DRAFT BILL entitled An ACT to amend the Consumer Affairs Act, Cap. 378
ABBOZZ TA' LIĠI msejjaħ ATT sabiex jemenda l-Att dwar l-Affarijiet tal-Konsumatur, Kap. 378
Start date: 7 December, 2021
Closing date: 10 January, 2022
Title of the public consultation: A Bill entitled “An Act to amend the Consumer Affairs Act, Cap. 378” – transposition of the Omnibus Directive (EU) 2019/2161)
Ministry: Ministry for Tourism and Consumer Protection (MTCP)
Entity: Office for Consumer Affairs within the Malta Competition and Consumer Affairs Authority (MCCAA)
The Bill entitled “An Act to amend the Consumer Affairs Act, Cap. 378.” (the Consumer Affairs (Amendment No. 2) Act, 2021”, hereinafter referred to as the proposed Bill, is to transpose and to implement Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and modernisation of Union consumer protection rules, namely the Omnibus Directive; and to introduce necessary and consequential amendments with regard to subsidiary legislation made under the Consumer Affairs Act, hereinafter referred to as the Act. The Omnibus Directive amends the Unfair Contract Terms Directive 93/13/EEC, the Price Indications Directive 98/6/EC, the Unfair Commercial Practices Directive 2005/29/EC and the Consumer Rights Directive 2011/83/EU.
1.1 Brief overview
Part I of the proposed Bill introduces amendments to the Act; and Part II amends the subsidiary legislation made under the Act.
1.1.1 Part I
This Part mainly includes amendments to the provisions in article 106A of the Act with regards to ‘Penalties’ that may be imposed by the Civil Court, and to the provisions relative to Part VIII on “Unfair Commercial Practices and illicit schemes”.
The Directive provides a general amendment with regard to the penalty clauses relative to the Unfair Contract Terms, the Unfair Commercial Practices, and the Consumer Rights Directives, and establishes that when fines are to be imposed in accordance with Article 21 of the Consumer Protection Co-operation Regulation, the maximum amount of such fines shall be at least 4% of the trader’s annual turnover in the Member State or Member States concerned, provided that where such information is not available the maximum amount of the fine shall be at least €2 million.
In addition, in order to guide the establishment of fines, and in line with the provisions of the Directive, a non-exhaustive and indicative criteria for the establishment of the final penalty to be imposed on any infringement of the Consumer Affairs Act, relative to Unfair Contract Terms, Unfair Commercial Practices and the Consumer Rights Regulations, are being introduced.
In line with the above, three new provisos to article 106A (3) of the Act are added.
In Part VIII of the Act relative to unfair commercial practices, the amendments include an update to the definition of ‘product’ to also include digital products and digital services; and the inclusion of the new definitions “online marketplace” and “ranking”.
A new provision is added in article 51C relative to misleading actions with regard to dual quality of goods. This provision has been included to address instances where marketing of goods across Member States is presented as being identical when the goods have a significantly different composition or characteristics.
In article 51D(3) relative to misleading omissions and material information, paragraph (d) is being amended to remove the requirement to have the complaint handling policy. Furthermore, a new paragraph (f) is being added, namely: “(f) for products offered on online marketplaces, whether the third party offering the products is a trader or not, on the basis of the declaration of that third party to the provider of the online marketplace.”.
A new sub-article (3A) is also being added to article 51D. This sub-article establishes provisions relative to ranking of commercial offers within online search results. Furthermore, a new sub-article (5) is added with regard to consumer reviews of products and the information to be provided by the trader.
The Directive establishes that Member States may adopt provisions to protect the legitimate interests of consumers with regard to aggressive or misleading marketing or selling practices in the context of unsolicited visits by a trader to a consumer’s home or excursions organised by a trader. It is considered that the provisions in paragraphs 24 and 25 of the First Schedule of the Act already address such aggressive or misleading practices and no additional provisions are being proposed in the draft Bill.
In the First Schedule, that enlists those commercial practices that are in all circumstances regarded as unfair, four new paragraphs are added as paragraphs 11A, 23A, 23B and 23C.
In order to transpose and implement Article 11A of the Directive relative to redress for consumers harmed by unfair commercial practices, in article 21 of the Act relative to the determination of disputes before the Consumer Claims Tribunal, a new proviso is being introduced to ensure that when determining issues in disputes that concern harm suffered by consumers resulting from unfair commercial practices, the Consumer Claims Tribunal shall order proportionate and effective remedies.
