COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2013/11/EU on alternative dispute resolution for consumer disputes, as well as Directives (EU) 2015/2302, (EU) 2019/2161 and (EU) 2020/1828

EN EN
EUROPEAN
COMMISSION
Brussels, 17.10.2023
SWD(2023) 334 final
COMMISSION STAFF WORKING DOCUMENT
Subsidiarity Grid
Accompanying the document
Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE
COUNCIL
amending Directive 2013/11/EU on alternative dispute resolution for consumer disputes,
as well as Directives (EU) 2015/2302, (EU) 2019/2161 and (EU) 2020/1828
{COM(2023) 649 final} - {SEC(2023) 347 final} - {SWD(2023) 335 final} -
{SWD(2023) 337 final}
Offentligt
KOM (2023) 0649 - SWD-dokument
Europaudvalget 2023
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Revision of the ADR Directive - Subsidiarity Grid
1. Can the Union act? What is the legal basis and competence of the Unions’ intended action?
1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy initiative?
EU consumer protection legislation has served as a tool for strengthening the functioning of the
Single Market through harmonization of national laws. For this reason, all consumer protection
legislative acts have as a legal basis Article 114 of the TFEU. The complementarity between the
objectives to promote the single market and to ensure a high level of consumer protection is made
evident by the second paragraph of Article 169 TFEU, which states that the Union should promote
the interests of consumers through measures adopted pursuant to Article 114 in the context of the
completion of the internal market. By promoting common consumer protection standards across the
Union, traders can operate across borders without having to constantly adapt their practices.
Article 169 of the TFEU also states that EU measures shall not prevent any Member State from
maintaining or introducing more stringent protective measures provided that they are compatible
with the Treaties. In this way EU law provides a common basic level of protection to all consumers
residing in the EU.
1.2 Is the Union competence represented by this Treaty article exclusive, shared or supporting in
nature?
Consumer protection issues are a shared competence of the EU and Member States. Once EU
legislation in this domain is adopted through the ordinary legislative procedure, the Member States
are responsible for implementing and enforcing the EU rules.
2. Subsidiarity Principle: Why should the EU act?
2.1 Does the proposal fulfil the procedural requirements of Protocol No. 21
:
- Has there been a wide consultation before proposing the act?
- Is there a detailed statement with qualitative and, where possible, quantitative indicators
allowing an appraisal of whether the action can best be achieved at Union level?
Before putting forward this proposal, the Commission consulted widely. Those consultation activities
included, in line with the Commission’s Better Regulation rules:
- 2 public consultations (backward and forward-looking) published on the “Have your Say”
website in all EU languages – over 100 responses were received for each questionnaire;
- Online ADR assembly with participation of over 400 ADR practitioners and other consumer
protection stakeholders;
- Dedicated workshops with ADR competent authorities, ADR practitioners, European
Consumer Centres, etc;
- Studies incluidng a data collection study based on national ADR questionnaires, interviews,
case studies, etc.; a behavioural study and a mini legal study.
- Other ADR-related events (e.g. participation of Commission in national ADR events, ADR
networks, etc)
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Detailed information on the consultation strategy and the outcome of the stakeholder consultations
can be found in Chapter 3 of the Explanatory Memorandum to the proposal and in Annex 2 of the
Impact Assessment. The Explanatory Memorandum (Chapter 2) and the Impact Assessment (Chapter
3) contain a section on the principle of subsidiarity.
2.2 Does the explanatory memorandum (and any impact assessment) accompanying the
Commission’s proposal contain an adequate justification regarding the conformity with the
principle of subsidiarity?
The revised ADR directive will provide access to all consumers and traders to high quality and cost-
efficient out of court dispute resolution adapted to digital markets. Making ADR simpler and more
cost-effective to solve disputes with a cross-border dimension, including posssible collective ADR
proceedings, could help strengthening cross-border purchases of goods and services, notably in
online shopping but also consumption of tourism and travel services within the EU and beyond.
