Those of us who live and work in the world of competition law and policy are well used to a world that operates at multiple levels for enforcement, case review and policy discussions. Those rules have emerged over time as the EU has developed its competence in the area of competition law and it would be difficult to argue that Europe is a worse place for having multi-layered enforcement. We have well established procedures that tell us when a case should be looked at in Brussels and when it should be dealt with at a national level. We have also developed networks of competition agencies, in the form of the European Competition Network that meet regularly to discuss cases and issues and have processes that allow national authorities to claw back cases that they think are better looked at nationally but that the European Commission have already claimed as their own.
The reasons that competition law enforcement work so well at the national and regional level are many and varied. Firstly, the nature of competition regulation encompasses activities that can easily cross borders. One would hope that in a Single Market context cross border trade and activities are more common than under a more atomised European economy. Secondly, the firms engaged in mergers or indeed subject to antitrust scrutiny favour a ‘one-stop-shop’ approach to enforcement. Any cross border merger in Europe will affect each country in different ways and having a single authority able to review the proposed merger and make a single decision is enormously attractive. The alternative is 27 competing reviews that may throw up a whole mess of decisions. Thirdly, cost is an important factor – having to file a merger in 27 jurisdictions is a lot more expensive (in fees and legal costs) than doing one. Fourth, the outcomes from a single review are applicable in all member states – essentially everyone knows where they are.
For a consumer organisation the benefits of multi level approach to potential competition problems affecting consumers were well illustrated by a complaint filed by Which? in the UK about price discrimination between European consumers by Apple on iTunes pricing. The complaint, submitted in the September of that year, focused on the fact that iTunes prices in the UK were around 120 Euro cents compared to 99 euro cents in Germany and France. The complaint was initially made under the Competition Act of 1998. The OFT recognised that the issue was a cross border one, or rather that it affected multiple European countries, and many EU consumers, and so passed the case up to the European Commission. The EC launched an investigation in February 2005 which eventually lead to a negotiated settlement that brought all European prices into alignment. For a consumers’ organisation the benefit of a linked, multi layered enforcement approach was clear – you write one complaint, it gets passed to the right people; it gets sorted and it applies to ALL European consumers. As Neelie Kroes said at the time EC "The Commission is very much in favour of solutions which allow consumers to benefit from a truly Single Market for music downloads."
The experience of the use of competition law by Which? as a tool to enhance consumer welfare is a useful prism from which to review the more recent experience in Europe with the very same company, Apple, on the issue of consumer guarantees. It is also a useful prism through which to view the different ways of dealing with pan-European consumer welfare problems with consumer protection legislation compared to competition law.
The charge, led by Altroconsumo, against Apple’s flouting of EU guarantee rules triggered a number of actions in other EU countries, most notably in the Netherlands, Portugal, Belgium, Germany and Luxembourg. The European Commission spotted a good solid consumer issue and stepped up to the issue by encouraging Member State consumer enforcement agencies to take action. As Vivian Reding argued "The approaches to enforcement in these types of cases turn out to be very diversified and inconsistent at a national level. In at least 21 EU Member States Apple is not informing consumers correctly about the legal warranty rights they have. This is simply not good enough".
Commissioner Reding’s statement rather summed up what can be termed the Apple Conundrum – how do you enforce European law against a company infringing consumer rights or welfare when the action is affecting all, or many, EU consumers? If you are using competition law the answer is simple – you pass it to the European Commission who enforce the law across Europe and produce a single result that applies in all of Europe. If you are a consumer enforcement body you apply the European law nationally and hope everyone else does the same and that all the actions deliver the same result. However., as Commissioner Reding pointed out in her statement, at least 21 Member States the single European law is not being applied.
One has to ask if the reasons for such a varied application of law are explicable in the light of our experience with competition law. It is clear that there are consumer law issues that apply across Europe. Indeed, in an age of single market European consumer laws and increasingly regional distribution platforms it is unlikely that firms will want to have different levels of protection between European countries. It is also clear that consumers are buying the same products, under the same European laws, in multiple European countries. The argument for a single European enforcement would appear strong on this count alone. For firms as well it can hardly make sense to have to deal with 27 different jurisdictions on consumer law issues and the costs associated with dealing with multiple legal actions. It also makes no sense in a single European market for different consumers in different countries to have different levels of consumer protection simply because enforcement is varied across Europe.
The Apple Conundrum, created by the responses to iTunes and the guarantee controversy, throws into stark relief the need for European consumer law to be applied on the same basis as European competition law. Both laws are at base consumer protection laws and both govern areas of the market that can either operate nationally, in which case local enforcement is appropriate, or govern areas that operate across borders. In this latter area it makes sense for European consumers to be protected by a European consumer enforcer who can take a company like Apple to task and sort its guarantee misbehaviour out in one fell swoop. Such a move makes sense for Europe’s consumers, Europe’s credibility and also for Europe’s companies. Europe’s firms are well versed in dealing with a competition regime that protects consumers and competition on a cross-border basis – it is about time we had the same for consumer law.
Phil Evans is an independent consultant on consumer, competition and trade matters and is a Senior Consultant to Fipra. Phil is a member of the Competition Commission in the United Kingdom. The views expressed in this article are entirely personal. Before joining the UK Competition Commission, Phil was Head of Consumer Policy at Fipra, joining the group after ten years as Principal Policy adviser at the UK Consumers' Association where he was responsible for dealing with competition policy investigations and submissions and for developing its trade policy. The Chairman of the UK Office of Fair Trading, John Vickers, publicly wrote that "Phil has contributed enormously to the establishment of competition as a core consumer issue“; Phil is an economist by training, and has taught at the LSE, University of London and the University of North Carolina. Phil has also provided technical assistance to a number of national and international organisations, including UNICEF, Unctad and the WTO. Phil has authored six books and numerous studies on everything from trade policy to shopping.