1724 with regards to the discontinuation of the European ODR Platform - Main contents

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dossier	COM(2023)647 - Repeal of Regulation (EU) No 524/2013 and amendment of Regulations (EU) 2017/2394 and (EU) 2018/1724 with regards to the ...
source	COM(2023)647
date	17-10-2023

1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

In its Communication on long-term competitiveness of the EU ¹, the Commission has reaffirmed its commitment to actively screen the EU legislation in terms of its fitness for purpose, in particularly to reduce the compliance costs for businesses and public administrations.

The European legislation on out-of-court consumer redress (the Alternative Dispute Resolution (ADR) Directive ² and the Online Dispute Resolution (ODR) Regulation)³ was adopted in 2013 and has not been amended since notwithstanding the drastic changes of the consumer market, notably in relation to its rapidly expanding digital dimension.

While the ADR Directive establishes a general framework for consumer redress, obliging Member States to ensure that consumers can submit their disputes to ADR entities meeting common quality criteria, and can resolve disputes fairly, quickly and affordably, the ODR Regulation was adopted for the sole purpose of establishing the European Online Dispute Resolution Platform (the ODR Platform) where consumers and traders could refer their disputes over online purchases to ADR entities.

The ODR platform has been operating since 2016 as a fully multilingual digital infrastructure where consumers can request online traders to solve a dispute using an ADR entity. Despite a high number of visits, the ODR platform is only enabling on average 200 cases EU wide to be treated by and ADR entity per year.

This level of performance does not justify the costs incurred by the Commission to maintain the tool, nor the cost borne by public administrations and by online businesses to comply with their obligations under the ODR Regulation. The objective of this proposal is therefore to repeal the ODR Regulation, thus discontinuing the ODR platform and remove the obligation on the online businesses to provide a link to the ODR platform and manage an email for communication.

• Consistency with other Union legal texts.

The proposal also amends the legislation which currently references the ODR Regulation as a possible communication means between consumers and traders, including Single Digital Gateway Regulation ⁴.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The legal basis for the proposal (the same as the basis for the ODR Regulation) is Article 114 TFEU on internal market completion, with due regard to Article 169 TFEU ⁵. It confers upon the EU the competence to enact measures for the approximation of national rules regarding the establishment and functioning of the internal market.

• Subsidiarity (for non-exclusive competence)

The ODR Regulation was justified out of subsidiarity considerations: in 2011, when it was adopted by the Commission, digital markets were still developing, with no assurance of adequate private or public digital tools to assist online traders reach out to ADR entities. However, these considerations became irrelevant due to the rapid development of online complaint-handling systems of digital marketplaces, which themselves rapidly became one of the main dispute resolution channels for SMEs trading online.

• Proportionality

The repeal of the ODR Regulation eliminates the existing burden on public and private actors.

• Choice of the instrument

As the objective of this proposal is to primarily repeal the ODR Regulation, a Regulation is the appropriate choice.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations/fitness checks of existing legislation

Article 21 of the ODR regulation foresees the yearly publication of a report on the performance of the platform and periodic reports on the application of the ODR Regulation. In view of the information contained in these reports demonstrating the very low use of the platform to promote the use of ADR procedures in online markets, it was not necessary to carry a detailed evaluation. Annex 7 of the Impact Assessment carried out to review the ADR directive, however, details the reasons behind the low performance of the ODR platform.

• Stakeholder consultations and studies

As part of its endeavour to evaluate the ADR Directive, the Commission carried out extensive consultations throughout 2021 and 2022, where some questions were relevant for the ODR Regulation: two multi-lingual public consultations with a backward and forward-looking approach on ADR and Call for Evidence on its Have your Say website.

In addition, regular discussions with stakeholders were held on the performance of the ODR platform including studies for improving the design and functionalities of the platform which contained surveys and interviews with the consumers, traders, ADR entities and the national ODR contact points. The following events were also opportunities to discuss the performance of the platform such as the ODR contact points meeting of 13 September 2022 and various workshops including the ADR entities assembly held in 2021; a panel discussion at the 2022 Consumer Summit and a roundtable about Cross-border ADR also held in 2022.

