Master Thesis
The EU Energy Consumer - In-between Regulative
Expectations
A status quo on consumer protection against unfair commercial practices in EU, Dutch and German energy law
by
Sophia Steffensen
International and European Law: European Union Law (LL.M.)
Supervisor: Dr. K. J. Cseres Second Corrector: Dr. D. Obradovic
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Content
Abstract ... 4
I. Initial considerations ... 4
II. UCPs as opponents to well-informed and influence-free decision-making ... 6
1. Information access, transparency and freedom of choice ... 6
2. UCPD as an EU standard to protect the consumers’ economic decision-making process . 8 3. Conclusion to chapter II ... 9
III. The protection against UCPs in EU energy law ... 9
1. Consumers in the EU energy market design and their protection against UCPs... 9
a) The market design ... 9
b) The consumer definition ... 11
c) The Energy Directives ... 12
2. The normative consumer concept ... 14
3. Conclusion to chapter III ... 18
IV. The protection against UCPs in the Netherlands and Germany ... 18
2. The Netherlands ... 19 a) Legal framework ... 19 b) Practice ... 20 3. Germany ... 22 a) Legal framework ... 22 b) Practice ... 24 4. Conclusion to chapter IV ... 26
V. Effective implementation of the protection ... 26
1. The ability to make well-informed decisions ... 26
a) Regulatory framework and practice ... 27
b) Analysis of flaws in information presentation ... 28
c) Suggestion for an enhanced information presentation ... 28
d) Conclusion ... 31
2. The ability to take influence-free decisions as a neglected area? ... 31
a) Regulatory framework and practice ... 31
b) Analysis of misleading and aggressive practices... 32
c) Suggestion for enhancing protection against misleading and aggressive practices ... 32
d) Conclusion ... 33
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VI. Final conclusion and outlook ... 34
VII. Bibliography ... 36
1. Literature ... 36
2. Cases ... 42
3. Legislation and official documents ... 43
a) EU ... 43
b) The Netherlands ... 45
c) Germany ... 46
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The EU Energy Consumer – In-Between Regulative Expectations
A status quo on consumer protection against unfair commercial practices in EU, Dutch and German energy law
Abstract
This master thesis treats the energy consumers’ protection against unfair commercial practices. The paper assumes that to fulfil the role of a “driver of competition” in the EU energy market, the EU energy consumers’ ability to make economic decisions needs to be protected to allow the consumer to make - for the market design - useful decisions. To prove the assumption, the paper gives an overview of current provisions in the EU, the Netherlands and Germany in writ-ten law and compares these provisions to common unfair commercial practices in the energy sector in the EU, the Netherlands and Germany to find out if the protection is implemented effectively.
The outcome shows that the current provisions aim at providing consumers with information and (partly) guidance on how to present information. However, simply protecting these two aspects neglects the fact that the decision-making process is not only based on receiving infor-mation but also on how consumers are influenced by the traders’ sales technique. To achieve the goal of consumer participation in the energy market, the EU legislation needs to adjust the current legal framework by adding more provisions to support consumers in accessing infor-mation and protecting their decision-making process from unfair external influences. The au-thor presents proposals which fit in the current legal framework to achieve that goal.
I. Initial considerations
The EU study about energy consumer trends shows that 31% of EU energy consumers strongly
agree or agree to have felt pressure to sign an electricity supply contract.1 38% think that
ad-vertisement of electricity companies deceives, misleads or omits relevant information.2
Fur-thermore, the Bureau Européendes Unions de Consommateurs (BEUC) identifies aggressive sales as a barrier for consumers to switch their supplier.3 These examples show that energy suppliers commonly use aggressive sales practices to influence the consumers freedom of choice.4
1 COM, Energy consumer trends 2010-2015, p.37 (figure 17) referring to the COM, Second Consumer Market Study, 2016, p.201; Cf. COM, Consumer vulnerability, 2016, p.348 for similar findings.
2 COM, Energy consumer trends 2010-2015, p.37 (figure 17) referring to the COM, Second Consumer Market Study, 2016, p.201.
3 BEUC(2017-2), p.6 et seq.
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The Second Consumer Market Study further indicates that 41% of EU energy consumers do not know whether they are currently on the cheapest tariff.5 Energy pricing structures are com-plex and highly technical which leads to problems in information assessment and transparency on the consumers’ side.6
Despite these difficulties, the EU energy regulator regards the consumer as a “driver of compe-tition”.7 By promoting competition between energy suppliers, the EU legislator wants to im-prove better pricing and efficiency regarding energy use. By choosing the “best suitable” energy supplier, consumers choice is meant to lead to higher quality standards in services, more af-fordable energy prices and the promotion of the production of electricity from renewable en-ergy.8 The described practices and lack of transparency and information can restrict the con-sumers’ ability to choose.
Hence, the question arises, if the current provisions to protect against unfair commercial prac-tices (UCPs) are implemented effectively in EU energy law and if the consumer has the ability to make well-informed and influence-free decisions and be an active market participant in the energy market. Therefore, a horizontal9 study will be conducted to demonstrate whether the
current EU legislative framework sufficiently protects the consumers’ economic decision-mak-ing process. In order to reduce the complexity of the analysis, this paper will only focus on consumer–electricity supplier relations in the energy retail market.
The paper will start with initial considerations about the research question (chapter I). In chapter II, this paper will present the freedom of choice, information access and transparency as the basis for the consumer economic decision-making process. In a second step, the Unfair Com-mercial Practices Directive (UCPD) will be presented as a general EU measure to enable the consumer to make economic choices. Thereafter, a closer look will be taken at the consumer as a market subject which needs protection against UCPs. This is followed by an analysis of the specific provisions against UCPs existing in EU energy law (chapter III) to examine the existing level of protection for consumers against UCPs. In respect thereof, the perception and definition of the consumer in the energy sector will be analysed. In chapter III, a comparative study of written law and legal practice in the Netherlands and Germany will be presented, to get an
5 COM, Second Consumer Market Study, 2016, p.76.
6 35% of energy consumers disagree that it was easy to compare tariffs from their current energy supplier with tariffs from other suppliers, see COM, Second Consumer Market Study, 2016, p.76.
7 COM, Communication “Clean energy for all Europeans”, p.10; Lavrijssen(2017), p.6.
8 COM, Communication “Delivering a New Deal for Energy Consumers“, p.2; COM, Press release, “Clean en-ergy for all Europeans”.
9 In this paper a comparative consumer law study will conducted which examines the consumer protection in the retail energy market in the EU, the Netherlands and Germany.
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exemplary insight into the state of protection in these two member states (MS). In chapter IV, it will be discussed, whether the current state of protection is implemented effectively so the consumer has the capacity to take well-informed and influence-free economic decisions. The paper will end with a conclusion and an outlook.
II. UCPs as opponents to well-informed and influence-free decision-making
Consumers can only fulfil their positions as “drivers of competition” in the energy market de-sign if their ability to make economic decisions is sufficiently protected. This chapter examines the question how consumers accesses and processes information when taking an economic de-cision. That is why, it will be presented how consumers can be enabled to make an economic decision and how the decision-making process could be exposed to external influences in the energy market. Thereafter, the general EU legal framework to protect the consumers’ decision-making process (as lex generalis) will be outlined.
