Codes of conduct in Greece
(By Inka Greece)

Codes of conducts, transparency and self regulation: towards a double way of protection of the European consumers, legislation and self-regulation


INTRODUCTION

The discussion about the protection of consumer, first started in the beginning of 1960. It appeared as social claim from the corresponding, basically informal, organizations of consumers, a regional social movement as the equivalents of that time for peace, protection of environment etc. It is not accidental that this social reaction was initially expressed in U.S.A., with corresponding theoretical cover, which up to a point, formed the relevant demand in public opinion. In market economy, when free competition functions, is not a fair regulator.
The movement of protection of consumer reacted to the hallucination that the consumer is the regulator of the market and him who decides what will be produced and consequently what will be consumed. What is certain, is that the companies form the offer and the demand not only quantitatively but also qualitatively.
The publicity, with the most modern techniques, maintains or even promotes this superiority of companies against the weakest consumers, exceeding fictitiously the social inequalities and misdirecting the consumer to a model of life which is characterized by production and consumption.

II. 1.Protection in the Internal Market

The principal problem in guaranteeing consumer protection in the internal market lies in the different national laws concerning commercial practices between businesses and consumers. Neither group is currently taking full advantage of the potential of the internal market, which has been strengthened since the introduction of the euro, in the area of e-commerce (B2C or "business-to-consumer" commerce).

Businesses wishing to offer consumers the option of electronic commerce are faced with discouraging legal uncertainties, which limit the effectiveness of the internal market. This problem is also detrimental to consumers, as it restricts access to various products and to greater selection.

Following an analysis of the relevant services, the Green Paper states that Community rules on consumer protection have not succeeded in adapting to the natural development of the market or to new commercial practices. The solution envisaged involves simplification of national rules and a more effective guarantee of consumer protection. Simplification of rules may also involve harmonising Community legislation in this area. The Green Paper also plans to identify the main areas for this harmonisation.
The purpose of this green paper is to launch an extensive public consultation on the future direction of EU consumer protection. To stimulate a well-informed debate, it sets out an analysis of the current situation and possible options for the future.

2. Consumer Protection in the internal market

For the internal market to yield its benefits to consumers, they must be able to have easy access to goods and services promoted, offered and sold across the borders. It is the cross-border movement of goods and services that allows consumers to search out bargains and innovative products and services and thus ensures that they optimise their consumption decisions. This cross-border demand increases competitive pressure within the internal market and allows for a more efficient and competitively priced supply of goods and services. This virtuous circle can only be achieved if the regulatory framework in place encourages consumers and businesses to engage in cross-border trade. Different national laws on commercial practices relating to business-consumer relations can hinder this evolution.
The EU dimension to consumer protection (here understood as the regulation of consumer economic interests and excluding health and safety matters and other connected concerns) has existed for over twenty-five years. Article 153 of the EC Treaty enshrines a number of consumer rights - to information, education and representation. EU consumer protection directives, usually based on the internal market provisions of Article 95 (ex Article 100a) of the EC Treaty, have fleshed out the detail of certain of these rights. Further EU directives, whose primary purpose is not consumer protection, also have a direct effect on consumer protection. National regulations and jurisprudence in turn have an impact on consumer protection in the internal market.
However, consumer protection in the internal market is faced with a fragmented set of regulations and a fragmented system of enforcement. The prospect of enlargement brings the risk of further fragmentation of the internal market and additional enforcement problems. The circulation of Euro notes and coins which begun in January 2002 has given a huge opportunity to develop the consumer internal market. If it is not taken, citizens will be left with the impression that the EU's core project - the internal market - is an irrelevance to their daily lives and simply a project designed to serve the interests of business. The goals of consumer protection are to deliver a system of regulation that achieves as high as possible a level of consumer protection whilst also keeping costs to business to a minimum, it is as simple as possible and is sufficiently flexible to respond quickly to the market, and which involves stakeholders as much as possible and it provides legal certainty and ensures its efficient and effective enforcement, especially in cross-border cases.