Therefore, there is a strong added value in an action at EU level, as most of the problems that this
proposal tackles are not limited to the territory of one Member State but are of a cross-border
nature.
The objectives of the proposed action cannot be sufficiently achieved by Member States and can
therefore, by reason of the scale or effects of the proposed action, be better achieved by the EU. EU
action will ensure a consistently high level of consumer protection, more consumer trust in ADR and
more networking and exchange of best practices at EU level.
2.3 Based on the answers to the questions below, can the objectives of the proposed action be
achieved sufficiently by the Member States acting alone (necessity for EU action)?
(a) Are there significant/appreciable transnational/cross-border aspects to the problems being
tackled? Have these been quantified?
The ADR Directive provides an EU out-of-court dispute resolution legal framework to help EU
consumers and traders resolve domestic and cross-border disputes in a fair, transparent, affordable
and fast way. Nevertheless, the evaluation found that cross-border ADR uptake remained at very low
levels due to several barriers:
- consumers may not be sufficiently aware and informed of the applicability of consumer
protection rules and of the existence of cross-border means of redress;
- traders are not always keen to engage in ADR;
- other practical challenges e.g. costs, language barriers, no clarity on the applicable law to be
used in a cross-border context, lack of easily accessible online procedures.
The Proposaal is tackling such issues notably by providing for the creation of ADR contact points to
advise consumers with cross border purchase issues on the best redress solutions.
(b) Would national action or the absence of the EU level action conflict with core objectives of
the Treaty2
or significantly damage the interests of other Member States?
Without EU level action, different national initiatives to address cross-border ADR disputes would
likely result in divergent national rules and potentially overlapping requirements, leading to legal
uncertainty and increasing administrative burden for companies to operate cross-border, therefore
conflicting with the Treaty objective of establishing the internal market. The revised ADR Directive
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will retain the minimum harmonisation approach whilst the main objective is to widen its scope to
cover more consumer disputes, simplify cross-border ADR by improving assistance to consumers and
traders and by user-friendly tools for better signposting of ADR entities.
(c) To what extent do Member States have the ability or possibility to enact appropriate
measures?
Member State measures on their own could not bring about sufficient improvement in simplifying
cross-border ADR. Coordinated action is required to achieve the objectives of this initiative; for
instance, creating ADR contact points across all the EU Member States to promote cross-border ADR,
assist consumers by signposting them to competent ADR entities, and giving practical assistance e.g.
machine translation, documentation, etc. These ADR contact points aim to increase ADR uptake to
resolve cross-border disputes.
The proposal incentivises the use of digital tools to simplify cross-border ADR (communication, case-
handling, document management, etc) as to render cross-border faster, more consistent and
simpler.
(d) How does the problem and its causes (e.g. negative externalities, spill-over effects) vary
across the national, regional and local levels of the EU?
Given the minimum harmonisation approach, Member States have different ADR frameworks,
architectures and fees - depending on their resources, legal culture, perception, etc - which hinder in
different ways the access to cross-border ADR. Since these are cross-border disputes, they are
present across national, regional and local levels throughout the EU. The objective of this initiative is
exactly to improve the access both for traders and consumers to cross-border ADR.
(e) Is the problem widespread across the EU or limited to a few Member States?
Low cross-border ADR uptake is registered across all the EU Member States; nevertheless in certain
Member States, out-of-court dispute resolution in general is still limited for various reasons e.g. ADR
was only introduced through the transposition of the ADR Directive in 2015; lack of resources and
investment in ADR through public budget, or complex architecture e.g. where many ADR entities are
established without a residual ADR entity, high rate of rejected cases, etc. The evaluation concluded
that although the ADR Directive has been transposed across all the EU Member States and there has
been good progress in access to out-of-court dispute resolution; there are persistent gaps in its
implementation. The Commission has been awarding grants to quality ADR entities since 2018 to
improve awareness-raising, digitalisation, capacity building, etc.
