Islands and the Ocean: the rationalities of EU law and national private laws

As set out above, national contract laws have in the course of centuries developed their own conceptions of autonomy and freedom of contract in relation to moral notions of self-realisation and the respect of others’ autonomy. At the same time, the function of private law, including contract law, in society has been regarded as a means of facilitating market transactions. In this context, the central position of the general principle of autonomy and the freedom of contract fits with the ideologies of liberal market economies.Footnote ³⁵ At the EU level the same justifications can be put forward with regard to the recognition of a general principle of autonomy, but with an important adjustment: in the context of the internal market the instrumental function of contract law appears to supersede other, moral foundations on which autonomy might arguably be grounded. Moreover, European contract law is instrumental to one goal, which is the furthering of the integration of the internal market. Michaels in this respect contrasts the juridical rationality of national private laws with the market-oriented, instrumentalist rationality of European private law.Footnote ³⁶ EU law, with its goal-oriented and piecemeal approach, is in this sense contrasted with the systematic character of national private laws. Expressed in a famous metaphor, European private law directives are regarded as ‘islands in an ocean of national private laws’.Footnote ³⁷

Expressions of the market-oriented rationality of EU law can be seen foremost in the legal basis for the development of EU regulation in the field of private law. The EU Treaties contain several provisions that give competence to the European legislator for introducing legislation in the field of contract law, some specifically connected to the pursuit of consumer protection.Footnote ³⁸ Whilst some, like Article 169 of the Treaty on the Functioning of the European Union (TFEU), give competence for the introduction of legislation aimed at consumer protection as a self-standing goal, the EU legislator has in practice primarily made use of Article 114 TFEU as a legal basis for harmonising legislation in the field of consumer contract law.Footnote ³⁹ Further evidence for the market-based character of autonomy in EU law can be deducted from the way in which freedom of contract is embedded in the EU’s legal framework. Free movement regulation does not make explicit mention of a principle of autonomy. However, the objective of Article 34 TFEU to ensure open markets through the free movement of goods, unhindered by disproportionate restrictions in the member states’ national laws, presupposes a principle of freedom of contract. As Reich states, ‘[t]he Article says nothing about freedom of contract; it simply takes it for granted’.Footnote ⁴⁰ In a similar vein, Weatherill states that ‘[f]ree movement law promotes freedom of contract – it opens up and protects a wider terrain of contractual autonomy within the internal market’.Footnote ⁴¹ In other words, for the free movement of goods to be effective, parties must be free to choose contracting parties in other member states and to determine the terms of their contract.

The foundation of principles of autonomy and freedom of contract at the EU level within the pursuit of market integration also explains the definition of an ‘average consumer’ as a rational actor who, with the right information, can make sound purchasing decisions. This image of the consumer in EU law fits with the internal market logic. The ‘average consumer’ is construed as a confident consumer who actively shops across borders and reaps the benefits of the availability of products and services in the internal market.Footnote ⁴² Moreover, the consumer is construed primarily as an economic actor, with until recently little recognition of other aspects, such as citizenship.Footnote ⁴³

It is noteworthy also that the conception of justice in European contract law can be perceived as different from that in national laws. Micklitz has posited that the market-oriented rationality of European contract law has resulted in legal rules based on ‘access justice’. This is a narrower concept of justice than corrective justice, distributive justice, or other forms of justice that form the foundation of private laws around the world. It sits somewhere in between the libertarian justice that characterises market law and the expressions of social distributive justice seen in national laws.Footnote ⁴⁴ The term access justice embodies the idea that European contract law is aimed at empowering consumers and businesses to pass the threshold for taking part in the internal market. Ideally, as is Micklitz’s normative claim, this conception of justice in theory would mean that all consumers and workers would be included in the market and by extension in society.Footnote ⁴⁵ It is questionable whether European private law has lived up to that goal.Footnote ⁴⁶ As will be seen in the discussion in Section 3 of this paper, access justice alone is likely to be insufficient for protecting and including the most vulnerable in society. It rests perhaps too much on the principle of autonomy, without taking sufficient account of the obstacles that some of the more vulnerable actors in society encounter with regard to self-realisation.

Balancing autonomy with competing rights and principles – the EU Charter

This background explains the ways in which the principle of autonomy in European contract law is reflected in specific rules and regulation. In EU law the principle of autonomy is firmly embedded within the (positive) move towards harmonisation of private law, as well as in the (negative) control of private law rules that might count as restrictions under the free movement rules.Footnote ⁴⁷ The approach is distinctly different from that in national contract laws. At the EU level, the concept of autonomy in contract law is primarily related to the market, whereas national laws regard autonomy as one of the principles that fundamentally define the balance of interests between actors in private law relationships.

Another aspect requires elaboration, namely the statement that autonomy in EU law is ‘framed’. According to Reich, as stated above, this means that the principle must be balanced against rules of EU law with objectives of higher or at least equal ranking. Which objectives are these, that compete with the pursuit of a liberal market economy grounded on the principle of autonomy? Reich, in his foundational study of general principles in European private law, distinguishes at least three areas in which rules of EU law exist that limit the principle of autonomy in contract law: competition law; laws protecting the weaker party to a contract, mostly in labour and consumer law as part of the ‘social’ in the market economy according to Article 3(3) of the Treaty on European Union (TEU); and non-discrimination laws.Footnote ⁴⁸ Besides these competing objectives of EU law itself, the autonomy of market actors can be restricted by national legislation aiming to protect national public interests within the Cassis de Dijon exception in free movement law codified in Article 36 TFEU for the free movement of goods,Footnote ⁴⁹ or other justifications such as non-discrimination or proportionality.Footnote ⁵⁰