1. Information access, transparency and freedom of choice
Economic decision-making is defined as choosing “the option with the greatest expected util-ity”.10 The decision is therefore a representation of a person’s subjective utility functions and allocation of needs.11 Internal and external factors can limit the consumers’ ability to make an economic decision. EU consumer protection law assumes that information access, market trans-parency (internal) and freedom of choice (external) can enable the consumer to make economic decisions.12
An economic decision is based on having information and market transparency. Without infor-mation, a consumer is not able to make an economic decision.13 Crucial to decide which level of information is necessary for a consumer to make an economic decision is the perception on the intellectual abilities of the consumer (internal factors). In EU consumer law, the “average consumer” is seen as a standard14 which will be outlined in chapter III.2. with a special focus on the energy sector.
10 The definition is based on the “rational theory of choice” or “standard economic model”, with further explana-tion in LeBoeuf/Shafir(2012), p.2.
11 E.g. Keeney/Raiffa(1993), von Neumann/Morgenstern(1944). 12 MüKoLaut/Micklitz, Art.1 UCPD para.6 et seq.
13 As the telos of the information requirement in Rec.7 and 14 UCPD shows. The concept of a consumers’ ra-tional choice in general is challenged by behavioural economics school of thinking, see Laibson/Zeck-hauser(1998).
14 Main definition in CJEU, C-210/96, paras.31,32 – Gut Springenheide GmbH, see also CJEU, C-303/97, para, 36 – Sektkellerei Kessler, CJEU, C-220/98, para.27 – Lifting.
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Influencing factors for problems to access information and transparency can be the often-exist-ing lack of time to read information15, the absence of rules how to present the information, the length of information16 and the comprehensibility in general to the vulnerable consumer.17 The retail energy market is a very technical and thus complex market. Consumers in this market have the option to make different choices: stay in the basic supply scheme or having a different supplier, tariff structures for their electricity supply (e.g. package deal prices/real-time pricing), the amount of electricity used, their electricity consuming devices and their energy efficiency and even to produce and/or store electricity themselves. Because of the variety of options, con-sumers struggle to access information and find the option with their “greatest expected util-ity”.18 By not being able to access information, consumers can be restricted in making a well-informed economic decision.
The freedom of choice divides into two parts. The first part is based on the free determination of the will as a basis for an autonomous decision-making process. The second part contains the possibility to act economically by comparing quality and price of a product or service.19 The
first part therefore concentrates on how a will is developed internally based on information. The second part deals with influences from third parties to the decision-making process.
Especially the second part of the freedom of choice is exposed to third parties and often used in an unfair way by companies to sell products or services. 20 Examples for exploitation are complicated pricing structures (multi-part tariff structures) or so-called attention hurdles (high fees for exceeding an agreed threshold) which could be avoided if the consumer paid close attention.21 In addition the consumer may not be not fully aware of add-on charges or so called teaser pricing which means that the price increases significantly.22 The freedom of choice can therefore enable an influence-free decision-making process.
15 See Helberger/Guibault/Loos/Mak/Pessers(2013) concerning a similar problem when dealing with the “over-whelming” amount of information in digital content contracts.
16 See Zamir/Farkash(2015) with comments on Marotta-Wurgler concerning the length of standard-form con-tract; CEER(2015-2), p.18 on how certain information should be displayed.
17 BEUC(2017-3), p.2.
18 COM, Communication “Delivering a New Deal for Energy Consumers“, p.2; the idea of providing consumers with sufficient information to provide protection can be traced back to the “Information Model” influenced by Steindorff(1996), p. 196 and first stated by the CJEU in the case C-362/88 – GB-Inno-BM, Rec. 13 et seq., 19 Beater(2000), p.139 et seq., 190 et seq.
20 UCPs were the third biggest group for consumer complaints between 2011-2015 (after billing and other com-plaints), COM, Energy consumer trends 2010-2015, p.36 (figure 15)., p.37 shows a table which displays that the UCP which consumers noticed most is the “pressure to sign a contract with an electricity company” (figure 17). 21 See Grubb(2015), p.250.
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Furthermore, as a general obstacle for the economic decision-making process, consumers can be disadvantaged because of vulnerabilities in their person increasing the risk of being influ-enced in their decision-making process.23 As the energy sector is an essential supply sector, a wide range of factors can increase the risk of consumer vulnerability.24
The chapter shows that energy consumers can be limited in making economic decisions if their information access, transparency (internal factors) and freedom of choice (external factors) arise. The restriction can be an obstacle for the consumer to choose “the option with the greatest expected utility”. Especially the technical and complex energy market offers many opportuni-ties for supply companies to exploit the consumers’ decision-making process.
2. UCPD as an EU standard to protect the consumers’ economic decision-making pro-cess
The 2005 UCPD25 sets a standard of protection for Business-to-Consumer (B2C) practices through full harmonisation.26 The UCPD applies to all areas of commercial practices in the EU as lex generalis. Only if a sector has more specific provisions for the protection against UCPs, these provisions will apply as lex specialis.27 Thus, and if more specific provisions are lacking, it also applies to the energy sector.
The protection against UCPs laid out in the UCPD is based on the presumption that a well-informed and influence-free consumer will be able to make an “economic” decision.28 It there-fore includes the economic decision-making process in its protection.
Most importantly, Art. 5(1) UCPD bans all UCPs. Art. 2(d) UCPD defines UCPs as “‘business-to-consumer commercial practices’ […] [which] means any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers”. Art. 3(1) UCPD enlarges the scope of application further to all practices “before, during and after a com-mercial transaction in relation to a product”. The definition shows that the EU legislator wanted a wide definition that could contain all relevant practices.29
23 COM, Consumer Vulnerability, 2016, p.346. 24 VCWG(2013), p.4.
25 Directive 2005/29/EC.
26 Because of the special focus of this paper on the protection against UCPs, the analysis will focus on the UCPD and leave outside other EU legislation concerning information requirements as Directive 93/13/EEC, Directive 2006/114/EC, Directive 2011/83/EU and Directive 2014/95/EU.
27 Art.3(4) UCPD, see COM, UCPD guidelines 2016, p.16.
28 Rec.11 UCPD; To the necessity of the decision being well-informed and influence-free see Köhler/Born-kamm/Feddersen/Köhler, §1 para.25 and BGH, GRUR 2016, 207, para.18 – All Net Flat.
29 Even after sales measures, practices on social media are covered, see COM, UCPD guidelines 2016, p.16, p.6 et seq.
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A practice is unfair, if it is “contrary to the requirements of professional diligence”30 or “mate-rially distorts or is likely to mate“mate-rially distort the economic behaviour”31. The distortion of eco-nomic behaviour is defined in Art. 2(e) UCPD as “using a commercial practice to appreciably impair the consumer’s ability to make an informed decision, thereby causing the consumer to take a transactional decision that he would not have taken otherwise”. These practices could either affect the general access to information, their transparency (“an informed decision”) or influence-free decision-making (“make […] [a] decision”) and persuade consumers to make a decision, with probable negative financial impacts, they would not have made without the trades action.
In sum, the UCPD protects the consumers’ economic decision-making process against UCPs. The Directive applies as lex generalis to all EU markets with B2C relations if no more specific provisions exists.
3. Conclusion to chapter II
This chapter lines out which protection is needed and generally provided in the EU legal frame-work to enable the consumer to make an economic decision. The economic decision-making process is based on a protective trio: information access, transparency and freedom of choice. The UCPD protects all these factors and sets an EU-wide protective standard. Only if more special provisions apply, the UCPD is applicable as lex generalis.
III. The protection against UCPs in EU energy law
The following chapter will present the status quo of consumer protection against UCPs in EU energy law. For this purpose, this paper will firstly examine how the market design correlates with the consumer protection in EU energy law and how the legislator reflects that perception in his legislation. The analysis is followed by an examination of the normative concept of the consumer in energy law as an indicator which level of protection is needed.
