Government regulation of consumers market

Constituent and integral part of internal economic policy of German is the issues of government regulation of consumers market that are aimed at protection of consumers’ interests.

Main principles of market regulation are:
1. Health protection and safety of consumers. In the course of this policy, the Federal Ministry for protection of consumers’ right and food was established in 2001 (through reorganization of the Ministry of Agriculture of FRG) with a view to strengthen the quality control over food stuff using hormonal agents, genetically modified food etc. The Ministry of Economy and Labor of FRG also is responsible for overall safety of products observing the Law “About Product Security” dated April 22 1997. This law takes the European Legal Conception of overall product security into the German right. The principal part of the law is the provision, which indicates that a producer can bring its product into trade turnover if it fully meets the requirements of safety.
In addition to this law, there is quite a number of important special instructions to ensure the safety on concrete groups of products (for example, cosmetics), for the use of which, the Federal Ministry of Health Protection is responsible. There are special instructions for specific technical groups of product (for example, sporting goods, home appliances). These specific instructions are prepared by the Federal Ministry of Labor and Social Protection.
2. Protection of economic interests of consumers. The balanced system of interrelations between interests of entrepreneurs and private consumers was created for this purpose in the country. Cost to the consumers related to the purchase of any good and receipt of services or allowance of claim should be minimized as far as possible. The following serves for this purpose:
- Condition about responsibility of producer/seller to carry out precontract information of consumer secured by the legislation;
- instructions for marking of products;
- consumers right право потребителя to the return of defective goods;
- exchange for good quality products (from 2002, the guarantee period for technical goods was increased up to 2 years).
As the last example of measures carried out for protection of consumers rights against meat of poor quality, it is necessary to mention the decision dated September 1, 2000 about introduction of special marking of beef with indication of place for slaughter and dressing of cattle as well as additional information about country of origin and name of feeding farm. This information has been introduced mandatory in other countries of EU from the beginning of 2002. Main instruments to protect the consumers’ right are civil standards regulating registration, conclusion and execution of contracts for goods and services and possible reclamations.