Interestingly, the idea that autonomy is a principle that can be subject to balancing with other rules or principles of EU law finds some reflection in the finding that the EU Charter of Fundamental Rights also, without expressly stating so, presupposes freedom of contract.Footnote ⁵¹ Focusing on autonomy and freedom of contract, Title II of the Charter is relevant as it is concerned with ‘freedom’ in a broad sense. It includes as fundamental rights the freedom of association (Article 12), the freedom to choose an occupation and the freedom to engage in work (Article 15), the freedom to conduct a business (Article 16), and the right to property (Article 17). In order for these rights to be effective, contract law is an essential feature. As Reich states, ‘[c]ontracts are the dynamic form of putting to work the freedoms of economic and civil actors, whether they use their right to engage in work, to conduct a business, or to possess and use property’.Footnote ⁵² Weatherill also regards the rights laid down in the Charter as providing a frame for determining in which ways autonomy exists, and in which ways it can be restricted in EU law. He posits that Articles 16 and 17, with their emphasis on freedom with regard to conducting a business and the use of possessions, support the ideal of contractual autonomy and in that sense ‘challenge the ambition pursued by the EU in the name of harmonisation.’Footnote ⁵³ That freedom is nonetheless restricted by other Charter rights and principles that favour intervention in the public interest.Footnote ⁵⁴ The freedoms expressed in Title II of the Charter are for example limited by the rights laid down in Title IV, which may restrict market regulation with an eye to achieving broader goals in the collective interest.Footnote ⁵⁵ Rights laid down in this title include public health (Article 35), environmental protection (Article 37), and consumer protection (Article 38). Besides restrictions to autonomy arising from the balancing of competing rights, the Charter provisions also in some cases themselves indicate that rights can be restricted. Article 17(1), on the right to property, for instance contains a sub-clause stipulating that ‘[t]he use of property may be regulated by law in so far as is necessary for the general interest’. An example of a limitation in the general interest was given by the CJEU in Sky Österreich.Footnote ⁵⁶ In this case, the public interest in access to news reports on Europa League football outweighed Sky Österreich’s freedom to enjoyment of property as well as its freedom of contract. This can be seen as confirmation that the Charter creates a space for the social in European private law, anchoring the pursuit of a certain public interest within the EU’s market-constitution.Footnote ⁵⁷ On a more general level, Article 52(1) on the scope and interpretation of rights and principles laid down in the Charter states that limitations to the exercise of rights and principles are recognised as ‘provided for by law’.Footnote ⁵⁸

How do these provisions sit with other rules of EU law? The Charter stipulates in Article 51(1): ‘The provisions of this Charter are addressed to the institutions and bodies of the Union with due regard for the principle of subsidiarity and to the Member States only when they are implementing Union law.’ Therefore, the Charter is intended as a constitutional instrument, providing normative direction for avoiding conflict between pluralist sources.Footnote ⁵⁹ As such, it can affect the way in which restrictions in national laws with regard to the freedoms listed in the previous paragraph should be interpreted.

Beyond its constitutional role, the significance of the Charter for private law relationships is not straightforward, as it is not firmly established in which circumstances its provisions can have horizontal effect.Footnote ⁶⁰ That is, it is unclear whether the provisions can be applied to private law relationships or be invoked by private parties to effectuate rights against a contractual counter-party. The case law of the CJEU indicates that direct horizontal effect can exist, but only in limited circumstances. Where those circumstances were initially defined on the basis of Charter provisions stipulating rights and not mere ‘principles’ in accordance with the distinction made in Article 52(5) of the Charter,Footnote ⁶¹ recent case law has placed less emphasis on this distinction.Footnote ⁶² Instead, the case law attributes horizontal effect to Charter rights if they provide for mandatory and unconditional rights.Footnote ⁶³ As of date, the case law has established that Article 21 (non-discrimination), Article 31 (the right to fair working conditions including paid annual leave), and Article 47 (the right to effective judicial protection) can have horizontal direct effect.Footnote ⁶⁴ The case law on Article 21 and Article 47 is extensive and on occasion reflects aspects of social justice, eg, with regard to the right to housing laid down in Article 7 of the Charter.Footnote ⁶⁵ Further, the Charter can have indirect horizontal effect, meaning that courts take account of fundamental rights in the interpretation of open norms in private law, such as good faith.Footnote ⁶⁶ Occurrences of this are rare and are dependent upon national systems’ constitutional traditions. Still, recent case law at the national level concerning restrictions to the freedom of expression in Facebook’s standard terms has reignited the debate on the horizontal effect of fundamental rights.Footnote ⁶⁷ The case law shows that in some national legal systems indirect effect can be construed through the classification of fundamental rights, such as the freedom of expression, as personal rights in private law.Footnote ⁶⁸

In sum, this brief exploration shows that EU law does pay heed to non-economic interests. However, the effect on private law relationships is limited. Even if the EU Charter of Fundamental Rights enables a balancing of economic rights with public interests, its horizontal effect on private law relationships is reserved for the few instances in which Charter provisions stipulate rights of a mandatory and unconditional nature, or instances in which national laws allow for indirect effect. Furthermore, the free movement provisions, which could set limitations to contractual parties’ freedom of contract and hence their autonomy, are not often applied in that way. In practice, contract law will rarely count as a restriction to inter-state trade in the EU.Footnote ⁶⁹

Nonetheless, the framing of contract law in the context of the internal market has important ramifications for the substance of contract law in EU law. The market-oriented approach of European private law entails that emphasis is placed primarily on the economic interests of private actors, such as businesses and consumers. Other aspects of private law relationships garner less attention, which raises the question what the ‘social’ has meant and will mean in the future development of the EU market, with its stated aim of pursuing the establishment of a social market economy (Article 3(3) TEU).