In addition, further EU legislation, which does not have consumer protection as its primary purpose, provides for some consumer protection or regulates the power of national authorities to introduce consumer protection regulations. For example the e-commerce directive covers advertising and marketing to consumers by information society service providers. The television without frontiers directive also coordinates certain aspects of commercial communications through broadcasting means. It provides for a uniform high level of protection, application of the country of origin principle, precisely defined common definitions and clear enforcement requirements.

In addition, consumer protection rules at EU level generally allow Member States to take more detailed or stricter measures (through the so-called 'minimum clauses') to protect consumers, or, as is more common, to maintain existing rules, provided they are stricter than the EU rules. Thus, this generates further divergences between national laws in addition to those present in non-harmonised areas of consumer protection.
Where no Community legislation or case law exists, Member States national regulation is applicable which may differ in its substance and its application. Each Member State has a relatively well developed regulatory environment aimed either specifically at consumer protection or which regulate business-consumer commercial practices to other ends. However in addition to the same kind of regulations that exist at EU level, many Member States have a general legal principle, sometimes supported by specific laws, for regulating business-consumer commercial practices.

3. General principles

The general principle of contra bonos mores can be seen in laws of Austria, Greece and Portugal and Germany. The principle of Fair commercial practices can be seen in the legislation of Belgium, Italy, Luxembourg and Spain. France and the Netherlands adopt general provisions from the law of tort, the latter under the concept of unlawfulness. There are many similarities in the principle of good marketing practices adopted by Denmark, Finland and Sweden. Similar general principles can also be found in the legal systems of many third countries, but notably the US, Canada (where consumer protection is regulated at provincial level) and Australia. Although no such overarching legal standard regulating the consumer-business relationship exists in the UK or Ireland, equivalent principles do exist within their legal systems.

These general principles have either developed through further specific legislation or their development has been left to the courts, over many decades, which have produced a comprehensive and detailed jurisprudence. In each Member State its development has varied depending on the legal system and the scope and aim of the general principle. The principles originated for different reasons, even if they now serve to regulate business-consumer commercial practices. Thus in Germany and Austria, the appreciation of the general principle has been expanded from the protection of competitors against unfair commercial practices to also cover the protection of consumers. In France and Spain, these aims are treated separately - consumer protection is directly foreseen by specific legislation but consumers are protected indirectly by the general principles and regulations aimed at the protection of competitors. In contrast, Denmark and Sweden have adopted measures aimed specifically at the protection of both the consumer and competitors. The scope and application of these general unfair trading laws vary widely in practice between some Member States due to their objective and construction. The development of such variations can act as a barrier to trade and distort competition by ensuring that similar practices are treated in wholly different ways throughout the entire EU.

One of the main characteristics of EU consumer protection is the following:
Although it is developing fast in many Member States, self-regulation, through codes of conduct, is severely constrained at EU-level. Recent attempts that have been made to develop EU-level self-regulation have had only mixed results. Self-regulation has been shown to be a potentially useful complement to regulation that can reduce the need for very detailed legislation and provide benefits for consumers. Although codes of conduct are specifically referred to in some EU legislation, they have been unable to fulfil their potential at EU level because of the degree of national legal diversity. Moreover, further problems stem from the uncertainty over the status of commitments made in codes and their enforceability.

The use of self-regulation and codes of conduct varies greatly among the Member States. In Denmark, Sweden and Finland, the use of codes is encouraged to flesh out general rules. The involvement of the consumer enforcement bodies is more significant in elaborating these codes. Codes are also widespread in UK, Ireland and Netherlands, although consumer enforcement bodies have a more informal role. The use of self-regulation as a complement to regulation is less well-known in other Member States. The use of self-regulation appears to be growing in the EU, although along different lines in each Member State.

