Committee Reports > List of Committees > Joint > 1978 > Committee on the Secondary Legislation of the European Communities > Report No. 08 - Doorstep Sales and Unit Pricing

REPORT

A. INTRODUCTION

Proposals Examined

1. The Joint Committee has examined the proposals made by the Commission for Council Directives for consumer protection in regard to

(a)Contracts negotiated away from Business Premises [R/l 33/77, as amended by R/l34/78], and

(b)Marking and Display of the Prices of Foodstuffs [R/1277/77].

2. The first proposal seeks to protect the consumer when negotiations for the sale of goods and services are initiated by a trader away from his business premises. The second one seeks to make compulsory the display of the selling price and the unit price [i.e. price per unit of measurement] of foodstuffs for sale to the ultimate consumer whether prepackaged or in bulk.

3. These proposals arise from the Preliminary Programme of the European Economic Community for a Consumer Protection and Information Policy which was adopted by the Council on 14 April, 1975. The proposal relating to contracts negotiated away from business premises has already been considered on a number of occasions by a Council Working Group. The unit pricing proposal has not yet been considered.

Bodies Consulted

4. The Joint Committee has had the opportunity of considering the views of the Irish Housewives’ Association and the Consumer Association of Ireland Ltd. in regard to both proposals. In regard to unit pricing it also consulted the Irish Dairy Industries Association Ltd., the Food, Drink and Tobacco Federation (within the Confederation of Irish Industry) and the Retail Grocery. Dairy and Allied Trades Association. In regard to contracts negotiated away from business premises it has had the benefit of the views of the Incorporated Law Society. The Joint Committee deeply appreciates the help it received from these bodies and wishes to express its sincere thanks to each of them.

B. CONTRACTS NEGOTIATED AWAY FROM BUSINESS PREMISES

Scope of Proposal

5. The reasoning behind the proposed Directive is that a consumer may be placed at a considerable disadvantage when he receives a visit in his home or office or some such place from a trader who makes him an unsolicited offer to supply some goods or services. The consumer may be inveigled into buying goods or services which on mature reflection he finds he does not want. The proposed Directive would oblige Member States to adopt certain basic rules for the protection of the consumer in such circumstances but would allow them to apply more stringent rules if they so wished.

6. The Directive would apply to contracts and unilateral engagements negotiated away from business premises between a trader and consumers except contracts (a) negotiated exclusively on the initiative of the consumer, (b) negotiated solely in writing, (c) concluded before a court, lawyer or person under a duty to both sides, (d) relating to immovable property or rights therein and (e) where the price payable does not exceed 15 EUA £9.70).

7. Such “doorstep” contracts would be governed by special rules. They would be void unless they are made in writing and are signed by the consumer or unless they contain specific information or if a copy is not given or forwarded to the consumer immediately. The consumer would have the right of cancelling the contract within seven days of signing it and within that period no payment, except for any deposit required by national law, could be required of, or accepted from, the consumer. If the contract is cancelled the return of any goods received would be at the expense and risk of the trader.

Views of the Joint Committee

8. The Joint Committee readily agrees that a consumer is often at a considerable disadvantage in negotiations with a trader who makes a surprise call on him and subjects him to a smooth line of sales talk on his doorstep. The draft Directive is aimed at abating such a nuisance by giving the consumer a protection which Irish law does not at present provide. The Joint Committee fully supports this objective.

Initiation of Negotiations

9. It is the initiation of negotiations away from the business premises that would bring a transaction within the Directive. It has been suggested to the Joint Committee that a telephone call by the trader before calling on the consumer would suffice to take a transaction outside the; provisions. Moreover, contracts negotiated exclusively at the initiative of the consumer are to be excluded. A telephone enquiry by a consumer could be held to constitute such initiative although the real inducement to conclude the contract might be the pressure put on the consumer on his own doorstep. The Joint Committee is concerned that the insistence on initiation of negotiations as the essential element may frustrate the implementation of the proposal. It recommends, therefore, that the Directive should also apply where the contract is signed by the consumer away from the trader’s business.