Substantive choices in lawmaking

In relation to the first point, substance, the main difference between national contract laws and European contract law is in their weighing of interests. National contract laws are primarily concerned with the balancing of interests between individual contracting parties. Even when concerned with the protection of weaker contracting parties, such as consumers or workers, they start from the premise that contract law is of a facilitative nature. Its aim is to provide a framework that ensures legal certainty for parties entering into contracts based on their own terms, with a view to self-realisation. In other words, the foundations of contract law are the freedom of contract and the autonomy of the parties. The restrictions placed on the freedom of contract in consumer law or employment law, eg through mandatory rules, are regarded as exceptions that are necessary for ensuring that both contracting parties have a real opportunity for self-realisation. Businesses will mostly be in a stronger position for setting the terms and conditions of a contract and the law in this way forces them to take account of the interests of consumers. One may regard this balancing of interests as a pursuit of interpersonal justice.Footnote ⁷⁰ National laws also contain other instruments for doing this, such as contractual doctrines that protect against misleading information or conduct (eg, misrepresentation or mistake).

The focus on individual rights in national contract laws does not exclude that account is taken also of the broader goals of private law, eg, in relation to its role in the pursuit of social justice and its institutional design. In that sense, contract law can be regarded as instrumentalist, a means to achieving a societal goal. Yet, national contract laws are set to the pursuit of different goals than EU contract law’s market-oriented instrumentalism, their aim being to ensure just outcomes for society as a whole.Footnote ⁷¹ Although rules of consumer or worker protection are distinct from such doctrines in their categorical approach, in individual cases that distinction falls away as judges will focus on the balance of interests in the individual relationship between the parties.

EU law adopts a different perspective which in essence is much more aimed at the macro-economic ordering of the consumer market. The protection of consumers as weaker contracting parties is embedded within, on the one hand, the framework for free movement regulation and, on the other hand, the pursuit of market integration through legal harmonisation. As a result, the balancing of interests between businesses and consumers focuses on narrower aspects of the contractual relationship than in national contract laws and on a more aggregate level. The rules of harmonised European consumer contract law that, like national laws, have a direct impact upon the substance of contracts are limited to rights that enable consumers to make the most of the EU internal market. They contain information rights for consumers as well as rules that protect against unfair information and practices, complemented by some basic contractual remedies. The benchmark for determining what protection is required is set by the ‘average consumer’, who is conceived as a rational, confident consumer. Only some protection is directed specifically at consumers who are vulnerable due to age or disability. Although the EU Charter of Fundamental Rights has created openings for balancing consumer protection with other rights, potentially including social rights in the mix, the case law post-Aziz Footnote ⁷² has been disappointing.Footnote ⁷³ It appears that EU consumer law is still primarily market law.

The different structures of national contract laws and EU consumer contract law – or in the words of Michaels, different rationalities – will not always be visible in the weighing of interests between businesses and consumers. At heart, whether at the EU level or the national level, contract law is concerned with economic interests. Therefore, the policy objectives of many harmonisation measures in the field of private law will often be compatible with national laws’ choices based on interpersonal justice.Footnote ⁷⁴ Still, it is important to bear in mind the difference, as the instrumental nature of European private law means that rules developed at the EU level will sometimes cut through doctrinal structures of national private laws. That can result in conflicting norms. For example: the general norm of the UCPD with regard to misleading commercial practices is based on the benchmark of the average consumer, representing a category; whereas rules of misrepresentation, protecting similar interests with regard to misleading information, are tailored to the individual consumer. In individual cases, the application of the rules may lead to different outcomes. From a systematic perspective, the question arises as to whether the EU’s pursuit of maximum harmonisation implies that the open norms defining misrepresentation have to be adjusted to the general norm of unfairness in the UCPD.Footnote ⁷⁵ The UCPD’s market-based nature, centred on the average consumer as a rational actor, may come into conflict with the balance of interpersonal justice in national laws’ doctrines of misrepresentation.

EU law as a catalyst – opportunities and limitations

The pursuit of consumer protection at the EU level, nonetheless, has advantages over national approaches. Even if EU law is primarily market law, it contains openings for the pursuit of a social agenda, in some cases stronger than those available at the national level. As Micklitz notes, this is often not recognised. The shared competences of the EU and the member states are closely intertwined, yet ‘[t]he current situation is curious: the Member States appear as the potential savers of the Social, while the EU is blamed as its destroyer. Historically, this is not correct’.Footnote ⁷⁶ Notably, in picking up the challenge of the pursuit of social justice the legislator can play a role, but also the CJEU, in particular through the application of the Charter of Fundamental Rights. In both cases, however, account will have to be taken of limitations.