1.1.2 Part II
This part entails the consequential amendments with regard to the subsidiary legislation made under the Act, as follows:
220.127.116.11 Consumer Affairs Act (Price Indication) Regulations (Subsidiary Legislation (S.L.) 378.09)
The amendments to these Regulations include the update of the definition “consumer” to be fully in line with the definition in the original Directive. Furthermore, two new definitions are being added, these being the definitions for “place of business” and “stall”. The inclusion of these definitions does not emanate from the Directive but were included to clarify that “place of business” includes also an online marketplace and any stall.
A new regulation 5A to address ‘price reductions’ is being added to fully transpose the Directive. This new regulation establishes that announcements of a price reduction shall indicate the prior price applied by the trader during a period of time not shorter than 30 days prior to the application of the price reduction.
The Directive also allows Member States to provide for different rules for products which deteriorate quickly, and to establish other rules for products which have been on the market for less than 30 days, and where the price reduction is progressively increased. It has been considered that in the absence of such rules there will be lack of clarity and interpretation. In view of this, the Bill is proposing three provisos to this new regulation 5A.
Further amendments within this Regulation are in regulation 9 relative to offences. The first amendment refers to the commencement of proceedings, whilst the second amendment refers to minimum and maximum amounts of fines for the first, and second and subsequent convictions; and the deletion of the suspension of any licence or other authorization. Another amendment refers to the publication of the Court’s judgement.
Additionally, and in line with the Directive, a list of non-exhaustive and indicative criteria is being included, which is to be taken into account by the Court when imposing a fine.
18.104.22.168 Consumer Rights Regulations (Subsidiary Legislation 378.17)
The amendments within these Regulations comprise of a number of new definitions which are already defined in the Digital Content Directive . This in view of the fact that the scope of the Consumer Rights Regulations is being extended to cover contracts under which the trader supplies or undertakes to supply digital content or a digital service to the consumer. Other existing definitions are being amended to be in line with the Directive.
The applicability provisions of these Regulations are also being updated to reflect the extension of the scope.
In regulations 4 and 5 relative to information requirements, respectively for contracts other than distance or off-premises contracts and for distance and off-premises contracts, a number of provisions are being updated to reflect the inclusion of digital contracts and digital services.
Furthermore, in regulation 5 other provisions are being updated or added with regard to:
A new regulation 5A relative to additional specific information requirements for contracts concluded on online marketplaces is being added. This information, which is to be presented in a clear and comprehensible manner, should include:
Regulation 8 relative to formal requirements for off-premises contracts is being updated to clarify that other than the consumer’s express request on a durable medium as in the current regulation, the consumer has to also acknowledge that once the contract has been fully performed by the trader, the consumer will no longer have the right of withdrawal. The same applies for regulation 9(8) relative to distance contracts, which is also being updated in the same manner.
The Directive allows Member States to adopt rules in accordance with which the withdrawal period of 14 days is extended to 30 days for contracts concluded in the context of unsolicited visits by a trader to a consumer’s home or excursions organised by a trader with the aim or effect of promoting or selling products to consumers. The Bill is proposing this extension with the purpose of protecting the legitimate interests of consumers with regard to aggressive or misleading marketing or selling practices. This is being included as a proviso in regulation 10 relative to the right of withdrawal by means of a proviso. This update is reflected in other provisions, namely in regulations 10(2), 12(2), 16(4)(b)(i), 18(m), in the proviso to Regulation 18 which exempts points (a), (b), (c) and (e) from the exceptions from the right of withdrawal, and the Schedule to the Regulations.
In regulation 15 relative to the obligations of the trader in the event of withdrawal, new sub-regulations are added to cover contracts under which the trader supplies or undertakes to supply digital content which is not supplied on a tangible medium or a digital service to the consumer, and the consumer provides or undertakes to provide personal data to the trader instead of paying a price. Any processing of personal data should comply with Regulation (EU) 2016/679 of the European Parliament and of the Council, namely the General Data Protection Regulation.
Regulation 16 regarding the obligations of the consumer in the event of withdrawal is also being amended to include the consumer’s obligation to refrain from using the digital content or digital service and from making it available to third parties when exercising the right of withdrawal.
In regulation 18 with regard to the exceptions from the right of withdrawal, two paragraphs (a) and (m) are being updated. In both paragraphs the wording ‘if the contract places the consumer under an obligation to pay” is being added for clarification. Paragraph (m) is further updated to also clarify better those instances where the consumer cannot exercise the right of withdrawal for contracts for the supply of digital content which is not supplied on a tangible medium.
The proposed Bill in Maltese and English.
Malta Competition and Consumer Affairs Authority
Blata l-Bajda HMR 9010
Public Consultation is Legislative