The Omnibus Directive “Article IV” 

by , on Oct 27, 2021 06:00:06 AM

A new deal for consumers in the EU  

On 7th of January 2020, Directive 2019/2161 of the European Parliament and the Council as regards the better enforcement and modernisation of Union consumer protection rules, also known as the ‘Omnibus’ Directive came into force. It is the outcome of the so-called ‘New Deal for Consumers’ which was premised on modernising EU consumer law and strengthening its enforcement to reflect new global marketplace realities and the proliferation of e-commerce. The new Omnibus Directive introduced significant changes to four existing EU legislative frameworks, namely the:  

• Unfair Terms in Consumer Contracts Directive (93/13/EEC); 
• Price Indication Directive (98/6/EU); 
• Unfair Commercial Practices Directive (2005/29/EC); and  
• Consumer Rights Directive (2011/83/EC). 

 

Applicability 

Although the Omnibus Directive has already entered into force, EU Member States have to transpose its provisions until 28th November 2021 into their national legal systems and enforce the same as from 28th of May 2022. In light of Brexit, the UK will not be required to implement the Directive. Nonetheless, the UK Government had already published a Green Paper, called ‘Modernising Consumer Markets’ which is, in its large part, identical to the Omnibus Directive. 

  

Highlights of the Omnibus Directive :  

The Omnibus Directive introduces a swathe of amendments and new rules, including rules which will govern the following elements of consumer legislation: 

 

Enhanced transparency  

• Ranking of online search results: consumers must be informed about the main criteria determining the ranking of the offers received in response to a searched query and must indicate if ranking  is based on payments received from the listed traders. 
• Personalised pricing: consumers must be informed when the price of a product is based on an algorithm taking into account their personal behaviour, including the possibility of higher pricing as a result of the underlying algorithm.
• Consumer rights for free digital services: providers must provide clear information about, for instance, the characteristics of the service, the duration of the contract, and the conditions for termination. The consumer will be able to cancel an online contract within 14 days, without assigning any reasons. 
• Transparency about consumer reviews and endorsements: it would be considered an unfair commercial practice if consumers are misled where: (a) reviews of a product were not submitted by consumers who used or purchased the product and no reasonable and proportionate steps were taken to ensure that they originated from such consumers; and (b) fake and/or manipulating consumer reviews and endorsements are submitted to others for the sole purpose traders to promote their products. 

Tech-neutral application of consumer laws  

• National legislation must be evaluated and amended, where necessary, to ensure that consumer law applies to services and content in digital form, without distinction from the application thereof to non-digital services and content. 

 

Remedies, compensation and quality control 

• Compensation and individual remedies for consumers: consumers in all Member States have the right to seek and obtain specific remedies, such as: price reduction, financial compensation or terminating the contract when they were subject to unfair commercial practices.  
• Dual quality of consumer goods: traders are obliged, when a product they market across different Member States in an identical manner or imply that the product is identical, to ensure that the product is not manufactured with significantly different compositions or characteristics. This obligation applies only to goods, rather than services and is primarily addressed to traders in the food product market. 

 

Marketing behaviour and practices 

• Prevention of misleading marketing and selling practices: the Omnibus Directive allows Member States to implement new provisions aimed at prohibiting aggressive or misleading marketing and selling practices where the traders make unsolicited views to consumers’ homes; or any excursion organised by a trader to promote or sell its products. 
• Prohibition of reselling event tickets bought through bots: traders are no longer allowed to resell event tickets bought through bots which would otherwise give them the possibility to circumvent limits imposed on the number of tickets an individual could purchase for an event with the idea of acquiring more tickets; thence, reselling them. 
• Ensuring genuine price reduction: when there is a price reduction, the seller must indicate as a reference price the lowest price applied throughout a period of at least 30 days preceding the price reduction announcement.  

 

Interaction and communication between traders and consumers 

The Directive requires more flexibility in respect of the methods of communication which traders use when communicating with their consumers. Traders can use such method of online communication that allows consumers to maintain a written record of any correspondence and which also allows a quick and efficient way of communication. Furthermore, consumers are allowed to create content which the trader will have limited rights to use, and if the consumer requests such content, the trader will be obliged to make it available to the consumer free of charge and within a reasonable time, as long as it is in accordance with the contract. Moreover, when a consumer asks a trader to visit their home in order to undertake a repair, the consumer will lose the right to withdraw from a contract. 

 

Enforcement and consequences of infringement  

National authorities will be empowered to impose effective, proportionate, and dissuasive penalties for infringement of consumer rights. In these cases, national authorities will have the power to impose a fine of up to 4% of the trader’s annual turnover, or a fine up to €2 million when information on the turnover is not available. Member States are given the discretion to introduce higher maximum fines. When imposing a fine, Member States must take into account including, amongst others, the nature of the offending activity, its scale and gravity, whether there were any mitigating or aggravating factors, the financial implications the activity had for the trader, and the trader’s previous behaviour. 

 

What impact will they leave on businesses and/or consumers? 

The Omnibus Directive has already entered into force; however, Member States are given time until 28th of November 2021 to implement the Directive into their domestic legal order whilst using the time to carry out the necessary internal consultations about its possible impacts upon traders and consumers. It still needs to be seen how Maltese authorities will implement the amendments introduced by the Directive under Chapter 378 of the Laws of Malta. 

 

For further information on the implications of the EU’s proposed Digital Services Act and how it may impact you, please do not hesitate to contact us at [email protected]. 

 

Author: Stephanie Marinova 

• Topics:
• Europe
• Europe regulation