For legislation in the field of consumer law, the EU has a shared competence with the member states. That explains in part why European consumer law is heavily based on market integration goals, as this is an area in which competence can often fairly easily be constructed.Footnote ⁷⁷ The first waves of harmonising legislation in the field of consumer law, for example, fit exactly within this ‘integration through law’ logic. If EU law were to be used as an instrument for the extension of consumer protection beyond economic interests, it can only be done within the competences determined by the Treaties. When exploring avenues for the development of the social market economy envisaged by Article 3(3) TEU, it is vital to reassess the potential legal bases for legislation and policy making. As things stand, this is likely to still lead to Article 114 TFEU as the most suitable legal basis. Alternatives, such as Article 169(2)(b) and Article 352 TFEU, have in the past been considered, but are rarely used as bases for harmonised legislation.Footnote ⁷⁸ Also, one must assess how far the application of existing rules based on the pursuit of market integration can reasonably be extended to non-economic issues, such as data protection. Until now the EU legislator has not considered it to be problematic to use Article 114 TFEU as a legal basis, as the Digital Services Act (DSA) and the Digital Markets Act (DMA) are based on this provision. The same is true for the AI Act, even if Article 16 TFEU (on data protection) is cited as a corollary basis.Footnote ⁷⁹

Some pressing issues cannot, and do not, wait for legislation. Courts at the European level and the national level have already dealt with issues concerning new inequalities in private law relationships.Footnote ⁸⁰ The case law for now mostly turns upon the (indirect) application of the European Convention for Human Rights (ECHR). For EU consumer law, the Charter could of course also have an impact. If the Charter were to be applied more often to private law relationships, it could therefore be of great significance for the pursuit of the EU’s social (or societal) goals. Problematic is however that the Charter is considered only in limited circumstances to have horizontal effect. Even if pleas have been made for construing a self-standing principle of horizontality of the Charter,Footnote ⁸¹ the development of a structured approach to this issue will likely take yet more time. In terms of agenda setting, therefore, one might plead in favour of looking at the legislator for further action in the pursuit of the EU’s social market economy.Footnote ⁸² That does not prevent courts from exploring the opportunities and limits of horizontal effect of Charter provisions at the same time.

Consumer exploitation, access justice and vulnerable consumers

The term ‘exploitation’ does not have a set definition and further work needs to be done in order to operationalise it for use by legislators and policy makers.Footnote ⁸⁵ Still, it is not difficult to find examples of practices that structurally make consumers worse off. In some cases, the vulnerability of poor consumers has even been a central factor in the creation of profit-making schemes designed by banks. The sub-prime mortgage crisis of 2007 in the United States is an example, in that instance caused by a number of factors. Poor consumers were but one element in the fateful steps that were taken in the run up to what would become a global financial crisis. Securitisation practices that initially led to profits for investors were sustained by underlying assets consisting of consumer mortgage loans held by banks. As a means to build up mortgage portfolios, mortgage loans were widely offered to consumers without any kind of back up in the form of income or other financial means check. Although this helped increase the loan portfolios that could be used for securitisation, that process came at the cost of the consumers lured into mortgage loan contracts. Many ended up being unable to pay their loan instalments. The practices of banks in many US states allowed them to walk away from unpaid loans by handing in the keys to their homes upon foreclosure, therefore releasing them from further payment obligations. That nevertheless left them homeless.Footnote ⁸⁶ Practices such as these, where securitisation structures were created for the sake of investors but at the cost of poor consumers, can be designated as part of ‘extraction logic’, indicating practices by which vulnerable groups in society are exploited for the gain of other economically or politically powerful actors.Footnote ⁸⁷ In Europe, consumers have also been subject to extraction practices in mortgage markets, albeit due to other risk factors. In some member states the conditions for obtaining mortgages allowed for borrowing above the value of the property, leading to high household debt. In other members states, in particular in Central and Eastern Europe, foreign currency mortgages denominated in Euros or Swiss Francs were offered on a large scale from the early 2000s onwards. The providers of such loans were foreign banks who saw opportunities for investment. The credit contracts that they offered, however, placed the exchange rate risk mostly with consumers. That became apparent when that risk materialised, causing payment problems for many consumers and leading to a large number of defaults on mortgages.Footnote ⁸⁸

The question whether, and if so how, European consumer law should address socio-economic vulnerabilities has been asked before. To some extent, also, EU law has responded by introducing rules to protect vulnerable citizens. Of note are rules in relation to services of general economic interest, such as energy, communications, transport, and banking services.Footnote ⁸⁹ The EU has approached regulation primarily from the viewpoint of access, competition and choice. Regulation, however, also affects consumer contract law, for example by ensuring that contracts do not pose direct or indirect impediments to switching to another provider.Footnote ⁹⁰ Such regulation can still be regarded as fitting within the internal market rationality of EU law. Where it goes further, however, is in maintaining an obligation for member states to protect the most vulnerable final consumer. A general obligation to that effect is laid down in Directive 2019/944 on energy markets, which stipulates thatFootnote ⁹¹ :

The protection of consumers in energy markets, therefore, does take account of socio-economic circumstances that render them vulnerable. Notably, however, the EU legislator leaves it to the member states to determine which specific measures are introduced for the protection of this group. Moreover, the Directive also stipulates that the concept of vulnerability should be determined at member state level. Article 28(1) states: ‘each Member State shall define the concept of vulnerable customers which may refer to energy poverty and, inter alia, to the prohibition of disconnection of electricity to such customers in critical times’. By way of indication the provision adds that ‘the concept of vulnerable customers may include income levels, the share of energy expenditure of disposable income, the energy efficiency of homes, critical dependence on electrical equipment for health reasons, age or other criteria’.

