countries that have found it difficult to pay their debts. This model of governing for liberated, sovereign and marketised consumers, but, in reality, for the efficient consumer and in the pursuit of economic efficiency and growth has also led to asymmetric effects, in respect to economic and social developments and standards, by leaving some countries, and some segments of populations, with increased wealth and possibilities, and others with few resources, increasing insecurity and limited choices. Other problems have characterised, for example, the democratisation of consumer credit through deregulation and the implementation of New Public Management, with reference to market-friendly consumer imaginaries. In brief, without going into detail, attempts to turn citizens into sovereign consumers of credit or marketised consumers of public goods have arguably not brought about economic efficiency or increased political democracy – on the contrary.88 However, in spite of failed promises, no real alternative to market-friendly consumer imaginaries has emerged that might take their place in the present and the near future. In most western societal orders, the consumer still appears as a flawless figure, who can do nothing wrong, if only liberated, sovereign, efficient and/or marketised. As such, the figure has been freed from discussions of the possible problems that might characterise a market order based on such consumer-ideals; discussions raised by a wide cast of debaters since the late nineteenth century. Three forms of criticism have been particularly prominent. First, critics have referred to the fact that votes in the marketplace are not evenly distributed among the population, due to huge inequalities of income and wealth in modern society. Second, they have criticised the idea that individuals are thoroughly rational in their choices (and are not lacking information or influenced by external factors such as advertising). Third, they have protested that the idea of consumer sovereignty disregards the possibility of producer sovereignty, meaning that people as consumers can only choose between goods that are actually offered in a market that might be dominated by big and monopolistic firms.89 In recent decades, with the rise of the new political economy of consumer choice, all three criticisms of the figure of the sovereign consumer have been forgotten, silenced, or debunked. The question is: what might come after this political economy, that is, whether and when will economic-political discourse and practice see the coming of consumer imaginaries that are distinctly different from the one presently driving our societal orders? Currently, behavioural economists are exploring the notion of ‘bounded rationality’, that is, the idea that when individuals make decisions, their rationality is limited by various deficiencies, including irrationality. The American scholar Herbert A Simon coined the term ‘bounded rationality’ in the 1950s.90 But whereas

88 See the discussion in Olsen (n 17) 255–258. 89 Olsen (n 17). 90 Hunter Crowther-Heyck, Herbert A. Simon: the Bounds of Reason in Modern America (Baltimore, Md., John Hopkins University Press, 2005).

304  Niklas Olsen Simons’s notion was linked to arguments for consumer protection from the market by government, many behavioural economists today focus on providing policy makers with expertise using the heuristics and biases of people’s decision-making processes in order to influence, that is, ‘nudge’, them, to serve a particular, market-focused government rationality.91 Against this background, the consumer-ideal encapsulated in ‘bounded rationality’ does not necessarily break with the ideals of economic utility and growth that characterise the current political order. Green consumption, the idea that consumers are the driving force behind positive environmental change, offers another alternative. But only time can tell whether or not it can supplant our current paradigm – and offer a way out of our deep planetary problems, which have been caused, to a great extent, by overconsumption fuelled by market-friendly imaginaries in recent decades.

91 Behavioural economics is often associated with the work of American economist Richard Thaler, who won the Nobel Memorial Prize in Economic Science in 2017, and Israeli psychologist Daniel Kahnemann. For insider perspectives, see Richard Thaler, Misbehaving: The Making of Behavioural Economics (New York, W. W. Norton & Company, 2015); Michael Lewis, The Undoing Project, A Friendship that Changed Our Minds (New York, W. W. Norton & Company, 2015); Floris Heukelom, Behavioural Economics: A History (Cambridge, Cambridge University Press, 2014); E. Sent, ‘Behavioural Economics: How Psychology Made Its (Limited) Way Back into Economics’ (2004) 36 History of Political Economy 735, 735–760.

11 The Making of Consumer Law – A Sociological Critique THOMAS ROETHE

I. Disclaimer The speeches by the conference participants were recorded, transcribed, lightly edited and published.1 The various quotations are taken directly from the transcribed speeches.2 The current chapter analyses the speeches from a sociological perspective. The analysis provides a deep insight into the role of consumption and consumer policy in the market society and the role and function the different actors played in their respective legal environments. The speeches to be analysed demonstrate the similarities as well as the deep differences between the Member States and their understanding of what the role and function of consumer law and policy was supposed to be between 1960 and 1980. The chapter deliberately ignores the personal side of the conference and the published E-book and puts emphasis on the representative character of the various statements. The method used is objective hermeneutics, as developed by Oevermann.3

II.  Consumer Policy in the European Commission The spokesman starts his presentation with the following words: I have to address you a bit on the issues from the point of view of the European Union …. So, let us see about the beginnings when the European Economic Community was set up in

1 Hans-Wolfgang Micklitz, Ewoud Hondius, Thom Van Mierlo and Thomas Roethe (eds), The Fathers and Mothers of Consumer Law and Policy in Europe: The Foundational Years 1950–1980 (Florence, European University Institute, 2019). 2 With their permission, speakers’ speeches were recorded, http://soundcloud.com/search?q=fathers%20 and%20mothers%20of%20consumer%20law. 3 Ulrich Oevermann, Tilman Allert, Elisabeth Konau and Jürgen Krambeck, ‘Die Methodologie einer ‘objektiven Hermeneutik’ und ihre allgemeine forschungslogische Bedeutung in den Sozialwissenschaften’ in Hans-Georg Soeffner (ed), Interpretative Verfahren in Den Sozial- Und Textwissenschaften (Stuttgart, Metzler, 1979) 352–434.

306  Thomas Roethe 1958 – you might remember the word consumers appeared in the competition sector but not anywhere else. Consumer policy was something extremely strange and nothing was foreseen in the treaty. It was a free trade treaty and it was only gradually that things were moved.

In speaking of free trade (which should be guaranteed in an economic community), after the end of the war, in complete exhaustion, striving for a lasting peace, we speak of a time when economists and politicians were thinking about intra-European conflicts such as those from 1618–1648, 1792–1814, 1870–71, 1914–1918 and the time between 1933 and 1945. The consumer did not appear on the scene in a devastated Europe in the middle of the twentieth century – there were too many hungry mouths to feed, and the need was still too severe to mould the receiver into a consumer. Food rationing in the UK, for example, had to continue until 1954. This process reveals a banal reality: first of all, consumer goods must be produced, and production must be manifold and free, and only then will the consumer emerge. The consumer turns out to be at least a dual entity: he presupposes himself as a producer, and then can consume freely in a multifaceted market. Under historical conditions of distress, or under ideological conditions (GDR, USSR), the relationship between producers and consumers can be disrupted as the consumer/ producer is also a ‘zoon politikon’, and the Cold War was raging especially strongly in Europe. The wounds of 1953 in East Berlin and 1956 in Hungary were not forgotten. Western Europe had to face this threat, which meant the question of consumer protection was not the first to be dealt with, though in 1958 the balance of production and consumption began to grow in Europe. The social typus of the consumer still did not exist in a plagued Europe, since it presupposes free and competitive markets providing goods in excess of the mere needs of a population.

A.  The Institutional Anchoring of Consumer Policy within the European Commission The European Commission set up in 1964 a consumer contact committee which had had quite some perspective in the sense that it assembled representatives from consumer organisations and also from trade unions because it was considered at that time that civil society – next to the economic and social committee which existed via the treaty – should also be represented inside and close to the European Commission. This contact committee did not work too well.

Six years after 1958, there was some reaction within the European Commission, setting up ‘a consumer contact committee’, which did not ‘work too well’. One may ask: what would have worked better? Even the first generation of consumer lawyers were too young in 1964 to be of any influence. They did not even know they might be addressed as ‘Fathers and Mothers’4 one day. We might ask what their contribution could have been when the Treaty of Rome was signed. We would receive the answer: none, I was



4 See

Micklitz, Hondius, Van Mierlo and Roethe (eds), The Fathers and Mothers (n 1).

The Making of Consumer Law – A Sociological Critique  307 too young. We have to understand that all the masterminds of consumer protection and consumer law who entered the scene after the Treaty of Rome (1957) did so on a stage set by those politicians and people who were decisive enough to finish the everlasting European ‘Civil War’ and who fertilised mutual commitment without even knowing what consumerism in a peaceful Europe might include. Whenever we speak about consumer rights, it appears those rights are resting on the shoulders of giants who ploughed a field – they had endured and sown and from this harvest we still feed today. On 15 March 1962, President Kennedy (born 1917) declared four consumer rights for the US: The right to safety; the right to be informed; the right to choose; and the right to be heard, by this making consumer rights an official matter. This message was surely heard in Europe; but still Europe was not prepared to understand and draw corresponding conclusions: ‘This contact committee did not work too well.’ Somehow, fighters for consumer safety might have existed, doing a proper job, but the truth in real life practice is that there was no need for such a committee. Not in those days in Europe. Civil society existed without even knowing it should be labelled as such. The nation states simply had other things to do. The US – still slightly recovering from WWII and the Korean War, and gradually entering the Vietnam War, after having initiated the Marshall Plan and with an enormous cultural impact in literature, music and movies – encountered a Europe still searching for viable ways to end the centuries-long civil war between Europeans. In was at this time that the Wall (August 1961) was erected, definitively dividing Germany and Europe, the western and eastern hemispheres. The Cuban crisis kept the world breathless, the Vietnam War in the 1960s began to rage in a way the French could not have imagined, having enough to think about with Algeria and the pieds noirs. In the meantime, in 1968 an insurrection took place in Czechoslovakia, which the Soviets invaded and suffocated with tanks, as they had done years before in the GDR in 1953 and in Hungary in 1956. I know this is not a sufficient explanation for the misfortune of this committee, but the fact remains that ‘This contact committee did not work too well.’ This criticism ex post implies that the committee could have worked better in spite of all the circumstances, if only it had heeded the knowledge of the speaker in the present day. But this is an old problem: Afterwards we are always smarter. This shows a problematic ex-post dimension: not being historical, not being even embedded in everyday logic. But are we really cleverer nowadays? Do we not run the risk of seeing some things wrong with all our contemporary knowledge? Is civil society – now celebrated, for instance, in the form of NGOs – really so morally overwhelming? Only six years later: The 1968 students’ revolt caused the Commission to set up an administrative unit on consumer protection in order to take care more of civil society concerns, but it took the Paris Summit of October 72 – where the environment, consumer protection and social affairs were mentioned to be part of quality of life and the invitation was addressed to the European institutions to set up programs in these areas and administrative structures. This led to the creation of the environment and consumer protection services in the early 1973.

We find a highly refreshing interpretation of the student revolt, which on the one hand propagated the end of the Vietnam War and rejection of capitalistic consumption, but on the other hand also an emphatic love of the American way of life in music, movies,

308  Thomas Roethe and cars. But a special consideration for consumption, or even a passion for questions of consumption, cannot be ascribed to the Hippies, or to the young Stalinists/Maoists in Europe. It was imperialism and capitalism, the industrial military complex, the sinister power of the police and the National Guard in the US, protecting consumerism. And only in 1967 was the Brussels department store ‘Les Grands Magasins à l’Innovation’ set on fire because Europe kept consuming while Vietnam was at war, and only one year later in 1968 in Frankfurt, Germany two department stores were attacked and set alight to fight consumerism, ending up in the ‘Deutscher Herbst’ with assassinations and sheer terror. So, the phrase …: The 1968 students’ revolt caused the Commission to set up an administrative unit on consumer protection in order to take care more of civil society concerns but it took the Paris Summit of October 72 …

… sounds strange in imagining that in Brussels some officials immediately waved the white flag and tried to convince the violent young men who wished to transform existing society to resettle in the ‘bourgeois camp’ (bürgerliches Lager) again. Anyway, consumer hedonism was by no means as developed as today; it only developed afterwards. Nowadays we ask ourselves whether we have not been fraudulently poisoned or cheated. We are full of experience: olive oil, glycol wine, eggs, fish, BSE, chicken flu, Lehman Brothers. Europe today is concerned about its health and financial fraud – that is, consumer protection. Nobody cared about issues like this in 1968. The 1968 rioters felt mistreated as young individuals in multiple ways by the past, the ongoing Cold War, their parents, teachers and politicians. But the young rioters were not so much concerned about consumer quarrels. The public did not even regard the dramatic and cruel ‘Thalidomide disaster’ as a consumer conflict in those days (1960 onwards). In 2017 a blackmailer in Germany threatened to poison all sorts of food in supermarkets if he does not receive a corresponding ransom. After some days the police arrested this villain, who understood consumption as a societal pond of money-making entities. Today consumerism and consumer law are understood and exploited as an everyday life issue, and we are welcome to defend it or by chance to threaten the public – civil society. Consumption today is a source of top-down intervention and regulation; the consumer is the stakeholder of universal safety and, even more, the political avantgarde of universal justice in civil society, an engine of peace and freedom throughout the world, the planet – once in a while mistreating children, women and men (as Karl Marx described England 150 years ago), poisoning soil, water and air, leading to prostitution and child abuse in distant countries following globalisation.

i.  The Paris Summit Consumer and Environmental protection in tandem … but it took the Paris Summit of October 72 – where the environment, consumer protection and social affairs were mentioned to be part of quality of life and the invitation was addressed to the European institutions to set up programs in these areas and administrative structures. This led to the creation of the environment and consumer protection services in the early 1973.

The Making of Consumer Law – A Sociological Critique  309 All of a sudden ‘environmental protection’ (the oil crisis in 1972, the Club of Rome, of course, Carson’s ‘Silent Spring’5 had been published in 1962, Americans triggered environmental protection) appears as if the true sibling of consumer protection (which is not the case). ‘The creation of the environment and consumer protection services’ has a design flaw, because we are all consumers and because of our resource-consuming hedonistic existence alone we cause these concerns about the environment. ‘People’ can solve this problem, consumers cannot. Consumers are the ‘natural enemies’ of the environment and only when they stop consuming can the environment breathe again. It is not the consumer alone who has to be protected but the environment as well. Who could respond to all these protection needs? ‘European institutions’ are ready to take care of these needs to protect the environment from the offers of producers and the wishes of consumers. Even the term ‘quality of life’ has emerged, which must probably be understood as guided by the ‘environment and consumer protection services’. In a bundle of ideas, the ‘revolutionary student’ consumer is intellectually pampered and integrated into environmental protection and those who doubt this will be amused by ‘quality of life’. Indeed, ‘quality of life’ is an early invention already appearing in the preamble to the Treaty of Rome:6 a technocratic scheme of interpretation that tries to set standards for the possible supply of goods and services across all individuals. Statistically measurable in consumption figures and supply of various services, a triumph of the market economy. Within a few years the European post-war poor purchaser was transformed from a receiver of goods into a consumer with rights to protection and, in startling addition, to other complex themes such as ecology construed in the Brussels perspective. The consumer is designed to be the most flattered figure of modern times (after starving so much), now enjoying at least some ‘quality of life’, which has to be defined by the ‘European institutions’ and other benevolent entities. In the old days, one might have said that ‘life’ was an existential process, running one way or another and then coming to an end without any official organisation ever having been concerned with the quality of that life. But now the ‘quality of life’ of some hundred million EEC individuals has entered the scope and range of recognition of the Brussels radar. This is an exciting statement, paving the way for the long-term accusation against the European Commission of being technocratic, which was not justified in those old days, when nation states and the EEC tried to find suitable paths of integration, which only became real peu à peu decades later. No doubt, it is proper to keep people from avoidable dangers (Watch your step! Mind the gap!), but to call this an indispensable quality is risky. There is a danger of surmounting technical rules and meaningful standardisation and ending up in authoritarian regulation, touching the lives of those who feel autonomous enough to decide themselves. In the 1970s, the EEC still consisted of the six founding Members recovering from the European war (Denmark, Ireland and the UK joined in 1973). ‘Environmental and quality of life questions’ truly transcend the possibilities of the ordinary consumer 5 Rachel Carson, Linda Lear and Edward O Wilson, Silent Spring (Boston, Houghton Mifflin Company, 1962). 6 It was a reference point for building a whole theory on European Consumer Law, see Thierry Bourgoignie, Eléments pour une théorie du droit de la consommation: au regard des développements du droit belge et du droit de la Communauté économique européenne (Brussels, E. Story-Scientia, 1988).

310  Thomas Roethe in these days in practice – intellectually the European Commission is not afraid to praise and to erect a quality of life system also including, next to consumer protection, environmental protection. The statement the ‘Paris summit of October 72 – where the environment, consumer protection and social affairs were mentioned to be part of quality of life’ gives a signature to this testimony, to the appeal to turn consumers into the wards of not only private consumption, but also the environment and the quality of life itself, under appointment of skilled guardians and self-styled experts who understand and know better. The European Commission transformed the idea of the four basic rights that Kennedy wanted US consumers to be granted. European consumers must first be protected before they can actively be given secure rights. The impetus from America is inspiring; its understanding in Europe, though, is the language of a paternalistic guard against the dangers of a catastrophic history, against fraudulent and exploitative capitalist enterprises. The rationale of the Paris Summit 1972 breathes guardianship, not so much autonomy, as the recipe after the end of World War II. While the US has been providing its consumers with rights, the European Commission offered patronage, clearly calling for devotion to the environment and belief in a quality of life that no longer depends entirely on the individual citizen. The notable difference between Kennedy’s America and the European model lies in the different conception: US consumers gain defence rights against all kinds of unfairness when something goes wrong. European consumers are endowed with protective rights against producers and providers who are regarded as suspicious and hostile. Inevitably this early philosophical impetus leads to different results (concerning the US) in understanding the power of consumers, their agency, their legal representation as mechanisms of defence, costs and benefits. Unlike in the US, the European consumer is perceived as a weak and defenceless element of societies which the EU (EEC) Commission has to take care of. … and the invitation was addressed to the European institutions to set up programs in these areas and administrative structures. This led to the creation of the environment and consumer protection services in the early 1973.

