Monthly Archives: July 2014

photo credit: Javier Prieto (ganso.org) via photopin cc

Legislative Reform of the Spanish Consumer Protection Act

On Friday, June 13th (not a good date for the superstitious amongst us), Act 3/2014 of March 27th, 2014, yet another amendment to the Spanish Consumer Protection Act and supplementary legislation come into force.  The new regulatory regime is therefore applicable to agreements concluded with consumers from that date onwards.

The purpose of this legislation is to introduce into the Spanish Consumer Protection Act the amendments necessary in order to implement Directive 2011/83/EU of the European Parliament and  the Council, on consumer rights.

The Directive established the new legal framework for distance and off-premises contracts and amended the European rules regarding unfair terms in consumer contracts and certain aspects of sales and guarantee of consumer goods.  Its aims include:  consumer protection  at the European level, in particular,  in relation to sales made on the Internet; the consolidation of the Internal Market; and  strengthening  legal certainty for  consumers and  traders, as the previous  regulatory regime  exposed  important gaps in the European rules.

Consequently, the most relevant legislative amendments introduced by  Act 3/2014 are:

  • New definitions of consumers and traders;
  • Joint regulation of distance and off-premises contracts;
  • Standardized and broader pre-contractual information obligations regarding, in particular: a) deposits or other financial guarantees (i.e. blocked amount on the consumer’s credit card); b) legal guarantees; conditions of after sales services and commercial guarantees; and c) supply contracts on digital content, where the consumer has to be informed about the use of this content and its technical limits, protection mechanisms and regional codification, as well as the interoperability of digital products with hardware and software;
  • Modification of the rights of withdrawal of consumers, with a new regulation that introduces a standard form which the consumer may use and an extension of the time-limit for withdrawal   to 14 days. If the trader does not provide information concerning the consumer’s rights of withdrawal, the time-limit is extended to two months from the beginning of the initial period.
  • Implementation of the TJEU ruling regarding unfair terms, which enables the national court to rule on the nullity of such terms in consumer contracts and to integrate different provisions according to the principles of good faith to the contract.

It is clear that the purpose of the new Spanish Consumer Protection Act is to achieve coherent regulation by virtue of the entire Spanish legislative system, especially in relation to the sector-specific regulation of consumer protection. The Consumer Protection Act guarantees the application of each sector-specific rule which gives significant protection to the consumers subject to the rules of harmonization in the terms established by European Union law. We will see whether the 13th will be a bad omen for consumer protection in the harmonized market or whether we can hope for a reasonable and Internal-Market-related interpretation by the administrative authorities and courts in Spain. In any event, consumer contracts used until today should be fundamentally revised.

photo credit: Hani Amir via photopin cc

Music Industry: comments on the Indies vs. Google controversy

In recent months we have followed with interest the controversy arising from complaints by independent labels against the practices of Google and its subsidiary Youtube, due to the introduction by this economic group of its expected streaming subscription service.

The independent labels, grouped together in the organization IMPALA (http://www.impalamusic.org/), have complained that Youtube has abused its dominant position, by attempting to force smaller record labels to join Youtube’s streaming platform under worse contractual conditions than the “majors”,  and by threatening to withdraw their videos from Youtube if they do not accept these conditions.

The contract allegedly imposed on independent labels by Youtube was leaked by specialized media (http://www.digitalmusicnews.com/permalink/2014/06/23/fk-heres-entire-youtube-contract-indies) and certainly contains some remarkable clauses. For example, a permanent “least favoured nation” clause, whereby independent labels are obliged to accept lower royalties if these are negotiated by the “majors”. The situation reached such a point that Youtube announced that within a matter of days, it would begin to delete the videos of labels which refused to accept the terms of Youtube’s licenses for its new streaming service.

Nevertheless, fuelling the controversy even more, some independent operators like BELIEVE DIGITAL (http://www.believedigital.co.uk/) stated that the economic conditions proposed by Youtube were in line with market conditions and no threats to withdraw content from the Youtube portal had been received. http://www.musicweek.com/news/read/youtube-why-one-significant-indie-music-group-has-signed-licensing-deal/058772-

IMPALA’s response in defense of its members was twofold: firstly, it took mass media action, which spread like wildfire on social networks and throughout the music industry, condemning what it viewed as an abusive practice by Youtube; secondly, a complaint was lodged before the Community competition authorities,  accusing Google’s subsidiary of practices that were abusive of its dominant position contrary to Community competition law  (http://www.impalamusic.org/content/dispute-between-youtube-and-independent-music-companies-%E2%80%93-formal-process-starts-brussels).

Finally, according to some media reports, Youtube decided to backtrack and withdraw its threat to remove videos from its platform, with this being interpreted as a small victory for the independent labels.

The conclusion to be drawn from this episode is that, for weaker operators in an industry such as the music industry, it is not just important –but essential- to have a strong sector association, with a suitable communication policy, efficient counselling and defense of the interests of its members. This is the only way to explain this small victory against Youtube or IMPALA’s other successes of the past, such as that in the case of Impala v. Commission (T-464/04) in which, for the first time in history, the Court of First Instance set aside an European Commission decision on an economic concentration (the Sony-BMG merger).

 

 

photo credit: Foto Pamp via photopin cc

The Right to be Forgotten and the Judgment of the CJEU

The Court of Justice of the European Union issued a ruling a few days ago on a Preliminary Question referred to it by the National High Court (case C-131/12), known as the “Costeja Case”, firstly, that Google is responsible for the processing of personal data in connection with the business activity it carries out, irrespective of the role played by the Web host whose content is indexed by Google; and secondly, that Google is bound by law, in this case, Spanish law, having established an affiliate which carries out promotional activities and the sale of advertising in Spanish territory, as processing is not done not through the establishment of the said affiliate but within the framework of its activities.

Thirdly, it is recognized that the Data Protection Directive guarantees the so-called “right to be forgotten”, that is, the possibility that the search engine may have to eliminate content with personal data although the said information may be true and is not eliminated from the website which contains it, albeit such a decision has to be reached taking into account the possible public interest in obtaining the said information, based on the role, public or otherwise, of the data subject.

The judgment commented on has been warmly welcomed in certain sectors, but one certainty is that it gives rise to a considerable variety of problems: on the one hand, it establishes a different system of responsibility for Web browsers and communication media, which is, to say the least, questionable. On the other hand, in addition to balancing the public interest, the balancing of other types of democratic interests and values should also be considered, these being freedom of expression or the right to information. The latter is, obviously, a technical problem: the weighing and balancing of competing values: Who has to do it? The search engine or third parties? Should the latter convert itself into a supervisory organ or an infiltrator? Should this be the case, could it do so legally? Would such supervision be effective, and, would it include the elimination of content by the Web browser? We have to consider that the information will remain, in any event, on the original website… although Google no longer indexes it in searches.

Finally, given all these questions, it remains to be seen how national courts carry out the possible implementation of this decision of the CJEU.