The socio-economic protection of vulnerable consumers seen here for energy is mirrored in EU legislation concerning access to banking and other financial services. Social inclusion in Europe has increasingly come to depend on financial inclusion, meaning that citizens’ inclusion in society is dependent upon their access to financial services.Footnote ⁹² In addition, financial stability has become a cornerstone of EU regulation after the financial crisis of 2018. That is visible in the recitals of directives adopted since then, such as the Consumer Mortgage Credit Directive and the revised Consumer Credit Directive,Footnote ⁹³ as well as in the case law of the CJEU. In the case law, besides the principle of effectiveness, financial stability seems to have become a new overarching principle also for contract law.Footnote ⁹⁴ In terms of consumer protection in contract law, however, the move towards financial inclusion in EU law is in some respects a double-edged sword. First, regulation aimed at access to services, such as bank accounts and credit, ensures that citizens should be able to at least pass the threshold for access to markets. The protection against over-indebtedness in EU law, however is mostly formal in nature, focusing on information rights for consumers and the requirement of passing a creditworthiness assessment. Ex post protection for those who have become unable to pay off their debts is left to national laws. Financial consumer law, therefore, like energy law follows the model of access justice in European contract law.Footnote ⁹⁵ Moreover, due to its focus on interpersonal exchange, EU law fails to fulfil its social function in terms of distributing market risks fairly between both contracting parties.Footnote ⁹⁶ Second, financial stability policies aim to secure a stable financial environment where consumers can place trust in financial institutions. However, there is also another, darker side to the influence of financial stability on contract law. It may conflict with other principles and aims in private law and it may, even if only theoretically, lead to a decrease in consumer protection.Footnote ⁹⁷ Also, the use of the consumer benchmark of a ‘responsible financial citizen’ in EU supervisory regulation of retail investment markets can result in instances where consumers have to bear the losses in cases of bank resolution. Consumer protection in that case is trumped by financial stability goals.Footnote ⁹⁸ In summary, therefore, EU financial consumer law ensures that all citizens have access to financial services, but it leaves much to the member states for ensuring consumer protection.

Noteworthy is that the approach of EU law towards the protection of vulnerable consumers of services of general interest is sector-specific and leaves much space to the member states for determining what types of protection will be maintained. The EU does not prescribe to what extent socio-economic inequality can be addressed. One may wonder whether it is in a position to do better. As noted above,Footnote ⁹⁹ the EU and the member states have shared competences and responsibilities with regard to social policy. Perhaps they can use these as a basis for regulating beyond access justice. In digital markets, as the following will show, that seems a prerequisite for consumer protection.

Consumer exploitation in digital markets

The societal challenges of digitalisation and sustainability that have arisen in recent years have created new forms of inequality that have yet to be addressed by regulators. In earlier work, I have focused on three examples: vulnerability of consumers in digital markets, who are targeted by (often hidden) profiling techniques aimed at influencing their purchasing behaviour; an unfair balance of responsibility for ‘prosumers’ in platform markets who may be subject to liability towards consumer-buyers, whilst the platform acts as an intermediary only; and the potentially unfair expectation of consumers to act as responsible citizens in the pursuit of sustainability goals, which may require them to give up established consumer rights whilst it is unclear what contribution towards sustainability is made by industry and/or government.Footnote ¹⁰⁰

Elaborating on these observations, I will focus on digital markets as a testing ground for addressing inequality. The digital market is at the centre of current legislative proposals and scholarly debates due to its rapid overtaking of traditional models of consumer markets. Grochowski in this context has posited that we are witnessing the development of a post-consumer society in which traditional consumption – namely, the acquisition of things – loses its importance due to a growing interest of consumers in experiences, emotions and services.Footnote ¹⁰¹ If online platforms are considered digital services, that means that consumer interests have shifted towards the creation of content (pictures, videos), the expression of thoughts and opinions, and the use of digital content (ebooks, apps). The protection of such interests requires a different framework from that of traditional consumer law, which focused on economic interests. Instead, account has to be taken of risks typical to digital markets, such as the oversharing of data, the risk of harming one’s individual sovereignty in social interactions mediated by professionals such as online platforms, and risks to one’s personal and political freedoms.Footnote ¹⁰²

One step that needs to be taken, therefore, is to redefine the interests that are taken into account in consumer contract law. It is helpful to consider that question in relation to the concept of ‘digital asymmetry’, a term coined by Helberger and Micklitz et al. Digital asymmetry denotes the structural imbalance between tech-providers and consumers, due to consumers’ structural and universal inability to fully understand the digital architecture.Footnote ¹⁰³ This concept of asymmetry is tailored to the legal domain, finding a medium between broader notions of ‘vulnerability’ or ‘weakness’ used beyond law, and narrower notions of information asymmetry in consumer contract law.Footnote ¹⁰⁴ It provides a framework for deciding which vulnerabilities, when encountered in digital markets, can be tackled by private law. Important for the analysis here, is that the concept allows for an exploration of vulnerability beyond the economic interests of consumers that existing contract laws focus on. The concept of digital asymmetry also provides an opening for considering other types of vulnerability on the fringes of consumer law, such as data protection concerns, the safeguarding of freedom of expression, and the (lack of) remuneration for digital ‘prosumers’. Some of these issues are already being picked up by lawmakers and policy makers, whilst others require attention.Footnote ¹⁰⁵

Focusing first on issues that have been picked up, the expansion of consumer contract law beyond economic rights has started to gain traction in the case law of national courts as well as the CJEU. The lines between the protection of consumers’ economic interests and fundamental rights protection are blurring, as evidenced by judgements of the German Bundesgerichtshof (BGH)Footnote ¹⁰⁶ and the Italian Administrative Court of Appeal, confirming a decision of the Italian Authority for Consumers and Markets (AGCM).Footnote ¹⁰⁷ These national courts and authorities applied the Unfair Contract Terms Directive (UCTD), respectively the Unfair Commercial Practices Directive (UCPD), to Facebook’s terms and conditions concerning freedom of expression.Footnote ¹⁰⁸ These judgements are part of a recent trend in which the European consumer acquis in individual cases extends to other interests, such as data protection and freedom of speech, as long as the claim is related to an infringement of economic interests.Footnote ¹⁰⁹ That is an interesting development, but it is not unproblematic. Whereas the extension of the scope of the consumer acquis can lead to greater protection of consumers in digital markets, it should be borne in mind that the protection of fundamental rights is in essence a different issue than the weighing of contractual interests. On what basis then will a civil court determine a term ‘unfair’?Footnote ¹¹⁰