3. Information and consulting of consumers. In this field as well as in the field of presentation of political interests of consumers, the Federal Government proceeds from the assumption that problems are solved better through private representation organizations, through association of consumers rather than with the assistance of any state structures. Many organizations are dealing with issues related to protection of rights and interests of consumers in Germany.
The Federal Ministry of Economy and Labor provide the organizations, which provide consumers with information and protect their interests, with financial assistance. In addition to participation of governmental institutions, nongovernment organizations play an important role to create conditions for functioning of consumers market – unions, associations and other nongovernment structures, which carry out feedback between entrepreneurs and government and also present a function of informational support for their members. First of all, “Labor community of consumers union and fund for goods testing belongs to such organizations. These organizations carry out comparative studies of goods and services quality.
“Consumers institutions” carries out the tasks comprehensive information of consumers about advantages and disadvantages of goods and services as well as optimal options of their use.
“Union for protection of consumers' rights” has undertaken a task for protection of legal interests of consumers through filing of claims by the Union basing on rule of law that regulates competitive activity and standards that regulates general conditions to carry out the trade deals.
The Federal Union of Consumers – “Consumers Initiative” – was established in 1985 with regard to severe consumers. Main task is the health protection, ecological and social support of consumers.
Information about market and prices for consumers is provided by the Valuation and Information Food, Agriculture and Forestry Service and the Center of Market and Pricing Information of Agricultural Products. Also, a number of unions provides information for consumers: Union of German Internet, German Energy Agency, German Union for Animals Protection, Euronature Fund and others.
The Ministry of Economy and Labor supports an activity of private representation organizations through regular grants from the state budget, amount of which under the budget for 2002 was about 16 mil. EURO. Also, the Federal Ministry for Protection of Consumers Rights (in the field of food) and the federal Ministry of Health Protection (in the field of health protection) provides the financial support for organizations dealing with provision of necessary information for consumers.
“The Centers of Consumers”, which work in the federal lands as private associations and get financial support from the relevant budgets, are also assigned the tasks to carry out consultative work. The Federal Union of the Centers and Consumers Associations consist of 16 centers of consumers and 21 Unions oriented to consumer policy.
In 2003, some important innovations for consumers came into force. So, new hypothecation prices for the dishes were introduced (the beginning of this innovation was in 2002), warranty period for goods was increased from six months to two years, diseases insurance dues are at the level of 2002, funeral grant was decreased, new phone numbers - 0900 instead of 0190 were introduced up to 2005 against unauthorized, reform of ecological tax is under way, allowances for housing habitations , tax increase for tobacco повышение налога на табак, the proposal of the Federal Ministry of Economy and Labor to close shops at 20.00 on Saturdays was adopted in Bundestag.
Immediate instruction to prevent the spread of bird plague.
The Minster for protection of consumers’ rights, food and agriculture – Renate Kyunast issued immediate instruction with the view of preventive protection measures against the bird plague. “ For the purposes of safety, everything should be organized in such way in order to have all necessary data in relevant case and immediately to take protective measures”. Since, with regard to the bird, as a rule, there are no rules about compulsory registration, the immediate instruction stipulates the following:
- responsibility for notification about keeping of ducks, gooses, pheasants, partridges, quails or doves (for keeping of chickens, there is a responsibility for notification according to the rules of cattle-breeding),
- if there is the increased losses of bird within 24 hours (in farms up to 100 Nos., not less than 3 animals, in farms with number of more than 100 – more than 2%), if productivity decreases, an owner is obliged to inform the relevant authority about this issue according to the article 9 of the about epizootic (suspicion for epidemic) and after further instruction to carry out an investigation for influenza virus A of types H 5 and H 7.
- owners of bird should maintain the register, in which in-and-out of birds should be shown with indication of name and address of transport enterprise, previous owner as well as purchaser. Additionally, the data about visit to the enterprise by other persons should be registered. The instruction entered into force on February 8, 2004.
Special place within the system of institutions for protection of consumers’ rights is taken by “The Fund for goods testing”. It is an independent organization, which, according to the charter, should inform the public about the level of “usefulness, effectiveness, use value and ecological compatibility of goods and services”, consult a consumer about technical and other possibilities for optimal housekeeping, and also about healthy life-style and environment protection. Annually, the fund checks approximately 2400 goods in average and presents about 30 critical assessments. The program of inspection covers practically all groups of consumer goods. Other important field is and examination of services. In average, about 70 types of services are subject to checking per year. German consumers have right to inquire and count on getting a response to any question related to consumer goods and services. Recently, such issues as the selection of provider of cheap electrical power, Telephone Company with low tariffs, insurance society with acceptable conditions, issues related to environmentally and genetically safe food etc. along with ordinary subjects are the most topical for the consumer. The Fund is mainly financed thanking to the selling of their specialized journals. Due to that it is not allowed to get/use an income from advertising according to the charter, since 1988, the Government subsidies its activity providing EURO 6.5 mil. per year.
In Germany, control over quality of goods is carried out by an independent organization “German society for quality issues”, the main task of which is to carry out the scientific-technical work in order to modernize and improve the goods quality of all sectors of industry. The society includes the representatives of some committees, which prepare different documentation for quality but these document do not have the standard character and they are used as guideline by the German Institute of Standards (DIN).
The organization “Association of technical supervision”, which certifies the manufactured goods, is dealing with issues of technical supervision over safety of machineries, equipment and instruments in Germany.
On December 15, 1989, the Bundestag adopted the law “About Responsibility for goods of bad quality” aimed at protection of consumers’ rights in Germany. Adoption of this law was stipulated by the decision of EU Council about unification of legal standards of country-members of the Common Market regulating the responsibility of producers for goods of bad quality. In order to protect a trademark in Germany, there is the relevant law dated October 25 1994 with the following amendments.
In Germany, there is growth of problem related to expansion of market of piracy goods. According to the information provided by the Ministry of Justice of Germany, turnover of such goods has negative effect on employment-population. Due to this, annually, about 50 thousands workplaces are lost, and about 300 thousands in Europe. With a view to carry out joint actions against piracy goods in Germany, leading produces have established “Association against piracy goods”. At present, the Association includes the following firms: Adidas, Bad`Mad, Calvin Klein, Chipie, Corus Modevertrieb, Fashion Box (Replay), FC Bayern München, Nike, O‘Neil, Over Look (Homeboy), Oxbow, Reebok, Windsurfing Chiemsee und Ford and others.
Cooperating with German government bodies and the Government, the Association also presents the interests of its members in EU. It puts the task of harmonized legal space to optimize the protection of rights of industrial ownership within EU, contribution to adopt single legislation in order to improve the customs control as well as protection of industrial ownership in third countries. There is General Board for protection of health and consumers in the European Commission, which consumers and unions of consumers may apply to.
At the end of 1997, In Germany, the Public Organization “Action of German Economy against piracy in the field of products and trademark” has been established basing on initiative of German Congress of Commerce and Industry Chambers (DIHK), the Federal Union of Industry (BDI), Union for Protection of Trademarks (Markenverband) and also 15 members-founders.
The rules of trading, particularly, working time of commercial enterprises in Germany as well as in EU are fixed by legislation and have clear restrictions (except Ireland) . In Germany, since 1956, there is the Federal Law “About closing time for shops”, according to which the shops should be closed on Sundays and official holidays, and also on weekdays up to 6 o’clock and after 20 o’clock, and on Saturdays up to 6 o’clock and from 16 o’clock (four Saturdays before Christmas festivities, trading is prolonged till 18 o’clock). At the eve of Christmas on December 24, time of trading is individually regulated. There are special rules for the works of drug shops, newsstands, refueling stations, commercial points in sea and river ports, railway stations and airports, recreational areas and sanatoriums. There are some exceptions to common rules, including delegation of some rights to regional (land) level. Particularly, adoption of this law was related to protection of rights of workers in the commerce sectors to full rest and provision of such possibility for other population including for implementation of civil duties (family, public, religious etc.). In order to adjust the rules of commerce, in 1985, the Ministry of Economy and Labor of Germany issued the decision “About indication of prices”, which is a valid at present with amendments dated September 1, 2000.

This decision assigns to show prices for goods and services in the prescribed manner, in such way, so that a consumer/user can accept the price indicated in price list as end price including taxes and other components of price regardless of provided discount.