Vote for Good! Transforming Consumer Protection into a Competitive Edge for a Stronger EU in the Geopolitical Game

Recently, my attention was caught by the Conclusions of the EU Court of Justice Advocate General in Case C-646/22 regarding unfair commercial practices. The Advocate General stated that the “average consumer is not necessarily a rational individual who is proactive in obtaining the relevant information, who rationally processes the information presented to him or her and who is, thus, able to make informed decisions. Whereas, in some situations, the ‘average consumer’ may be considered as able to act rationally and make an informed decision. The concept is flexible enough for him or her to be perceived, in other situations, as an individual with ‘bounded rationality’, who acts without obtaining the relevant information or is unable to process rationally the information provided to him or her (including the information which is presented to him or her by the trader)”. 

In essence, the Advocate General describes the average consumer as a somewhat irrational actor, which shouldn’t shock us. The entire discipline of consumer protection, largely developed over the last 30 years by the European legislator, is based on the concept of the information gap that the average consumer suffers when interacting in the market with companies that have much more information at their disposal. Therefore, it is an important duty for legislators and judges, when consumer protection is at stake, to continuously rebalance the playing field by protecting the consumer as the weaker party in the market, indirectly safeguarding the efficiency of the market itself. 

A second, and perhaps even more important reflection, triggered by reading the Advocate General’s conclusions, is that while it is right to continue considering the average consumer as the weaker party in the market deserving of appropriate and continuous protection, it is also time to recognize that consumers together in Europe are also the protagonists of the new digital markets, in which they confer – more or less consciously – their personal data. The protagonists of the energy transition, because only with their massive adoption of farsighted behaviours will real change be possible. Finally, they are the protagonists of a pragmatic, non-elitist approach to sustainability, through which only, we can imagine designing more balanced, just and responsible markets for the future. More broadly – as we will analyse closely below – paying adequate attention to the wellbeing of the demand side in the internal EU market becomes strategically crucial to relaunch it in the most appropriate way, given the current geopolitical scenario. 

The global and pervasive scope of the pandemic, alongside urgent concerns surrounding climate change and the war in neighbouring Ukraine have triggered unexpected responses from EU institutions in the last years. Despite inevitable errors and imperfections, these institutions have proven resilient and coherent, receiving broad support from EU citizens. These successes have renewed confidence in Europe, bolstered by community policies focused on health, safety, environmental protection and the adoption of sustainable energy sources. However, it is important to underline that we are only at the beginning of a path that will guide us through the challenges of the digital and sustainability transitions. This trajectory must not be disrupted in the upcoming mandate, during which we will be tasked with implementing the Digital Services Act (DSA), Digital Markets Act (DMA), and AI Act on the digital front, while also concretizing and possibly refining aspects of the Green Deal to address pragmatically sustainability fair concerns.

In light of the current and future challenges posed by the new global geopolitical context, citizens’ expectations for the next five years are indeed soaring, with 50% of respondents to our survey wanting more EU, not less. We must aspire to a Europe that is more cohesive and determined in its positions. One that does not hesitate to outline a strong unitary policy in these tumultuous times. 44% of the respondents to our survey trust the EU to protect consumers. One out of three trusts the EU more than their national governments and at the same time 69% agree that Member States should act as Europeans and not only defend their national interests. 45.6% even claim that there should be a single EU army. 

The growing geopolitical and technological tensions between the United States and China and the evident delays in EU innovation risk creating international markets dominated by bilateral conflicts, condemning the European economy to a marginal role without a change of pace (it seems worthwhile to highlight here that 79.9% of the respondents to our survey supported that when taking political decisions, the EU should always consider their impact on future generations). The impression is that the ability to support a generous welfare state and strong regulation, typical of the second most developed economic area in the world, has indeed come to an end, as well explained in the report “Much more than a Market – Speed, Security, Solidarity” written by former Italian Prime Minister Enrico Letta at the request of the EU Council. This report conducts a thorough examination of the Single Market’s future following a succession of crises and external challenges that have fundamentally tested its resilience. 