Another issue, not yet subject to lawmaking action but identified in scholarship, is whether legal reforms are needed to do justice to the value created by content creators on social media platforms.Footnote ¹¹¹ Content creators are an interesting category, as they can be labelled ‘prosumers’. Alvin Toffler coined the term prosumer in his 1980 book The Third Wave, conflating the concept of the consumer with that of the producer.Footnote ¹¹² The prosumer is a natural person, not acting in the course of a business (ie, a consumer) but also a creator (ie, a producer). The relevance of this concept is that it relates to a part of the economy that is mostly invisible. It concerns value created outside the market for mass produced goods and commodities, referred to by Toffler as Sector B. Taking note of the rise of ‘do it yourself’ practices and in general acknowledging housework as part of economic productivity, Toffler stated: ‘But even in these words the “productivity” of the consumer is still seen only in terms of Sector B – only as a contribution to production for exchange. There is no recognition as yet that actual production also takes place in Sector A – that goods and services produced for oneself are quite real, and that they may displace or substitute for goods and services turned out in Sector B.’Footnote ¹¹³

Prosumers are therefore part of the economy, but not by way of exchange. This can be seen if we look closer at the position of prosumers as content creators. Social media platforms TikTok, Facebook and Instagram can only be viable if users keep posting new content. Content attracts users and makes a platform interesting for advertisers, who in many cases are the main source of funding for online platforms. Despite their importance for keeping the business model afloat, creators themselves hardly ever reap the financial benefits of the content posted on a platform.Footnote ¹¹⁴ Although some content creators earn large amounts of money through social media platforms, most do not. Somewhat surprisingly, the literature does not consider them to be badly off. It has been said that ‘[i]t’s difficult to think of prosumers as exploited. This idea is contradicted, among other things, by the fact that prosumers seem to enjoy, even love, what they are doing and are willing to dedicate long hours to these activities without receiving anything.’Footnote ¹¹⁵

Still, viewed from the perspective of rewards and distribution, it is odd that creators earn nothing while online platforms that only offer a space for content dissemination make a profit. To address this imbalance, one step forward would be to give recognition to the value created by users other than that having quantitative economic value on the market. That value, named exchange value, is recognised by law and forms the basis of the ways in which Western private law systems balance the economic interests of businesses, consumers and other private actors. Prosumers on social media platforms, however, also create qualitative value. They post photos, videos and other digital content aimed at connecting socially with other users of the platform. That social goal is not reflected in the exchange value that can be quantified in relation to products exchanged on a market. It should rather be seen as a satisfaction of needs in a qualitative way – a use value.Footnote ¹¹⁶

This exploration of issues is not meant to provide an exhaustive list of expressions of digital asymmetry in consumer markets. It does serve as a basis for assessing the concept of equality in European contract law. What can be gleaned from the analysis, is that in digital markets consumer contract law will have to take account of: (i) interests beyond economic interests, expanding also to fundamental rights such as freedom of expression and data protection; and (ii) economic value beyond the concept of exchange value, so as to include use value for online platform users. One could say that the first is an expression of a negative interest of digital consumers – eg, protection against unjust restrictions on the freedom of expression – whilst the second reflects a positive interest, namely the recognition of value created by prosumers. As existing regulation does not do justice to these interests of consumers, they could be seen as issues giving rise to new inequalities between businesses and consumers. Where existing regulation has aimed to secure equality for consumers and other ‘weaker’ parties, such as SMEs, by ensuring that they have access to markets and enjoy a certain level of substantive protection with regard to the quality of goods and services, the issues at stake in digital markets are different. We see in the two aspects identified here a reflection of a post-consumer society in which inequality arises not only in economic terms in existing conceptions of markets, but also with regard to potential harms to individual sovereignty and a lack of remuneration for non-market values when using online platforms.

For European contract law to address these issues, inroads would have to be made upon the existing framework of autonomy described in Section 2. Currently, online platforms enjoy a very large freedom to set the terms and conditions for use of their services. The question is whether that freedom, and hence their autonomy, should be restricted in order to do justice to the two interests – one negative and one positive – of digital consumers identified here. By questioning the scope for autonomy, we again come back to equality, as it is a corollary principle in contract law that can function as a mediator. Depending on what is needed for achieving a certain equality between consumers and providers of digital services, lawmakers and policy makers can establish what restrictions on businesses’ autonomy are justifiable.

New perspectives on prosperity and welfare

While the consumer image provides a benchmark for lawmakers to determine appropriate rules for consumer contracts, the substance of those rules is influenced by the political economy of European contract law. The term ‘political economy’ does not have one defined meaning, but can be summarised as ‘the methodology of economics applied to the analysis of political behaviour and institutions.’Footnote ¹²⁰ Having been current in North-American legal scholarship for some decades, it is now also gaining ground as an approach in European legal scholarship. Of course, in the field of consumer law the influence of political philosophy and institutional economics has already made its mark, most notably through the work of Hans Micklitz.Footnote ¹²¹ The development that is now becoming apparent, however, augurs the acceptance of political economy into the mainstream of private law scholarship in Europe.

