A ‘New Deal’ for Consumers: EU Omnibus Directive to Be Implemented Shortly

EU member states must implement before the end of the year Directive (EU) 2019/2161 (informally referred to as the Omnibus Directive), aimed at boosting consumer protection laws and modernizing e-commerce and digital content regulations as a result of the “New Deal for Consumers” initiative, adopted by the EU Commission on April 11, 2018. INTA’s Unfair Competition Committee (UCC) is tracking its progress.

The “New Deal for Consumers” initiative serves to strengthen enforcement of EU consumer protection laws. In addition, an increase in e-commerce and the use of digital content and services combined with the loss of transparency and accountability have created the need to modernize and unify the currently inconsistent regulation throughout the European Union.

Current national laws on penalties differ significantly across the EU. There are gaps among national laws in effective and proportionate penalties to deter and sanction intra-EU infringement, insufficient individual remedies for consumers harmed by breaches of national legislation, and shortcomings with regard to injunction procedures. However, it is also necessary to safeguard traders’ ability to operate in the internal market and to provide practical guidance to traders.

Consequently, on November 27, 2019, the European Parliament and the European Council of EU member states adopted the Omnibus Directive, which consists of two directives and a communication. EU member states must implement the provisions of the Omnibus Directive into their national laws by November 28, 2021, and ensure that national legal provisions are effective as of May 28, 2022.

The Directive amends four existing EU consumer protection directives, provides more detailed sanctions for infringements of the amended directives, improves the legal remedies available to consumers, and eliminates shortcomings and inconsistencies in regulations.

Additional key developments include the legal ban on marketing products of different quality in different countries without justification, and new notice and information obligations toward consumers. For example, online traders operating their own websites must ensure that customer reviews or recommendations are real. If a trader provides access to customer reviews, it must explain how it ensures that the reviews come from real consumers who have purchased and used the products.

The following are the specific details of the “New Deal for Consumers” initiative:

COM(2018) 183: Communication on the New Deal for Consumers.

The Commission already expressed the need to strengthen the level of compliance of market participants in 2017, when it concluded that EU consumer protection rules must be better applied, enforced, and improved to keep up with the developments of a digital market.

COM(2018) 184: A proposal on representative actions for the protection of the collective interests of consumers and repealing the Injunctions Directive 2009/22/EC (Representative Actions Proposal).

The Omnibus Directive now aims to enable qualified entities to bring representative actions for both injunctive measures and redress measures against traders that infringe provisions of EU law. Furthermore, it seeks to ensure a balance between consumers’ access to justice and appropriate safeguards for traders to avoid abusive litigation.

COM(2018) 185: A proposal to amend Directive 93/13/EEC on unfair terms in consumer contracts, Directive 98/6/EC on consumer protection in the indication of the prices of products offered to consumers, Directive 2005/29/EC concerning unfair business-to-consumer commercial practices, and Directive 2011/83/EU on consumer rights (Proposal on better enforcement and modernization).

In summary, this latter proposal includes the following improvements to consumer protection:

• More effective, proportionate, and dissuasive penalties for widespread cross-border infringement, such as breach of (the EU General Data Protection Regulation (GDPR).
• Right to individual remedies for consumers when harmed by unfair business practices such as aggressive marketing.
• More transparency for consumers in online marketplaces relating to origin of the goods and the trader.
• Consumer right to obtain clear and comprehensible information if traders operate with personalized sales prices.
• Transparency in online searches: Consumers expect “natural” or “organic” search results based on relevance to their search queries, not based on payment by third parties.
• Extending protection of consumers’ personal data with respect to digital services, such as cloud storage, social media, and email accounts.
• Granting traders more flexibility in choosing the most appropriate means of communication with consumers.
• Clarifying member states’ freedom to adopt rules on certain forms and aspects of off-premises sales.
• Clarifying the rules on misleading marketing of “dual quality” products. Products with a similar presentation but different composition may not be sold in different countries (for instance, drinks with different juice content, different fat percentage, vegetable fats vs. animal fats). This means that products with identical or similar packaging can only be marketed with different compositions in different EU member states if the differences can be justified by objective and legitimate factors, such as local law requirements or seasonality of raw materials.

One of the Commission’s main concerns was that the effectiveness of EU consumer protection law has been compromised by a lack of awareness among both traders and consumers, and that consumers were not taking advantage of existing means of redress as often as they should. In addition, the current legal provisions had not been clearly or consistently applied to online markets.

The UCC is monitoring national legislative proposals with special attention to the fact that the new rules will not only benefit consumers, but also provide clear and practical guidance for brand owners. The UCC will provide updates on relevant milestones and will also report about the status of the national legal initiatives of the EU member states around November 28, 2021, and May 28, 2022.

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest.

© 2021 International Trademark Association