For someone who loves the environment and wants to protect consumers, this might be a great day, no question, but adding a question of today, what about those consumers who terrify the planet with airplane traffic tourism, leaving enormous carbon footprints and fine dust loads, leaving garbage en masse, nurturing local providers who themselves can no longer afford to live in their own cities (Venice/Italy or Sylt/Germany for example)? One might ask whether consumer protection and environmental protection really fit together in these former days, and especially nowadays. Thus, if consumer protection and environmental protection were a part within the framework of the EEC/EU, one wonders about the rationality and reasoning, because, of course, for his own benefit the consumer will perceive in a positive light every opportunity that offers the consumptive happiness which was promised to him – be it a T-shirt for the price of less than a beer, be it flights to Mallorca cheaper than transportation via taxi from Piccadilly to Hampstead. This consumer is a citizen of the EEC/EC/EU. The environment is not a citizen of the EEC but instead somehow sneaks in to be regarded as if it were. Quality of life is by no means a citizen, either in Europe or in the EEC Commission. Protection is what counts.

The Making of Consumer Law – A Sociological Critique  311

ii.  Trade Unions and Civil Society Organisations Who can protect? Only strong institutions are able to. Who should be protected? The idea was that this service should be a horizontal service. It was placed under the direct leadership of the Vice President of the European Commission, by that time there were only 2 Vice-Presidents, and it should work in the same sense as the legal service – that means that all other activities, fisheries and agriculture, industry and harmonization of legislation should pass via the environment consumer protection service in order to be allowed to finally be approved by the commission’s college ….

This idea is full of self-confidence. Once the disparate and somehow randomly welded triad of consumer protection, environmental protection, and quality of life in this social construction is recognised as correct, the rest of the world should understand it and follow. But … … This structure was set up in the administration but it was not really realized because the objections from the existing structures, in particular industry and agriculture, was much too heavy, they were not ready to let different policy proposal be checked by consumer or environment protection aspects. The Consumer Consultative Committee which was set up at the same time in early 737 again grouped consumer protection organizations and trade unions, in particular the French and Italian, also communist trade unions, but this once more was a failure because for one reason or the other I presumed that large reasons are linguistic reasons and the lack of sufficient academically trained staff inside the trade unions made them not interested in European integration; quite an amazing aspect because trade and industry immediately saw the chance of taking the European economic community as some sort of regional globalization instrument and set up European structures, set up European lobby groups, and initiatives, whereas the trade unions satisfied themselves of taking a lot of money from the European budget for the training exercise but otherwise did not care about consumer protection, social protection or other issues.

… there were voices against this arrangement and against this interpretation of priorities by those sorts of entities making society work (industry and agriculture) and colourful, while the consumer agencies and trade unions are linguistically inhibited or even too narrow-minded to comprehend what a great project it is, thus consuming any EEC money to enhance their poor understanding. This, of course, is a claim from today that accuses the unions of the 1970s of giving strategic preference to national workers’ inter­ ests rather than international socialist ones. I apologise for the witticism: unions always had to look after their national members, they always had to take action against the subproletarian labour force (Marx: ‘Reservearmee’) undermining wages. From today’s point of view, accusing them of being ‘Socialists thinking national’ in order to convert them into global ‘Socialists thinking European’ or even better into global consumers detached from the idea of production sounds somewhat modernistic but in full harmony with the Zeitgeist that ‘fisheries, agriculture’ and trade unions appear to have fallen out of time, missing ‘sufficient academically trained staff ’ to become a sort ‘of regional globalization instrument’.

7 Commission Decision 73/306/EEC of 25 September 1973 relating to the setting up of a Consumers’ Consultative Committee [1973] OJ L283/18–19.

312  Thomas Roethe This is a hopeful but also problematic formulation from our today’s perspective, as Europe was the only force in the last five centuries to develop global trade, to invent globalisation, be it more regional or transoceanic in the scope of world exploration. The Dutch Vereenigde Oostindische Compagnie (absolutely global), the British fleet (global and regional), the Hanseatic League (regional), the Spanish Armada (global), the Portuguese fleet (global), the Italian sailors did nothing other than global and regional trade. One might add that the interests of transnational and global actors are structurally distinctly different from those of local, regional and national consumers and productive workers, that is, the ‘Somewheres’ (as David Goodhart8 calls them tentatively) in contrast to the ‘Anywheres’. The reference to the 1968 revolt makes this portrayal understandable: those ambitious consumer protectors had to learn that there were other enlightened interests and corresponding enforcement. So, these two aspects, the integration of civil society and the structure inside the European Commission were well conceived but it did not work out in practice.

Taking this statement literally we see that the proper attitude, the fitting ethos, fails due to the opposing arguments of different stakeholders, who want to fish or produce – then we recognise that the ‘egg-head’ idea of a civil society, consisting of uneducable fishermen, farmers, workers and a working middle class, behaves in a very different way from what was expected. Conceived as an obedient and acquiescent mass of followers, it turns out they just do not want to take the promised chances. Civis romanum sum, declared President Kennedy 10 years earlier, having in mind civil rights. Civil society means that citizens acquire rights which they have defined together. The utterance ‘… the integration of civil society and the structure inside the European Commission were well conceived but it did not work out in practice’ tells a story about a civil society existing only in imagination. Simply that a thought, a concept, an irrefutable intention and its realisation, can be astonishingly broken. Reality often looks different than the best intentions and insights suggest. This leads to irritation, motivational crises, and sometimes to anger. Times are changing but epistemic structures keep struggling between desired states and reality. What do we learn? Already 44 years ago, young inspired consumer lawyers in the EEC Commission emphatically tried to enforce consumer protection, environmental protection, and ‘quality of life’ concepts, to overcome any particularism through universalism in favour of globalisation.

B.  The Making of the EU Programme on Consumer Policy This story breathes the spirit of an indefatigable will to assert and a deep ideological conviction to do the right thing, to be active in a missionary task, so to speak. In 1975 the European Union adopted a consumer protection program, the first program which was timidly called preliminary program with five chapters and this whole program was 8 David Goodhart, The Road to Somewhere: The Populist Revolt and the Future of Politics (London, C Hurst and Co Publishers Ltd, 2017).

The Making of Consumer Law – A Sociological Critique  313 inspired by initiatives from the Council of Europe which had adopted measures in this area. Health and safety of consumers, protecting the economic interests, the right of information, the right of education, and dispute settlements questions. There was a long list of things that could be done, not concrete actions so the world of the action program was a little bit high flash. It did not turn out in practice.

Only in 1975 do we find ‘the right to information’ and ‘the right to education’ (Koen Docter takes up this intriguing folk-pedagogical term in his contribution to BEUC in this volume as follows: the right to consumer education. It stipulated that ‘Such consumer training shall be given to school-children as will enable them to act as informed consumers throughout their lives’ and ‘Education facilities in the field of consumer problems shall equally be made available to adults.’) while the rest of the five-chapter program gives the impression of being a catalogue of protection issues – ‘of things that could be done’ – without concretising what precise problem needs to find a solution. Having the model of protection in mind, having the idea of being the protector of the poor: in 1975 European people and consumers were not ready for this kind of patronising and nannying. Conversely, it could be said that the self-confidence of consumers and of people in general sufficed to believe that they would be able to make their own decisions in terms of consumption. What could a finding like so, the world of the action program was a little bit high flash. It did not turn out in practice

mean to those propelling consumer protection, environmental protection and even a quality-of-life-programme? What to do if no individuals who are in urgent need of help seem to exist? To talk in terms of market economy: this reminds us of strategies to sell certain products, which then ultimately cannot prevail in the market. Consumers in the US disliked the ‘Ford Edsel’ – one of those products at the time. ‘Ford’ finally gave up production of that complex car. Alas ‘consumer protection’ is not a product; it is the idea of intervening in private interactions between buyers and providers, be they merchants, be they producers, be they buyers with best or most evil intentions. By the way, in societies once in a while the fragile equilibrium of supply and demand is abandoned when the nasty habits of the one or the other side utterly destroy intersubjective trust and almost regularly end up in insolvencies and crashes. Society is an enormously exhausting thing, as Margaret Thatcher found out when she denied the existence of ‘society’ at all. This time, she was definitely wrong. However, we are only implicitly talking about society. We are not talking about society’s relation to a Member State government or even EEC/EU Commission, we are talking about a hard-boiled group of intellectual fighters, instructors and strategic masterminds embarking on the long march through the institutions – prophets, missionaries, clear-cut pragmatists, legal scholars, class fighters and comrades. We are not talking about an endogenous development within the EEC; we are talking about an avant-garde that wants to reap the benefits of true belief and compassion after enduring a ‘timidly called preliminary program’. At the time of the early 1970s, the Commission discussed, and the Council later adopted instruments such as safety belts for cars, head rests for cars, aerosols and the flaming risk, provisions on the chemical substances on cosmetics, on food. The consumer protection organization, the consumer protection administration inside the Commission and the

314  Thomas Roethe academics who worked in the consumer protection area were hardly interested in these areas. The discussion on safety belts, head rests (whether they should be compulsory in cars or not, this was the question) did not interest consumer organisations. In the same way the question of pesticides pharmaceuticals, of electrical goods of product safety, were not questions which raised any significant interest, lobby concern, mobilisation of the public for others. With regard to economic issues, the Commission developed in context between the industry department and the consumer protection service, initiatives on doorstep selling contracts, contracts negotiated away from business premises, unit pricing on misleading advertising on consumer credit, there were very limited interest from NGOs, no interest from academics and the NGOs did not even have interest in such issues that were at the same time treated – insurance issues, data protection, quality rules, environment protection such as drinking water or air pollution. These were issues, which went beyond the consumer area. The main objective of consumer organisations at that time (and there was no other voice for the consumers) was better value for money. Give me a car, I do not care how it behaves in environment or in society or anywhere else, I just want the best value for my money. Comparative testing was very strong at that time – almost all national organisations would try to be representative, made comparative testing. Questions of health or safety were not of interest or of limited interest. The same the broader aspects of agriculture and fisheries policy. No interest at all in competition issues, state aids, transport, regional policy, transboundary measures, and the second part of the consumer protection program, information, education, dispute settlement raised very limited interest. The consumer organisations or the consumer movement, if I include academics, if I include other lobbying groups close to consumers, did not manage to establish themselves as social group. Trade Unions did not wish to socialise with consumer organisations. Consumer organisations themselves were too weak in human and financial resources and too often dependent on public funding. I remember for example the German NGO, which was absolutely opposed to anything as critical to the federal government or to the European institutions because they were almost 100% financed by the German Government and this did not work well. Since 1980, but it was earlier, 76–77, that the (European) Consumer Law Group, group of lawyers working in consumer area organised itself at European level and got progressively some influence on the law making. Package holiday to be mentioned is a directive that still exists in a modified form today, unfair contract terms, product liability, unfair and comparative advertising, these areas were prioritised by the (European) Consumer Law Group despite quite some objection from the department of trade and industry which was all in favour of looking at these aspects under the general auspices of unfair competition and was not in favour of establishing precise rules. Because the consumer movement did not find the strengths to organise itself as a social group. The Commission, the European Parliament, not to talk of the Council where member states took their national interests, lost interest of consumers as a social group, and left the consumer law to drive into private law issues, which were not being dealt with as such at European level. Well what have these first 10–15 years from 1972 onwards achieved, the first issue I would submit was the present article no 114, 169 or 191 of the TFEU that measures in the area of consumer protection, of environment protection even to some extent in the internal market, minimum measures. This idea was born in Benedicte Federspiel9 … who visited the European Commission in early 1973, to find out what was happening in Brussels, and it was during these discussions that this idea was born. Until then, harmonisation of legislation meant at European level uniform standards. No way out of that and you do not find before



9 See

her speech in Micklitz, Hondius, van Mierlo and Roethe (eds), The Fathers and Mothers (n 1).

The Making of Consumer Law – A Sociological Critique  315 1973 any provision where MS were allowed to maintain or introduce more stringent national provisions. The second aspect is the right of withdrawal, the cooling off period, which first saw the light in the doorstep-selling issues, an idea which came from the Netherlands via the Council of Europe to Brussels. The third aspect was the apprehension from the European Institutions. The EU treaty was changed by the Single Act that one should not only introduce measures for environment protection; social affairs were dealt with anyway so there was no need to amend, but there should also be something on consumer protection so that came a consumer chapter into the Treaty. Information and telecommunication as I said was an area that was of little if no interest to consumers- best perhaps illustrated by the fact that when the discussion on genetically modified organisms started in Brussels, the consumers did not ask even for a label that the product is GMO free or contains GMO. This was not quality for money and therefore did not really go on their screen. Again, agriculture and fisheries policy almost absolutely outside the perspective of the consumer movement.

These 70 lines present a compendium of the inability of all those who should have been concerned: Daredevil and life-weary consumers were not even interested in the question whether they should be forced by law to use safety belts in their cars or have to have headrests. Even worse: They were so simple-minded as to react like ‘Give me a car, I do not care how it behaves in environment or in society or anywhere else, I just want the best value for my money.’ Consumer Associations, NGOs, academics were ignorant in the same way. A failure all along the line … Because the consumer movement did not find the strengths to organize itself as a social group. The Commission, the European Parliament, not to talk of the Council where Member States took their national interests, lost interest of consumers as a social group, and left the consumer law to drive into private law issues, which were not being dealt with as such at European level.

Still the question is how the consumer can and should be understood. Is he really only an illusory member of a minority represented in ‘a social group’, not being able to organise themselves, or has the consumer to be established first, and educated? Understanding safety belts and headrests in cars as a consumer question is not easy. Society, not consumers, has to decide whether to follow left-hand or right-hand-traffic or to prefer pork versus beef versus lamb versus vegan. Whenever any parliament decides to make safety belts and headrests compulsory then that is the law. If there were enough consumers among all those voters to wish for even more or less public safety or public health, they would express this at the next election. Is the accusation that consumers and their associations would not care enough about … In the same way the question of pesticides pharmaceuticals, of electrical goods of product safety, were not questions, which raised any significant interest, lobby concern, mobilization of the public for others.

… not a bit high-brow? Is it not the business of the Member State governments/EU Commission to take care of dangers and risks to protect national/European people? Is controlling pesticides and pharmaceuticals really the business of consumers and their agencies? Is it not perhaps the task of officials to guarantee the safety of citizens as we find it in the intensive collaboration with the ‘Scientific Committee on Food’? Is this the view through the lens of today regarding the 1970s? Probably yes, because in those old days consumers were recognised only as a (marginal?) social group (which they are not)

316  Thomas Roethe and (this seems to be crucial) ‘ … and Member States … left consumer law to drive into private law issues’. There remains also the question whether the consumer organisations addressed would agree. It does not seem so: I do not agree with all the many negative things that (the speaker said), because the consumer organizations did not do this and that. It is very difficult to talk about the consumer organizations. I know my organization. We are the oldest one in Europe, No 2 in the world and we have certainly been working since 1947 and we had, it was actually a lot of citizens, many of them women that went to the government and simply said in 1947 (because that was after the war) that they were very angry that the politicians did not want to buy the right things they needed for the children, for food, instead they were buying luxury items and we could have bananas. And actually, the prime minister that was conservative he said, I can see a point, you are right, we have to do something about it and he really did something. So, in 1947 it was started that the citizens could go and tell a tale which they understood because everybody could agree why are we buying luxury products after the war when we had absolutely no money to spend.

Here we find a sensitive criticism of the supranational organisational spirit, which was very much alive in those years.

i.  The Real Consumer In all these considerations we have missed the real consumer so far. What we got and heard is the miserable state of the consumer protection movement in the old days. Therefore, the following sequence is surprising: it grants the consumer attention in the form of attentive parents, despite all of the ignorance previously lamented. Without any NGO, without the Commission, without state institutions: We had one big event where consumers were strong and that was a strike, which consumer organizations made in 1980 on hormones and meat for about 3 weeks – paralyzed the whole beef market in Europe until the agriculture ministers agreed that they would ban the gross promoters in meat in the community. This measure still stands today, and the European Union still pays today compensation amounts to the USA for maintaining this ban and it has 2 times been unsuccessful with the WTO to have these compensation payments lifted. The GMOs as I mentioned were not a subject for consumer organizations. So, these hormones and meat remained unique and singular item of activity of consumer organization. It started, and I am pleased to say it started in Italy, where judges and the public opinion were too concerned about too many hormones in meat in kindergartens, very interesting story. This is all that I would like to tell you about the first 15- 20 years, thank you very much for your attention!

This sequence is very inconspicuous, yet still very meaningful: The first issue with the meat scandal it happened that parents in the Italian kindergarten discovered that children of 6 years developed breasts. So, they made a storm, and this got immediately the attention of the Italian public and in Italy people blocked the consumption of beef meat. And those organizations who were open to this kind of protest … The Dutch called for action, the Germans said absolutely no way we veto beef. The UK was passive. These were then the countries. But of course, the media took it and there was an enormous concern of the media – the result of the consumer organizations plus the media and I presume there were other instances also was that the beef market in Europe broke completely down. For three weeks, the Commission could not sell anything. It had to take large quantities of beef on stock

The Making of Consumer Law – A Sociological Critique  317 and try to sell it two years later. But the consumers said we will not give in until there is ban of the hormones. And finally, the agriculture administers accepted this issue which was the first and last time that such a thing had happened. So, it was really private initiative in Italy, which I found very admirable to be frank.

What do we find? All those consumers not interested in safety belts and headrests react when all of a sudden, little children in Italian families develop breasts, as parents notice something strange is happening, even earlier than any Italian or European institution. After that empirical determination the sleepy institutions woke up and became busy – talking about the WTO, OECD and all sorts of things which had not prevented this phenomenon from happening. It was attentive parents in Italy who as private persons reacted and found some echo in the Italian media: ‘So it was really private initiative in Italy, which I found very admirable to be frank.’ On the one hand, we are experiencing tremendous efforts to establish the consumer as a figure of law and justice and consumer force like labour force, and to confront them with the terrible consequences if they would not vote for those caretakers who know better, who understand pesticides and pharmaceutics and fishery and all. On the other hand, quite ‘normal’ Italian consumer/parents are putting all paternalistic experts in Europe in distress because they are the suffering eyewitnesses. Europe, the Member States, Consumers, Consumer Associations will have to decide between theoretical expertise and real-life practice, which reacts directly to the quality of life.