There was a general consensus that the useful effect of the ODR Platform was very limited and thus not cost-effective. The ODR platform however was considered an important source of information to obtain the list of ADR entities that have been accredited by national authorities in the Union according to the ADR Directive, an obligation however stemming from this Directive and implemented by the Commission on the ODR platform and which will thus continue to be maintained. Stakeholders also valued the advising role of ODR Contact points in relation to cross-border purchases. For the majority of the cases, the role of ODR contact points were taken up by the European Consumer Centres.

The Commission also received internal IT advice on improving the design and functionalities of the ODR platform which showed that a very substantial overhaul of the ODR platform was necessary to make it up to current IT standards.

• Impact assessment

An impact assessment was carried out to review the ADR Directive which included a detailed analysis of the functioning of the ODR platform in its Annex 6.

This Annex reviews the statistics about the use of the ODR platform since its beginning in 2016 in order to understand why so few cases are treated by ADR bodies (less than 200 per year EU wide). The analysis shows that the platform receives between two to three million visitors per year. However, a minority (about 2%) of these visitors decide to contact the concerned trader to propose to launch an ADR process. Most visitors leave the platform after a few seconds. Despite improving the home page of the platform (providing information and an interactive Q&A system), the number of requests for an ADR process did not increase but on the contrary decreased when consumers where better informed of the objectives and functioning of the system. Once a request is made by the consumer, the trader has 30 days to agree to launch the ADR process. Only 2% agree to do so, about 40% of the traders contact the consumers directly outside the platform to settle the matter while the majority of traders simply remain silent as participation is not compulsory. ADR bodies, perform a test of eligibility on the cases reaching them (about 400 per year) and on average keep only half of the requests. The poor results of the ODR platform is therefore the result of a succession of facts linked to the lack of prior information of visitors on how ADR works, the very limited interest of traders and the uneven completeness or relevance of the consumer complaints in relation with the eligibility criteria set by ADR entities.

This limited use of the ODR platform led the Commission to study various solutions to improve the uptake by both traders and consumers, which however were not conclusive on the means that would permit to increase the use of the platform.

On the contrary, discontinuing the ODR platform would save the European Commission about EUR 500,000 per year ⁶, i.e. EUR 4.4 million in 10 years.⁷ A behavioural study conducted on ADR information requirements ⁸ showed that the current requirement for traders to clearly disclose on their websites the ODR link does not positively impact on consumer’s intention to use ADR procedure. Thus, removing this link would not produce any negative consequences on consumer engagement in ADR.

Impact on SMEs: Businesses operating online, the majority of which are SMEs, would not need to maintain an e-mail address for ODR correspondence, saving EUR 100 per year.⁹ The total benefit for EU businesses would then be EUR 370 million saved per year.

Social impacts: Replacing the ODR Platform would have no social impact on employment as Member States contact points (about 50 FTEs throughout the EU) would be absorbed by ECCs or other bodies tasked to provide advice on cross-border ADR and other redress possibilities.

Environmental impacts: discontinuing the ODR platform would reduce the digital carbon footprint of the European Commission.

• Fundamental rights

The proposal takes due account of the rights related to personal data by providing a clear date when the platform is discontinued (and an earlier date when the platform will still operate, but no new complaints can be submitted). The proposal ensures that all personal data is deleted as soon as the platform is discontinued, to minimise the risk of data breaches.

4. BUDGETARY IMPLICATIONS

As evaluated in Annex 6 of the ADR Directive Impact Assessment, the discontinuation of the ODR platform would permit to save costs for businesses, Member States and for the Commission, while the cost for ADR entities would not be impacted. Discontinuing the platform therefore does not have any negative budgetary implications.

5. OTHER ELEMENTS

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