1. Consumers in the EU energy market design and their protection against UCPs
a) The market design
In the energy market design, consumers have the role of active market participants.32 Consum-ers can only fulfil their role, if they have the same abilities as other market participants (espe-cially the ability to make economic decisions).33 In the retail energy market, there are different
market participants, e.g. energy producers, transition system operators, distribution system
30 Art.5(2a) UCPD. 31 Art.5(2b) UCPD.
32 Rec.5, 6, 8, chapter II and III Recast Proposal.
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operators, aggregators and energy suppliers.34 These parties are all operating commercially when participating in the market. Due to their commercial background they have further knowledge or at least financial means to gain knowledge to understand and act on the market.35 Because of less financial means and specialist knowledge, the consumer is disadvantaged com-pared to the other market participants.
In the Consumer Rights Directive36 the consumer is defined as a person who is “acting […] outside his trade”.37 In the energy market, consumers are not limited to that definition. The Commissions’ Recast Proposal of the third Electricity directive actively promote consumer par-ticipation in the energy retail market by producing electricity38 and thereby blurs the borders between private and commercial action.
The Commission aims at empowering consumers to be more in control of their choices in the energy sector. The main idea is that better information would make consumers more active in the retail energy market and therefore more in control of the results of their choices as for ex-ample energy costs.39 Energy suppliers on the other hand would have to compete more for
consumers as consumers could decide more easily between competitors.40 Consumers would
then again influence the retail energy market to perform better.41 To cope with the challenge to
implement volatile input of renewable energy in the system of energy supply, the Commission follows the idea that markets for energy supply should be more decentralised and flexible. In such a market design, consumers would be encouraged to generate, share, store, consume or sell back even more their own generated energy.42 However, potentially “weaker” consumers43 can only fulfil their function in the market design if their decision-making capacities are guar-anteed.
When the liberalisation process started, the focus of the EU legislator was to forward consumer choice and later on also switching providers.44 The so-called Winter Package explicitly speci-fied eleven rights for consumers.45 The large number of consumer rights shows the intention of
34 EP(2016), p.2.
35 Art.3(1i) Recast Proposal. 36 Directive 2011/83/EU.
37 Art.2(1) Directive 2011/83/EU.
38 See for further elaboration p.10 of this paper.
39 The assumption is based on the idea that consumers would base their decision on an informed basis (“Infor-mation Model”), see Steindorff(1996), p. 196.
40 COM, Communication “Clean energy for all Europeans”, p.9. 41 COM, Consumer Markets Score Board 2016, p.9.
42 COM, Communication “Clean energy for all Europeans”, p.9. 43 By a lack of expertise and financial resources, as stated above. 44 Johnston/Reich(2016), p.112, 114.
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the EU legislator to create a market design where the consumer is protected and at the same time empowered to take active decisions that then advances the market. The rights should fur-ther prevent the consumer from being the “weaker” party in a top-down energy model.46
b) The consumer definition
In EU energy law the consumer is not explicitly defined but referred to in several Directives.47 Already the First Electricity Directive only refers to the “customer”.48 The “consumer” is not defined in the Directive. “Consumer” is defined in the Oxford Dictionary as “a person who purchases goods and services for personal use”49. “Customer” on the other hand is “a person
who buys goods or services from a shop or business”50. Therefore, the energy “customer” is the
energy “consumer” in a contractual relation. Consequently, the “customer” is a more specific term than “consumer” which entails as the more general “customers”.
The current Electricity Directive51 (as well as the Second Electricity Directive52) makes a dis-tinction between different forms of customers.53 In Rec. 1 of the Directive the legislator differ-entiates between commercial and private customers. The energy legislator thereby promotes his view that provisions should apply to different forms of customers. By dedicating several provi-sions only to final or household-customers, the legislator differentiates in his level of protection of the different customer forms. The “household customer” stands out by being the only cus-tomer that explicitly purchases electricity for non-commercial purposes.
In Art. 15 of the Recast Directive the legislator gives specifications of which rights should be ensured for the “active” final customer, also named as the so-called prosumer.54 This provision is newly added to the Directive and represents the promotion of a prosumer who participates in the market by consuming, storing or selling energy. The participation of an as “active” defined customer by the Directive therefore even expands the understanding of an “ordinary” final cus-tomer being “active” by making a decision through which contract and when to use energy. The
46 Cseres(2018), p.2.
47 See e.g. Rec. 1, 3, 5, 6, 42, 46, 50, 51, 52, 54, 55, 57, Art. 3(3), 3(7), 3(12), 3(13), 3(15), 5, 36(d) etc. Directive 2009/72/EG.
48 Art. 2(7) Directive 96/92/EG (1st Electricity Directive). 49 https://en.oxforddictionaries.com/definition/consumer. 50 https://en.oxforddictionaries.com/definition/customer. 51 3rd Electricity Directive 2009/72/EC.
52 2nd Electricity Directive 2003/54/EC.
53 The definitions of “household customer” (Art. 210)), “non-household customer” (Art. 2 (11)) and “eligible customer” (Art. 2(12)) Directive 2003/54/EC were added, Household customers are “customers purchasing elec-tricity for their own household consumption, excluding commercial or professional activities”, whereas non-household customers include “any natural or legal persons purchasing electricity which is not for their own household use and shall include producers and wholesale customers”.
54 The word stems from a combination of “producer” and “consumer”. Further to the “prosumer” see Tof-fler(1980) and Diestelmeier/Hasselmann(2018).
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analysis of this paper will focus on final customers as “ordinary” active because of their higher need of protection. This definition does not exclude the prosumer being a final consumer. The chapter shows the factual approach of the legislator to define the protective framework for consumers. “Consumers” are only mentioned in a wider context. Definitions are customised to “customers” which are defined as being in a contractual relation to the energy supplier. By this method, the legislator expresses awareness for the need of differentiation of protection for the different customer categories.
c) The Energy Directives
The Directive 2009/72/EC targets the safeguard of a high level of consumer protection, espe-cially regarding appropriate tariffs, choice of the supplier, representation of interests and the possibility to take part in a dispute settlement mechanism.55 By reading the Directive, due to
the way the consumer is mentioned, it becomes apparent that the consumer should be enabled and empowered to reach a decision by receiving enough information. Already Rec. 52 states that the consumer needs to receive enough and clear information. Because of the complexity of information in energy law, information needs to be provided in a certain and understandable way. Thereby, the Directive grants rights so the customer can be active (as described in Art. 3) to be provided with energy of a certain quality for appropriate prices. At the same time, cus-tomers should receive all information about their consumption data, Art. 3(5b). Furthermore in Art. 3(9), the Directive refers to bills and promotion material which should contain information about the contribution of each energy source to the overall fuel mix of the supplier, Art. 3(9a). Art. 3(9b) and Art. 3(9c) extend the information requirement. Energy suppliers are therefore required by law to give certain information to the end-customer. Art. 3(9) ensures that certain information is made available to the consumer in bills and promotion material. In addition, the Directive gives in its Annex I an explicit overview over measures which should ensure con-sumer protection. Still, the requirement of certain information is more of a description of which information to provide rather than how to provide the information.
The Directive 2009/72/EC is now in the legislative process to be amended. 56 The Recast
Pro-posal57 focuses even more on the consumer in the centre of the market design than Directive 2009/72/EC. Rec. 8 claims that the consumer is “essential” for the market. By explaining the market design in chapter II, Art. 3 even names the purpose of the market being “consumer centred”. As general concepts and rights, the choice of a supplier (Art. 4) and the protection of
55 Rec.42 Directive 2009/72/EG.
56 See the status at https://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2016:0864:FIN. 57 COM, Recast Proposal, 23.2.2017.