III.  The Intellectual Context in the European Economic Community I was not exactly sure what was expected from us, so I prepared something on my own, … . The idea is – I was trying to identify what were the key features, which at least could explain my own investment in this field, and/or common investment in this field in the 70s–80s. So, this will be very subjective, this is really my own assessment. I see the past and probably very incomplete. I will refer to a lot of documents, a lot of names, which had a lot of impact on my own way, on my own investment and commitment to the consumer law and policy area but this will be incomplete. So, don’t feel offended if your name does not appear, it does not mean anything really. It is just that I have tried to identify some key elements. … Let’s start …. I just found when I went through all my papers the minutes of the first meeting of the law group, (the Commission) invited five or six consumer lawyers to attend a so-called ‘world conference’ which was not at all a world conference, it was a US conference trying to lobby the European Institutions in January 1977. The message was ‘please do not work on product liability’ and do not do what we have done in the US, look at this Frankenstein monster, which is the product liability story in the US. That was the purpose of this conference and we were five – six consumer lawyers invited by (the Commission) to that conference against more than 300 business lawyers making the case against product liability. So, we had to fight a lot and in the evening we met in the basement of the premises of the conference and we decided to set up a group so that we could start to lobby – we had a lot of fun during this conference. We decided to go there to so many events possible and make life more difficult for business industry, to lobby the European Commission. There was a two-page document prepared by David Tench, the so-called objects procedure and plans for the future, this is

318  Thomas Roethe really the first document asking for the establishment of such a law group. The first meeting was held in Brussels, on 30 March 1977. The first topic that was selected was product liability and redelivered, the first opinion of the law group in December 1977.

A.  The European Consumer Law Group The spokesman’s narration10 begins about 15 years after Kennedy’s approach in 1977, when the EEC/EU Commission had a high attendance of some 300 business lawyers from the US ‘making the case against product liability’. But the Commission had provided for resistance – inviting five, six European consumer lawyers as well – and under the impression of this sheer superiority of the American business side, they decided to form a Celtic-Gallic-Viking Alliance, to be dedicated to the benefit of consumers defending the European way: the legendary ‘European Consumer Law Group (ECLG)’,11 consisting of young, decisive lawyers having fun with controversy with experienced, hardboiled and unsentimental business lawyers from abroad and relishing the challenge of standing and arguing. This is really the history of the Law Group because I have considered that work in the consumer group was really the forum where we met altogether. We had a lot of personal contacts. Personal contacts one with each other. But the Law Group was really to my opinion the channel where we discussed all our ideas and we promoted, we really developed it in common this consumer law and policy during the formative years. I will have to select some priorities. To my opinion the consumer lawyers being connected with universities or consumer associations or consumer institutes that was really a key feature of the consumer law group. It was not only an academic thing, it was shared with consumer associations and also some consumer institutions, state institutions. But we had a common vision. That is my feeling at least when I see it from distance. We shared some visions, we shared common concepts, we shared a common approach about social changes about the rule of law and the status of consumer law. I will come back to that.

The ECLG, this born-in-the-moment group of resilient ‘Asterix and Obelix’-type activists, transcending science, gradually expanded and formed an argumentation community made up of academics and representatives of various consumer organisations in some way combining theory and practice: ‘common concepts, we shared a common approach about social changes about the rule of law and the status of consumer law’. In no time at all intellectual reflection and resistance to the US interpretation became an intense reflection on social change (one may presume – about desired social change), such foundations of democratic society as the rule of law, and finally the present-day reality of ‘consumer’ laws so far predominantly codified in private law. A truly intrepid group of young people who did not exaggerate respect for old-fashioned beliefs, and who were fond of changing society as a whole – law as such, and consumers in particular,

10 The spokesman is Thierry Bourgoignie, who agreed explicity to be named. 11 For more details on the ECLG see Koen Docter, ‘The early years of the European consumer organisation BEUC, 1962–1985’ ch 3 in this volume; Hans-Wolfgang Micklitz, ‘The Intellectual Community of Consumer Law and Policy in the EU’ ch 4 in this volume.

The Making of Consumer Law – A Sociological Critique  319 to gain new legal status. This reformist or even revolutionary view includes an implicit sociological founding act: the birth of the consumer. When Kennedy had granted consumers certain rights in a practically nonchalant way, the young revolutionaries thought about establishing the consumer’s own social character in law and society. We were able to observe a similar legal development much earlier: within a few decades of the nineteenth century, industrialisation produced classic workers under historical capitalist conditions, workers who suffered, and who had to lead women and children into the production process in order to survive as a family. In the end, Karl Marx became famous for analysis of these structural conditions. The development of ‘Labour Law’ responds to the phenomena of social change, which, with the appearance of the expropriated and exploited worker, caused incomprehensible misery in the western industrial world. With the discovery or invention of the consumer it looks a little different – the consumer more resembles the ‘affluent worker’12 who disposes of income, social security and personal autonomy, which makes them a significant market participant to be protected against fraud, quality defects and all sorts of ‘betrayals’. Incidentally, in the late 1960s there was serious discourse about ‘consumer terror’ (in Germany: ‘Konsumterror’). Consumption was considered a seductive expression of capitalism blinding the ‘working class’, consumers and voters, and led to the burning of department stores (Brussels, Frankfurt) as mentioned.

B.  The Self-Understanding of the Community We can see, with some irritation, two argumentative opposite poles of this time: The first recognises in consumerism the devil’s work of capitalism and the market. Consumers must therefore be radically enlightened; they should create a different society. Consumers are in the tradition of their bitterly poor and exploited ancestors. The other line of argumentation wants to protect consumers from the dangers of producers and trade, assumes lack of empowerment of the autonomously acting subject/consumer and wants to act in benevolent substitution. At the very first moment it might sound strange that the relatively rich­ descendants of the exploited masses (no money – no consumer) – affluent workers/ consumers – have to be protected, as they turn out to be serious players in the market. On the other hand, consumer protectors, who have clearly won this debate with many overlaps, simply start lobbying as all other interest groups have to do. What we also – one thing which I think had a very strong impact: we started thinking international, but not that much international at that time but regional, that means European, so that was also one explanation I think of this movement and finally but not last, we consolidate the area of consumer protection as a field of law. We consolidate this by exchanging of knowledge, by exchanging experience and passion because behind this, of course, you have people, human beings, then without this people, if they are not motivated or dedicated nothing will work of course. 12 John H Goldthorpe, David Lockwood, Frank Bechhofer and Jennifer Platt, The Affluent Worker in the Class Structure (Cambridge, Cambridge University Press, 1969).

320  Thomas Roethe One thing is surprising – a growing self-confidence, which is due to the internationalisation of discourses, that is, the intellectual confrontation with US business lawyers. At the same time, this results in a reflection on European legal traditions, which here are modestly called regional, with which European consumer lawyers intellectually constituted themselves as the European Consumer Law Group dealing with issues of European consumer protection. At that time, the US had been discredited by the war in Vietnam, giving young dynamic European ‘resilients’ the courage to genuinely conquer a legal area ‘against more than 300 business lawyers making the case against product liability. So, we had to fight a lot’. The young ‘motivated’ and ‘dedicated’ consumerists, today’s veterans, were on the warpath of argumentation, as the martial rhetoric reveals. Strategies and tactics must be thought up and tested. Sharing visions and approaches I will go rather quickly on this, because of time, my feeling is that from an academic point of view (which is the point of view that I will develop here), there was a quite great consensus, on the need to empower consumers on the market place, on the need also to develop or to promote a social vision of consumer protection policy. We are in the 1970s, Welfare State, the main responsibility should be on the state to protect consumers. So, there was a good consensus, of course there was a lot of academic work, which helped us in developing this social dimension of consumer policy.

These consumers about whom we are talking, who had emerged from the yeast of the bleeding worker, are now to be protected by an ‘academic point of view’ in pleasant cooperation with the state – the welfare state. While in the US consumers still only have expressive rights against whomever, the European consumer – in the eyes of the speaker – need empowerment in the marketplace through a ‘social vision of consumer protection policy’. It was Helmut Schmidt, a former Chancellor of Germany (1974 until 1982), who said: ‘Wer als Politiker eine Vision hat, soll zum Arzt gehen’ – ‘anyone who has a vision as a politician should go to the doctor’. Helmut Schmidt was a well-known protestant North German social democrat who did not have much time for visions. It is quite remarkable how a young, rebellious European avant-garde, confronted with US legal concepts of the 1960s and 1970s, beyond the concrete naming of current consumer problems, fell for the idea of developing ‘visions of consumer protection’ from an academic perspective. It is the European welfare state that has to solve the problems. That is the academically consensual vision. Paternalism. It must be said that every student and academic with a working brain was at that time also politically deeply interested and engaged against injustice in this world – so ‘visions‘ were nothing unusual, even if they had little to do with the solution of real problems. We may also see in this argument the beginning of emancipation from US influences in Europe, triggered not least by the 1968 movement. After the Second World War, the US was able to establish itself as an important protective power in the Cold War and, beyond that, in the American way of life for the younger generation in clothing, music, movies, democracy and also literature (‘We enjoy being culturally colonised by Hollywood’, said Wim Wenders, a German filmmaker, at that time). This changed with the student and youth revolt, in which the Vietnam War played a significant role. US policy as an expression of capitalist imperialism was considered much more critically than before. Of course, one could also speak of

The Making of Consumer Law – A Sociological Critique  321 liberation – liberation from the moral burden that the US had saved Europe in gloomy days. On the other hand, the welfare state’s traditions in Europe differ significantly from those in the US.

C.  The Role of the Welfare State In any case, an apparently self-confident new generation that wanted to direct the American-made discovery of the economically important consumer on to its own, European pathways, while already organised beyond national borders and absorbing transnational experiences. At the same time, these young revolutionaries and activists succeeded in a consensus-based insight: We are in the 1970s, Welfare State, the main responsibility should be on the State to protect consumers. So, there was a good consensus, of course there was a lot of academic work, which helped us in developing this social dimension of consumer policy.

The state, seeking to survive, has to safeguard internal peace and its external borders. These keen young people, who are all likely to have discussed the ‘State Theories’ of Hobbes, Hegel, Montesquieu and Marx and other thinkers, came up with another idea: the benevolent state should not leave citizens alone; no, it should protect them – in the form of consumers – in the meaning of the welfare state. We must not forget that the temptations and promises of real existing socialism were considerable at that time, although Soviet imperialism had long been recognisable (Germany 1953, Hungary 1956, Czechoslovakia 1968, in a latent sense also in Poland in the 1980s). We can say that the young consumer lawyers were in the midst of tremendous excitement. They wanted consumer protection now. We must not forget that a welfare state is not only allowed to look after its millions of consumers, but also after its citizens in the same number. Citizens form the state, not consumers. But that is a question that arises here. What kind of state do consumer protectors want? Are all consumers really objects of the welfare state? Can consumers per se be estimated as structurally weak, victims par excellence because of wicked capitalism? Can only academic Consumer Protectors decide this when stubborn or indolent societies do not understand the current melody of protest and innovation? Is it a bad habit to consume once in a while? If we take this question seriously – the consumer as an object of the caring state – then we find in these reflections from the 70s exactly the authoritarianism which should have been explicitly fought at this time because of recent history. A group of determined, motivated and even dedicated – this includes an almost religious conviction – people from some European countries creates a new object of protection that can only be taken into the hands of the state by these experts, if followed by corresponding legislation (consumer law), which then provides protection through courts, agencies and other stakeholders. This happened at a time when civil society did not even exist as a word and NGOs were only known in their early forms. It is rare enough for an academic lawyer to profess authoritarianism for the benefit of all European people, or of European consumers only. Of course, and not overdoing it – it is a benevolent power that takes care of the consumer without forcing them to join this venture – only the state should keep an eye

322  Thomas Roethe on consumption and regulate and secure its conditions. It can be said that these young elites were very close to the protective welfare state when the state itself did not know what to expect and what to learn in terms of market and society and consumption, which would go beyond simple and effective market inspection known for hundreds of years in confidence between market suppliers, municipal supervision (ever since medieval times) and attentive consumers who could become very rebellious when cheated, for instance in selling diluted milk (Tyll Eulenspiegel). So what is so new about the visions of these academics? What is so ground-breaking about protecting consumers from fraud and health risks? Has not every European society been careful to protect its population from harm?

D.  Merging Theory and Practice What did the young consumer lawyers in these years wish to achieve? What real problem was so burning? Full control, of what? In fact, they, as children of their times, were implicitly influenced by the horrific years of World War II, the Nazi dictatorship and Soviet Communism – the two forces this generation had experienced. Did the Soviet Bloc of welfare and consumer protection not give another brutal answer, when saboteurs of consumption were heavily punished? What was so wrong with the US answer of President Kennedy in the midst of the Cold War, that consumers are endowed with consumer rights? Was there a wide discussion of the pros and cons? Obviously not, but a concentrated eye on: This market failure theory, first presented by Norbert Reich and Klaus Tonner in 1976,13 Gustavo Ghidini14 here in Italy. So those looks, those works had a really great impact on the legal thinking. Iain Ramsay for the OFT in 1984, you published a paper for OFT (Office for Fair Trading) on the economic and social policy rationale for consumer protection. This also at least on my own legal thinking had a very important impact. So I think that we share a social vision of how the market should operate; looking for fairness, the concept of fairness, distributive justice, participative governance, the priority that we wanted to give to the collective interest of consumers, the countervailing power idea developed by Galbraith. So, all those to my opinion had an impact. Also, we should remember that at that time 70s and mostly, 80s the idea that consumers should benefit from some fundamental consumer rights, from some basic rights emerged.

In a scientific and also in this context important sociological point of view, we all know theories are theories. Theories are not opinions, but challenges, we have known this since Popper, which are to be falsified or are only waiting to be demystified. In these years, ‘theories’ always thought that they could mingle with practice – so to be able to master the categorical difference between practice (life practice of humans) and scientific exegesis. Here we find a true document of this ‘scientific’, well-intentioned 13 The speaker refers to Reich Norbert, Klaus Tonner and Hartmut Wegener, Verbraucher und Recht: Überholte Konzeptionen, Lücken und Mängel in wichtigen Verbrauchergesetzen und die Praxis der Rechtsprechung (Göttingen, Schwartz, 1976). 14 The speaker refers to Gustavo Ghidini, Consumer Legislation in Italy: A Study Prepared for the EC Commission (New York, Van Nostrand Reinhold, 1980).

The Making of Consumer Law – A Sociological Critique  323 categorical error. But at least sharing a vision of how the market should operate, ‘looking for fairness, the concept of fairness, distributive justice, participative governance, the priority that we wanted to give to the collective interest of consumers’, discloses a touching naivety. Under the magnifying glass, science always follows the evolving practice of life. Markets are social arrangements in their respective historical forms. Who among the young European consumer lawyers could have foreseen at the time how much markets would be changed by the Internet? Nobody – and yet theorists constantly assume that they could merge practice with theory. To overcome a so-called failure of the market (for example: Thalidomide and Lehman Brothers) is the semantically logical premise of such ideas and efforts needing a full explication of deficits since social life practice with all its knowledge and all precautions against disasters can only be captured afterwards by careful theory – an irrevocable categorical dissonance that calls for modesty, at least in the humanities. Consumer theory has not delivered and could not deliver, but ‘that time 70s and mostly, 80s the idea that consumers should benefit from some fundamental consumer rights, from some basic rights emerged’. After all those ideas about ‘fairness, distributive justice, participative governance in collective interest of consumers’ we find the individual consumer not perceived as a citoyen, but reincarnated as a being that ‘should benefit from some fundamental consumer rights, from some basic rights emerged.’ We are witnessing the birth of a legal entity that owes its existence to the consumer rights from which it should benefit. That sounds fair enough and much more modest than any theories about market failure. I ask myself, what is the topic? Consumers are armed with rights (Kennedy) – or are they protected consumers (Welfare State) and, as in the US, equipped with consumer rights, while still considered victims of an unfair market? Where is the evidence? We have to ask, were the 1970s a nostalgic reminiscence in bringing this critique of performance of capitalism of the past to morbid life again, while real capitalism had been tamed, or a real failure of the markets with serious consequences for consumers, which was suppressed in public discussion? In other words, where is the evidence of failing markets, where is the empirical study that markets should be abolished? Of course, there was Nader’s ‘Unsafe At Any Speed’,15 which was a succinct attack on Corvair and Volkswagen: a highly successful book warning US consumers not to buy the ‘VW Beetle’. It helped, by the way. But was the ‘Beetle’ in spite of all deficiencies a market failure, or a technical problem? Vance Packard16 joined with ‘Hidden Persuaders’, a lecture on understanding psychological strategies of selling by an author who developed and introduced these methods himself. What Marx in his time could not understand, is: The market is firstly a social and only secondly an economic event. For a pinpoint example: there is a very clear market failure in the marriage market. Some willing to marry just cannot find a partner for whatever reason and definitely should be protected against market participants who seek to exploit this miserable situation. The crucial question in a human life



15 Ralph

16 Vance

Nader, Unsafe at Any Speed (1965) Near Fine Hardcover (New York, Grossman Publishers, 1965). Packard, The Hidden Persuaders (New York, Pocket Books, 1958).

324  Thomas Roethe is: Who do I want to live with, have children with, start a family with? ‘Opposites’ attract each other, they say, but on the other hand, it is also said that ‘like and alike like to join’ (in German: Gleich und gleich gesellt sich gern – Gegensätze ziehen sich an). So how is it to decide? The divorce rates speak a clear language. The marriage market is full of failures, but does not come to a standstill. But legal theory with all areas of application worked in the minds of those consumer lawyers to take care of the so-called weaker party. They found their subject, the naïve consumer, and with all their academic knowledge and the mutual emergence of agencies in contact with consumers constituted a hitherto unknown legal discipline. Of course, Kennedy says 1962 but then the Council of Europe, this was already mentioned, the charter of consumer protection, the first one in 1973, Council of Europe, then of course 1985 the UN guidelines. Also, some countries going from dictatorships to democracy, political systems there included consumer rights in their own constitution, Spain, Portugal. That had an impact because that means that we had a strong legal basis, even a constitutional basis to fight for consumer legislation. This means that our objectives were more or less the same. It was clear that we all wanted to correct market imbalances, we wanted markets to function not to the detriment but to the benefit of consumers. I don’t think we shared the idea that we wanted to change consumer society as such. Apart from some words from N. Reich, G. Ghidini or myself, where we really wanted to question the capitalist type of market society, I think the consensus was more that we have to change the way the market operates, to make it more to the benefit of consumers, but we were not ready to change how to question the system as such or to leave the capitalist way behind. There was also a consensus among us, I think, about the new role of the law. The law as a tool for social change. The law should not only make the market better operating, we wanted law to use law in order to really fight for social changes. It was clear that we all wanted to correct market imbalances; we wanted markets to function not to the detriment but to the benefit of consumers. But we were not ready to change how to question the system as such or to leave the capitalist way behind …

Concentrating on only some utterances we learn that the common will of this inspiring group was to put the market, sometimes out of balance, in order again when needed. But this noble pursuit of balance, that is, ultimately supply and demand, nevertheless has an amusing tautological bias: precisely because, without the producer, the consumer would remain a purely abstract laboratory being despite all the protective rights assigned to them. Friedrich A Hayek’s simple dictum – there is not a cup of coffee for free in the world, even in a socialistic world – reminds us of this deep social truth.