Suggested Exclusion of Certain Transactions

10. The Joint Committee sees a danger that the proposed Directive while protecting the consumer in areas in which he is vulnerable may jeopardise several types of trade that the householder finds useful. If the cost of service exceeds 15 EUA it would seem that contracts for services to be performed immediately on the spot by such as chimney sweeps, window cleaners, handymen, occasional gardeners and the like could be within the Directive. The requirements regarding a written contract and a cooling off period seem wholly inappropriate in the case of such transactions. Neither are they appropriate where the goods sold are perishable foodstuffs. Moreover, it would be quite impracticable to return certain goods after the cooling off period e.g. goods consumed by use such as a fuel or supplied to meet an emergency. The Joint Committee believes that there would be legitimate public protest if these type of transactions were put in jeopardy by excessive formalities. It recommends that the scope of the proposed Directive be narrowed so as to take in only dealings in which the consumer is genuinely at a disadvantage.

11. While the proposed Directive covers a wide range of commercial transactions it contemplates further specific Directives to deal with particular areas e.g. consumer credit and insurance contracts. It seems to the Joint Committee that the present proposal does not deal adequately with contracts of the latter kind. It would be preferable to exclude such contracts from the proposal altogether and to leave them to be dealt with in separate instruments.

Price Payable

12. Originally the Commission proposed that the Directive would not apply to contracts where the price payable did not exceed 25 EUA but it has amended this figure to 15 EUA as recommended by the European Parliament. It has been suggested to the Joint Committee that it would, be preferable to increase the figure to 45 EUA rather than reduce it on the grounds that contracts involving less than half a general labourer’s weekly wage are not worth subjecting to special legal requirements. On balance, the Joint Committee favours the figure proposed by the European Parliament because it believes that the abuses which it is hoped to eliminate can be found in quite small transactions.

Cooling Off Period

13. The Joint Committee welcomes in particular the provision whereby a consumer could cancel a contract within seven days of signing it. It notes that the proposed Directive would allow Member States to choose a later date from which the cooling off period could commence. The Joint Committee believes that advantage should be taken of this to allow the period to run in Ireland from the date of the acceptance of the goods.

Effect of Breach

14. Failure to observe the provisions of Articles 3 (written contract) and 4 (signing and supply of copy) of the draft Directive would make the contract void. The Joint Committee agrees with the Incorporated Law Society of Ireland that in the event of such breach, the contract should be voidable rather than void. The option of voiding the contract should, of course, be the consumer alone.

C. MARKING AND DISPLAY OF THE PRICES OF FOODSTUFFS

Scope of Proposal

15. The proposed Directive would oblige Member States to make it compulsory for all foodstuffs on sale to the consumer to be marked with both the selling price and the unit price, both inclusive of tax. The unit price would show the price per unit of measurement. Prices could be shown by means of labels, shelf labels, signs, posters or wall charts. Prices in advertisements, offers and catalogues would have to be shown in similar fashion. When special offers of limited duration are made the period of validity would have to be shown.

Foodstuffs packaged in prescribed quantities in accordance with Community Directives or national legislation would be exempt. Food sold for consumption on the premises would also be exempt. The unit price only would have to be shown in the case of foodstuffs sold in bulk.

Unit prices would have to be expressed in kilograms or litres but prices could be expressed in imperial units in Ireland and the United Kingdom as long as their use is permitted by Community legislation.

Views of the Joint Committee

16. The purpose of unit pricing is to facilitate price comparison and so enable the consumer to assess the relative value of the goods on offer. It should, therefore, benefit the consumer by enhancing competition in the retail trade. The Joint Committee, therefore, welcomes the proposal in principle. The additional costs imposed on the trade and the various exemptions envisaged are factors, however, which may determine the practical effects of introducing unit pricing.