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the vulnerable consumer (Art. 5(2) can be found right at the beginning. In chapter II under the title “consumer empowerment and protection” several provisions are given. Art. 10(1) contains basic contractual rights, Art. 10(2) information rights, Art. 15 is a provision explicitly describ-ing the “active consumer” (prosumer). Art. 18 concerns billdescrib-ing information and refers for the explicit requirements to Annex II of the proposal. As a new requirement, Art. 18(1) specifies that “information […] shall be […] presented in a manner that facilitates comparison by con-sumers”. The legislator shows his sensitivity for the problem of how information is presented. Furthermore, Art. 14 about comparison tools demonstrates that the legislator wants to provide support for the consumer to access information.58 If comparing the Directive 2009/72/EC and the Recast Proposal, the stronger focus on the consumer in the Recast Proposal becomes clear. The EU legislator furthermore extents the provisions to empower the consumer from giving information to “how” information is presented (Art. 18). Nevertheless, the requirement of Art. 18 has a vague wording which could lead to different perception of the MS which then could result to a varying standard of consumer protection in the MS.59
The Energy Efficiency Directive60 has the aim to achieve energy savings. In the Directive,
con-sumer participation is mentioned several times. Rec. 28 will empower concon-sumers to actively regulate their consumption by individual meters or cost allocators. Rec. 39 sets the standard of consumer choice between cogenerated or other electricity. Demand response61 is named in Rec.
44 as a tool for the active consumer. Art. 9(2a, c, d, e) contains information requirements for meters. Art. 10(1) refers for standards concerning energy efficiency to billing information to Directive 2012/27/EU. Art. 10(3e) explicitly requires that information is provided “in an easily understandable format enabling consumers to compare deals on a like-for-like basis.” The leg-islator thereby shows a sensitivity for the problem how information is accessed. The standard for information access is still Directive 2009/72/EC.
Finally, the Renewable Energy Directive62 will be analysed. The Directive defines the frame-work for the promotion of production of electricity from sources of renewable energy. The Renewable Energy Directive is the least consumer centred out of the presented Directives. The
58 Comparison tools allow the consumer to compare information through a presentation of information in catego-ries which allow the consumer to better access information. In depth discussion how to improve internet compar-ison tool see Gamper(2012); Cseres(2018), p.18; BEUC(2017), p.1.
59 See below p.27. 60 Directive 2012/27/EU.
61 Demand response is a technique which allows to adjust consumer consumption in cases of electricity network overload by mostly electricity input by renewable energy, for the potential of demand response see, p.46; Rec.45 Directive 2012/27/EU, COM, Demand Side Flexibility, p.2, Williams/Wang/Crawford/Djilali(2013).
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only consumer relation exists in form of guarantees of origin from renewable energy, Rec. 52, 53. The recitals address MS to ensure the guarantee of origin within the meaning of the Di-rective. Consumer empowerment or explicit rights or provisions concerning sales practices are not mentioned.
A short remark should be given on the Energy Labelling Regulation63 from 2017, which regu-lates uniform labelling for the energy efficiency of products that are relevant for the energy consumption in the EU. Already in Rec. 2 the Regulation assumes that the „informed consum-ers’ choice benefits the EU economy overall”. According to the specification in Rec. 10 this information should be “accurate, relevant and comparable”. Art 6(c) imposes the obligation on MS not to mislead or confuse end-users with respect to the consumption of energy or other essential resources during use. Different to the above presented Directives, the Energy Label-ling Regulation explicitly refers to misleading or confusing practices for the end-user.64 The analysis of the EU energy law provisions shows that provisions against UCPs are mostly focussed on information access and transparency. Some provisions about the presentations of information exist (Recast Proposal, Energy Efficiency Directive). Especially the addition of the requirements on how to present information in Art. 18 of the Recast Directive shows the legis-lators’ growing awareness of how information assessment can influence the consumers deci-sion-making process. Provisions to explicitly target aggressive or misleading practices as laid out in the UCPD only appear in the Energy Labelling Regulation.
2. The normative consumer concept
Different to the definition of a consumer is the normative concept. The concept entails which cognitive abilities the consumer is expected to have and e contrario which protection level is needed to enable the consumers’ “equal” market participation.
In EU consumer protection law, the concept of the “average consumer” was developed as a standard for consumers’ intellectual capacity. The notion of consumers was first developed in the CJEU’s free movement case law. The CJEU established that “average consumers” (regard-ing their intellectual capacity) are “well-informed, reasonable and circumspect” market
63 Regulation (EU) 2017/1369.
64 The Energy Labelling Regulation is generally not part of the analysis of this paper because its scope of appli-cation extends the area of energy supply. The short presentation was chosen to demonstrate that there are Direc-tives/Regulations in the energy sector which contain provisions for the protection against UCP. Since this paper only focuses on provisions concerning electricity supply, energy labelling provisions in the Netherlands and Ger-many will not be analysed.
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actors.65 The concept is based on the thought that if the consumer is able to process and use information (by way of information disclosure), then less market regulation is needed.66 In the current Electricity Directive, the normative concept of the average consumer is not men-tioned while vulnerable consumers as an exception to the “average consumer” are referred to several times.67 Since the CJEU case law for consumer protection and the provisions of the UCPD apply as legis generalis for protection against UCPs,68 the concept of the average con-sumer must also be applied here.
The UCPD defines the “average consumer” in Rec. 18 as “reasonably well informed and rea-sonably observant and circumspect”69 and thereby implements the CJEU’s case law.70 Art. 5(2b) UCPD refers to the same perception without explicitly defining it. Art. 5(2) UCPD pro-vides the opportunity to take into account special target groups of consumers so that, e.g., an advertisement targeted at children is to be judged from the point of view of the children.71 Exceptions can be found in Art. 5(3) UCPD which refers to the vulnerable consumer. Although Art. 5 UCPD mentions a non-exhaustive list of vulnerabilities.72 The definition therefore
pre-sumes that consumers have generally sufficient information (“reasonably well-informed”) to make a decision, and also attributes them a certain attentiveness (“reasonably observant and circumspect”) when taking economic decisions. Therefore, the EU legislator generally expects consumers to (at least to a certain amount) gather information themselves (“reasonably well informed”) and bring a certain intellectual capacity (“reasonably observant and circumspect”). The legislator has taken into account that the average consumers’ capacities can fluctuate, so the average capacity does not represent the actual consumer capacity.73 To acknowledge these exceptions to the norm, the legislator created the concept of the vulnerable consumer. The leg-islator sees a wide range of factors that can increase the risk of consumers being vulnerable.
65 Main definition in CJEU, C-210/96, paras.31,32 – Gut Springenheide GmbH, see also CJEU, C-303/97, para, 36 – Sektkellerei Kessler, CJEU, C-220/98, para.27 – Lifting.
66 See Steindorff(1996), p. 196.
67 See Rec. 45, 50, 53, Art. 3(7), Art. 36(h) Directive 2009/72/EC.
68 Concerning the application as lex generalis see Art. 3(4) UCPD, see COM, UCPD guidelines 2016, p.16. 69 Different: Helm(2013), 715, who sees in Rec.8 the abandonment from the jurisdiction.
70 This case law became relevant because some MS (here especially Germany) defined the consumer in the field of UCP as superficial and generally uncritical, Köhler/Bornkamm/Köhler, §1 para.29 with reference to
BGH, GRUR 1982, 564, 566 – Elsässer Nudeln; BGH GRUR 1984, 741, 742 – patented; BGH GRUR 1990, 604, 605 – Dr. S.-Arzneimittel; BGH GRUR 1992, 450, 452–Beitragsrechnung.