E.  Law as a Tool for Social Change As a sociologist, I would like to recall the collective model of the GDR, which in the 1970s had already gained more than 25 years of experience in manipulating the shrinking markets in poverty and destruction without calling this a market failure. I would also like to recall the glorious Soviet Union, which at that time for 60 years had also placed the recipient of rare goods at the centre of all aspirations and could not outsmart the market, wherever it existed in niches. I cannot remember that Marx criticised the market itself. But these are nuances – consumer lawyers – being young these days but fertile had more in mind than ‘changer le marché!’ (‘change the market!’), or ‘consumers

The Making of Consumer Law – A Sociological Critique  325 of Europe unite!’ The ambition was even more thorough at least with regard to the role of law: There was also a consensus among us, I think, about the new role of the law. The law as a tool for social change. The law should not only make the market better operating, we wanted law to use …

What had the old role of law been in those days? Ensuring norms some hundred years old to secure unjust conditions? Really? This, in the midst of the 70s, when the ‘The Rolling Stones’ and ‘The Small Faces’ sought ‘Sex and Drugs and Rock ‘n’ Roll’, as Ian Dury formulated? Now in the same breath the legal technicians and constructors of markets and society stand up, seeking recognition and influence. Traditional law as a compound of wisdom, knowledge and professionalised application should no longer play a role on the European stage, but should now become a universal and versatile tool for social change. Social change is one thing, as long you are in stable Europe. And indeed, there are no societies that do not change. But the market is a completely different matter. To force social change into a better functioning market was an irritating approach even in those days. The prominent idea that law is a politically kneadable mass must be understood as a relatively new mode of faith and self-consciousness. … what was referred to by especially Ch. Joerges or G. Teubner as reflexive or responsive law,17 those concepts or droit adaptative which was developed by … in Belgium or Jean Calais,18 droit fonctionnelle he was talking about droit fonctionnelle. So, this was very strong. This also had a strong impact on the legal thinking. Multidisciplinary, yes, we wanted too while developing consumer law and policy, we were not afraid to deal with economics, politics, sociology of law. That was new at that time in our legal career. The illusion of access to justice, to my opinion this had a lot of impact, law without lawyers. And mostly of course these ideas come from the US but also this huge project lead by Mauro Cappelletti on the access to justice movement, that was run here in Fiesole, and that had a very big impact because we had strong evidence that law was simply not working, was not effective; that consumer protection even on paper was just an illusion for most consumers, so we had to do something.

We have to understand that there was a broader, challenging discussion about the law itself, disclosing that law was simply not working, was not effective; that consumer protection even on paper was just an illusion for most consumers, so we had to do something. ‘We had to do something’! This phrase we have to understand as the guideline, the motto against all odds, fearless of multidisciplinary efforts and busy in the question of access to justice – and it worked. We have to understand this utterance as an exceptional demand that is normally only felt by revolutionary or at least radically reformist activists as they are called nowadays, politicians who claim power, politicians who are determined to tackle social issues. The young daredevils were not too lazy to apply this plan in its necessities intensively and extensively. It was not disillusioned consumers who had to attempt to silently storm the Bastille – the consumer advocates took over this cruel 17 Gunther Teubner, Law as an Autopoietic System (Oxford, Wiley–Blackwell Publishers, 1993). 18 Jean Calais-Auloy, Hélène Bricks, Marie-Thérèse Calais Auloy, Jean Maury, Frank Steinmetz and Henri Temple, Consumer Legislation in France: a study prepared for the EC Commission (New York, Van Nostrand Reinhold Co, 1980) (trans of Droit de la consommation en France from the French by Michael Corkery).

326  Thomas Roethe and heroic act in an attitude of higher knowledge. If we now also remember that we are all consumers, then it becomes clear that it is about everyone, it is about individual Europeans, it is about a variant of a European constitution, which must be understood in the spirit of consumer law. Everything for the benefit of the consumer! In comparison: The ‘Making of Labour Law’19 – considered and reacting to the emergence of shocking and appalling working conditions due to industrialisation with harm, death and grievance for those who were doomed to work – tried to mitigate the class struggle, save society in terms of the possible and to find necessary compensation (and to a large extent succeeded). Yet the conception of ‘The Making of Consumer Law’ is more demanding, since not only the maltreated working class is in focus, but also – and this is a bizarre peculiarity – the consumer, being a worker, a clerk, a businessman, a politician, a philosopher, a homeless person, a helpless old woman, and even a lawyer, share a common interest: to be supplied by each other, to be able to trust each other, to be able to rely on each other and to find solutions in case of conflict. The inner ties of society. This is what we call civil society embedded in the rule of law. Who is the actor and who is the protected subject? Is it the citizen who obeys the law and shares corresponding expectations with others? Is it the citizen who produces, the citizen who takes over distribution and organises logistics? It is this citizen who assigns the market inspector as a deputy to control the market because he knows there are freaks and criminals acting for the sake of self-interest, acting against the ideas of altruism, fairness and reason and decency. In case of trouble the court has to decide. The old procedure for some hundred years is working and working. Consumer Law, in the eyes of the young consumer lawyers, is dedicated to offering a much closer look at all these interactions in society, transforming a market society into a society of consumers even when ‘consumer protection even on paper was just an illusion for most consumers’; alas, consumer protection, without consumers knowing that they need it. The reality is doubled by this kind of thinking – while the consumer advocate still speaks and proclaims their goals and enforces them, the consumer is a victim and unwittingly buys a cup of coffee whose origin they can hardly know among the metaphors of social change and change of market imbalances. Coffee beans do not grow in Europe. The question ‘how the market should operate; looking for fairness, the concept of fairness, distributive justice, participative governance, the priority that we wanted to give to the collective interest of consumers’, is morally unquestionable. We are all bound to agree. But the question how it is with the ‘international’, or only ‘regional’ European reality in production and consumption is not easily answered. Once again, it is the consumer who has to be protected. The question in this extraordinary emphasis of the ‘consumer’ inhibits the terrible task firstly of understanding the world.

F.  Legal Entrepreneurship Personally, I was quite interested by developing this entrepreneurial approach, making the case that lawyers could do something, but there were other actors which had to play a role,

19 Bob Hepple (ed), The Making of Labour Law in Europe: A Comparative Study of Nine Countries up to 1945 (London, Mansell Publishing, 1986).

The Making of Consumer Law – A Sociological Critique  327 especially of course consumer associations, specific non-governmental organisations having consumer protection as their objective, the consumer movement. So law for me is just a tool for social movement, whether consumer movement or access to justice movement or at that time also the critical legal studies legal movement, all these ideas that were in society, we as lawyers we had to take them and see how we then could adopt all legal, all legislation to these new ideas …

For a lawyer, this is a truly astonishing train of thought when we stick for a moment to the traditional conviction that the law, namely private law, has the task of resolving conflicts and providing consensus and therapy with the help of scientific rule of knowledge and case-related reconstruction. But here we are talking about lobbying. It is quite reasonable for lawyers to advocate elimination of recognised or even possible weaknesses in procedural law, such as ‘access to justice’. This should also apply to the internal professional discussion of ‘Critical Legal Studies’. The ultimately politically motivated will of a lawyer, however, to attribute social movements, such as the ‘consumer movement’, to one’s own professional environment must fail structurally, and is even a sign of de-professionalisation. As a private individual, the speaker is allowed to make their professional knowledge available to all social movements of their preference. However, promotion of social movements is certainly not one of the tasks of a lawyer. But does this inevitably forge an instrument out of the normative and conflict-solving law that can be re-forged just as voluntarily on other suitable occasions? In its revolutionary habitus that approach breaks all boundaries, and aside from all the sentimental good-will and kindness forgets that real life proceeds in unpredictable ways. To explain this, we all have enough experience of how the law can be made compliant. The rule of law ultimately consists in the fact that highly educated individuals, with all their knowledge of the history and philosophy of law, with all their knowledge of the realities of the present, are in accordance with the spirit of the law. With all due respect, by what right can lawyers, who are not lawyers at this logical second, but activists, think about changing the system and try to enforce it? The answer is simple – they can, because they are not contradicted. Law is more than a technocratic tool like a screwdriver fitting screws. Anyway, law understood as the substance to argue against anything withstanding consumer interests seems to be a ‘proper’ vision. … Proactive vision of the role of members of the judiciary, which did play a very important role in the development of consumer law and policy in the 70s and 80s. Legislation was quite either inexistent or legislation was using very abstract concepts so the judges were asked to interpret them, to apply them. And in general, they were doing a very positive interpretation work to the benefit of consumers.

Once again, the importance of the legal academic milieu is emphasised and its appeal to practical judges, who filled the present ‘very abstract concepts’ with life, interpretatively followed in favour of the consumer. But there is another message in this sequence: because we know that there is no case on earth that a judge could not solve juridically. So, if there is talk of non-existent consumer law, that is only half the story; because of course judges always had been able to decide in consumer-related lawsuits under civil law/common law – but not always in a ‘properly’ biased manner – is there a list of what went wrong before in the eyes of today? It is about adjusting the bias – it is just a matter of adjusting Justitia’s blindfold a little. Not so much that it would have meant leaving the

328  Thomas Roethe capitalist way behind, and by no means directly marching into enslaved and dependent justice like that formerly known from Spain, Portugal – no – but just from inside and outside in unanimous conviction to invest in ‘the benefit of consumers’. This stream of thought reveals a remarkable, almost latent premise. The law, symbolised in the figure of Justitia blindfolded, strictly speaking does not know any preference for one or the other side. Law speaks a different language, as we can learn from Alexander Somek20 and the theory of juridical professionalised action, speaks the language of unmistakable consistency in terms of structure – completely uninterested in questions of fairness and/or even interests, deciding simply on the case under reconstruction, finding consensus and thoroughly needed therapy as the case is challenging. There are no benefits and no losses – there is only the LAW. Allow me an excursion into all that turmoil, there are some stakes to rely on in thousands of years of enlightenment: We find in Marx’s ‘Das Kapital’, without talking about law, a strand of thought that argues with special profits (Extraprofit) of some entrepreneurs which are irregular and thus do not change the structure of capitalism. However, Marx points out that structures are not determined by such particular oddities, namely the temporary special profits of one capitalist or another do not question the analysis and the system itself. We can therefore assume that the benefit of the one is not the blessing of the whole, not even the solution to the underlying problem. It seems strange that these young rebels should not have read all about these dialectical traps. To turn it the other way around – ‘the benefit of consumers’ sounds really awful. There is an old ironic saying: in socialism the single person, the socialist human being (der sozialistische Mensch – homo sowjeticus – steht im Mittelpunkt) is at the centre of all efforts, therefore this socialist human being has to duck and take cover. Taking care of ‘the benefit of consumers’ bears the sound of seizure of power by a fine-tuned, well-organised intellectual group of determined activists taking over the justice system in favour of ‘Consumers’, making all adult citizens care cases without explaining why consumers – be they working people in factories, be they employees in administrations, be they entrepreneurs in exquisite top offices, be they politicians, and be they social welfare cases on the streets – should be protected from themselves. This is a peculiarity that the consumer protection movement of the 1960s and 1970s has never intellectually solved, insisting that though we are all consumers there are still ‘alien’ villains and enemies.

G.  The ‘New’ Law of Consumer Protection Although armed with the idea of interpreting ‘Law’ to the benefit of consumers, that is, to shape the spirit of the law against so-called adversaries/enemies – traders and producers as a whole, establishing a general suspicion – these initiatives have not had the opposite effects to those we find in labour law, where imaginative employers always discover new ways to circumvent legal requirements. Instead, on the stage and

20 Alexander

Somek, Rechtsphilosophie und Rechtstheorie (Nomos, 2020).

The Making of Consumer Law – A Sociological Critique  329 behind the curtains throughout Europe we find an effective system of control, market inspection with fast-working remedies and collaboration to keep scandals and emergencies (however seldom occurring and of whatever character) within narrow limits. We also, I think, of course this is my own view of this, we were all interested in developing specific consumer law, freeing consumer law, taking consumer law out of the traditional legal categories of law. We all wanted consumer law to be independent from competition law, from civil law, from contract law, we wanted to have our own piece of law, our own categories of law, that was consumer law, with our own objective, our own viewpoint. We wanted consumer law to make the case for the consumers and that was the main objective of that new approach of this law. Specific tools, information, indication but also regulation, transversality, new legal concepts, like we just mentioned already strict liability, cooling off period, the concept of unfair contract terms, new consumer redress system first developed by … (name, not understandable) for consumer contract at that time, she was really the first to come with an inventory of new consumer redress systems, administrative civil law and criminal, that was I think 80 or 81.

We find a view, which may now be called revolutionary in legal history, for it is without substantive justification, without ex-post experience, which normally establishes legal norms. Again, where is the evidence of massive damage to the consumer’s interest under civil law, inviting us to establish a completely new legal area? There is hardly anything to be found there, but another factor may be relevant: the EEC needed an organisational and legal infrastructure for its ambitious common market project (from 1986 on, the Single Market), because it is the consumer who is treading the path to social union. So, the speaker who reports on regional efforts shapes a design claim of a supranational European consumer law, beyond concrete consumer interest. Young consumer lawyers developed the new consumer law as a design, touching the nerve of western societies after Kennedy, breathing easily, and devoting themselves to this task with the widest variety of efforts and the widely helpful administrative services in the MS prepared to follow. We can therefore conclude, even without immediate real hardship, that a new legal area, a specialised branch of law – Consumer Law – can be implemented, affecting producers and retailers to the imagined benefit of the consumer. The study on ‘Federalism and Responsibility’21 has also shown that in emergency management at Member State and EU level, all instances (traders, manufacturers, market inspectors, insurance companies, whoever) and institutions beyond all regulations work jointly to minimise damage and risk aside from all precautionary legal rules. Legal assessment takes place only afterwards, if at all. At the same time, however, it should be noted that the legal options sometimes seem like a ‘big stick’, which certainly fuels willingness to cooperate (as a British official declared during an interview). We should not be petty; we enjoy clarity in performance of products, guarantees, and national efforts to protect the consumer’s interest. These emphases that we all have supported, stressed upon or emphasized on the ­collective interest of consumers; consumer law will have to deal with the protection of individual

21 Hans-Wolfgang Micklitz, Thomas Roethe and Stephen Weatherill (eds), Federalism and Responsibility: a Study on Product Safety Law and Practice in the European Community (London, Graham and Trotman, 1994).

330  Thomas Roethe consumers but there is also a public interest issue.22 There are topics, there are challenges, which are collective by their own nature and we have to protect them.

This statement shows how difficult it is to distinguish between individuals and the collectivity of consumers within the framework of a newly established consumer law by young consumer lawyers and their self-assessment of doing the right thing healing it all. Consumer Law has neither destroyed Capitalism nor established Socialism but enhanced the establishment of control bodies throughout Europe and in the end in real life in the Member States’ fostered trust in Europe. But, no law without unintended consequences – a new class of consumers entered the frame, who exploit exactly these protective mechanisms unrestrained in excess: one should follow the reports of overindebtedness; as studies show, ‘Debt Collection Agencies’ are those who make private debtors aware of their personal responsibility. Internet/mail-order companies with their sickening reports about returned deliveries like used underwear, bikinis, pyjamas, and so on (all of that of course ‘priced in’ to the detriment of fair consumers). These days, the holy, innocent, informed/uninformed, autonomous, weak consumer, included/ excluded, with limited or only discriminating access to justice turns out to be a beast without shame, exploiting and cheating providers in various ways like simply not paying or abusing consumer goods. Is it true that we are all consumers and therefore consumers are society? Or do citizens constitute society? Would citizens return misused articles? Citizens with selfresponsibility and ethical autonomy probably would never do so. But thoroughly and permanently equipped with all imaginable consumer rights, they may be tempted to surrender to the newly adopted consumerism, ‘quality of life’ and take advantage of all legal intervention in the market in their favour.

IV.  Consumer Associations in the Making of European Consumer Law In what follows we are putting together different quotations from speakers who are discussing the role and function as well as the differences between consumer organisations in their understanding of consumer law and policy.

A.  Organisation and Political Necessity Nolens volens, consumer organisations are a result of pure need, a national step of historic development. To put consumer organisations under guardianship, a Nordic voice goes against the grain and insists on the essential feature of organisational and political necessity … So, it is difficult to compare to the countries that had almost no consumer organizations. It was mentioned about the trade unions that were members also of the consumer’s consulted

22 See

the contribution of Micklitz, ‘The Intellectual Community’ (n 11).

The Making of Consumer Law – A Sociological Critique  331 committee at that time and they were not interested at all but they had no competition in their own country from consumer organizations because there were not any, and if there were any they were very weak. If we talk about Spain and Portugal of course there was no consumer organization. It did not exist at that time; it was not possible for political reasons and now there are some, but it is much more difficult we know about the Eastern European countries. There are some of these countries (and I do not have to mention who) who have one employee, but we have hundreds. But they have one employee to do everything in the work, which means you don’t have a consumer organization in that country. So you cannot ask about why they did not do this and why they did not do that and some were – actually, we were discussing, whether it was environmental questions that they were not interested in, that they were thinking the money they got from the government and then they did not want to criticize anything. I promise you we have said to the government and to the parliament that we insist on giving some money back from our tax money in order to work for the citizens and apparently that has worked. So, you do not come and tell anybody that we’re bought by anybody and that we could not say what we wanted or that we hesitated. Maybe this happened in some countries, but it does not happen to all countries. This is why it is difficult to generalize and say this is how consumer organizations did not do this or they did not do that. It is not a criticism. It is just because as a consumer organization we lived with the consumers organizations and they are very, very different and their strength is different and it was also mentioned some countries’ consumer organizations are actually, I am sorry to say, are thinking of earning money for themselves, to themselves, money down in the pocket to themselves. And even some often were sitting in their own board and were getting special money which was put into bank in other countries and so on. And I know, very, very well it is correct. I am not just saying it. So, you cannot say this is what consumer organizations did. Because they are so different, they are so different. I think I am the only one who can tell exactly who is who and how they are, how they are working in Norway. In Norway, the consumer chairman and the board of directors were elected by the government. No way they were touching who is the managing director or the chairman or anything in Denmark. It would be unthinkable, simply not doable. But it happened in Norway and the other stories I can tell you if you want. Can I get another drink if I tell all these wonderful stories? No. But it is just to warn you against talking about consumer organizations as being one big thing because they are very, very different.