Responsibility for and Cost of Unit Pricing

17. In the Joint Committee’s view, if the Directive is adopted, the responsibility for unit pricing will necessarily fall on the retail trade. RGDATA has strongly insisted that this would considerably increase retailers’ costs. On the other hand the Food and Drink Federation and the Irish Dairy Industries Association Ltd. resist any suggestion that the responsibility be transferred to the manufacturers. The Joint Committee considers that unit pricing by manufacturers could amount to retail price maintenance and therefore agrees that it should devolve on retailers alone to display unit prices. It notes, however, that advertising by manufacturers insofar as it refers to prices would be caught by the Directive.

18. The Joint Committee is informed that it is not possible at this stage to evaluate the likely cost to retailers in Ireland. However, it notes that the Directive would allow retailers a wide choice as to the manner in which unit prices would be displayed. In particular, it notes that the Directive would not require retailers to unit price every item separately. It believes, therefore, that there would be scope for retailers to keep their additional overheads as low as possible. Indeed, it may be that overall unit pricing could reduce the general level of prices as it apparently did in the USA.

Exemptions

19. Foodstuffs prepackaged in quantities prescribed by EEC Directives or national legislation would be exempt from the requirements of unit pricing. The Consumers Association of Ireland Ltd. believes that this will lead to the wholesale introduction of standardised packaging which will make unit pricing, even if it is adopted, very rare in practice.

20. The purpose of prescribed quantities legislation is to enable consumers to make ready comparisons between prices of competing products by requiring the products to be put on sale in packages within a specified range of sizes. At present a proposal for a range of sizes Directive covering a wide variety of goods is before a Council Working Party. The effect of the latter proposal, if adopted, would be that goods prepackaged in compliance with an earlier Directive 76/211/EEC and in accordance with the proposed prescribed range of sizes would enjoy free movement throughout the Community notwithstanding any national laws to the contrary. If would not, however, make the range of sizes compulsory for any Member State. Directive 75,’106/EEC (which Ireland need not implement until 1980) made similar provisions in regard to certain prepackaged liquids.

21. In Ireland the Merchandise Marks Act, 1970 empowers the Minister for Industry, Commerce and Energy to make orders requiring that specified prepacked goods be marked with an indication of the quantity of contents. This Act also empowers the Minister to require by order that specified goods be prepacked only in standard quantities and that they be marked with the name and address of the packer or importer. One such Order has already been made entitled the Merchandise Marks (Prepacked Goods) Marking and Quantity Order (S.I. No. 28 of 1973). It requires that the goods listed in it may not be packed or imported or sold by retail in prepacked form unless they are marked with the quantity of the contents expressed in metric terms. In addition, some of the goods listed may be prepacked only in certain specified sizes.

22. The Consumers Association of Ireland Ltd., while acknowledging that in some instances (e.g. butter) the range of sizes allowable permits the consumer to compare prices readily, suggests that in other cases (e.g. milk) the range is too wide. Moreover, the Association believes that it will be impossible for the consumer effectively to compare prices when the same product appears in a package which shows the unit price and in another which is exempt from the requirement.

23. It would be regrettable if measures intended to help consumers had the effect of confusing them. It may be that across the board unit pricing of foodstuffs would benefit consumers considerably if the introduction of prescribed quantities should be long delayed. It does seem to the Joint Committee that the adoption of these related measures should follow some order of priority. If unit pricing is only to be introduced when many products will be exempt, it might be preferable to drop the idea of across the board unit pricing and to endeavour to identify ranges of foodstuffs in which the system could be applied without exception. As to the range of prescribed quantities the Joint Committee notes that the Commission is conscious of the need of simplifying the ranges at Community level and it believes that this task should be energetically pursued.

Imperial Units

24. If the proposal is adopted, unit prices would have to be expressed in terms of the kilogram or the litre but imperial units could be used in Ireland as long as their use is permitted by Community legislation. The future of the imperial units for unit pricing purposes (pound, ounce, gallon and pint) is to be reviewed by 31 December, 1979.

25. The Irish Housewives Association has suggested that during the transitional period unit prices might be shown in Ireland in both international and imperial units. The Joint Committee recommends this suggestion for favourable consideration if and when the Directive is being implemented in Ireland.

(Signed) MARK CLINTON,

Chairman of the Joint Committee.

26th April, 1978.