71 Duivenvoorde(2013), 70.
72 Ct. also Rec.18, 19 UCPD for a better idea what the Directive refers to; COM, UCPD guidelines 2016, p.53. 73 For UCPs in general see COM, Fitness Check Part 3, p.841 et seq.
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These factors include people’s individual circumstances74 and living conditions75 which can be short- or long-term and may vary over time.76 In the Vulnerable Consumer Report, the
Vulner-able Consumer Working Group77 recognises that factors for vulnerability can also arise from “practices and behaviour of market players, and the way that the retail energy market oper-ates”.78
In the Energy Directives, the specification for vulnerable consumers applies as lex specialis to the vulnerable consumer in the UCPD.79 Generally (Rec. 50), vulnerable consumers should benefit from competition and fair pricing in the energy sector despite their “weaker” position. A list of vulnerabilities is not given. An indication how to understand the term can be found in Rec. 53. Here, the EU legislator explicitly links energy poverty to consumer vulnerability and thereby gives an example of vulnerability.80 Rec. 53 leaves the concept of defining the vulner-able consumer explicitly to the MS.81 Consequently, the EU legislator must be aware that not all energy consumers fulfil the requirements of an “average consumer”.
Apart from these provisions, the Commission recognises in recent publications that there can be further structural differences between the existing consumer image and the “real” con-sumer.82 When designating the consumer to be an active market player in the electricity market,
the report recognises that competition may be uneven with some consumers benefitting more than others due to e.g. intellectual capacity or time to compare prices.83 Specific for the retail energy market is the problem that the subject of energy supply is complex and depends on different factors. Therefore, the report concludes that in order to make informed choices, there must be sufficient information available.84 Another Commission study shows that consumer vulnerability in the energy sector was based mainly on “having difficulty in obtaining or
74 E.g. income level, health, IT skills, internet access, education, age, employment etc., cf. VCWG2013), p.44 et seq.
75 E.g. under-occupancy, type of heating system, quality of housing stock, climate etc., VCWG2013), p.46 et seq.
76 VCWG(2013), p.4.
77 VCWG was created by the COM following the conclusions of the 2015 Citizens' Energy Forum, see the con-clusions of the forum p.2, https://ec.europa.eu/energy/sites/ener/files/documents/2015_03_13_LF_conclu-sions.pdf.
78 VCWG(2013), p.4.
79 See Art.3(4) UCPD, COM, UCPD guidelines 2016, p.16.
80 Rec.53 Directive 2009/72/EC, with the same interpretation Diestelmeier/Hesselman(2018), ACER(2015), p.116.
81 Rec.45 and Art.3(7) Directive 2009/72/EC; The Insight_E study on energy poverty and consumer vulnerability states that definitions for consumer vulnerability vary significantly in the MS and suggests creating additional guidance to define the “vulnerable” consumer. Insight_E(2015), p.V, 76.
82 COM, EU Consumer Policy Strategy 2007-2013. 83 VCWG(2013), p.7.
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assimilating information”, the “inability or failure to buy, choose or access suitable products” and a “higher susceptibility to marketing practices”.85 The indicator which occurred most in the experiment was the influence by market practices (85%).86 The analysis displays the variety of factors which can influence vulnerability but also vagueness of the term.
Moreover, the problem of consumer inertia is discussed as a consumer vulnerability.87 Because of information overload, some energy consumers tend to be inactive.88 Several authors try to explain inertia with behavioural biases.89 Further reasons for inertia are low levels of consumer confidence and trust in energy suppliers, low levels of awareness of the ability to switch sup-pliers, and a perception that switching suppliers is “a hassle”.90 Consumer inertia is not an en-ergy specific phenomenon but appears in several sectors e.g. insurance and pension schemes.91 Propositions to address the problem vary from forcing the consumer into an action to custom-ised solutions.92 A solution for consumer inertia is yet not incorporated in the EU energy legal framework.
Some authors go further by criticising the general classification of consumers in EU energy law of the “average” and “vulnerable” consumer. Butenko and Cseres even propose a more detailed classification of consumers according to their consumption.93 Terryn recommends a
classifica-tion by a “knowledge criterion” (experience, knowledge and intelligence of the person) and a “purpose criterion” (purpose for which goods and services). The EU concept focuses on the purpose criterion. The Energy Directives are mainly based on the purpose criterion. The knowledge criterion is not defined in the Directives as it is in the UCPD (“average consumer”). Both proposals try to develop a more detailed classification of the “consumer”. The discussion shows that also on the level of the normative consumer notion it is discussed to differentiate between different levels. A more detailed classification would allow a higher level of protection for some consumer categories. Such a classification could help forward the energy market by
85 COM, Consumer Vulnerability, 2016, p.347 et seq. 86 COM, Consumer Vulnerability, 2016, p.348.
87 See e.g. COM, Consumer Vulnerability, 2016, p.36; COM, Energy Consumer Trends 2010-2015, p.10 et seq.; Decker(2017), p.162 et seq.; Lavrijssen(2013), p.274; Straetmans(2016) p.210.
88 COM, Evaluation Report Electricity Market Design, p.45 indication a switching rate only around 6% as meas-urement of consumer activity.
89 ACER/CEER(2015), p.164, Angeletos/Laibson/Repetto/Tobacman/Weinberg(2001) about short- and long-term behaviour; Beshears/Choi/Laibson/Madrian(2011) about consumer behaviour in public sector pension plans.
90 Decker(2017), p.172; See CEER(2015), Analysis and critiques of the concept of the “well-functioning market” are provided in Littlechild(2015), p.605.
91 Cf. the study of Beshears/Choi/Laibson /Madrian(2011).
92 Beshears/Choi/Laibson /Madrian(2011), Keller/Harlam/Loewenstein/Volpp(2011).
93 Butenko/Cseres(2016), p.9 proposing the classification “active”, “passive”, “responsible” and “prosuming con-sumption”.
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supporting some consumer categories more than others and to further enable them to participate in the market. Since these proposals did not find their way into the legal framework or jurisdic-tion yet, they must be seen as a link to potential further development of the normative consumer concept in the future.
In sum, the concept of the “average consumer” in EU energy law is widely discussed and crit-icised. The concept could be adjusted by expecting less intellectual capacity from the consumer and further specify categories for vulnerabilities. Thus, a higher consumer protection against UCPs for all consumers (average and vulnerable) would be achieved at the cost of higher inter-ference by the legislator. As a different approach, a new consumer classification method could be developed to create differentiation for consumers protection levels.
3. Conclusion to chapter III
In conclusion, in EU energy law, the consumer has an important place in the market design which is underlined by a high level of differentiation between costumer definitions and specific customer protection provisions in the Energy Directives. The protection in the EU legislation contains not only providing information but also information presentation. Thereby, the legis-lator acknowledges study findings presented earlier about how consumers can be supported in their decision-making process.94 Specific provisions to protect against misleading or aggressive practices rarely exists. As to the intellectual capacities, the “average consumer” concept is ap-plied. The concept stems from general EU consumer law and is not explicitly regulated in EU energy law. As exceptions to this concept, vulnerabilities should compensate for consumers not providing the “average” capacity. By applying the “average consumer”-model to the energy market, the EU legislator generally expects consumers to (at least to a certain amount) gather information themselves (“reasonably well informed”) and bring a certain intellectual capacity (“reasonably observant and circumspect”).
IV. The protection against UCPs in the Netherlands and Germany
This chapter analyses the level of consumer protection against UCPs in written law at MS level (Netherlands and Germany), as well as in practice. The analysis of these two MS should exem-plarily allow an impression of how the EU concept is implemented and if, despite the imple-mentation and the general measures to protect consumers against UCPs, UCPs occur in the energy sector.94 Cf. chapter II.1.