… and by this draws a clear line between theory and practice – the theory that wellmeaning consumer lawyers can formulate with emphasis and passion in the sway of supranational yearnings including even environmental questions and collective objectives, and the hardships of earthly existence in terms of getting the consumer to organise, because their safety and their satisfaction is at stake. Behind this tiny difference, worlds of philosophical, political and doctrinaire nature are expanded and obviously after 45 years are not pacified, not discussed, and one might think how conservative these revolutionary old activists can be. Historically seen, consumer protection and consumer rights have many Mothers and Fathers – one could talk about the milk scandal Tyll Eulenspiegel reported in the fifteenth century; one could talk about the Dutch tulip crisis; one could talk about Tennessee Ernie Ford’s ‘16 Tons’ owing his soul to the company store; and one can talk about the high time of consumer debate in the post-war decades, when within the EEC consumer protection and consumer law became the first vehicle of social integration. Interestingly, the speaker hardly talks about the consumer, but more about the citizen. The consumer, as the successor to the exploited and subjugated proletarian, was offering himself as a general object of protection to those who understand better, although

332  Thomas Roethe at the same time he also decided on the welfare and woes of developing companies and traders, who devoted themselves to offering their wares to consumers. Even more complicated – consumers since industrialisation are manufacturers and clerks in all different branches themselves. It is not ‘Avanti popolo’, it is not ‘Völker hört die Signale’, it is production, delivery and consumption. So, who should be protected from whom? As a rule, consumer protection responds to this problem by differentiating the technical and legal features – engineering, practicability, quality and safety. Furthermore, preventive protection measures, precise standards to be respected in large-scale scientific committees with a strong ethos and incorruptible eyes, growing armies of experts from NGOs, journalists, lobbyists, stakeholders, riders of the system, ethics committees, bloggers and, of course, all those who care about the environment wanting to protect the planet, have recognised that it is only the human being, the consumer who is to be protected. With so much complexity – when everything, really everything is connected with consumption – it becomes difficult to protect those who are not perpetrators but true victims. In this dimension, consumer advocates were and are to be understood as knights in shining armour, who bravely defend the underprivileged. That happens and of course it happens in a fancifully-painted society, including about 500 million European consumers, producers, rogues, criminals, faithful fathers and mothers of consumer protection and surveillance, silent majorities and loud minorities. And having said that I would also like to say that what we did, we are talking now about the 70s. The 70s was a super era for consumer organizations in the Nordic countries. In our country, it was a big push from consumer organizations. And from government, that agreed that we have to do something, so the big parts of legislation were actually made in the 70s, things that had not being heard of in the other countries and it is no wonder that … (name?) wrote as you mentioned, she was writing about complaint boards and complaint handling and different forms, it is because she came from Norway and in Norway, Sweden and Denmark and later in Finland there is a very well-functioning system of redressing things …

In the 70s, important legislative channels were paved, the Nordic countries responded quickly and efficiently to the post-war era, so that one could think that all decisive measures had been taken, except for some fine-tuning further on.

B.  Differences between Consumer Organisations The philosophical question about how the western European consumer – indeed the western European Human Being – is to be protected has been swept under the carpet; the difference between consumer and mankind remains unsolved. What task could remain nowadays for advanced consumer protection?23 … but it does not exist in other countries, so it is difficult to say that this is how they do, and you were quite right that some organizations are not. I remember the UK with one

23 Here reiterated in the published version in Micklitz, Hondius, van Mierlo and Roethe (eds), The Fathers and Mothers (n 1).

The Making of Consumer Law – A Sociological Critique  333 of the major organizations never dreamt of touching anything that was remotely close to environment because that was dirty, environment was only for the left wings. It is true. I promise you it was true. It is simply like: no, you are not dealing with environment, and we said I am sorry, but we have been dealing with all of it for years and we cannot see it is a problem. But certainly, in the UK it was really a big, big problem. Just that shows how very, very different the organizations were.

And suddenly a complaint sneaks in against one British organisation, which denounced environmental issues as a left wing idea. We may take this caper of a right wing attitude by the unnamed UK consumer organisation as a pragmatic defence against entrusting consumer organisations with the additional burden of saving the planet. This episode gives an insight into the diversity of Europe and the different ideas of organisations that want to protect the consumer in their homelands and Europe as well. What organisation prevails, why and how? What concept is promising and successful? We find a downto-earth statement of the work to be done and the financing of consumer protection: And you could also see in the Netherlands and Denmark there is only one organization, and so you have monopoly. No actually we have been allowed to be the consumer organization because we are doing what the consumers want or we would not exist. That’s the point. And we are earning good money now, but we are certainly getting money from the government because we think it is fair and it is not from the government by the way it is from parliament that we are getting the money. It is on the Finance Act every year and that’s simply because we ought to get some of the money back that we are paying, then we should get the good things you are being advised and helped by consumer organizations. And we are earning by the way now a lot of money nowadays but we keep saying to the Commission that they ought to be able to create systems so that the Eastern European consumer organizations will get up at a certain level because we have to remember that in the EU we are talking about they are going to vote each time in the Council for all this consumer legislation and if they don’t have anybody in your own country that will push them and tell them you should do that, then nothing happens. They don’t have to do anything. So, it is very, very important for my organization that the organization in Slovenia or elsewhere is healthy because otherwise we may not get the consumer legislation we want. So, it does not come by itself. Yes, the family organizations, the trade unions and the consumer organizations were part of this original set up in the 70s. And the family organizations were just sticking to their own family organization ideas and we did not have a problem because we actually have family organizations, we are an umbrella organization, as we are also an organization selling our magazine as a member’s magazine.

We are talking about payment for those organisations which dared to do it, as I said – in philosophical and moral justification – without fear. They got paid, they did not suffer. Twinned with government and Parliament they could present drafts for consumer protection. Thinking about consumer protection and doing it in practice is a huge difference, when one considers one’s own historical development from need and deprivation to the development of a consumer society. A historical development that still has to be pushed forward to the new Member States beyond the fallen Wall. It is an enormous undertaking to force this wild Europe into a consensus concerning consumer protection where no consumer ever existed before. In the sequence following the speech, we find a remarkably brief discussion between three representatives from different Member States highlighting the difference of an organisational view to solve a problem or to find a problem:

334  Thomas Roethe You know, as I, that the Irish consumer organization is very weak and you mentioned that (I know it is very weak, it has very little money and I know very well because I talked to them all the time about that). You mentioned Jim Murray …. who was not consumer organization but got a fantastic influence as the first Director of Consumer Affairs, but that was not a consumer organization. Did that play any role? That the consumer organization is quite weak?

The speaker bluntly states that consumer protection in Ireland was and is poorly organised. Weakly organised consumer protection in Ireland makes one prominent consumer lawyer frown, and only deep inside one might ask, what is so wrong about simply adopting UK and EU regulations if consumer problems have not been detectable since 1902 in Ireland? But here is the reaction: ..If I am correct, the UK ‘Which’ organization, was actually instrumental in setting up the Irish consumer organization, why did they drop out and they did not manage for instance, the Belgian …. ‘Which’ really got off the ground in Spain, Portugal, Italy, why the hell did the British drop out? Why was it not successful to get also a strong consumer association in Ireland?

Both questions are peculiar, as they bypass the claim that there are no consumer problems in Ireland. Here the reply of the speaker who raised concern: I can answer the question to a certain extent. I will take (the two TR) questions together. The consumer association was set up in 1966 which was also when the England won the World Cup so there might be a connection with the ‘Which’ consumer organization. ‘Which’ were very good to the Irish consumer association in the early years and they made their magazine available to the Irish consumer organizations at a miniscule cost so that the Irish consumer organizations could sell their own magazines in form, Which was only OK with the really high calibre professional British magazine. I don’t know the answer, why ‘Which’ pulled out Ireland or whatever. But certainly, they lost interest after a while. But it does have to end here in the sense that it is dialogue. I can pick up the phone to …. when I go back or to one of the first directors and give you the answer to that, but I don’t know personally why they pulled out. In response to (the initial THR) question, yes, I mean you are absolutely right, the consumer associations of Ireland were never a strong consumer association, they were underfunded, they had one director and that was the only full-time salary. All the others were part time. And most of the money went into producing the magazine for decades. And there was very little money for campaigns. So, yes is the answer, they were weak. And they are still weak as an organization.

The Irish speaker talks about the difficulties in Ireland not building a powerful and politically effective consumer protection organisation. He humorously claims to deeply regret this shortcoming – he takes it personally and apologises for this failure, but he knows Ireland does not need anything like this; otherwise Ireland would have installed it. In the immediate reaction to answer are so far unanswered crucial questions: I think one of the problems, and you know I am sad to make this admission, but consumer protection never had a priority from an Irish perspective, so that often when it came to implementation, we left it at last minute and we never considered the contextual background in which we implemented the directives.

We get an idea of what will happen if consumer protection is approached in a sloppy way; consumer lawyers have an eye on dissenters. The Irish speaker on the one hand is

The Making of Consumer Law – A Sociological Critique  335 bold enough to believe in instant court solutions via common law whenever needed, as in 1902; on the other hand, he has no pronounced sense of a need for consumer protection and expresses this very diplomatically. The exchange between the different representatives does not fully cover the varying roles of consumer organisations in the Member States: The first Greek consumer association called ‘Consumers Protection Institute’ was founded in Athens in 1971. It was an association with offices in the most important cities of Greece and according to its statute it intended to safeguard the protection of consumers and of the environment and to work for the improvement of the quality of life.

However, long before Greece joined the EU, it had a ‘not well organised’ consumer protection organisation, congenial to the simultaneous efforts of consumer lawyers in Brussels, and which was concerned not only with ‘consumer protection’ but also with the ‘environment’ and ‘improvement of the quality of life’, even earlier than Brussels. … Consumer centres were established in Germany in the 1950s and when we began the debate in the 1970s, we called them ‘Hausfrauenvereine’, Housewife-Associations – prominent for advisors and politicians that spoke about washing machines, how to choose the right washing machines and how to shop a little bit cheaper than otherwise – but important questions of law were not discussed in that frame and that changed drastically in the 1970s. These consumer centres – ‘Verbraucherzentralen’ – changed into active fighters for consumer rights. Of course, that was a slow process and I remember that there were 4 consumer centres in Germany – we called them ‘Viererbande’ – of course who were consisting of Hamburg, Bremen of course, Lower Saxony (Niedersachsen) and Baden-Württemberg, who were in the forehand to change the role of consumer centres to fight for law.

We can indeed feel the shame that there were truly even some prominent counsellors who gave subjugated housewives advice in the Bronze Age of consumer law on how to buy ‘the right washing machines and how to shop a little bit cheaper,’ not touching ‘important questions of law’. This difficult condition changed in the 1970s when ‘consumer centres’ took on a Herculean task: Quoting the Maoist successors of the Cultural Revolution in China (the ‘Gang of Four’ – Jiang Qing , Zhang Chunguia, Yao Wenynau, Wang Hong Wen), in Germany the four consumer centres – ‘Verbraucherzentralen’ – of Bremen, Hamburg, Lower Saxony and Baden-Wuerttemberg dedicated themselves to answering the important questions ‘to fight for law’. And we have to admit, luckily, they did so without any bloodshed. But what is important is to realize that at that stage all these consumer centres were financed and got their budget from their states – from their regions and from the ‘Länder’, and the federal level as well, and only in later period in the 1990s they changed the system how to raise money to choose a certain percentage of the budget as self-earned money today, but that was not at that time. Nevertheless, we could call them fighters for consumer rights.

As it turns out, all these wild West German consumer associations, fighters for consumer rights, inspired by Mao were luckily funded by the federalist ‘Länder’, the federal government – by the taxpayer. And by the way, why should the taxpayer, who is essentially also a consumer, not pay for the fact that decided experts confront them with the legal problems of purchasing a washing machine?

336  Thomas Roethe

C.  The EU Action Programme and the Consumer Organisations About an action program in the 70s – I remember they made these lovely action programs and they were very, very proud and then they had promised that, the Commission promised that would make a new action program I think every two years … or something closer to that but the consumers were saying but you have not done anything of all you should from the first program so you cannot just start a new program when you have not done that; but it was a smart thing that you had to do that; so that did not work that well. Maybe I am too hot now … , I mean it is not (the Commission’s TR) fault if it did not happen.

Maybe we are talking of long-lasting intricate relations throughout Europe and the passionate probing of possibilities and ways to feature individual ideas – we find contesting realities. ‘… the consumers were saying but you have not done anything of all you should from the first program so you cannot just start a new program when you have not done that …’, then it becomes clear that there is still a great deal of practical work to be done in everyday business and that big ideas pay far too little attention to immediate needs where consumer protection really has to be established first. ‘Product liability’ seems to be such a subject: But the product liability, that is something that we discussed. That was one of the big issues because product liability was a big problem in the industry and of course the situation in the States. We should not get anything that terrible and you will have to be wheelchaired out of every building in order that shows the doctor has not done anything to you and you could prove it. And product liability, they started actually in the Commission to work with it, it was a German,24 what was his name? … but he was good, he was doing a great job there (inside talking … He gets so upset it is too dirty for him, you will all get the story later). But product liability was really a very complicated thing to work with because the industry was so much against it. But in X-country (HWM) (and this had nothing to do with the colour of the government) we were always informed of what was happening so I knew what was happening, I saw the drafts of the paper, I got them from the Ministry of Justice, I got the drafts, which was unthinkable at that time that people would, that was in 1985 and I was speaking at a conference in Germany and I was almost being killed by somebody because I had been speaking about some secret papers, no transparency there, and I said secret?25 I got them from the … Ministry of Justice, and it is for everybody open. So, I went to the Ministry of Justice and I said you make it a complaint because I had been talking and he said I don’t care, tell them to come to me. And I was told that they actually did come to him and to the officials in the government and they said this is the way we always do it, don’t you? So that disappeared. But this also shows the difference of how the consumer organizations were really involved in creating the consumer policy at that time.

V.  Differences in National Approaches Each Member State has its own approach to consumer law and policy, which has to be merged and integrated into the design of a European Consumer Law and Policy. 24 The speaker refers to Hans Claudius Taschner, former head of the unit at the European Commission. 25 There are enormous differences between the Member States in the degree to which the citizens have access to information of the government and the national administration.

The Making of Consumer Law – A Sociological Critique  337 The following statements are in no way exhaustive, let alone that it is difficult if not dangerous to put a label on one particular Member State, in particular as there might be voices who claim that countries may cover different labels. The assignment, as problematic as it may be, indicates the variety but also the tensions that had to be merged in particular in the European Consumer Law Group so as to come to joint opinions,26 but they might also cover the most important positions around which most if not all Member States could be grouped together.

A.  The Nordic ‘Advanced’ Position I think during these years quite quickly the Nordic countries adopted a relatively advanced position. The Nordic consumer law was considered quite radical and efficient. I don’t want to get into any competition; it seems that every one of us thinks that our own law was radical at that time. But I don’t think we need to compete on that issue.

This is the admirable clarity of a speaker who knows the processes of his own experience – from a certain point onwards ‘quite quickly the Nordic countries adopted a relatively advanced position’. Where might they have started from? And what kind of radicalism and efficiency is meant in comparison to slacker positions outside the Nordic countries? We are talking about ‘Nordic consumer law’, not even about consumer protection. The answer might be: There is background noise within the then common market, the European nations, which reveals quite different legal provisions and philosophies for consumer law, and the non-Nordic countries lag behind the radical and efficient legal norm. It has been accepted that the Nordic countries had a fairly advanced consumer protection legislation quite early. It was due to two things: a) favourable societal and political conditions: consumer law was understood as an integral part of the welfare state project in our countries and that had a very broad political support in the sense that crossed the lines between different political parties. But it was also facilitated by relatively low grade of internal resistance from law itself – from the legal profession – and that again I would attribute to the fact that they have this special Nordic instrumentalist approach to law. We don’t have a civil code that locks our thinking into the systematics.

These are, of course, astounding findings; the ‘folkshuset’ (‘people’s home’) in the small Nordic nations can agree on the necessary steps relatively quickly, and the persuasive work succeeds to a large extent with a Protestant pragmatism that facilitates consensus.

B.  Kreisky: Exploitation through the Market Bruno Kreisky (the Austrian Chancellor in this period of 1970–1983) is quoted with the following discovery: not only labour is exploited, the market itself exploits people.

26 With

regard to the latter Micklitz, ‘The Intellectual Community’ (n 11).

338  Thomas Roethe This understanding, if we take it seriously, leads to complications and at the same time to simplifications, which are sometimes needed politically. If the Marxist dictum of exploitation of labour by the capitalist entrepreneur is no longer solely responsible for the misery of the Austrian population/citizens and consumers, but the ‘Impersonal Market’ exploits starving Austrians, if that is so, then Austria needs no class struggle, no bourgeois revolution, then a decided social democratic paternalism is sufficient to liberate Austrians from the slavery of Germanic feudal law, from the capitalist alienation of Roman law and also from individualistic French shackles. The marketplace where buyers and sellers formerly met is no longer a basic social institution, but a strange construct. Are Adam Smith’s considerations of the invisible hand overcome? The quotation from the late Bruno Kreisky captures the beginning of conceptual confusion in old Europe: We may call it Liberalism, we may call it Neo-Liberalism, it means to transform the citizen into the universal consumer belonging to a worldwide community without even asking. To put it bluntly, to replace a society of responsible citizens with a community of cared-for consumers.

