The (In)Compatibility of Direct Selling Trade Barriers with EU Law: Before and After the Consumer Rights Directive

MEPLI Working Paper Series 2013-15

27 Pages Posted: 31 Oct 2013

See all articles by Orsolya Tokaji-Nagy

Orsolya Tokaji-Nagy

Maastricht University - Faculty of Law

Date Written: October 30, 2013

Abstract

The direct selling retail channel is often abused by rogue trades which triggers Draconian responses from national legislators. As a result, the direct selling industry in the EU is restricted by a number divergent trade barriers. At the chore of the problem lies the conflict of interest between the liberalization of trade in respect of the direct selling industry and Member States' freedom to impose stringent regulations in order to favor consumers’ economic interests.

The current paper assesses direct selling trade barriers' compatibility with European law, and in particular, the fundamental freedoms of the internal market and the relevant secondary law regulating consumer protection, fair trading law and the provision of services.

Through the comparative analysis of the CJEU's jurisprudence concerning four direct selling trade barriers, it was found that the unworkable rigidity of the Keck formula has significantly hampered the Court's efforts to give clear rulings on the assessed cases, although curiously, in none of the four cases did the Court pronounce that direct selling trade barriers were in compliance with the free movement of goods principle.

The Consumer Rights Directive is expected to bring about much needed clarity and legal certainty in respect to direct selling trade barriers. Complemented by the assessment of relevant provisions of the Unfair Commercial Practices Directive and the Services Directive, it was concluded that as of the entry into force of the Consumer Rights Directive, the introduction or maintenance of direct selling trade barriers will no longer be legitimate under European law.

Keywords: direct selling, trade barriers, product bans, channel bans

Suggested Citation

Tokaji-Nagy, Orsolya, The (In)Compatibility of Direct Selling Trade Barriers with EU Law: Before and After the Consumer Rights Directive (October 30, 2013). MEPLI Working Paper Series 2013-15. Available at SSRN: https://ssrn.com/abstract=2347507 or http://dx.doi.org/10.2139/ssrn.2347507

Orsolya Tokaji-Nagy (Contact Author)

Maastricht University - Faculty of Law ( email )

P.O. Box 616
Maastricht, 6200
Netherlands

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