(f) Are Member States overstretched in achieving the objectives of the planned measure?
The planned measures build on what exists at national and EU level today and therefore, do not
require from Member States to overstretch. The newly establish ADR contact points will absorb the
current ODR contact points - in the vast majority already sitting in European Consumer Centres.
These bodies have a lot of experience in assisting consumers resolve cross-border disputes an
established infrastructure to assist consumers in cross border cases and they promote consumer
rights in general. The EU budget is already earmarked to support the ECC-Net and award ADR grants
through the Single Market Programme.
Given that the scope of the ADR Directive is to be widened to cover disputes related to statutory
consumer rights be they explicitly written in a contract or not, some additional resources may be
needed for ADR entities.
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(g) How do the views/preferred courses of action of national, regional and local authorities
differ across the EU?
Member States expressed support for the measures planned under this proposal, during the
meetings bringing together Member State representatives from Ministries responsible consumer
protection (e.g. Informal Miniterial in Prague under the Czech Presidency of the Council) and in
replies by authorities to the Call for Evidence and other consultation activities in the context of this
initiative.
In general, they considered that boosting traders’ participation in ADR and strengthening the
accreditation process of national ADR entities as crucial to increase consumer trust in cross-border
ADR. No objections were raised by the authorities on the widening of the scope of the ADR Directive.
2.4 Based on the answer to the questions below, can the objectives of the proposed action be
better achieved at Union level by reason of scale or effects of that action (EU added value)?
(a) Are there clear benefits from EU level action?
There is a strong value added in improving the access to quality ADR to resolve cross-border disputes
in the Single Market. Traders and consumers will benefit from effective and fair procedures to soleve
their disputes and will therefore increase their trust in selling or purchasing in another EU country.
Legal costs will be lower than having to use tribunals. A robust cross-border ADR framework with the
possibility of participation by third country traders will create a level-playing field for traders
operating in the single market.
(b) Are there economies of scale? Can the objectives be met more efficiently at EU level (larger
benefits per unit cost)? Will the functioning of the internal market be improved?
A stronger ADR framework will enable more consumers to benefit from effective redress. Simpler
and streamlined procedures will reduce the overall cost of ADR processes across all MS. Both effects
will play together and reduce the average cost for one ADR process in a similar manner in all EU
countries. There will be improved consistency among outcomes of similar disputes, possibilities to
group them in one collective case, allowing to make better use of the limited resources in ADR
entities. Long-term investments into digitalisation of ADR processes will also lead to substantial cost
savings for all actors in ADR. Online traders will no longer have to provide the link to the ODR
platform on their websites; hence reducing information obligations.
(c) What are the benefits in replacing different national policies and rules with a more
homogenous policy approach?
The proposal does not seek to change the national ADR architectures but the targeted amendments
aim at simplifying cross-border ADR, boosting trader participation in ADR through the duty to reply to
enquires by ADR entities as to whether they will be participating or not in an ADR process and
making it more cost-effective by reducing the administrative burden on ADR competent authorities
and on ADR entitites. The proposal does not intend to make trader participation mandatory; Member
States will remain free to decide on binding v. non-binding ADR outcome, mandatory v. voluntary
trader participation in ADR.
(d) Do the benefits of EU-level action outweigh the loss of competence of the Member States
and the local and regional authorities (beyond the costs and benefits of acting at national,
regional and local levels)?
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Member States will retain their current power to accredit and monitor the ADR entities established
on their territories and the competence to design the overall ADR architecture. The authorities will
continue notifying the quality ADR entities to the Commission.
(e) Will there be improved legal clarity for those having to implement the legislation?
It is expected that EU rules will lead to improved legal certainty as compared to today’s fragmented
ADR framework e.g. in terms of coverage of non-contractual disputes and willingness by non-EU
traders to participate in ADR. Moreover, the possibility to set up collective ADR structures at national
level will lead to more concistent decisions on similar cases.