C.  Intellectuals as Spearheads of Legislative Action … Several individuals have played a major role … Thierry (Bourgoignie) was the chairman27 and Ewoud Hondius was our non-Belgian member of that commission. We worked many, many years and in 1995 I think Thierry presented his report to the minister, and it was in two languages, it is published, I still have a spare copy if you are interested; and it was like a code but it has never been accepted. It had some influence on later reforms of the unfair practices act but there was never a code in Belgium and in that sense, it was not very successful I must say, but it had a certain influence …

Not overdoing it, the speaker’s impressions refer to those ideas elaborated not by the public but by consumer activists having a goal situated outside the normal political routine, including political parties and parliaments – ‘the march through the institutions’ as this was called in these days of the 1970s. One of the founding nations of the EU, Italy, was storm-tested in these wild years, which were not ‘una festa sui prati’. We concentrate on some statements: … We were discussing about consumer protection and I was studying this field which was considered in Italy a very new fashion, and the same time consumer interests were ignored – ignored, politically speaking, by the left, because the left thought that consumer protection was something linked to the market and those who protected consumers were in some ways involved in protecting the interests of the enterprises. It was also criticized by the right because they thought that those who protected consumer interests were dangerous revolutionaries. So, I must say that, politically speaking, the consumer protection has never appeared in a programme of a political party, and consumer rights were raised by lawyers and mostly by the implementation of European directives. So, I must say that the building of the notion of consumer and consumer protection is due to a sort of work of jurists and also to the work of the parliament, the government applying the European directive.



27 Chairman

of the European Consumer Law Group.

The Making of Consumer Law – A Sociological Critique  339 The topic of consumer law was considered a mere fashionable phenomenon; it did not even take the consumer seriously. Just as an interjection: The Italian Left discussed at that time for example – and this is very important for understanding Italian consumer status – whether it was possible to build a car at FIAT in Turin, not at ‘exchange value’ (Tauschwert), but only at ‘use value’ (Gebrauchswert), to overcome Marx’s dialectical dichotomy; that is, to cause the market and capitalism to disappear forever. In this sense, the question of consumer law and consumer protection in Italy has always been in the focus of political orientation. And even more, anyone who wanted to grant rights to the consumer exposed themselves to the suspicion of being a servant of capitalism.

D.  The Communist Legacy Consumer lawyers who joined the EU after the enlargement in 2004 look at consumer law and policy from a different perspective, wishing a market had existed, a market that would have allowed choice, individualism and, indeed, work. If we want to understand the concept of consumer policy and consumer law in a slightly complex manner, it is necessary to look back onto as I said the communist era, when the status of citizen was reformed into the status of working member of the society, cared for by the state and its socialistic organizations. This was the concept …

If we now want to get involved in communist times and what might have been called ‘consumer protection’ when scarce allocation was meant ‘in a slightly complex manner’, we have to realise that the citizen is declared a working member of society without detour, without even considering the socialist consumer. The consequence is captivating: the ‘state and its socialistic organizations’ will take care of them and tell them what and when to consume. The autonomous citizen (a creation only some 200 years old) was abolished and banned. The concept in real socialism was and is to destroy the autonomous citizen and with them civil society and the market as a platform of competing ideas, spirit, and intensity, and to replace it by safeguarding corporatist alignment. There is no space for the ‘consumer’ in socialism. Looking back, a number of questions can be asked about consumer protection and consumer law that touch on the obvious question how to define the consumer. … That in addition leads to an unbearably wide interpretation of the term ‘consumer.’ Consumer protection is perceived even in the areas where legal rights (regulations) tend to protect against the dangers threatening any person without regard to his market status. Even common protections related to pharmaceuticals, water, air, etc. is considered as a consumer protection in a very sense … That leads to the situation where provisions based on public law regulation, which serves common protection, are considered as consumer protection as well …

However, there are considerable differences between the former communist countries, which go back to the particularities of their history: … So, Polish do not trust other Polish but also Polish do not trust the state, Poles do not trust the Government; but there is one positive thing. We really like European Union and we are really enthusiastic about it.

340  Thomas Roethe For about 50 years, the Poles were in the custody of Soviet communism, socialisation, economic arrangement, fantasy and shortage but dared at least to revolt with Lech Wałęsa in Danzig/Gdansk and ultimately with the consent of Michael Gorbachev. Catholicism, Pope John II – these are social and cultural realities that are shamefully concealed in this reporting on consumer law. We cannot ignore it now – we are in a debate about the characteristics of the Polish people, which distinguishes them as a people, as a nation. This has nothing to do with consumer law, one might say. But again, the Polish people remember the destruction of productivity and consumption, the destruction of sociality – only surviving in inner circles, and even those destroyed once in a while by the agents of proper belief. But we can say that political dictatorships can completely destroy people for decades in their mind and consciousness and behaviour. There is enough literature about this. The following statement gives an impression of the suffering. … Polish people do not want to cooperate, they don’t want to get, they want to … the entitlements and this is not only a consumer law problem. The same situation you can find in the Polish approach towards refugees, towards disabled people or even the state of the law. This is a common cause that we do not really fully understand. And this lack of trust means that there is no willingness but also no ability to negotiate. And how can consumer law, how can contract law really function properly without this? So that was a pretty long introduction, but I wanted to give you the background.

We can confidently accept this statement on the whole, but: Poland has definitely achieved a massive economic success over the last 25 years. Nobody can really deny that apart from our government. Probably those days you just need to go to Poland and see how it looks. One of the reasons why that happened was that the Polish were able to achieve this as a society because of this deep conviction that one can only rely on oneself. So, what happened is that Poles massively engaged in economic activities, they were willing to take the risks.

Strangely enough, all these antisocial Poles gain economic success after longstanding years of socialist suppression, providing increasing wealth through intensive work, which from a distance is reminiscent of Adam Smith, who recognised the blossoming of the common good in successful selfishness.

E.  Legislature and Judiciary – Who Takes the Lead? Considerable differences exist between the Member States on who takes the lead in changing the law, the government together with parliament or the judiciary. I am going to the actors; I think that the main actor was the (German, TR) government. There was a policy; consumer policy was one result of what we call 1968, eight years after that in Germany a social democratic government came to office combined with the name of Willy Brandt. It was quite interesting to listen to Maria Reiffenstein yesterday, and she mentioned Bruno Kreisky – there were similar developments in the post (missing war? Omission also in the audioprotocol) German speaking countries – and Olof Palme from Sweden: the three leading social democratic politicians in Europe at that time, and all the three of them have much to do with the construction of environmental protection law in the 1970s and with consumer law. I think the focus was more on environmental law than on consumer law.

The Making of Consumer Law – A Sociological Critique  341 Consumer law was a bit in the development and environmental law – it was not combined as it is today, but it existed.

Without further ado the speaker recognises 1969/the early 1970s with the politicians Willy Brandt (Germany), Bruno Kreisky (Austria) and Olof Palme (Sweden) as representative of a social democratic change in Europe, which beside environmental protection favoured the development of consumer protection – or enforced consumer protection – as a social democratic goal. In 1875, Karl Marx accused the Social Democrats in his ‘criticism of the Gotha program’ of ignoring nature, which we now call ‘the environment’. The question whether consumer protection in Germany was the sole political issue of the SPD, or whether in the 1970s disregard of consumers had reached such an extent that it was imperative that political decisions had to be taken on consumer protection, is not yet answered in this statement. The Greek judiciary finds answers to urgent questions of the inferiority of Greek consumers, of course in favour of consumers. But still there is no determination of objective inferiority. The moral question is not answered either. By implying the general clause of good morals, courts have also held as unfair and therefore prohibited all marketing practices, which constituted a psychological coercion to buy or an excessive lure impinging upon the consumers’ freedom of choice. This might occur when enterprises succeed selling in goods by offering bonuses and gifts, by using premiums to govern, by organizing lotteries etc., because those methods exploit the human passion for gambling and making easy money.

There we have it at last, the judicially recognised inferior position of the consumer who, like all other people, is subject to the most varied temptations and because they are morally unstable, must be protected by an elite that is beyond reproach.

F.  French and English Pragmatism To jump straight into the place of consumer law in France: … The first period: It is very useful and interesting to go backward and consider this first in history act of consumer protection, the 1905 act against frauds and falsifications. This act is still in activity in some western European countries and it presents many peculiarities, worth to be described. This act was initially dealing only with goods and foodstuff but lately mattered with services in 1978. All the goods and services are concerned. And it is applicable for relations between industries or business and consumers, but as well between two business companies, two professionals in a business relationship. This 1905 Act, is interesting because it was coming from a strong demand from industry, and when the industry today objects against consumer law it is nice to recall them you required this act because it was your interest to control the market and to ban frauds and all kind of falsifications and misleading. So today very often you hear this approach that consumer law is against industry. It is false, absolutely false.

The French Government passed a law in 1905 designed to ban fraud and falsification in the market. This law was so wise that it sought to protect consumers and producers, those producers who in turn – because of the division of labour – became consumers of products of other producers. Noteworthy about this early law is that it breathes the spirit of Marxian analysis. In, for instance, ‘Das Kapital’, Marx repeatedly referred to the

342  Thomas Roethe rational structures of capitalism and typified all extra profits/fraud/deception as anomalies of reason – and therefore deviant behaviour in action. The French view of 1905 seems simple and has hardly changed at its core: Of course, with growing production and the repercussions of consumer protection, new fields of attention have arisen. There is now a sophisticated pre-market control that cares about safety and an equally efficient post-market control that pulls faulty products from the market. The second general principle, general obligation of conformity of the product and services, conformity to the contract and conformity to the different regulations. The third general principle, general obligation of safety, is quite strange, probably unique in our legal system. Products and services must under normal conditions of use or under other circumstances not be a danger to the public health. To my comprehension it is the first example that a thing is the subject of an obligation in our law. Products and services must, and usually it is persons that must do something, not products and services. But this peculiar way to deduct, to write the law, adds high efficiency. These general obligations have the advantage to be very clear and they organize all the matter around.

Here we find all the ingredients that Marx anticipates with the fetishist character of goods. This was meant to be critical of ideology, but the speaker points to French pragmatism: If goods in abundance in the market are released to consumers, then they should at least be safe. As a large trading and producing nation, the UK has vast inventories of rules that existed before President Kennedy’s initiative. They are of course known to all consumer lawyers of older age. The way grandparents and great-grandparents join the astonished and quite young consumer lawyers. So, even in the dark days, there were regulations that came into effect without the direct help of civilian consumer organisations. … but it also followed the traditional English approach of enforcement of consumer legislation – which is the use of strict criminal liability with a due diligence defence, which I call the regulatory defence – so the reorganization of local authorities during this period meant that you got the moving from just being weights and measures committees to having consumer protection committees. And they also began to develop consumer advice centres which was actually an idea coming from the Consumers’ Association, which would lead the way with a storefront consumer advice centre in Camden, London. And this act, the Trade Descriptions Act, was the workhorse of consumer protection in the UK for many, many years. It was not actually abolished until the Unfair Commercial Practices Directive.

It is easy to see that – rooted in the traditions of the market across Europe and worldwide – the British do not pardon scammers and other criminals in local and regional circumstances. They do not spend much time thinking ideologically, they have no happy consumer community in mind – they just want to take fraudsters and other criminals out of the market. A state can accomplish that without terrible intellectual dystopian disorders.

VI.  Final Thoughts We can distinguish three different levels of consumer protection and intermingling consumer law: the European level is about promoting the idea of consumer protection

The Making of Consumer Law – A Sociological Critique  343 in the Member States and the pressure to increase legal development in Member States, and also to promote and organise consumer organisations. It is a legitimate interest of the ‘fledgling’ EEC to develop basic policies for the European economy, for the European consumer, for the European market that allows for reasonable negotiations between the economic zones in different legal systems. Consumer protection, product liability and warranty are just elements of this strategy. We recognise a second level in the theoretical and intellectual interpenetration of this topic, which should be condensed into a common European pattern of argument in which the EEC and the Member States can agree grosso modo. In addition, there is the attempt to formulate a supporting ‘philosophy’, which can justify the European pattern of argument in contrast to the US – for example consumer rights versus consumer protection. On the third level, we find consumer protection organisations at the interface between production/distribution and consumption, which are responsible for informing, advising and, if possible, legally representing consumers. They take the form of an intermediate group, which, like a trade union, represents the interests of workers and employees, without consumers necessarily having to be members of the organisation. This raises the difficult issues of financing and independence (consumer protection organisations always stand between providers, government and consumers), which is answered very differently in each single Member State. The establishment of the organisations themselves, especially in the former Eastern Bloc countries, succeeds only to a varying extent. In the former paternalist Comecon States, consumer protection was a state task from the outset and related to a market of general deficiency being pretty fruitless, like production itself. The ‘consumer’ could merely act as a recipient, who was generally happy if there was anything to buy at all that could possibly be bartered later. There was not the western model of the autonomous and informed consumer with enormous choice. In western Member States, the consumer has a similar problem of self-understanding as consumer protection means occasionally paternalistic care. The adult consumer should be protected against the consequences of their ignorance, of their false impulses, and also from the false and seductive promises of unscrupulous providers and advertisements. This is just one aspect; the other is that consumer protection organisations should be understood as a manifestation of ‘civil society’, where citizens express their will in autonomy, peace and freedom. This is why consumer organisations are always on a tightrope and have to keep the balance between education and pure paternalism. Only recently has the effect of this unresolved desideratum become clearer. With concern for public health and contempt for providers who want to sell poor-quality and dangerous products, for instance full of sugar and fat, we return to the discussion about the autonomy of the consumer, as they contrast intellectually with their intermediary representatives, who want to decide how and what the consumer should eat and drink. This is definitely quite different from resolute intervention in the market when immediate danger threatens, or an emergency has already occurred.

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12 Looking Back to Look Forward Spring 2021 HANS-W MICKLITZ/THOMAS WILHELMSSON

It is tricky to write ‘your’ own history and even more difficult if you yourself are a member of a community that forms an integral part of what you want to present and describe. The solution could be to look back in order to look forward. In the epilogue we want to map some theoretical and conceptual issues that we encountered in the founding years and which we are still seeking a solution for. All of us had to face these issues in some form, and they keep returning in new forms as society changes. The issues are discussed both on a national as well as a European and global level. The development of consumer law as a ‘new’ discipline has not been equally strongly hampered by longstanding national traditions as have some other legal disciplines. Moreover, there has been an obvious readiness to learn across borders with regard to both principles and details. This book indeed demonstrates how the European and global consumer law communities are tied together. The discussion on theoretical and conceptual issues raised here certainly will – and has to – go on across national borders. We deliberately stress the need for ongoing discussion. It is hard to imagine that one could find a ‘solution’ to these issues that would settle questions once and for all. They rather appear as ‘eternal’ issues that each generation of (consumer) lawyers has to rethink, in relation to their temporally and spatially determined societal conditions. Perhaps one can foresee a continuous oscillation between various solutions, depending on prevailing conceptions concerning the market, the role of regulation, and social justice.

I.  The Shaky Concept of the Consumer What is the relationship between the consumer, the worker, and the citizen or between consumption, production, and society? There was already early on a theoretical debate on where to locate the consumer, whether and to what extent it was possible to refer to the various in-depth probing attempts to define and conceptualise labour law so as to

346  Hans-W Micklitz/Thomas Wilhelmsson shape consumer law and the consumer. The problem relates to the fact that the concept of consumer refers to a role but not to membership of a class or a group. This role may easily be blurred with other roles played by the same individual. The issue appears in many variations. Even in the developmental phase the question was posed whether only activities related to private consumption should be covered by consumer protection. The issue was often concretised in the question whether ‘consumer protection’ should also cover small businesses as buyers in the market.1 Those defending the extension emphasised the similarity of the need for protection and those opposing it relied on the different role and nature of private consumption. Another variation relates to the question whether the role of the consumer should include the consumer’s moral obligations as a citizen. Even at the time when consumer law was first developed the question arose to what extent this field of law should deal not only with protecting consumers in achieving consumer satisfaction, but also with citizens concerned with the societal consequences of their consumption.2 The consumer law discourse has constantly touched upon the relationship between consumer protection and, for example, the human rights of those involved in production. Today of course the environmental impact of private consumption has become a vital challenge. To what extent and how should consumer law contribute to sustainable consumption?3 Should consumer law only deal with the rights of the consumer or should it also be interested in the societal obligations of consumers? What remains of consumer law if it has to be merged with environmental law? The role of the consumer may also be mixed with the role of a seller or producer, as even early cases show. This challenge has become increasingly important in today’s digital society. On various platforms an individual may at the same time act in both roles. The consumer-seller-producer conceptuality has to be rethought in the platform economy.4 The consumer: a self-interested market actor, an altruistic citizen, or both?

II.  The Guiding Consumer Image Our understanding of the ability and capacity of the consumer in the marketplace has determined the policies and tools of consumer law ever since its beginnings. The variations in ambitions between different Member States and the EU relate directly to how the image of the typical consumer is defined in context. As well-known as the European standard is the consumer who is informed and reasonably circumspect, whilst some national jurisdictions might have been more focused on consumers that act less rationally.5 1 With regard to Australian Consumer Law see Aviva Freilich and Eileen Webb, ‘Small Business – Forgotten and in Need of Protection from Unfairness?’ (2013) 37 University of Western Australia Law Review 134. 2 Frank Trentmann, Empire of Things: How We Became a World of Consumers, from the Fifteenth Century to the Twenty-First (New York, Harper, an imprint of HarperCollins Publishers, 2016). 3 Bert Keirsbilck and Evelyne Terryn (eds), Consumer Protection in a Circular Economy (Antwerp, Intersentia, 2019). 4 Adrian Kuenzler, Restoring Consumer Sovereignty: How Markets Manipulate Us and What the Law Can Do About It (New York, Oxford University Press, 2017). 5 Dorota Leczykiewicz and Stephen Weatherill (eds), The Images of the Consumer in EU Law, Legislation, Free Movement and Competition Law (Oxford, Hart Publishing, 2016).

Looking Back to Look Forward  347 The choice of image determines, for example, the balance between informational and other measures used to protect the consumer. One may also operate with several standards, for example setting particular rules for so-called vulnerable consumers. The consumer image, and the role of vulnerable groups, certainly must acquire new features in a globalised and digitalised consumer society. Behavioural research continuously challenges the realism of traditional images and introduces ever more finely-grained distinctions in the behaviour of the consumer.6 To what extent should these distinctions be reflected in consumer law? Digitalisation of the economy even promotes personalisation of advertising and contracts, breaking away from consumers as a group and turning in its most advanced form to individualisation. The implications of personalisation through digitalisation are far from foreseeable.7 However, the question remains how to bring the normative implications of whatever consumer image into line with empirically proven behaviour. As prevailing conceptions concerning the functioning of the market, the role of regulation, and the content of social justice are directly reflected in the consumer image adopted and applied, the question of the consumer image is a continuously recurring issue. What at a certain point of time is fair and reasonable to demand of consumers and businesses is the result of a contextually related express or implied political struggle. The consumer: a knowledgeable information-seeker, a vulnerable underdog, or both?