For European consumer law the political economy perspective can be of use for anchoring the meaning of the ‘social’ in the EU’s objective of establishing a social market economy (Article 3(3) TEU). The social can, in a similar vein to Wilhelmsson’s work on welfare approaches in contract law, be connected to models of welfare.Footnote ¹²² Although further research would be required to determine how a social policy can take shape in regulation, the EU Treaties arguably allow space for that. As Kaupa states, ‘while neoliberalism continues to shape the Union’s law and policies, the Treaty is yet not fully determined by it … the Treaty allows for different readings in the light of competing socio-economic paradigms.’Footnote ¹²³ In this light, economic theory has in recent years been a rich source for the discussion of values, in particular whether growth should still be the primary objective of economic policies. Authors such as Mazzucato and Raworth have offered alternative perspectives in which societal goals, such as the pursuit of sustainability, take over as the more important ones.Footnote ¹²⁴

Marija Bartl has in recent work suggested that the EU is in the process of developing a new imaginary of prosperity. The starting point of her enquiry is the 2022 proposal of the European Commission for a Directive on Sustainable Due Diligence.Footnote ¹²⁵ Bartl regards this as an indication that the EU is moving away from the neoliberal image of prosperity that, so she argues, characterises the EU’s internal market programme.Footnote ¹²⁶ Whether that movement will consolidate into a new image of prosperity, nevertheless, will have to become clear over time. As Bartl states by way of comparison, neoliberalism did not become the hegemonic ideology of European politics overnight but through a process starting in the second half of the 1990s.Footnote ¹²⁷ Her proposition of using social imaginaries as a means of changing the narrative for economic policy making in the EU nonetheless serves an important goal. It provides an image of what the future could look like. That in itself can be an inspiration for law and policy makers to align their choices towards that goal.

Other authors have also put forward visions for the political economy underlying European private law. Hesselink in recent work has made a plea for a progressive code of private law ‘aimed at making progress towards a more just society, where there is less inequality and where we have more democratic control over our future’.Footnote ¹²⁸ His argument starts from the diagnosis made by Katharina Pistor in her book The Code of Capital, which highlights the key role of private law in creating capital and, thereby, in producing and entrenching social and political inequalities.Footnote ¹²⁹ Although the introduction of a European code, certainly in light of past failures of such projects, seems ambitious, the suggestion should not be discarded to soon. Even if the discussion of such a code is an academic exercise only, it could serve as an inspiration for future choices in lawmaking and policy making. Also, it can provide a touchstone for lawmakers against which to consider other available alternatives.

It can be seen, therefore, that the momentum for a reassessment of the political economy underlying European private law is growing. Perhaps this will lead to a return to earlier debates on the foundations of a European civil code, as conducted in the early 2000s by various study groups under the aegis of the European Commission.Footnote ¹³⁰ Even if the objective is not so ambitious as to introduce a code, the use of political economy as a framework for legislative choices could give an impetus to lawmakers and policy makers at the EU level and the national level to look beyond neoliberal ideology as a basis for regulatory choices. If that leads to a reassessment of value in private law relationships, that could fundamentally change the way in which autonomy is ‘framed’ within European contract law. The pursuit of societal goals such as sustainability is likely in some cases to diminish the autonomy of private actors, businesses as well as consumers. At the same time, a change of perspective could in other instances give space to regulatory choices diminishing inequality in private law relationships.

Beyond non-economic interests – the EU Charter as a catalyst for legal development?

Debates concerning the political economy and the push for reform of institutions, as illustrated by the examples given in the previous section, often require the legislature to take action. For a reform of European contract law, therefore, the ball is in the court of the EU legislator to consider if and how new forms of inequality can be addressed. The recognition of value beyond market value or exchange value, extending for instance to the value created by content creators, could be a starting point for evaluating the regulation of the digital market. That could lead to reforms aiming at a redistribution of profits between providers of digital services and the users posting the content that they created. At least as a normative goal, the debate on the protection of non-economic interests in a so-called post-consumer society would seem to support that direction.

How to give effect to such a redistribution through European contract law is not straightforward, but it is also not impossible. The EU legislator has limited competences in this field and will have to look for opportunities. In the past, these have been found in relation to issues that supersede national borders, of which digital markets are a prime example. The regulation of European contract law through directives and regulations, with a peak in the 1990s and 2000s, found its legal basis in the pursuit of market integration (Article 114 TFEU). In recent years, the regulation of digital markets through the DSA, the DMA and the AI Act have also all used this as a legal basis. The effect of this is that legislation, even if it extends beyond economic interests, is always connected to the EU’s market-oriented rationality. That has in the past been seen as a barrier to distributive justice, as the discussion on ‘access justice’ in European contract law reflects.Footnote ¹³¹ The more recent legal instruments, in particular the DSA and the AI Act, however show that the European legislator does not shy away from expanding regulation to cover other interests, such as data protection and freedom of expression. To some extent, therefore, the protection of non-economic interests can go hand in hand with the protection of economic interests.