4. E-commerce codes of conduct

Codes of conduct have proved particularly popular for e-commerce. In Denmark, Sweden and Finland, efforts are underway to develop a national e-commerce code of conduct, bringing together business and consumer organisations under government sponsorship. In Netherlands, UK and Germany, recognising that many codes of conduct for e-commerce develop, governments have worked with consumers and business on projects to establish criteria for codes and arms-length bodies to monitor them. While the respective codes and criteria being developed have many common points, they all differ in order to reflect different underlying national rules.

II DEVELOPMENT AND OBJECT OF REGULATION OF CONSUMERS’ PROTECTION LAW

The demand for protection of consumer is analyzed, with today’s experience, regarding the need for protection of life and health of consumer from defective products, the guarantee of conditions for a free choice of goods or services that is translated to his protection from aggressive and misleading advertisement and generally from the contract suddenness, his protection from abusive general exchange terms and, finally, the existence of legal frame that will ensure the organization of consumers and one simple, fast, economically accessible, fair and effective judiciary protection. Relevant was and is the demand for attendance of consumer in the centers of decision-making. There is no doubt that fragmentary regulations which aimed at the protection of consumer always existed. The determination of prices from the state and the specifications of quality for certain goods (foods, drinks, medicines etc.) consist of several examples.

A. THE PERSPEVTIVE OF THE GREEK LAW

Firstly, the significance of consumer as a person of special legal protection was connected with the economically weakest. This approach was degraded and resulted today in having, through legal texts, a neutral and "classless" significance of consumer, determined from the perception that all of us are consumers.
Thus, consumer is anyone who buys goods or services so that to satisfy his personal needs or for not professional reasons (thus, the article 2 of the law 1961/91, which is not in effect any more) or the final recipient of products or services that are offered in the market according to article 1 §4 of the being in effect protection of consumer law 2251/945. This wide conceptual determination resulted, in social level, in the difficult of organization of consumer, which essential for his protection.

1.The exchange obligation. The general principle of protection of consumer

On behalf of the legislator or the implementer of right, the establishment of exchange obligations of safety and care is judged as imperative, in cases where specific social moral orders, as they are expressed in the being in effect legal order or are concluded by the regulations of being in effect right, impose the undertaking of special measures of diligence, thanks to the third participants of law.
The following real situations consist of conditions of exchange obligations:

1. The sovereignty of a specific field of action which may create dangers for third persons
2. The circulation of products that may create dangers for third person.
3. The creation or possession of the source of a particular danger.
4. The exercise of profession or vocation or the providing of services that may create dangers for the public.

More specifically, the activities of the supplier of products and services conclude to the exercise of sovereignty in his field of responsibility, especially when mass elements of transaction, of inequality of terms of negotiation and dependence from the particular provision or service exist. Consequently, the danger of offence of legal goods of participants of law, may create the need of taking measures under the form of exchange obligations, which will limit the possibility of danger.
The exchange obligation of protection of consumer aims at the protection not only of each person but of his economic interests too.

2. The provided, from the Greek Law, codes of conduct about the protection of consumer

Unfortunately today, there are no important codes of conduct for the protection of consumers which have been contracted by the interested parts, the consumers and the providers of services.

However, there has been an effort, with no great success, from the side of Greek state for the creation of codes of conduct, in which general principles of protection of consumer will be incorporated, and will have basic application in all consuming conventions, and more specifically:

In Law 1969/1991 (OFFICIAL JOURNAL OF THE HELLENIC REPUBLIC A-167) about investments of capital and committee of capital market etc, the following is defined:
With presidential decree, after the proposal of Minister of National Economy and after the opinion of committee of capital market and Administrative Council of Stock Exchange of Athens, each subject referred to the exercise of vocation of member of Stock Exchange of Athens and the depending to that, persons, as is the information of customers-consumers and in general the establishment of rules of conduct.