III.  The Autonomy and Boundaries of Consumer Law President Kennedy’s declaration8 of consumer rights shaped the scope and reach of consumer protection not only in the Western capitalist democracies but also – at least indirectly – in the communist countries9 and later in the Council of Europe, the European Union, the OECD10 and even the United Nations. Legislators around the world have put the emphasis on advertising, sales promotion techniques such as doorstep selling, and later distance selling (today online trade), on consumer contract law, mainly sales law and consumer credit, on particular types of consumer contracts, such as package tours and time-sharing, on product liability and on appropriate mechanisms of law enforcement. They did not really keep pace with the rise of services and what is called the service society, even though some efforts were made in this area as well.11 6 Hans-Wolfgang Micklitz, Anne-Lise Sibony and Fabrizio Esposito (eds), Research Methods in Consumer Law (Cheltenham, Edward Elgar Publishing, 2018). 7 Christoph Busch and Alberto De Franceschi (eds), Algorithmic Regulation and Personalized Law: A Handbook (Beck/Hart Publishing, 2021); Omri Ben-Shahar and Ariel Porat, Personalized Law: Different Rules for Different People (Oxford University Press, 2021). 8 www.jfklibrary.org/asset-viewer/archives/JFKPOF/037/JFKPOF-037-028. 9 Thierry Bourgoignie, ‘The Approximation Process of Consumer Laws of Central and Eastern European Countries to EU Legislation: A Favorable Context but an Urgent Need for Clarification’ in Hans-Wolfgang Micklitz (ed), Rechtseinheit oder Rechtsvielfalt in Europa? – Rolle und Funktion des Verbraucherrechts in der EG und den MOE-Staaten, VIEW Schriftenreihen 1, 1st edn (Baden-Baden, Nomos, 1996) 91–126. 10 Erich Linke, ‘Consumer Policy Activities in OECD’ in Hans-Wolfgang Micklitz (ed), Rechtseinheit oder Rechtsvielfalt in Europa? – Rolle und Funktion des Verbraucherrechts in der EG und den MOE-Staaten, VIEW Schriftenreihen 1, 1st edn (Baden-Baden, Nomos, 1996) 127–160. 11 Fabrizio Cafaggi and Horatia Muir Watt (eds), The Regulatory Function of European Private Law (Cheltenham, Edward Elgar, 2009) 16.

348  Hans-W Micklitz/Thomas Wilhelmsson The de-regulation and partial privatisation of former state monopolies have enlarged the field of consumer law to telecommunications, energy, and transport. The rise of finance in the last decades of the twentieth century enhanced the need to adopt appropriate consumer laws. All these have led to special regulation and the rise of new fields of law, where consumer protection appears as an annex. The role of consumer law with regard to services of general interest has been debated in consumer law doctrine.12 In the Global South issues related to the right to basic goods and services, the right to education and the right to a healthy environment have been understood as important consumer challenges.13 Where, then, are the borders between consumer law and consumer protection? Should the law of the regulated markets be integrated into consumer law, turning consumer law into customer law or at least adding a different layer to consumer law? If there are no borders because the consumption society has become universal, this redirects our attention to what was an important issue in many countries when consumer law was first being developed: the relationship between consumer law and general private law. The German discussion on whether consumer law should be regarded as just a specialised Sonderprivatrecht or whether it should rather be treated as part of the core of private law is well-known.14 This is not a purely pedagogical issue, as it may have important implications for the development of private law. Reforms of the German law of obligations, as well as similar reforms elsewhere, show how EU consumer legislation can have an impact on the general system of private law. Consumer law that is recognised as an important part of private law may even offer materials for development of new social principles of private law15 – but at the same time this recognition of the position of consumer law in the private law structure may on the other hand hamper radical development of consumer law rules. This complicated discussion concerning the systemic ‘place’ of consumer law is of course not eased by the fact that consumer law is under development in a rather multidisciplinary fashion, with considerable use of administrative measures that in traditional systematics would be called public law. The interplay between private and public enforcement naturally varies in different Member States.16 Consumer law is most 12 Peter Rott, ‘A New Social Contract Law for Public Services?–Consequences from Regulation of Services of General Economic Interest in the EC’ (2005) 1 European Review of Contract Law 323; Colin Scott, ‘Services of General Interest in EC Law: Matching Values to Regulatory Technique in the Public and Privatised Sectors’ (2000) 6 European Law Journal 310; very comprehensively Martina Melcher, Dienstleistungen von allgemeinem wirtschaftlichem Interesse im europäischen Privatrecht (Tübingen, Mohr Siebeck, 2016). 13 Sothi Rachagan, ‘Development and Consumer Law’ in Geraint Howells, Iain Ramsay and Thomas Wilhelmsson (eds), Handbook of Research on International Consumer Law, 2nd edn (Cheltenham, Edward Elgar Publishing, 2018) 35. 14 See, eg Reinhard Damm, ‘Verbraucherrechtliche Sondergesetzgebung und Privatrechtssystem’ (1978) 33 Juristenzeitung 173; and later, eg, Reinhard Zimmermann, ‘Consumer Contract Law and General Contract Law: The German Experience’ (2005) 58 Current Legal Problems 415. 15 See, eg Hans-Wolfgang Micklitz, ‘Principles of Social Justice in European Private Law’ (1999) 19 Yearbook of European Law 167; Martijn W Hesselink, ‘European Contract law: a Matter of Consumer Protection, Citizenship, or Justice’ (2007) 15 European Review of Private Law 323; Brigitta Lurger, ‘The “Social” Side of Contract Law and the New Principle of Regard and Fairness’ in Arthur S Hartkamp, Martijn W Hesselink, Ewoud Hondius, Chantal Mak and Edgar du Perron (eds), Towards a European Civil Code, 4th edn (Nijmegen/ Alphen aan den Rijn, Ars Aequi Libri/Kluwer Law International, 2011) 353–386; Thomas Wilhelmsson, Social Contract Law and European Integration (Aldershot, Dartmouth, 1995). 16 See Fabrizio Cafaggi and Hans-Wolfgang Micklitz (eds), New Frontiers of Consumer Protection: The Interplay Between Private and Public Enforcement (Antwerp, Intersentia, 2009).

Looking Back to Look Forward  349 certainly one of the areas in which the traditional divide between private law and public law is clearly breaking down. This does not relieve consumer law, however, of continuously discussing the right balance between administrative ‘collective’ measures and the traditional ‘individual’ private law sanctions of contract and tort law. Consumer law: a recognised part of private and public law, an autonomous area sui generis, or both?

IV.  Interaction between National Consumer Law and European Consumer Law and Policy The rise of consumer law in Europe went hand in hand with a somewhat belated increase in European consumer law and policy, which in some aspects seems to be related to a decline of the welfare state in many European countries. Still unsolved is the question how and to what extent the EU as a supranational organisation with a quasi-statutory character can be compared to a nation state with a national consumer policy. There has been much discussion on how consumer law has mutated through a shift from the national to the European level. The EU has been criticised for abusing the confident consumer for market building purposes17 or for transforming consumer protection law into consumer law without protection.18 It is no secret that for a long time an abundance of academic discussion has focused on the choice of directions of EU consumer policy.19 The discussion is ongoing, with the deep interaction between consumer law and the regulatory state at stake. How does – and how should – transfer of competence and the rise of the European administrative state affect consumer law and policy? Are the two bodies of law, national and European consumer law, standing apart from each other? This is not about whether and to what extent the Member States have properly implemented European consumer law directives. It is about whether and to what extent European consumer policy and the concept of consumer law behind it has made its way into national legal orders, national courts, and national legal culture.20 What does the extensive case law of the Court of Justice of the EU contribute to the development of national consumer law? How can the interaction between the two be assessed? The ultimate question is to what extent one should recognise the emergence of a European and even global consumer society in need of similar regulative solutions, and to what extent there still remain national or local consumer cultures of such importance 17 Thomas Wilhelmsson, ‘The Abuse of the “Confident Consumer” as a Justification for EC Consumer Law’ (2004) 27 Journal of Consumer Policy 317. 18 Hans-Wolfgang Micklitz, ‘The Expulsion of the Concept of Protection from the Consumer Law and the Return of Social Elements in the Civil Law: A Bittersweet Polemic’ (2012) 35 Journal of Consumer Policy 283. 19 See, eg Stephen Weatherill, EU Consumer Law and Policy, 2nd edn (Edward Elgar Publishing, 2013); Hans-Wolfgang Micklitz and Stephen Weatherill, ‘Consumer Policy in the European Community: Before and after Maastricht’ (1993) 16 Journal of Consumer Policy 285; Jules Stuyck, ‘European Consumer Law after the Treaty of Amsterdam: Consumer Policy in or beyond the Internal Market’ (2000) 37 Common Market Law Review 367. 20 Fabrizio Cafaggi and Stephanie Law (eds), Judicial Cooperation in European Private Law (Cheltenham, Edward Elgar Publishing, 2017); Anthi Beka, The Active Role of Courts in Consumer Litigation: Applying EU law of the National Court’s Own Motion (Cambridge, Intersentia, 2018).

350  Hans-W Micklitz/Thomas Wilhelmsson that the variation should influence the diversity of consumer law.21 This brings civil society back in and sheds light on the role of consumer organisations and their future in a digitalised and globalised world. Consumer law: national, European, or both? The consumer: the average European, determined by national and local culture, or both?

V.  Actors of Consumer Law and Policy The rise of consumer law and policy in the nation states was bound to a variety of actors, with different leading players depending on the national context. The driving force might be the government that took action, it might be an intellectual avant-garde, it might be the national courts or consumer organisations which were using a scandal to promote the idea of protection. When the EU took over consumer law and policy, the European Commission turned into the driver in law making, playing an ever stronger role in the enforcement of consumer law, seemingly to the detriment of civil society organisations and in the long run also of the intellectual avant-garde. In short a multiplicity of actors have been more or less replaced by a single actor on the law making side: the European Commission. In the area of enforcement a new and prominent role has been taken by the European Court of Justice. Both are surrounded by a particular epistemic community. A whole world of experts provide input to European law making, not to forget the lobbying institutions which are all located in Brussels and putting pressure on the European Commission and the European Parliament.22 The preliminary reference procedure is subject to strategic litigation, from both sides, business and consumers, who professionalise in bringing cases to Luxembourg.23 Consumer law has become a field of law that is developing mainly top-down. Even international organisations are devoting ever more resources to development of international guidelines and their transposition into national consumer law.24 Can the new actors, brought in on the scene by digitalisation and globalisation, promote a new kind of bottom-up approach, one where consumers themselves play a much more active role? Or will both the traditional legislator and consumers and their organisations have to leave to technology the driver’s seat and the opportunity for completely new forms of normative steering that it creates? What does this mean for the outlook of consumer law? Consumer law: created top-down, bottom-up, or both? 21 Thomas Wilhelmsson, ‘The Average European Consumer: a Legal Fiction?’ in Thomas Wilhelmsson, Elina Paunio and Annika Pohjolainen (eds), Private Law and the Many Cultures of Europe (Alphen aan den Rijn, Kluwer Law International, 2007) 243–268. 22 Emilia Korkea-aho, ‘Legal Lobbying:’ The Evolving (But Hidden) Role of Lawyers and Law Firms in the EU Public Affairs Market’ (2021) 22 German Law Journal 65; Päivi Leino-Sandberg and Emilia Korkea-aho (eds), Legal Expertise in EU Policymaking: Changing Roles for the Legal Profession (Cambridge University Press, forthcoming). 23 Betül Kas, ‘“Hybrid” Collective Remedies in the EU Social Legal Order’ (Florence, European University institute, PhD Thesis, 2017); R Daniel Kelemen, Eurolegalism: The Transformation of Law and Regulation in the European Union (Cambridge, Mass., Harvard University Press, 2011). 24 Arnau Izaguerri Vila, ‘International Consumer Protection at the United Nations: Towards Global Governance?’ (2020) 43 Journal of Consumer Policy 91.

INDEX ADR (alternative dispute resolution)  154–60 ADR Directive  128, 132–3 advertising  22, 23, 26, 27, 244–6 Advertising Standards Authority (UK)  244–6 AGB-Gesetz  107–8, 112–13 AgV (Arbeitsgemeinschaft der Verbraucherverbände)  102 alienated consumers  286–7 alternative dispute resolution (ADR)  154–60 antitrust laws  152–4, 295–7 Arbeitsgemeinschaft der Verbraucherverbände (AgV)  102 ASA (Advertising Standards Authority (UK))  244–6 Ascarelli, Tullio  139 aspirin tests  34–5 Altroconsumo  49 Austria  337–38 autonomy of consumer law  347–49 bank overdrafts  261 banking industry  21 Barcellona, Pietro  148 Baun, John  15 beer  55 Belgium  308 Bessone, Mario  148 BEUC see Bureau Européen des Consommateurs Bills of Sale Acts (UK)  259, 263, 266 Bork, Robert H  296–7 Borrie, Gordon  245, 247, 269 Borschette, Albert  14, 36–7 boundaries of consumer law  347–49 bounded rationality  303–4 Bourgoignie, Thierry  66, 68–70, 76, 77, 79, 80, 85, 91 Brandt, Willy  340–1 Bricks, Hélène  66 Brussels, Belgium  308 Bultmann, Fritz  74 Bureau Européen des Consommateurs (BEUC) ‘adolescence’  43–50 ‘adulthood’  59–2 agriculture  45–7

aim and scope  33 beef boycott  29 ‘birth and infancy’  32–5 ‘childhood’  35–43 Committee of Euro-Tests  33 competition cases  55 competition policy  39–40 consumer protection principles  41–2 disadvantaged consumers  54 ‘early adulthood’  50–59 energy policy  53–4 establishment of  32–4 Euro-Tests  34–5 expansion of  43–5, 50–1 food prices  51–2 free market campaign  60 harmonisation of law  40 hormones in meat  53 Italian corruption scandal  47–49 lead-free petrol  53 optimism  59–1 pessimism  51–3 priorities  39–40, 53–4 product liability  51–2 safe market campaign  60 secretariat  37–39, 51, 61, 62 working language  43–4 CA (Consumers’ Association(UK))  38, 43, 61, 238, 239, 241, 250–2 CAI (Consumers’ Association of Ireland)  60 Calais-Auloy, Jean  63, 66, 72, 79 Calais-Auloy, Marie-Thérèse  66 camouflage techniques  5–6 CAP (Common Agricultural Policy)  32, 45–7, 57, 60 capitalism  282–3, 323 Cappelletti, Mauro  76 car industry  19–20 Carpentier, Michel  70, 80 cars  55, 60 cartels  55 case law  133–4, 224–6 Cassis de Dijon judgment  64

352  Index Castelain, Gilbert  36, 38, 48, 61 CCC (Consumer Consultative Committee)  15–17, 37, 42, 44–5, 62 CCCCE (Comité de Contact des Consommateurs de la Communauté Européenne)  13, 34–7, 306–7 CDC (Centre de Droit de la Consommation)  69–70, 71–2, 82 CDC (Comitato Difesa Consumatori)  49 Central Europe  2, 4–5, 8–9 Centre de Droit de la Consommation (CDC)  69–70, 71–2, 82 Centre for European Legal Policy (ZERP)  70–2 Chase, Stuart  283 Check Trading  259–60 Chicago Antitrust Project  295 Chicago School of Economics  290–1, 294 circular economy  8 citizen consumers  301 civil society organisations  311–12 CJEU see European Court of Justice class actions  160–5 Clinton-Davis, Stanley  60 Cold War  292 collective interests  89–2, 284 Comitato Difesa Consumatori (CDC)  49 Commission de la Refonte  79 Committee of Euro-Tests (BEUC)  33 competition  39–40, 55, 67, 98–99 see also unfair competition concepts of consumer protection  25–6 ‘confident consumers’  238–39 conspicuous consumption  283 Consumentenbond  43, 61 consumer associations  168–70, 330–6 consumer centres  102 consumer choice  177, 285, 288, 292, 293, 301–2, 303 Consumer Consultative Committee (CCC)  15–17, 37, 42, 44–5, 62 consumer contracts  146–51 see also contracts Consumer Council (UK)  239, 242, 243, 250, 252, 254 consumer credit  5–6, 21–3, 26, 111, 222n180, 236, 243, 259–69, 273–4 Consumer Credit Act (Germany)  113 Consumer Credit Act (UK)  237–38, 266–7, 268–69 Consumer Credit Directive  118–19 consumer education  27, 42, 283, 313 consumer ideals  280–2 consumer imaginaries  277–78, 302–4 consumer information  27, 41, 152

consumer law centres  72–3 Consumer Law Group  27 Consumer Law Journal  74 consumer loans see consumer credit Consumer Ombudsmen  177–78 consumer participation  3, 28 Consumer Policy Committee (OECD)  75–6 Consumer Programmes (EEC)  17–19, 22, 42–3, 52–3, 65–6, 79, 89 Consumer Protection Charter (Council of Europe)  40–2, 57 consumer rights  17, 18, 307, 323 Consumer Rights Directive  117 consumer sovereignty  238–39, 242, 244–6, 282, 283, 290–4, 300, 303 consumer unit (EEC)  13–14, 15, 16, 20, 21, 27, 28 consumer welfare  296–298 consumerism  307–8 consumers access to justice  28, 41, 89–2 alienated consumers  286–7 citizen consumers  301 concept of  345–6 ‘confident’  238–39 definition of  25 disadvantaged  554 economic interests of  21–5 efficient consumers  294–298 elderly  54 in free markets  283 ‘ideal’  45 image of  346–7 as a juridical concept  137–40 liberated consumers  287–90 marketised consumers  298–2 meaning of  165–68 rights  57 as socio-political figures  278–4 weak consumers  284–7 Consumers Research, Inc.  283 consumption culture  285–6 contracts  5, 41, 125, 146–51, 195–6 freedom of  3, 125, 195, 202, 212, 214–15, 247–48 cooperative movements  29, 279 cosmetic products  14 Council of Europe  17, 40–2, 57, 74 Courtois, Jean-Marie  70, 80 COVID-19 pandemic  8–10 credit cards  261 credit unions  258, 261 Crosland, Anthony  240, 241 Crowther, Geoffrey  263 Crowther Committee (UK)  262–7