Of course, if the legislative route is chosen, other problems have to be dealt with. For example, how should economic and non-economic interests be balanced, should they conflict? Does the EU’s market rationality prevail? And would the balance be struck differently if a national legislator had to weigh the interests at stake? Taking account of the characteristics that set EU private law apart from national laws – in particular its piecemeal approach and its instrumentalist, market-oriented rationality – it is likely that some outcomes will be different if the EU legislator determines how contract law should strike the balance between competing interests of private actors. In the past, instances have occurred where that has been the case, as the example of unfair commercial practices regulation shows.Footnote ¹³² In that case, discussions continue on whether the UCPD’s aim of maximum harmonisation precludes national laws from offering remedies that potentially give more protection to consumers than the Directive does.Footnote ¹³³ Such debates go to the heart of European contract law, as they concern fundamental aspects of how to define fairness and which protection to offer to consumers if a fairness rule is breached. It is inevitable that such tensions continue to exist between EU law and national contract laws. To some extent, they can be moderated through the use of open norms – as the general fairness rule of the UCPD is – for national courts can determine in individual cases what outcome is justifiable. Of course, that only works until a definitive interpretation of the fairness rule by the EU legislator or the CJEU renders national interpretations diverging from the Directive, even if on different legal grounds, impossible. Until then, however, legal pluralism prescribes that the EU rule and the national rules can coexist and, moreover, that their interaction can actually lead to legal development.Footnote ¹³⁴

Even if the legislator is better placed for general agenda setting in EU consumer law and policy, legal development can be instigated through alternative routes. One option is to leave the search for an appropriate balance to private actors themselves. That would be in line with the general principles of autonomy and freedom of contract. Also, the framework laid down by the DSA follows this approach, placing responsibility on online platforms for creating a safe digital environment but otherwise leaving the design of the private law relationships with their users to the platforms themselves. Whether that is enough, however, can be doubted. The examples of exploitative practices that currently characterise digital markets suggest that private regulation by itself is not sufficient for protecting the interests of consumers. Some form of public control, whether through legislation or the courts, will have to safeguard that consumer interests are taken into account.

Another alternative route, namely through the courts, is worth considering in relation to digital markets, as private actors can relatively quickly access this route to address perceived injustices. Individual cases can highlight societal issues for which regulation does not provide adequate solutions, and they can in some cases be a starting point for exploring legislative solutions. As was seen, national courts have for now tried to do justice to users’ interests by considering non-economic interests – such as the protection of freedom of expression – in cases where also economic interests were at stake. Would the same be possible at the EU level?

In relation to equality in digital markets, the question arises as to what role the CJEU can play, in particular through the application of the EU Charter of Fundamental Rights. The main relevance of the Charter, at least for now, appears to be the pathway that it opens towards effectuating legal protection for individual citizens. As the Aziz-judgment of the CJEU made clear, an appeal to the Court for the protection of fundamental rights can provide citizens with effective judicial protection also in private law relationships. The Court in that case held that a Spanish procedural rule allowing eviction on the grounds of non-payment of mortgage instalments should be set aside in cases where a consumer had instigated proceedings against the mortgage lender to challenge unfair terms in the mortgage agreement.Footnote ¹³⁵ The case showed that the preliminary reference procedure could provide ‘an open goalmouth’ for effectuating consumer protection not available in a consumer’s national legal system.Footnote ¹³⁶

For private actors, there is an opening here for the pursuit of fundamental rights protection with a view to safeguarding their autonomy and, by corollary, redefining equality. If we focus on digital markets, the right of freedom of expression laid down in Article 11 of the Charter could provide a basis for rebalancing the autonomy of platforms and their users. As was seen, national courts have made reference to that right in cases concerning restrictions to the freedom of expression laid down in Facebook’s terms and conditions.Footnote ¹³⁷ The UCTD and the UCPD were in those cases used as frameworks for assessing the fairness of terms, with the justification that fundamental rights could be taken into account if also economic interests were at stake. The Charter would not be limited to such instances but could also be invoked in cases where limitations to the freedom of expression did not affect economic interests but only other interests, eg, political speech. In such instances, the Charter would be applied through indirect horizontal effect.Footnote ¹³⁸

The application of the ECHR or, in some cases, national fundamental rights protection in recent case law could serve as an example. National courts in Germany and the Netherlands have dealt with ‘put-back requests’, ie, requests by platform users to have their content reinstated after it being removed by Meta/Facebook, LinkedIn or YouTube for violating their standard terms.Footnote ¹³⁹ In the Netherlands, claims were based on the direct or indirect application of Article 10 ECHR, which contains the right to freedom of expression. German constitutional law itself enables the direct horizontal application of fundamental rights. The German Bundesgerichtshof in two cases dealt with the suspension of Facebook accounts for violation of the platform’s terms and conditions on hate speech. In an interest-based balance of conflicting basic rights, the court held that Facebook was obliged to inform the user in advance of the intended blocking of his account, inform him of the reason, and give him the opportunity to reply.Footnote ¹⁴⁰ The horizontal application of fundamental rights therefore can set limitations to the platform’s contractual autonomy.

Nevertheless, even if one can look towards the Charter as a catalyst for redefining equality in European contract, at least two caveats are in order. First, until now the horizontal effect of the Charter has been minimal, partly due to the limited circumstances in which private actors can derive rights from it. The indirect application of fundamental rights could, as suggested, provide openings for expanding the protection of consumers in digital markets beyond economic interests. However, whether such application is possible depends on national law.Footnote ¹⁴¹ Court can therefore, unlike the EU legislator, not ensure that equal protection applies for consumers throughout the EU. Second, the comparison between the application of the Charter and the ECHR by national courts can be illustrative at a general level. However, seeing the very different frameworks through which the Charter and the Convention interact with national laws, further conclusions will require more in-depth research.

In summary, therefore, EU law provides some routes for addressing the new forms of inequality arising in digital consumer markets. Even if both the legislative route and the route of adjudication contain obstacles, it is worth pursuing these routes to see whether reform – or perhaps a revolution – can address the needs of consumers in digital markets. As an alternative, one may look towards national legislators for reform. They have already in some instances been at the forefront of legal development and could again take the lead, with the possibility of EU legislation following at a later time.