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Activities of Directorate GeneralActivities of Directorate General

for Health and Consumer Protectionfor Health and Consumer Protection

Evidence based policyEvidence based policy of consumer of consumer protectionprotection

University of Zurich, 24 November 2007University of Zurich, 24 November 2007

Maria LissowskaMaria Lissowska, Taskforce on Consumer Markets, DG , Taskforce on Consumer Markets, DG SANCOSANCO

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Mission of DG SANCOArt.153 of the Treaty establishing the European Community

In order to promote the interests of consumers and to ensure a high level of consumer protection, the Community shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organise themselves in order to safeguard their interests.

Mission: to meet the expectations of European citizens to live safe, healthy and full lives and to have their health and safety rights protected througtout Europe at the same level.

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Structure of SANCO

Human health

Food safety

Health and human treatment of animals

Rights of citizens in their role of consumers

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Consumer Strategy 2007-2013

Empowering consumers, enhancing their welfare, effectively protecting them

Principal goal: to enhance consumer welfare, but:

In what conditions?

How to distinguish where welfare – detriment is?

By what means?

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Conditions for consumersFragmentation of consumer market, partly counter-balanced by:

importe-commerce - still limited to national markets (if 27% of consumers made an on-line purchase over a year, only 6% made it cross-border)

Advertising increasingly sophisticated, too much informationDomination of providers

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Measures to enhance consumer welfare

To empower consumers by enabling choice, assuring accurate information, provide effective protection and respect of rights

To protect them against serious risks that they cannot tackle as individuals.

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Measures to empower consumers

Legislation

Enforcement and redress

Education

Support for consumer organisations

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Principal Directives protecting consumersOn unfair commercial practicesOn contracts negotiated away from business premisesOn package travelOn unfair terms in consumer contractsOn timeshareOn distance contractsOn indication of pricesOn injunctions for the protection of consumers’ interestsOn sale and guaranteesOn consumer creditOn electronic commerceOn distance marketing of consumer financial servicesOn compensations to air passengers

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Role of legislationBinding for providersRegulating relations between providers and consumersEmpowering consumers and not replacing them in their choices

Legislation is transposed and enforced by national administrations, not by the Commission

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Consumer protection and other policies

Supply-side of economy has an impact on consumers – market failures (abuse of dominant position)But: even competitive markets may not perform for consumers, due to:

Information asymmetry, misleading advertising Common actions of suppliers (e.g. bundling, market partitioning, unfair commercial practices)Behavioural deficiencies of consumers (exploited by suppliers).

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Competition and consumer policy

Competition necessary, but insufficient to empower consumer

Empowered consumers enhance supplyby making pressure on providers

by activating innovation

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Knowledge necessary for consumer policy

Which markets are failing? Who is concerned?What is the reason (market failure, behaviour)? What remedies may be applied?What the consumers really wish?What may be the effectiveness and cost of remedies?

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Knowledge on the outcomes of past policies

Rationale: consumers are subject to influence of different measures (of national bodies, of other EU policies), necessity to check effectiveness of competition and consumer protection measures

Tools: monitoring (now Consumer Markets Scoreboard being developed); indicators:

Price divergencesConsumer satisfactionConsumer complaintsSafetySwitching

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Knowledge on consumers

Satisfaction methodology and surveys

Eurobarometers on consumer protection and on business attitudes with respect to cross-border sales

Eurobarometer and focus groups on services of general interest

Consumer detriment (in progress).

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Satisfaction surveys Completed in 2007 on services of general interest:

Electricity supply

Gas supply

Water distribution

Fixed telephony

Mobile telephony

Urban Transport

Extra-urban transport

Air transport

Postal services

Retail banking

Insurance services

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Satisfaction surveys cont.

Distinguishing

25 Member States

Socio-economic groups (gender, age, education, occupation)

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Satisfaction survey - methodology

Definition of satisfaction – to what extent consumer requirements are met

Satisfaction drivers:Price (transparency, payment process, affordability, accuracy)

Quality (reliability, safety, information, technical support, availability, points of sale)

Image (reputation, relationship with customer, flexibility, consumer mindedness)

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Satisfaction survey - methodologyPrimary indicators – satisfaction measures (1..10)Contribution of drivers to overall satisfaction (by regression analysis) – to distinguish essential driversTwo-dimension visualisation (degree of satisfaction with a driver – degree of expectations for a driver) – to distinguish priority actions (high expectations – low satisfaction)

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Satisfaction survey – outcomesHigh satisfaction: air transport, insurance, mobile telephony – low satisfaction:urban and extra-urban transport (but indices fairly similar)The most important driver: price, but the most satisfactory - qualityFor some services (insurance, water, fixed telephony, urban transport) new MS less satisfiedThe most satisfied are elder consumers (especially retired), with secondary education. Students and self-employed are the least satisfied

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Eurobarometer on consumer protection in the Internal Market

Objectives:To detect facts on cross-border shopping:

level and principal areas problems it may generate (unfair practices, respect of rights, delivery, complaints)

To measure level of consumer confidence in cross-border shopping, reasons of its lack To find out what is the level of satisfaction with consumer protection, role of authorities.

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Eurobarometer on consumer protection in the Internal Market

Findings:Cross-border shopping is occasional (holidays), more frequent for package holidayE-commerce increasingly popular, but mostly for domestic purchasesProblems in cross-border delivery, informationLow knowledge and confidence in cross-bordeer shopping – higher for educated consumers High (but not general) satisfaction with national protection systems, price transparency as favourite tool

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Eurobarometer on business attitudes

Target group: SME (97% of the sample)Problems focused on: cross-border sales and consumer protection

Role of different sales channelsPreparedness for cross-border salesBarriers for cross-border sales (risk of non-payments, costs of compliance with national regulations, delivery, language, after-sale and complaints connected difficulty)Measures to facilitate cross-border trade (harmonised regulations, better information, Alternative Dispute Resolution)

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Eurobarometer on business attitudes

Principal findings:29% of retailers carry out cross-border trade (mostly by Internet), but only to a few countries48% of retailers declare to be prepared to sell cross-borderThe most important obstacle: insecurity of transactions, national fiscal regulations and consumer laws, complaints and after-sale handling Not cross-border trading companies perceive barriers as more harmfulHarmonization of laws perceived as promising

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Eurobarometer and focus groups on SGI

Services:CommunicationsMobile telephonyFixed telephonyInternetPostal servicesBankingWater and energyTransport

Aspects:AccessUseAffordabilityImportance in daily lifeComparing offersSwitching providersFair terms and conditionsMaking complaintsProtection of consumer interests

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Eurobarometer on SGIMain findings:

Some sections of society excluded because of inaffordability of services (electricity, mobile telephony)Better educated consumers make more complaints and their handling is poorComparison of offers is difficult and terms of contracts are often unknownConsumers feel in general well protected with respect to SGI.

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Focus groups on SGIServices: fixed and mobile telephony, postal services, bank account, Internet accessObjectives – to detect:

usagesatisfaction (ease of access, prcie, quality)attitudes with regard to choice of supplier

Scope of study:average consumersvulnerable consumers (with insufficient resources, elder, retired, living in remote areas)

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Insights from behavioural economics

On needs and objectives of consumersTo what degree new commercial practices may be beneficial/harmful Which consumer behaviour is due to conscious choice and which is an anomaly (where to intervene?)

On potential empowering measures and their effectiveness