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2. The Netherlands
a) Legal framework
In the Netherlands consumers are protected against UCPs through the Wet oneerlijke
handel-spraktijken.95 Generally, the Netherlands have a rich tradition in regulating UCPs outside
pri-vate law, which explains the still existing large number of codes of conduct96, as well as
measures for friendly settlement as the Dutch Reclame Code Commissie97 for disputes about
advertisement or the Geschillenkommissie.98
The Dutch electricity supply system is based on the Elekticiteitswet 199899, the Wet
imple-mentatie EU-richtlijnen energie-efficiëntie100, the Wijzigingswet Elektriciteitswet 1998101. In this paper, only the codes which contain provisions for consumer protection will be analysed. The Auroriteit Consument & Markt (ACM) supervises the market.102
Rules for consumer protection can be found in Art. 95m Elekticiteitswet 1998. Art. 95m has the title “consumentenbescherming” which translates to “consumer protection”. The title shows that consumer protection has a certain focus in Dutch energy law.103 The title of the ACM (Au-toriteit Markt & Consumenten) leads to the same assumption. Different to the inconsistent wording of the EU provisions, the title does not address the “customer” as in most EU legisla-tion but the “consumer” in general. Art. 95b(5) para. 1, 2 and 3 clarify that the condilegisla-tions for an energy supply contract (1) and information on current tariffs and prices (2) need to be com-municated in a transparent way. Para. 10 forces energy suppliers to give and make practical information accessible. Para. 3 forbids energy suppliers to approach customers in a way that might result in uncertainties over the conclusion of a contract. Thereby, the provision includes a special protection for energy customers when concluding an energy supply contract. The pro-vision can be understood in a way that the energy supplier must give at least a notification or confirmation to the customer when concluding a contract. As an argumentum e contratrio, the provision can be seen as a ban of misleading, aggressive practices or other UCPs that lead to the conclusion of an energy supply contract. The norm can therefore be interpreted as an indirect provision to protect the consumer against UCPs leading to the conclusion of a contract. The
95 Wet handhaving consumentenbescherming of 20.11.2006.
96 E.g. code of conduct for the understandability of energy bills, code for providing information and fair selling, code for debt service organisations.
97 Nederlandse Reclame Code (NRC), https://www.reclamecode.nl/consument/default.asp?paginaID=0. 98 https://www.degeschillencommissie.nl/over-ons/commissies/energie/.
99 Elektriciteitswet 1998 of 2.7.1998.
100 Wet implementatie EU-richtlijnen energie-efficiëntie of 26.2.2011. 101 Wijzigingswetten Elektriciteitswet 1998 of 23.11.2006 and 12.7.2012. 102 Art.3 Elekticiteitswet 1998.
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provision does not contain explicit practices and can therefore be seen as a general clause. Rules to protect the vulnerable consumer can be found in Regeling afsluitbeleid voor kleinverbruikers
van elektriciteit104. The code should ensure the grid-connection for end-customers.105 Art. 95lb Elektriciteits Wet 1998, Art. 4 Besluit factuur, verbruiks- en indicatief kostenoverzicht energie contains billing information requirements106.
The Netherlands Competition Authority(NMa) as predecessor of the ACM has already noticed in 2006 the problem of UCPs in the energy sector and that trust in the retail energy market could be disturbed by misleading practices, so they initiated the creation of a “gedragscode consument en energieleverancier”.107 The code is a legally non-binding instrument that is applied by sev-eral energy suppliers.108
In the code, eight Articles give a complex code of conduct.109 The detailed provisions concern-ing the protection against UCPs show that the Dutch regulator is aware of the problem of UCPs against the energy consumer. But instead of deciding to legislate in a legally binding way, the regulator initiated a code of conduct concluded between the supplier and consumer.
To enhance protection of the energy consumer, the ACM has furthermore created an information website just for energy consumers where one part is especially dedicated to UCPs against the energy consumer and the rights the consumer has.110 This website also aims at providing extra
protection for vulnerable consumers.111
b) Practice
Concerning consumers’ capacity to better process energy pricing information, the yearly report of the ACM shows a positive development.112 Consumers seem to better understand pricing
104 Regeling afsluitbeleid voor kleinverbruikers van elektriciteit en gas of 27.6.2011, No. WJZ/11076169. Fur-ther regulation can be found in Regeling van de Minister van Economische Zaken en Klimaat of 30.1.2018, No. WJZ/17093557.
105 Diestelmeier/Hesselman(2018), under 2.2, who refer to health and sanitary reason why grid-connection need to be ensured.
106 Besluit factuur, verbruiks- en indicatief kostenoverzicht energie of 21.5.2015. 107 See the code of conduct consumer and energy supplier (translated by the author). 108 See the full list at https://www.energie-nederland.nl/positionpaper/658/.
109 Art.1 (misleading information) can be seen as a general clause. The Article explicitly treats the practices of comparing advertisement (Art.1(4), consumers with vulnerabilities (Art.1(5), information without the conclusion of a contract (Art.1(6) and information requirements after concluding a contract (Art.1(8). In Art.2 to 5, the code deals with UCPs sorted by the way of communication with the consumer as doorstep selling (Art.2), telemarket-ing (Art.3), internet and e-mail (Art.4), as well as direct markettelemarket-ing via e-mail (Art.5). The code further distin-guishes between UCPs addressing the consumer not under contract (2-5) and the consumer faced with practices when already having concluded a supply contract. Art.7 treats judicial protection.
110 See https://www.consuwijzer.nl/energie/klantenwerving-door-energiebedrijven.
111 See https://ec.europa.eu/energy/en/single-point-contact which refers to https://www.consuwijzer.nl/energie. 112 ACM, Energiemonitor 2018, p.15; Energiemonitor 2017, p.5; Energiemonitor H2 2016, p.6 et seq.; Trendrap-portage Marktwerking en Consumentenvertrouwen in de energiemarkt H2 2015, p.17.
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information and their energy bill, which facilitates the switch to another supplier. 80% of the respondents nevertheless indicate that they have problems to understand energy pricing infor-mation complicated.113
In the context of environmental claims, several UCPs have been exposed in the past in the Netherlands.114 Moreover, comparative advertising seems to be an issue.115 Energy suppliers use terms as “cheapest”116 and “sharpest tariffs”.117 Also discussions about misleading adver-tisement is not unusual in discussion forums which indicates a certain relevance.118 By using these statements trades try to utilise the consumers’ positive attitude towards cheap electricity supply to persuade consumers to switch the supplier.
In 2008 and 2010, there appeared several cases where energy suppliers tried to win customers by telephone marketing.119 Generally, in the Netherlands aggressive telephone marketing does not appear as often as in other MS. Due to the fact that the authorisation to contact consumers via telephone is generally regulated.120 Still, discussions in discussion boards indicate, that
tel-ephone marketing, as well as doorstep selling still play a role when it comes to UCPs in the Dutch energy sector.121 In the described situation, suppliers use the overwhelming effect to
persuade the consumer to enter into a contract. Legal disputes in that field are mostly governed by Art. 95m E-Wet 1998 in combination with the general provisions for the protection against UCPs.122
The analysis shows that the protection against UCPs in the energy sector is based on a combi-nation of general consumer and energy sector specific protection. The coded provisions are extended by a legally non-binding code of conduct and the NRC as a mechanism for friendly dispute settlement. Studies of the ACM show a positive development in information perception
113 ACM, Energiemonitor 2018, p.15. 114 COM, Fitness test Part 3, p.841.
115 College van Beroep, 17.3.2017, 2016/01006 – CVB; College van Beroep, 20.2.2014, 2014/00001; College van Beroep, 4.7.2011, 2011/00484.