6 years after the law 1969/1991, the modification of article 78 was realized and in particular with paragraph 21 of article 113 of Law 2533/1997 (A 228) the following modification was realized: the Committee of Capital market is able to establish a Code of Conduct, which forms after relevant proposal of Union of Companies of Investments of Portfolio and Management of Reciprocal Capitals of (Union of Institutional Investors), which will concern the behavior of Companies of Management of Reciprocal Capitals and Companies of Investments of Portfolio and their personnel to the consumers.
In 2002, paragraph 14 of article 3 of Law 2992/2002 (OFFICIAL JOURNAL OF THE HELLENIC REPUBLIC A 54/20.3.2002) formed that: the Committee of Capital market can establish Codes of Conduct, which will concern the behavior of Anonymous Companies of Management of Reciprocal Capitals in real estate property, of Companies of Investments in real estate property and their personnel.

3. Usual content of codes of conduct towards those who provide services to consumers

1. They take each advised measure and act so that their customers’ interests are protected and the regular operation of market is ensured.

2. They use effectively the resources and the processes and methods that are essential for the exercise of their activities.
3. They are informed regarding the financial situation, the objectives and the experience of their customers in the area of investments, so that they provide the suitable investment advices.
4. They notify to their customers all the essential and useful information for the negotiations with them.
5. They deter the conflicts of interests between themselves and their customers.
6. They ensure equal treatment to their customers.
7. They function according to the legislation that regulates the exercise of their activities, so as the interests of their customers are protected and the normal operation of the market is ensured.

B. AN EXAMPLE OF GREEK CODE OF CONDUCT

With the decision 12263/B.500 OFFICIAL JOURNAL OF THE HELLENIC REPUBLIC of B 340/24-4-97 of the minister of national economy, the Code of Conduct of enterprises providing Investment Services was ratified.

The aim of Codes of Conducts is the establishment of rules that will condition the relations and the behavior of companies, and those who are working in them or persons collaborating with them, at the exercise of activities inside the frame of being in effect legislation and lawful provisions with a way that:

1. The normal operation should be enforced and the development of Greek capital market should be supported
2. The interests of the investors
3. The safety and transparency of transactions should be ensured
4. The healthy competition between the companies and the right and complete
information of market according to the following code:

a) The companies and the covered persons will take each advised measure and they will act according to their duties so that the interests of their customers are protected and is the operation of market is ensured.

b) The companies and the individuals and legal persons working in them will effectively use the resources and the processes and methods which are essential to the exercise of their activities.

c) The companies which according to the law provide investment services and the individual and legal persons working in them shall be informed about the financial situation, the objectives and the experience of their customers in the sector of investments so that they provide suitable investment advices.

d) The companies and the individual and legal persons working in them will notify to their customers all the essential and useful information regarding their negotiations with them.

e) The companies and the individual and legal persons working in them will deter the conflicts of interests between them and their customers.

f) The companies and the individual and legal persons working in them shall ensure their customers equal treatment.

g) The companies and the individual and legal persons working in them should behave according to the legislation which regulates the exercise of their activities, so that the interests of their customers and the smooth operation of market are ensured.

SUGGESTIONS

1. General framework for fair commercial practices

A framework directive would be based on a general clause for consumer-business relations. This could draw on existing legal models based on 'fair commercial practices' or 'good market behaviour'. In essence, it would be a requirement not to engage in unfair commercial practices and would include a general test. Such an approach is comparable to that in the unfair contract terms directive. National rules that purely covered general interest objectives in relation to commercial practices other than consumer protection (e.g. pluralism, the protection of culture, health and safety, decency) and national contract law requirements would be excluded.
The general clause would have to be supplemented with general tests of fairness and specific rules in order to eliminate differences in national rules on commercial practices. These could cover all the elements of fair trading e.g. information disclosure, misleading and deceptive practices or undue influence as well as rules on marketing and commercial practices linked to the contractual and after-sales phases of the transaction. These general principles and rules would address the main issues of uncertainty and diversity and would draw upon:

? ECJ jurisprudence and existing EU legal concepts, notably on misleading advertising and unfair contract terms tests, and;
? National examples on issues such as misleading and deceptive practices, undue influence or pressure, disclosure, vulnerable consumers, equitable bargains and good faith.