The Single Market, Letta writes, “is a product of an era when both the EU and the world were “smaller”, simpler, and less integrated, and many of today’s key players had not yet entered the scene”. European wellbeing can therefore only be safeguarded if the EU can create a more competitive production model. The ingredients of this new model are those already adopted in response to the pandemic in the Next Generation EU to continue riding the green and digital transition. However, realizing these transitions risks being difficult without adequately strengthening European fiscal capacity (as supported by 58.9% of respondents to our survey) and linking it to a more efficient allocation of public and private resources among individual member states, as well as to the reinforcement of European public goods and solidarity among member states. The key is to launch a European industrial policy that transforms the Single Market from a space without obstacles for the circulation of goods, services, and people into an engine of innovation, driven by the interaction between the strategies of the most efficient European companies and projects financed by an integrated European fiscal capacity in line with market signals. 

In such a scenario, allowing EU companies to scale up is not just an economic imperative but also a strategic one. However, as Letta’s report states, “not all EU companies and markets are in need of a bigger size. We must not mimic models that are consistently different from our own and that do not fit with the European reality. Our model, which thrives on the essential link between large and small enterprises, actively safeguarding a level playing field, must be preserved. This model is a fundamental strength and the bedrock of our social market economy. No company can be allowed to grow undermining fair competition, which underpins consumer protection and economic progress”. 

It is indeed inappropriate, especially from a liberal perspective, to think that making European industry more competitive on a global scale requires sacrificing the essential basis of our internal market. This approach risks compromising not only consumers’ wellbeing but also the rules governing competition, which are essential to maintaining a fair and functioning market and forging businesses that can compete globally. The diagnosis on the looming obsolescence of the EU production model has already been recognized by European institutions, as evidenced by the aforementioned report entrusted to Letta and another on EU competitiveness, not yet published but with some previews available, commissioned by the EU Council to another former Italian prime minister, as well as a pre-eminent personality in the European institutional panorama, such as Mario Draghi who already emphasized in a compelling wake-up call the waning reliability of the EU’s traditional economic pillars: energy from Russia, exports from China, and reliance on the US defense apparatus.

Today, the EU talk is, as it should be, all about competitiveness. But this must not merely be about supporting EU industry as it is; the goal is to reinforce our internal market! And consumers are a crucial part of that. To strengthen European companies’ global competitiveness, we must make the EU internal market rules more effective, not weaker. Lowering consumer rights and enforcement is a misconception. Instead, it is essential that the role of active consumer demand is recognized and, if necessary, enhanced to ensure a healthy and efficient European internal market for the foreseeable future. The priority should be to protect not only the wellbeing of producers but also the rights and interests of consumers, since without them, the market itself risks losing its integrity and functionality. 

We need to strengthen rules that empower European consumer organizations and establish an effective system of public enforcement. This should be dynamically integrated with a well-functioning private enforcement through cross-border class actions as outlined in the Representative Actions Directive. For instance, in the famous Dieselgate scandal, we recently celebrated a settlement by Altroconsumo, our Italian consumer organization, which secured over 50 million euros in compensation for more than 60,000 Italian consumers. However, procedural complexities and varying legal traditions across EU member states have led to inconsistent outcomes. Euroconsumers has initiated Dieselgate class actions also in Belgium, Spain, and Portugal, but the results have varied, underscoring the need for a unified approach. 

The internal market should ensure that when large companies benefit from it, they are also held accountable in a timely manner when things go wrong. Currently, the lack of harmonized enforcement rules allows companies to exploit these inefficiencies, delaying due compensation to affected consumers. This inconsistency poses a market problem, affecting fair competition and the appropriate training for large European companies. To compete globally, these companies need to be prepared for swift sanctions and enforcement, similar to practices in the US, which include there also punitive damages. 

Returning to our initial point, consumers undeniably represent a vulnerable aspect of the market, and continuing to protect their interests through legislative and judicial measures is not only equitable but also beneficial for the efficiency of the EU internal market, as recently affirmed by the ECJ Advocate General. However, it’s equally vital to acknowledge that, thanks to the effectiveness of European consumer protection policy developed on the initiative of the European Commission and the European Parliament over the last three decades, we’ve cultivated an industrial asset in Europe. This asset comprises the aggregated demand of consumers, who, through their daily exercise of free choice in the market, constitute a fundamental and defining characteristic of the EU internal market. 

We should not only take pride in this accomplishment and the corresponding asset but also judiciously fortify it — especially in light of the evolving geopolitical landscape, where aiming for European growth predominantly fuelled by exports, as in recent years, may become more challenging. Strengthening and leveraging this solid foundation will be pivotal for the continued expansion of the internal market and fostering a robust and healthy competitive stance for large EU companies operating in global markets.