116 “Goodkoopst” (translation by the author) College van Beroep, 20.2.2014, 2014/00001. 117 “Scherpst tarifen” (translation by the author) College van Beroep, 4.12.2015, 2015/01117.
118 Cf. e.g. https://kassa.bnnvara.nl/vraag-beantwoord/vraag/huishouden-energie/energiedirect-misleidende-reclame-voor-bestaande-klanten; https://www.klachtenkompas.nl/bedrijf/easy-energy/klachten/misleidende-reclame/details?complaintId=9146fac4-7bb1-49b3-836c-9c296595148c; https://dmcc.nl/nieuws/631/reclame-code-commissie-handhaaft-berisping-easyenergy#. 119 https://radar.avrotros.nl/nieuws/detail/irritante-deurverkoop-energiebedrijven-achtergrond/, https://www.ad-formatie.nl/influencer-marketing/nlenergie-krijgt-1-miljoen-boete-voor-misleiding. 120 https://business.gov.nl/regulation/telesales/.
121 https://radar.avrotros.nl/forum/viewtopic.php?t=178799 (2017); doorstep selling: College van Beroep voor het bedrijfsleven, 31.3.2015, AWB 14/21, Rechtbank Rotterdam, 25.4.2013, ROT 12 / 284; telephone marketing: Rechtbank Rotterdam, 5.12.2006, MEDED 05/5862 WILD
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of consumers. Still, most consumers find information difficult to access.123 UCPs in the energy sector often appear in aggressive sales practices as telephone marketing and doorstep selling. The ACM as competent authority dedicated parts of their consumer information explicitly to UCPs in the energy sector. The authority therefore seems to be aware of the problem of UCPs in the energy sector.
3. Germany
a) Legal framework
The protection against UCPs in German law is mostly based on the UWG124. The protection stems from a wide general clause which is specified by case law. In addition to the specific UCP related code, references for energy supply contracts can also be found in §§ 312 BGB et seq. (Bürgerliches Gesetzbuch), § 356(2 No. 2) BGB125 and § 357(8) BGB126, as well as Art. 246 § 1 II 1 No. 3 EBGBG which codify special information and termination requirements for consumer contracts.
German energy law is legislated in different codes. Mainly the Energiewirtschaftgesetz127 (EnWG) gives an overview of how the energy market is structured. Special codes to forward the energy transition are the Erneuerbare-Energien-Gesetz128 (EEG 2017), the
Kraft-Wärme-Kopplungs-Gesetz129, the Energiesicherungsgesetz130, Stromsteuergesetz131,
Energiesteuerge-setz132, Messstellenbetriebsgesetz133, Energieleitungsausbaugesetz134,
Netzausaubeschleuni-gungsgesetz135, Energieverbrauchskennzeichnungsgesetz136 and several more. Due to the focus of this thesis on consumer protection against UCPs, only those codes will be analysed which
123 The Energiemonitor 2018 shows that 18% of consumers find finding pricing information still complicated, Energiemonitor 2018, p.15.
124 Gesetz gegen den unlauteren Wettbewerb of 3.10.2010. 125 Implantation of Art.9(2c) Directive 2011/83/EU 126 Implantation of Art.14(4a) Directive 2011/83/EU
127 Gesetz über die Elektrizitäts- und Gasversorgung of 7.7.2005. 128 Gesetz für den Ausbau erneuerbarer Energien of 21.7.2014.
129 Gesetz für die Erhaltung, die Modernisierung und den Ausbau der Kraft-Wärme-Kopplung of 21.12.2015. 130 Gesetz zur Sicherung der Energieversorgung of 20.12.1974.
131 Stromsteuergesetz of 24.3.1999. 132 Energiesteuergesetz of 15.7.2006.
133 Gesetz über den Messstellenbetrieb und die Datenkommunikation in intelligenten Energienetzen of 29.8.2016.
134 Gesetz zum Ausbau von Energieleitungen of 21.8.2009.
135Netzausbaubeschleunigungsgesetz Übertragungsnetz of 28.7.2011.
136 Gesetz zur Kennzeichnung von energieverbrauchsrelevanten Produkten, Kraftfahrzeugen und Reifen mit An-gaben über den Verbrauch an Energie und an anderen wichtigen Ressourcen of 10.5.2012.
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contain provisions for consumer protection. The development of the energy market is mainly supervised by the Bundesnetzagentur (BNetzA) as the regulating entity.137
The EnWG is at the centre of the German retail energy market legislation. § 1(1) EnWG ex-plicitly states that the supply with electricity and gas should be, next to other criteria138, “con-sumer friendly”139. How important the position of the “consumer friendly” criterion is, is highly discussed in German literature and has not yet been fully resolved.140 §§ 36 EnWG et seq. govern the energy supply to the end-consumer (especially the access to supply)141. The focus of the §§ 36 EnWG et seq. lies on the guarantee of basic needs142, especially for the vulnerable consumer.143 §§ 39 EnWG et seq. regulate prices and conditions.
§ 40(1) EnWG requires energy bills to be easy and comprehensible144 by giving further details which information needs to be given exactly. Thereby, the German legislator follows the scheme of the need for the consumer to receive all information needed to take well-informed decisions. The structure of § 40(1) EnWG reflects and implements the requirements on the EU level for a well-informed consumer. § 41(1) EnWG then states that also contracts for energy supply need to be easy and understandable and contain certain information. The content of the contract is thereby nearly standardised. Furthermore, the Stromgrundversorgungsverordnung145
which was enacted based on § 36 EnWG, predefines the content of an energy supply contract. To ensure the electricity supply, these conditions are mandatory and do not allow deviation. § 42 EnWG implements Art. 3(6) Electricity Directive. The aim is to enable any consumer to make a decision to choose a supplier and the amount of electricity used according to the criteria of primary energy source and environmental impacts.146 Therefore, the EnWG contains several information requirements for the energy supplier directed towards the consumer. § 42 EnWG determines explicitly the need to give certain information with advertisements.147 Nevertheless,
137 See https://www.bundesnetzagentur.de/DE/Allgemeines/DieBundesnetzagentur/UeberdieAgentur/Auf-gaben/aufgaben-node.html.
138 „Safe“, „cost-efficient“, „consumer friendly”, “efficient”, “environmentally friendly”, ct. §1(1) EnWG (trans-lation by the author).
139 “Verbraucherfreundlich”, cf. §1(1) EnWG (translation by the author). 140 Alexander(2015), 491 with further references.
141 „Energieliefeurng an den Endverbraucher“, ct. title of part 4 (translation by the author). 142 See the ruling BVerfG, 20.3.1984, 1 BvL 28/82 = BVerfGE 66, 248, 258.
143 BerlKommEnR/Busche, §36 EnWG para. 1.
144 „Einfach und verständlich“, ct. §40(1) EnWG (translation by the author). 145 Of 26.10.2006.
146 BT-Drs. 15/3917, p.67. 147 Cf. Alexander(2012).
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the requirements of these provisions focus on “what” to provide and not “how” to provide it. Therefore, the protection aims at informing but not at protecting against manipulative practices. In § 82 EEG 2017, “consumer protection”148, is explicitly named in the title of the provision. Nevertheless, the norm is a reference for the application of legal consequences of the German UCPs149 code at provisions for renewable energy150 and does not contain information require-ments or restrictions for sales practices.