3. Proportionality: How the EU should act
3.1 Does the explanatory memorandum (and any impact assessment) accompanying the
Commission’s proposal contain an adequate justification regarding the proportionality of the
proposal and a statement allowing appraisal of the compliance of the proposal with the
principle of proportionality?
The proposal does not go beyond what is strictly necessary to achieve its objectives. It maintains the
minimum harmonisation approach, enabling a degree of flexibility on Member States to decide
whether trader participation in ADR is mandatory or voluntary, or mixed depending on the market
sectors; whether the outcome of ADR is to be binding or not; the implementation of collective ADR;
consumer fees; ADR framework, etc.
Streamlining reporting obligations for ADR entities and competent authorities will improve the data
comparability across the EU. Although the introduction of the trader’s duty of reply to enquiries by
ADR entities is expected to increase business engagement in ADR and increase come costs, the costs
will be offset by the removal of disclosure obligations for traders who do not intend nor are obliged
to participate in ADR. Moreover, the repeal of the ODR Regulation will alleviate the burden on online
traders of including the link to the ODR platform and a dedicated email address on their website.
The impact assessment carried out a proportionality test to ensure that proposed policy options are
proportionate based on costs and resources. The proposal has an ambitious and future-proof
approach leading to higher benefits for consumers and society in general.
3.2 Based on the answers to the questions below and information available from any impact
assessment, the explanatory memorandum or other sources, is the proposed action an
appropriate way to achieve the intended objectives?
(a) Is the initiative limited to those aspects that Member States cannot achieve satisfactorily on
their own, and where the Union can do better?
The proposal focuses on cross-border aspects and introduces solutions which could not be achieved
by Member States on their own, as explained above in replies to the sub-questions of question 2.3.
(b) Is the form of Union action (choice of instrument) justified, as simple as possible, and
coherent with the satisfactory achievement of, and ensuring compliance with the objectives
pursued (e.g. choice between regulation, (framework) directive, recommendation, or
alternative regulatory methods such as co-legislation, etc.)?
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The review to the ADR Directive is planned through targeted amendments as the aim is to strengthen
the EU ADR framework rather than to revamp it. The Commission is issuing a Recommendation
addressed to online marketplaces and EU trade assocciations to incentivise rather than to oblige
them to set up dispute resolution mechanisms in alignment with the quality criteria laid down in the
ADR Directive. In addition, the Commission plans to repeal the ODR Regulation which provides for an
EU ODR Platform managed by the Commission which has proved not to be cost-effective given the
low number of disputes which are resolved through it.
(c) Does the Union action leave as much scope for national decision as possible while achieving
satisfactorily the objectives set? (e.g. is it possible to limit the European action to minimum
standards or use a less stringent policy instrument or approach?)
A directive is binding as to the result of achieving the functioning of the internal market, but it leaves
to the national authorities the choice of format and methods. This will enable Member States to
amend the legislation in force (as a result of having transposed Directive 2013/11/EU) to the extent
necessary to ensure compliance, hence minimising the impact of such a reform on their legislative
systems. Due to the minimum harmonisation approach, many regulatory choices are left to the
Member States.
(d) Does the initiative create financial or administrative cost for the Union, national
governments, regional or local authorities, economic operators or citizens? Are these costs
commensurate with the objective to be achieved?
The proposed provisions are limited to what is necessary and proportionate to achieve the objectives
of the initiative while respecting national legal traditions and, where possible, providing flexibility to
Member States to achieve the requirements in line with their national laws and systems. The
amendments proposed contain cost reduction measures and therefore it is expected that new costs
will be balanced by cost reductions.
(e) While respecting the Union law, have special circumstances applying in individual Member
States been taken into account?
Existing Member States’ ADR frameworks were thoroughly examined in the preparation of this
proposal (including through a legal mapping carried out in the external contractor study). The
proposed provisions should apply without difficulties to all Member States.