Ministers scrap ‘country of origin’ from unfair trading law

The decision supports a recommendation earlier this month by the Irish Presidency of the European Union, subsequently endorsed by the European Commission.

The draft Directive is intended to clarify consumers' rights and to simplify cross-border trade within the EU by establishing a single, common, general prohibition of unfair commercial practices distorting consumers' economic behaviour.

The original draft was based on the country of origin principle, which took the line that because the Directive would ensure EU-wide standards of protection, businesses would only have to comply with the requirements of their country of origin when selling to consumers around the EU. The Directive then prevented Member States from imposing additional requirements.

But many Member States rejected this principle, arguing that it would be unfair to those countries with higher consumer protection requirements.

The Irish Presidency then came up with its compromise: the removal of the principle on the understanding that other provisions of the Directive would ensure maximum harmonisation. On Tuesday, the European Competitiveness Council accepted the proposal, despite opposition from the UK and five other countries.

According to the Council, the key features of the agreed common position are:

• the deletion of the country of origin clause on the understanding that other provisions of the Directive ensure maximum harmonisation;
• the understanding that other provisions of the Directive ensure maximum harmonisation;
• the possibility for Member States to apply national provisions more prescriptive or restrictive than the Directive; and
• a revision clause ensuring that the situation will be re-examined after four years.

The UK's Advertising Association yesterday expressed its regret at the Council's position, arguing that it strips away legal certainty from the text of the Directive and could leave UK businesses needing to comply with 24 other sets of national law.

Andrew Brown, the AA's Director General, said:

"The Ministerial agreement will discourage the UK advertising business, and indeed those of other Member States, from engaging in cross-border activity. Instead of removing barriers to trade it will serve to keep them in place."

Phil Murphy, the AA's Head of European Public Affairs, added:

"The Directive dangled the now empty promise of legal certainty for business through a strong 'country of origin control' mechanism. It is an injustice to both business and consumers that in the space of a week the Commission and the Member States may have lit the touch paper to an Internal Market bonfire."

The draft Directive will now be formally adopted by the Council of Ministers before submission to the European Parliament for a second reading.