Index  353 Dahl, Børge  66 dangerous products  55–6 de Coninck, Hans  74 debt collection  262 Defeso do Consumidor (DECO)  43, 60 democratic narrative of consumer protection  2, 10 Denmark  286 see also Nordic countries deregulation  293, 294, 297 Diamond, Aubrey  247 Diani, Aldo  35, 38, 48 digitalisation  9, 125–6 Director, Aaron  295–6 disadvantaged consumers  54 distance selling  111 Dona, Massimiliano  49 Dona, Vincenzo  47–49 doorstep selling  24–5, 26, 41, 110 Downs, Anthony  298–300 Droit et Consommateurs  74 Dubois, Jacques  38 Dumont, Anthony  36, 44, 56 ECJ see European Court of Justice ECLG (European Consumer Law Group)  50, 65, 67–69, 77, 80, 82, 83–6, 88, 91, 318–20 e-Commerce Directive  122–3 Economic and Social Committee (EEC)  16–17, 83, 146 economic interests of consumers  21–5 economic narrative of consumer protection  2, 10 ECSC see Economic and Social Committee (EEC) education  300 see also consumer education EEC see also European Commission; European Union car industry  19–20 Common Agricultural Policy (CAP)  32, 45–7, 57, 60 common market  22, 29 competition policy  39–40 Consumer Consultative Committee (CCC)  15–17, 37, 42, 44–5, 62 Consumer Programmes  17–19, 22, 42–3, 52–3, 65–6, 79, 89 consumer protection  13–17 concepts of  25–6 member states  29 consumer unit  13–14, 15, 16, 20, 21–3, 27, 28 cosmetic products  14 dangerous products  55–6 Economic and Social Committee  16–17, 83, 146 Environment and Consumer Protection Service (SEPC)  15

foodstuffs  19 hormones in meat  58–59, 60 intellectual context  317–30 law making process  19–20 lead-free petrol  60 Misleading Advertising Directive  110–11, 120, 245 price provisions  27 product liability  60, 80 EECOSOC see Economic and Social Committee (EEC) effet utile  8 efficient consumers  294–298 elderly consumers  54 energy policy  53–4 Environment and Consumer Protection Service (SEPC)  15 environmental protection  308–10 EP (European Parliament)  56–7, 83, 85 Erhard, Ludwig  98, 287–90 EU see European Union European Commission see also EEC; European Union Consumer Consultative Committee (CCC)  15–17 consumer law  66–7, 350 consumer policy  305–17 consumer protection  65–7, 75 Consumer Protection Laws Project  65–7 Contact Committee for Consumers  13, 34–5, 306–7 legislative proposals  83 research projects  81–2 European Consumer Law Group (ECLG)  50, 65, 67–69, 77, 80, 82, 83–6, 88, 91, 318–20 European Consumer Organisation see Bureau Européen des Consommateurs (BEUC) European Court of Justice  6–7, 55, 111, 115–16, 124, 134, 224–5, 228–30, 350 European Economic Community see EEC European Journal of Consumer Law  74 European Parliament (EP)  56–7, 83, 85 European Union see also EEC; European Commission ADR Directive  128, 132–3 alternative dispute resolution (ADR)  154–60 austerity measures  302–3 Consumer Credit Directive  118–19 consumer credit regulation  268 consumer law  78–80 consumer policy  312–17 Consumer Rights Directive  117 Council of Ministers  83 e-Commerce Directive  122–3

354  Index European Economic and Social Committee  16–17 market citizens  294 Residential Immovable Property Credit Directive  118–19 Single European Act (SEA)  30, 75, 80 Unfair Contract Terms Directive (93/13)  5–6 Euro-Tests  34–5 fair trading  21 Fair Trading Act (UK)  254–7 false labels  5 family organisations  29 Federspiel, Benedicte  16, 50, 51, 56, 59, 64 Finland  176, 179–1, 182 see also Nordic countries Fontaine, Marcel  66 food additives  19 food prices  51–2 foodstuffs  19, 55–6 Forbrugerrådet  39, 61 Ford  55 France  341–2 Frank, Thomas  301–2 Frankfurt, Germany  308 Fransen, Anne  36, 37, 44 free markets  283, 292–3 freedom of contract  2–3, 125, 195, 202, 212, 214–15, 247–48 Friedman, Milton  290, 291–4, 300 Galazzo, Rolande  46, 48 Galbraith, John Kenneth  240–1, 285–6, 299 Germany  95–135 AGB-Gesetz  107–8, 112–13 case law  133–4 collective enforcement  129–1 competition policy  98–99 consumer centres  102 consumer construction contracts  125 consumer contract law  95–7 consumer credit  111, 113–14, 268–69 Consumer Credit Directive  118–19 consumer law  133–4 consumer policy  104, 109–11 consumer protection  135 consumer protection policy  105–6 Consumer Rights Directive  117 consumers  279, 280, 287–90 customer contract law  117–20 debt tower problem  113–14 digitisation  125–6 distance selling  111 doorstep selling  110 e-Commerce Directive  122–3

economic policy  103–4 enforcement  97, 127–33 Leitbild  123–5 liberated consumers  287–90 medical treatment contracts  125 ordoliberalism  288 package travel  119–20 package travel law  108–9, 111–12 private law instruments  134–5 product liability  110 public enforcement  131–2 Residential Immovable Property Credit Directive  118–19 Schuldrechtsmodernisierung  114–17 Schuldturmproblematik  113–14 social market economy  98, 287–90 Sonderprivatrechte  106–7 soziale Marktwirtschaft  98, 287–90 Standard Contract Terms Act  107–8, 112–13 standard terms  99–100 Stiftung Warentest  102–3 sustainability  126–7 timesharing  111 unfair commercial practices law  100–1, 109, 110–11, 120–2 unfair contract terms  112–13 Verbraucherkreditgesetz  113 welfare state policy  105–6 Gesetz gegen Wettbewerbsbeschränkungen (GWB)  98 Gessner, Volkmar  71 Ghidini, Gustavo  48–49, 50, 66, 139 Giddens, Anthony  301 Gide, Charles  279 Goldman, Peter  52, 59 Goode, Roy  247, 263, 269 Goodhart, Philip  251, 254 Gore, Al  301 Goyens, Monique  74 Grandi, Dino  137 Greece  341 green consumption  304 Groes, Lis  44 growth hormone scandal  58–59 Handler, Joel  90 harmonisation of law  40, 85–7 head rests in cars  19–20 Heath, Edward  253 hire-purchase  259–1, 263, 266, 267, 268 Hoffmann, Dieter  70, 80 Hondius, Ewoud  66, 79 hormones in meat  29, 53, 58–59, 60 Howe, Geoffrey  254–5 Howells, Geraint  72, 73, 74

Index  355 Iceland see Nordic countries ideal consumers  45 IEA (Institute of Economic Affairs (UK))  253 individual autonomy  3–4 Institute of Economic Affairs (UK)  253 institutionalisation of consumer protection  13–17 insurance industry  21 Integration through Law Project  76–7 intellectual community  64–5, 82, 87 International Organisation of Consumers Unions (IOCU)  34 interviews  5 IOCU (International Organisation of Consumers Unions)  34 Italian corruption scandal  47–49 Italy  137–70 Antitrust Law  152–4 class actions  160–5 consumer associations  168–70 Consumer Code  151–2, 164–5 consumer contracts  146–51 consumer law  338–39 consumers as a juridical concept  137–40 product liability  141–6 unfair terms  146–51

legal entrepreneurship  326–28 legal origins theory (LOT)  82 Leitbild  123–5 Levi, Edward  295 liberal narrative of consumer protection  2 liberal political economics  281 liberated consumers  287–90 Lidbom, Carl  181 Linke, Erich  75 LOT (legal origins theory)  82

Kennedy message  1, 104, 138, 307 Kentro Prostasias Katanalotan (KEPKA)  60 Keynes, John Maynard  284 Kivivuori, Antti  180 Koschnick, Hans  70–1 Krämer, Ludwig  65, 66, 67, 70, 79, 80, 85 Kreisky, Bruno  337–38, 341 Kyrk, Hazel  283

mail-order  261 Mansholt, Sicco  32, 34, 61 Marcuse, Herbert  286–7 marginal utility theory  281–3 market citizens  294 market failure  323–4 market populism  301–2 market reality  4–8 marketised consumers  298–2 marriage market  323–4 Marx, Karl  341 Maury, Jean  66 medical treatment contracts  125 Menger, Carl  281–2 Merchandise Marks Act (UK)  242–3 Merkel, Helga  32 Micklitz, Hans-Wolfgang  74, 165–6, 297–298 minimum clauses  25–6 Mises, Ludwig von  282, 301–2 misleading advertising  22, 23, 26, 41 see also advertising Misleading Advertising Directive  110–11, 120, 245 Moeller, Karen  15 Molony, Dennis  138 Molony Committee (UK)  242–4, 260 Moneylenders Acts (UK)  259–60 monopolies  41, 293, 295 Monsen, R Joseph  299 Morelli, Biagio  48–49 mortgage loans  7 mortgages  267–68 Müller-Armack, Alfred  98

labelling of products  27 labour law  87 LAUCI (Lega per l’Ambiente Utenti e Consumatori Italiani)  49 law centres  252 Law Commission (UK)  249–50, 251–2 lead-free petrol  19–20, 53, 60 Lega per l’Ambiente Utenti e Consumatori Italiani (LAUCI)  49 legal basis of consumer law  25–6

Nader, Ralph  285, 293, 323 National Consumer Council (UK)  237, 239, 257–59 national consumer law  78–79, 349–50 NCB (Nederlandse Consumentenbond)  37–38 NCC (National Consumer Council (UK))  237, 239, 257–59 Nederlandse Consumentenbond (NCB)  37–38 neoclassical economics  282–3, 291, 300 neo-conservatism  79

Jenkins, Roy  61 Jevons, William Stanley  281 Joerges, Christian  71 Journal of Consumer Policy  73 Journal of European Consumer and Market Law  74 journals  73–4 justice, access to  28, 41, 89–2

356  Index neoliberal narrative of consumer protection  2 New Public Management (NPM)  300 Nordic countries  171–91 consumer law  337 Consumer Ombudsmen  177–78 consumer protection legislation  175–79 languages  172n3 legal community  172–5, 186–90 legal establishment  183–6 Market Courts  178, 185 politics  179–3 private law  184 product liability  183n48 unfair contract terms  183n49 Norway  176, 286 see also Nordic countries NPM (New Public Management)  300 nuclear energy  54 OCU (Organización de Consumidores y Usuarios)  44 OECD (Organisation of Economic Cooperation and Development)  74–6 Office of Fair Trading (UK)  245, 255–7 oil crises  54 Ölander, Folke  73 olive oil  56 Olson, Mancur  90, 250 ombudsmen  177–78 ordoliberalism  98, 236, 238, 255, 288 Organisation of Economic Cooperation and Development (OECD)  74–6 Organización de Consumidores y Usuarios (OCU)  44 Pachl, Ursula  68 package travel  27, 108–9, 111–12, 119–20 Packard, Vance  285, 323 Pareto, Vilfredo  137 Paris Summit  308–10 participation of consumers  4, 28 Peter Goldman Fund  60–1 petrol  19–20 Poland  193–233 business-to-business disputes  231 case law  209–11, 224–6 Code of Obligations  195n5 consumer credit  222n180 consumer law  231–3, 339–40 before 2001  194–211 before EU Accession  212–21 inter-war period  194–6 consumer market  197–205 consumer protection  221–4 contract law  195–6 economic liberalisation  212–15

European Law  215–21 freedom of contract  195, 202, 212, 214–15 legal system  194–5 legislative reform  215–18 mistrust  222n182 private law  194–5 social coexistence  202n55 socialist regime  197–205 transposition of EU Rules  218–1 unfair contract terms  227–30 UOKiK (Urząd Ochrony Konkurencji i Konsumentów)  215–17 politics  298–99 Posner, Richard  296 poverty  252, 258 Prendergast, Peter  70, 80 price labelling of products  27 Price Marking (Bargain Offers) Order (UK)  256 price-fixing  55 private law  4–5, 87, 106–7, 134–5, 184, 194–5 Private Members Bills (UK)  240, 251 product liability  22, 23–4, 26, 51–2, 60, 80, 110, 141–6, 183n48 product safety  60, 75–6, 146 production and consumer law  8–9 productivist attitude to consumer protection  3–4 public interest litigation  90–1 quality of life  9 questionnaires  5–6 racial discrimination  261 Reich, Norbert  63, 64, 65–6, 68–69, 71, 73, 76, 91 Reifner, Udo  74, 91 research tools  5–6 Residential Immovable Property Credit Directive  118–19 restrictive practices  41 Revue Européenne de Droit de la Consommation  74 Richely, Paul  35 Ridley, Nicholas  254 Riefa, Christine  73 riots of 1968   307–8 Roberts, Eirlys  39, 43–5, 48, 51 Rodotà, Stefano  148 Romans  1 Romieu, André  32, 34 Roppo, Enzo  148 Russia  280 safety belts in cars  19–20 salmon  55 Scarascia-Mugnozza, Carlo  37 Schadee-Hartree, Elisabeth  32

Index  357 Scharpf, Fritz  78 Scherhorn, Gerhard  73 Schmidt, Helmut  320 Schmitz, Bob  64 Schuldrechtsmodernisierung  114–17 Schuldturmproblematik  113–14 Schultén, Gerhard  180 SEA (Single European Act)  30, 75, 80 Seccombe, Monica  76 SEPC (Environment and Consumer Protection Service)  15 Sevón, Leif  180 Sheehan, Jeremy  15, 70, 80 Silent Spring (Carson)  90 Simon, Herbert A  303–4 Single European Act (SEA)  30, 75, 80 social change  87–89, 324–6 social democracy  105, 340–1 social inequality  54 Sonderprivatrechte  106–7 sovereign consumers  238–39, 242, 244–6, 282, 283, 290–4, 300, 303 Special Message to the Congress on Protecting the Consumer Interest  1, 104, 138, 307 Spinelli, Altiero  14 Standard Contract Terms Act (Germany)  107–8, 112–13 standard terms  99–100, 107–8, 112–13 Stauder, Bernd  72, 73 Stauder, Hildegard  72 Steindorff, Ernst  84 Steinmetz, Frank  66 Stiftung Warentest  102–3 Stigler, George  291, 295, 296, 300 Stillner, Walter  74 student riots of 1968  307–8 Stuyck, Jules  72, 74, 79 subsidiarity  18 sustainability  126–7 Sweden  176, 181, 279, 286 see also Nordic countries Tala, Jyrki  180 Taylor, Edward  254 Temple, Henri  66, 72 Tench, David  50, 250, 251–2 Terryn, Evelyne  72 Thomas, Richard  250 timesharing  111 Tonner, Klaus  66, 74 Trade Descriptions Act (UK)  243–4 trade secrets  5 trade unions  16n8, 29, 311–12 trader manipulation of consumer law  11

Trentmann, Frank  278, 280, 287 Trubek, David  77, 90 UFC (Union fédérale des consommateurs)  43 UNC (Unione Nazionale Consumatori)  47–49 unfair advertising  23 see also advertising unfair commercial practices  100–1, 109, 110–11, 120–2, 245 unfair competition  21, 100–1 unfair contract terms  7–8, 27, 112–13, 146–51, 183n49, 227–31 Unfair Contract Terms Act (UK)  251 Union fédérale des consommateurs (UFC)  43 Unione Nazionale Consumatori (UNC)  47–49 United Kingdom  235–70 advertising  244–6 Advertising Standards Authority  244–6 affluence  240–1 bank lending controls  267–68 bank overdrafts  261 banking crises  267 Bills of Sale Acts  259, 263, 266 Check Trading  259–60 class distinctions  240 competition  241–2 Consumer Coun cil  239, 242, 243, 250, 252, 254 consumer credit  243, 259–69, 272–4 Consumer Credit Act  237–38, 266–7, 268–69 consumer law  240–59, 271–2, 342 consumer sovereignty  244–6 Consumers’ Association  38, 43, 61, 238, 239, 241, 250–2 credit cards  262 credit unions  258, 261 Crowther Committee  262–7 debt collection  262 Director General of Fair Trading  255–7 exemption clauses  247–49 Fair Trading Act  254–7 freedom of contract  247–48 hire-purchase  259–1, 263, 266, 267, 268 household debt  268 Institute of Economic Affairs (IEA)  253 law centres  252 Law Commissions  249–50, 251–2 mail-order  261 Merchandise Marks Act  242–3 Misleading Advertising Directive  245 Molony Committee  242–4, 260 Moneylenders Acts  259–60 mortgages  267–68 National Consumer Council  237, 239, 257–59 Office of Fair Trading (OFT)  245, 255–7 ordoliberalism  236, 238, 255

358  Index political system  239–40 poverty  252, 258 Price Marking (Bargain Offers) Order  256 Private Members Bills  240, 251 racial discrimination  261 Report to Parliament by the Committee on Consumer Protection  138 resale price maintenance  242 Trade Descriptions Act  243–4 unfair commercial practices  245 Unfair Contract Terms Act  251 unsolicited goods and services  251 United States access to justice  89–90 advertising  246 Chicago School of Economics  290–1, 294 citizen consumers  280, 284–5 Consumer Bill of Rights  4 consumer policy  76 consumption culture  285–6 deregulation  293, 294, 297 growth hormones  59 implied warranties  247–48 monopolies  293 New Deal  284 product safety  75 regulated economy  284–5, 292 sovereign consumers  282 Unsafe at any Speed (Nader)  90

Urząd Ochrony Konkurencji i Konsumentów (UOKiK)  215–17 utility  281–3 veal  58–59 Veblen, Thorstein  282–3 Venables, Tony  16, 50–3 Verbraucher und Recht  74 Verbraucherkreditgesetz (Germany)  112 Voices (Szymborska)  1 Vromans, Marinus  50 weak consumers  284–7 Weatherill, Stephen  72, 73 Wegner, Hartmut  66 Weichmann, Elsbeth  32, 34 Weiler, J.H.H.  76 welfare state  78–80, 105–6, 300, 320–2 West Germany see Germany Whincup, Michael  66 Willet, Chris  72, 73 Williams, Shirley  245 Woodroffe, Geoffrey  72, 73 Young, Michael  257–58 Zeitschrift für Verbraucherpolitik (ZVP)  73 ZERP (Centre for European Legal Policy)  70–2