The German regulation authority adds to the provisions a display of information on their web-site.151 Moreover, the Deutsches Institut für Energietransparenz offers a specialised certificate for suppliers which provide consumer-friendly bills.152 Specific information for the consumer concerning UCPs in the energy sector (as on the Dutch website https://www.consuwijzer.nl/en-ergie/klantenwerving-door-energiebedrijven) and how to protect against them does not exist. Furthermore, also on the non-legal-binding side, there are no provisions that could strengthen consumers‘ protection.153
b) Practice
In Germany, publications of the Verbraucherzentrale Rheinland-Pfalz and Niedersachsen indi-cate that the presentation of energy bills varies despite mandatory requirements several infor-mation which complicates it for the consumer to understand the bill.154 Generally the size of energy bills in Rheinland-Pfalz is up to five pages because of the high amount of mandatory information requirements. For several consumers it stays unclear what their electricity con-sumption is (26%) or if the billed amount of electricity is estimated or based on direct reading (23%). Also, energy efficiency requirements as the energy consumption of the year before is described as problematic to access in 30% of the cases. The energy bills further vary in the presentation of information. The Verbraucherzentrale Niedersachsen therefore proposes a more standardised energy bill by an easier layout (minimum font size, continuous text, struc-ture, essential requirements on one page).155
148 „Verbraucherschutz“, ct. the title over §82 EEG 2017 (translated by the author). 149 Gesetz gegen den unlauteren Wettbewerb, of 3.3.2010.
150 BerlKommEnR/Steffens, §82 EEG 2017 para.1.
151 See https://www.bundesnetzagentur.de/DE/Sachgebiete/ElektrizitaetundGas/Verbraucher/verbraucher-node.html.
152 Cf. http://www.difet.de/zertifizierung-kundenfreundliche-strom--und-gasrechnung-2018.html.
153 Compare Austria also having a code of conduct at least mentioning the protection against UCP https://oester-reichsenergie.at/files/Downloads%20Handel%20und%20Vertrieb/Verhaltenskodex_092012.pdf in C for adver-tisement.
154 Verbraucherzentrale Rheinland-Pfalz(2016), Verbraucherzentrale Niedersachsen(2017). 155 Verbraucherzentrale Niedersachsen(2017), p.21.
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In Germany, misleading advertisement linked to environmental protection statements, for ex-ample, „completely free of emissions“, “100% environmental friendly” and “CO2-neutral” are
intended to attract consumers to change their energy supplier.156 The same goes for statements as “hair drying against nuclear power” or “ironing for health”.157 By using these statements trades try to utilise the consumers’ positive attitude towards environmental friendly electricity supply to persuade consumers to switch the supplier.158
In the past years, complaints about telephone marketing of energy suppliers arose.159 Further-more, companies often work with comparing their prices to other suppliers. Such evaluations can be misleading (e.g. if tariffs are compared that do not have comparable conditions or when the basis for comparison is not made clear).160 The “Stadtwerketrick” also posed several prob-lems in the past. Here, in a doorstep-selling practice, elderly people were approached with the statement that the sales person represented municipal utilities with the intention to get the con-sumer to change suppliers.161 The “Stadtwerketrick” combines aggressive (doorstep-selling)
and misleading (tariff-comparison) and explicitly targets older people. Trades use these prac-tices as an advantage to overwhelm consumers and trick them into changing the supplier. Legal disputes in the field of UCPs in the energy sector is governed by the general UCP code or at the
Schlichtungsstelle Energie.162
The analysis shows, that information given in energy bills vary immensely in Germany. Some even do not display the mandatory requirements. Consumer organisations propose a more standardised layout to facilitate the comprehension. In sum, German provisions for consumer protection correspond mainly to the provisions given on EU level. Protection against UCPs is ruled under the UWG or in friendly settlements of the Schlichtungsstelle Energie and not under energy specific provisions. Misleading advertisement, but also aggressive practices seem to be a problem in the German energy sector. Especially practices which address potential customers
156 „Completely free of emissions“(„völlig frei von Emissionen“), „100% nuclear power free“ („100 % atom-strom frei“, OLG Frankfurt a.M., 2.12.2008, 11 U 45/08, „CO2-neutral“ (translation by the author).
157 Landgericht Hamburg 10.11.1999, 315 O 773/99, cf. also Roller ZUR 2014, 211, 213 seq.
158 See https://www.wettbewerbszentrale.de/de/branchen/Energie-undVersorgungswirtschaft/ueberblick/. 159 Schulte-Nölke/Henning-Bodewig/Podszun(2017), p.5, between 2010-2013 ca. 30.000/year complaints and since 2014 ca. 30.000/year; Schlichtungsstelle Energie, Report 2017, p.16; https://www.wettbewerbszen-trale.de/de/aktuelles/_news/?id=1394 (the Wettbewerbszentrale is an association of business owners for the self-governance of fair competition practices); Landgericht Frankfurt, 21.9.2011, 3-08 O 50/11; Landgericht Frank-furt, 30.10.2013, 3-08 O 50/11.
160 See https://www.wettbewerbszentrale.de/de/aktuelles/_news/?id=1401. 161 Hanseatisches Oberlandesgericht Hamburg, 7.3.2013, 5 U 118/10.
162 Concerning misleading practices: BGH, 13.6.2012, I ZR 228/10, KG, 27.3.2013, 5 U 112/11, OLG Hamm, 7.9.2017, 2 U 24/17; comparative advertisement: OLG Düsseldorf, 1.7.2014, I-20 U 231/13; information obliga-tion: OLG Frankfurt a. M., 12.4.2011, 11 U 5/11, OLG Karlsruhe, 26.6.2008, 4 U 187/07.
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in overwhelming situations as doorstep-selling or telephone marketing seem to be a current problem.
4. Conclusion to chapter IV
The exemplary analysis of the Netherlands and Germany in chapter IV leads to two assump-tions: 1. Consumers receive more information and tend to feel better informed about energy prices and their energy bills than in 2016 and before. Nevertheless, mandatory billing or con-tractual information is not always complied with and the amount of information still over-whelms consumers intellectually; 2. Energy law specific consumer protection against UCPs only exists partially or not at all. Most cases related to UCP protection in the energy sector are solved through the general protection against UCPs. Nevertheless, misleading and aggressive practices seem to be worth discussing especially practises that address consumers in situations where their possibilities to react or be prepared is reduced (as aggressive sales practices). The analysis can only be seen as an example from two out of 28 MS and cannot be seen as repre-sentative for the EU territory. It only can give an impression and possibly a trend of the level of consumer protection against UCPs in the EU. Official statistics specifically on how many complaints about UCPs in the energy sector the authority receives, do not exists either in the Netherlands nor in Germany.163
V. Effective implementation of the protection
The last chapter of this paper will analyse whether the consumer protection against UCPs is implemented effectively. Therefore, the EU legal framework will be compared to the imple-mentation on MS level and common UCPs. The result will then be compared to the consumers’ perception of the implementation and if it can be called “effective”. The chapter will finish with a recommendation on how to improve the current state of protection.
1. The ability to make well-informed decisions
In EU energy law, the ability to make well-informed decisions is the basis for the functioning of the EU energy market. The legislator assumes that an informed consumer would actively164 participate and thereby forward the market.165 This chapter discusses whether the EU energy consumer is actually enabled to make well-informed economic decisions and if not, how that goal could be achieved.
163 Further regular studies gathered by third party bodies could give incentives and provide assessment of the market performance., cf. Duterque(2013), p.84.
164 “Actively” in this sense means to participate by switching suppliers or consuming energy in an energy effi-cient way. The wording is not to be misunderstood for “active consumer” in the sense of the definition of the Re-cast Proposal of Art.15.
