Rules on competition and fair trading.(European Union)

Publication: Global Jurist Advances

Publication Date: 19-DEC-02

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COPYRIGHT 2002 Berkeley Electronic Press

Abstract

If we choose a perspective of consumer protection, and consider the impact of EC regulations or EC directives on the national systems (e.g. the Italian legal system), the idea to introduce general rules on fair trading into the common market should be highly recommended. The aim of this paper is indeed to give evidence of the fact that these rules are already existing in some national legal systems and cope very well with the rules provided by the Charter of Fundamental Rights. When a European Civil Code (a "model" code, or a set of general principles) will be enacted, those rules could cope with the other rules there provided and concerning the economic relationships between professionals and between professionals and consumers.

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1. Freedom to conduct a business and the limits thereto

"The freedom to conduct a business in accordance with Community law and national practices is recognised": thus Article 16 of the Charter of fundamental rights of the European Union.

The limits to this freedom seem to stem solely from the compliance of the economic activity with: (i) the rules of community law, namely the rules of the Treaty of Rome, regulations and directives, and the other sources of Community law, (ii) the rules envisaged in the national systems, (iii) the rules that the professionals have imposed upon themselves in as much as they derive from the "practices", i.e. from the uses, from repeated and accepted conduct, which have therefore been codified into models of reference contained in codes of self-regulation.

These are, in substance, rules of action, of control and supervision intrinsic to the market, and that, therefore, translate into an equal number of limits dictated by the workings of the market to ensure the better competition of operators.

Taken out of its context, and read in accordance with the canons of literal interpretation, this provision seems to legitimise any conduct held by the operators that is kept within these sole limits, limits that are, so to speak, internal to the market.

But, as any provision of law, even Article 16 must be interpreted in context, and therefore according to the canons of systematic interpretation and interpretation according to the goals of the law (so called teleological interpretation).

In the body of the same Charter we find rules that conflict with freedom to conduct a business and constitute an equal number of limits to the same: human dignity (art. 1), the physical and legal integrity of the person (art.3), individual liberty and security (art. 6), protection of private life (art. 7) and of personal data (art. 8), environmental protection (art.37), consumer protection (art.38), and, of course, the rights of workers (arts. 27-32).

The overall picture of the values that have to be reconciled with freedom to conduct a business is therefore vast and articulate. In brief, it is already summed up in a provision of the Italian Constitution (of 1948), which, in art. 41, in addition to recognising and guaranteeing private economic freedom, envisages that the same cannot take place "in contrast with social usefulness or in such a way as to damage human security, liberty or dignity".

In general terms, we can therefore distinguish two main categories of limits to freedom to conduct a business: in addition to those deriving from the market, the internal ones we have already mentioned, there are other limits, which we could call external, because they relate to values which must be reconciled with economic freedom, values which, as they concern the individual, should by nature prevail over economic freedom.

When we speak of economic freedom, we cannot therefore ignore this great division: on the one hand we have the dynamics internal to the system of economic relations, i.e. to the market, on the other hand we have the limits to economic freedom which derive from fundamental values. If we mix the two levels, we risk mediating between economic interests and higher-level interests, debasing the latter.

The relevance of external limits to economic activity is not new to Community law. If we read the provisions of the Treaty of Rome, we immediately understand that economic freedom is tempered by the provisions concerning workers, consumers and the environment. However, art. 16 of the Charter, read in connection with the other provisions contained therein, clarifies in marked terms the overall picture of values that business activity must comply with. The fact that in the text of the Charter the values of the individual are placed before those relating to economic activity is an unequivocal sign that the Charter intends to underline more markedly the external limits, compared to their emergence already in the Treaty.

But the time has come to re-think also the internal limits.

First and foremost among the "constitutional" provisions of the Union--as Mario Monti, the Commissioner for competition policy has recently reiterated--"is the fundamental principle according to which the Union's economic policy is implemented" in accordance with the principle of an open market economy in free competition. The promotion of a competitive environment by no means excludes public interventions aimed at objectives of general interest, rather these are often necessary for the protection of consumers, of operators, of the workers, in short for the whole of society. But they must be proportionate to the realization of the public good they intend to pursue and must never be motivated by the will (in most cases disguised) to protect vested interests, with the result of harming precisely that common good that we claim to pursue" (1).

Usually it is held that if the consumer is placed in a position to choose on the basis of correct information the goods and services he requires, it is not necessary to go beyond.

Now, can we reckon that from an economic viewpoint, i.e. looking inside economic relationships, consumer protection merely requires balanced information?

It has been said, by an authority on the subject, that the competitive method is designed in accordance with consumer choices; that protection must be devoid of paternalism, as it is pointless to erect the consumer as an autonomous legal entity and a repository of good feelings and human solidarity; the consumer's dignity derives from his right to information. Economic freedom and risk of enterprise correspond to freedom of preference and risk of choice" (2). I don't share these opinions.

It is not paternalism, but acknowledgment of the objective disparity of economic and legal position between consumers and entrepreneurs which is at the basis of the Community directives which protect the consumers from untruthful advertising, from business practices which encroach on their privacy, from the abuse of standard terms of business, from the lack of contents in contracts, from the circulation of products that are harmful because they are defective, from the sale of products which do not conform to the contract. Accurate information and freedom of choice would not by themselves be sufficient to place on a level of parity consumers and professionals.

We may ask ourselves then if it is not necessary or desirable to take a step forward.

Again in full observance of the principle of subsidiarity, and without resorting to the introduction of new rules, it is appropriate to proceed as the Charter has done, for external limits, i.e. making clear the values which are already contained in the fabric of Community law and which, however, given its very nature, are present in a widely fragmented context.

I refer to the fairness of conduct of professionals.

Fairness of conduct is one of...

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