2. General framework covering misleading and deceptive practices

As an alternative to being based on fair commercial practices, the framework directive could be based on the more restrictive concept of misleading and deceptive practices. It would probably be easier to reach agreement on such a framework directive as this concept is in many ways the common core of unfair trading concepts across the EU. In particular this general prohibition has already been established as the test in the Misleading Advertising Directive. A common EU approach to these matters would be a significant step forward on both consumer protection and a simplification of the regulatory environment. It could also be conceived as a first step towards a framework directive based on fair commercial practices. However, given the more limited scope the framework directive would not cover the full range of matters covered by a comprehensive duty to trade fairly (e.g. the use of selling techniques based on undue influence). Accordingly, divergent national approaches on matters falling outside the scope of the duty could continue to develop and further specific regulations at EU level would probably be needed.

Given the importance of information requirements in consumer protection and the consumer's right to information in Article 153 of the EC Treaty, general obligations on information disclosure would be central to both alternatives. A key aspect of this would be a requirement for businesses to disclose all material information to consumers in a timely and clear manner. This would ensure a proper fulfilment of the right to information conferred on consumers by the Treaty. Within the framework directive for fair commercial practices it would also be possible to preclude practices such as deliberate information overload and excessive use of 'small print'. It would, moreover, demonstrate another important dimension of unfair trading, namely that omissions can also constitute an unfair trading practice.

3. Self and Co-regulation

Many problems may not be suitable for regulatory action. Self-regulation can achieve some consumer protection goals, especially in industries that recognise they have a strong common interest in retaining consumer confidence and where free riders or rogue traders can harm this confidence. Effective self-regulation that contains clear voluntarily binding commitments towards consumers and which is properly enforced can reduce the need for regulation or co-regulation. At present there is no means of ensuring effective EU-wide self-regulation in the field of consumer protection. A further option is for the framework directive to make this possible, thereby enabling businesses to sign up to one common code of conduct, rather than fifteen. The differences in national laws and general duties do not at present permit the development of genuine EU-wide codes.

Second, the scope of the general duty would not only apply to business that traded with consumers but also to trade associations and other organisations that made recommendations on trading practices and drew up codes etc. This is currently the case for the Unfair Contract Terms Directive (Article 7). Given the influence trade associations have on the development of market practices, it makes sense to reinforce the responsibility of their actions in this way. Finally, there would be no provision for the explicit endorsement or approval of codes by the Commission. Given the potential for abuses of competition rules through codes and the Commission's responsibility for enforcement of these rules, this would not be appropriate.
The Commission has urged the greater use of 'co-regulatory mechanisms' and 'framework directives' in its recent White Paper on Governance. Any consumer protection proposal that includes co-regulation must therefore comply with the conditions for co-regulation set out in the White Paper. The role and responsibility of code-owners in developing codes and the role of public authorities in their enforcement could both be reinforced and clarified. The combination of a framework directive and a basis for EU-wide self-regulation could be seen as a co-regulatory approach, according to the terms of the White Paper, with some rough similarities with the 'New Approach'.
European Governance: A White Paper (COM(2001) 428).

Although consumers and consumer associations will continue to have an essential enforcement role to play, through the courts, a fully functioning consumer internal market will also depend on public consumer enforcement authorities acting in co-operation as 'enforcers of last resort'. The ability of public authorities to act to prevent consumer detriment before it happens, when businesses act fraudulently, dishonestly or unfairly and to persuade businesses to change their ways without recourse to time-consuming legal procedures is an essential component of business and consumer confidence. An internal market needs co-ordinated market surveillance.