The European Union was born in 1956 but during the last decade of the twentieth century and, especially, in the new millennia, it has been constantly expanding. New member states have been joining the Union time after time. The last cases were that of Bulgaria and Romania in 2007. At the moment speaking it is the largest customer consuming market in the world with more than 498 million people in 27 countries. There are also several other countries who aspire to join the union in the near future, thus rising the potentiality of the consumer market even more. For our company, it would be of great benefit for our company if it manages to expand its activities within this huge market. But in order to fully develop our activities within the borders of the union, we have to better understand how it functions. It is imperative to know the rules and regulations (the laws) that govern the market conduct of the European Union. It would be advantageous for us to conduct business in as many areas as we can of this huge market. But, as we will try to explain below, the conduct of business has not to be identical or similar in different parts of the Union. It varies from country to country and sometimes it creates confusion on whether which law is supreme ‘on the land’, the European Union law or the local member state law for governing the conduct of business within a specific area. Such is the case with our company with its new branches in the member states of the union, Flavia, Albia and Viridia. Of course, each of them has specific characteristics which we will consider case after case.
Customer protection is on the kernel of the new regulations imposed by the European Commission and European parliament. The quality of product and customer health and satisfaction are highly protected by the laws of the union. Several cases demonstrate that businesses find it difficult to find their way in the European market due to these tight customer protection laws. The European Commission imposed a fine of several million of Euros to the American-based company due to what it considered anti-competition behavior. The case was eventually brought under the judgment of the European Court of Justice. During the process, the European Commission defended its position by claiming that Microsoft corporation had inflicted damage on customers with its anti-competition behavior (Hines, 2004, p. 3).
It is this fact that must make us more prudent about the way we conduct business in the member states we want to expand in order not to commit the same mistakes as other companies before us. What the board must understand is that in the union the concept of protectionism of customers and fair competition is far more important than the American based principles of free trade.
Nevertheless, as acclaimed by the European Union official website:
“The single market is one of the European Union’s greatest achievements. Restrictions between member countries on trade and free competition have gradually been eliminated, with the result that standards of living have increased. The single market has not yet become a single economic area. Some sectors of the economy (public services) are still subject to national laws. The individual EU countries still largely have the responsibility for taxation and social welfare.
The single market is supported by a number of related policies put in place by the EU over the years. They help ensure that market liberalization benefits as many businesses and consumers as possible.” (“The European single market”, 2009)
The European Union has a policy of allowing single member states to regulate on their own their markets in accordance with the principles of the Union as established in the Treaty of Lisbon. thus, the member states can apply several additional rules for their internal local markets as long as these rules are in accordance with the principles of the Union. Such is the case of Flavia. As mentioned above, customer protection is at the heart of the European Union and it was reassessed in the treaty of Lisbon (“The European single market”, 2009). Thus, Flavia has the right to ask for businesses to pass the tests of its own inspecting consumer goods body. It is imperative for us to ask for a certification of our products by this governmental body of Flavia if we want to sell our products there. Certification in another European member state may be rejected by Flavia and have no legal obligation upon its territory but it surely will influence positively on the decision the Flavian inspecting of consumer goods body. This is the recommendation for the managing body of the company. It is best to send sample products to be tested for quality with the local authorities of Flavia before beginning any marketing campaign or any other relevant activity. Along with the sample test products we can send any other product certificate of any other member country of the Union we have. Since the principle of customer protection applies to all of the member states of the union, then the inspectorate at Flavia could take this as a positive sign for our quality of products.
The second case is that of Albia. This country adopted a law in 2004 stating that printers and print cartridges may only be sold in shops specialising in printer supplies in order to ensure product quality. As a result, our company cannot sell its products in general electronic stores or department stores in Albia. Here we can file a case against this member state of the Union because the ruling to differentiate our products to a specific category of stores could damage our business. Just like in the case of Microsoft against the European Commission, here we can claim that this rule is damaging our business and ultimately the consumers by not offering them the possibility to find properly these products if they want to. They will have to go only to a specific store instead of finding them on general electronic stores.
The third case is that of Viridia, which in 2003 prohibited the sale of print cartridges unless they contain Viridianink, a form of ink available only in Viridia. The Viridian government considers that all other forms of ink cartridge pose health risks, although scientific opinion is divided on this point. This is the same case as with Albia but even stronger for us. We can send our cartridges to be verified if they are compliant to the European Union health standards and if the results are positive then we can file a case in the European Court of Justice against Viridia for not compiling with the principles of the Union and damaging the consumers by limiting their choice of ink usage.
References:
2009. The European single market. Europa online, Web.
Hines, M. 2004. Microsoft pays EU in full. CNET News, Web.