Implementation of the EECC Directive: Why you should digitize your customer processes now

The German cabinet has unexpectedly passed the Fair Consumer Contracts Act and the EECC Telecommunications Modernization Act (TKmodG) on December 16, 2020. Both laws extensively affect how companies would initiate contracts in the future and design the contract terms with their customers. BAffected companies from the telecommunications sectorsbranche, electricity and gas providers, gyms and providers of subscriptions should adjust to the new framework and digitizetheir customer processes now.

The Federal Cabinet unexpectedly passed the draft bill of the Telecommunications Modernization Act (TKmodG) submitted by the Federal Minister for Economic Affairs and Energy and the Federal Minister for Transport and Digital Infrastructure on December 16, 2020. On January 29, 2021, the Bundestag spent half an hour in its first reading discussing its draft law on the modernization of telecommunications law (Telekommunikationsmodernisierungsgesetz, TKG) and then referred it, together with a motion from the FDP on gigabit expansion, to the lead committee for economic affairs and energy for further discussion[1]. In doing so, it does not wait for the opinion of the Bundesrat and the counter-statement of the Federal Government. The goal of the government factions is to complete deliberations in the Bundestag by mid-April. The law implements the European Electronic Communications Code (EECC, EU Directive 2018/1972), which entered into force on December 20, 2018 [2]. For an overview of the implications of the EECC Directive, see our detailed LionGate Dossier.

 

 

 

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TKG -Amendment passed

At the end of July 2020, a bill to revise the TKG, jointly drafted by the Federal Ministry of Economics and Technology (BMWi) and the Federal Ministry of Transport, Building and Urban Affairs (BMVi), was submitted for departmental approval. Shortly before Christmas, the cabinet passed this with haste to show Brussels that German legislation was not sitting idle. The code from Brussels had been put off for too long. Had it been complied with, it should have already come into force on December 21.

According to the discussion draft, providers of telecommunications services were to be obliged to offer one-year contracts in addition to the mandatory two-year contracts. Although the EU Code also explicitly permits a two-year minimum term for contracts, the German Federal Ministry of Justice (BMJV) long opposed a flexible regulation that also provides for longer terms. The BMJV wanted to enforce a maximum one-year term for new contracts. The companies rejected a shortening of the contract term [3].

Law for fair consumer contracts: Wake-up call for other industries

Therefore, another law follows the same approach, which now also affects other industries in terms of contract initiation and contract terms and no longer just telecommunications with the TKmodG. Almost unnoticed, the German cabinet also passed the Fair Consumer Contracts Act at the same time on December 16, 2020.

The aim of this law is to strengthen freedom of choice and better protect consumers from imposed contracts. The focus is again on the telecommunications industry, but it also includes contracts with electricity and gas providers, fitness studios[4] and newspaper and magazine subscriptions. Other industries are now waking up to the same dilemma that telcos face with EECC. Only, telco companies have had more time to prepare. For the new industries, it comes as a relative surprise – they are not prepared [5]. Insurance contracts are not affected, but should this law actually work its way through the Bundesrat and Bundestag and come into force, it will have a serious impact on the conclusion of future contracts:

  • "This provides for a text form requirement for energy supply contracts with household customers outside the basic supply, regardless of the sales channel. Thus, for a contract to be effective, it must be available in the future, for example, by e-mail, SMS, letter or fax. This provision is to be inserted into the in § 41 Paragraph 1 Sentence 1 of the Energiewirtschaftsgesetz. Originally, Art. 1 No. 4 of the BMJV draft bill provided for energy suppliers to make the validity of contracts closed on the telephone to be dependent on a subsequent confirmation in text form[6]. For this, § 312c BGB would have been amended.
  • A reduction of the maximum duration of continuing obligations from currently two to one year, whereby an exception should be given here. Originally, a reduction of the maximum term of continuing obligations from two years to one year without exception was initially planned in the draft bill. Now, according to the government draft, contracts with a term of more than one year and up to two years may be offered if a contract for the same service with a term of one year is also offered. This contract may be no more than 25 percent more expensive on a monthly average than the contract with the longer term. For this purpose, § 309 No. 9 BGB is to be amended.
  • New provisions on the deadlines for continuing obligations. Silent extensions of the contractual relationship for a maximum of one year are to be possible in the future only if the user of the AGB informs the other party of the contract in advance of his or her termination possibility. The notice period will also be reduced from three months to one month. An amendment to § 309 No. 9 BGB is also planned for this purpose.
  • Comprehensive documentation and retention obligations for telephone customer service for consents. For this purpose, § 7a UWG is to be newly introduced: "§ 7a UWG, Consent to Telephone Advertising (1) Anyone who advertises to a consumer by means of a telephone call shall document the consumer's prior express consent to telephone advertising in an appropriate form at the time it is given and keep it in accordance with paragraph 2, sentence 1. (2) The advertising companies must retain the evidence pursuant to Paragraph 1 for five years from the time the consent is given and after each use of the consent. The advertising companies shall submit the evidence pursuant to paragraph 1 to the competent administrative authority pursuant to Section 20 (3) upon request, without delay."[7]

CCV continues to reject documentation and retention requirements.

In its press release, the Call Center Association (CCV), as an important body of the affected companies, naturally supported the abandonment of the confirmation solution originally planned with the law and the temporarily intended shortening of the term without exception, but criticizes the text form requirement and continues to reject the documentation and retention obligations[8].

In contrast, Federal Justice Minister Christine Lambrecht argues in detail, stating:

“Whether undermined contracts or excessively long contract terms: Consumers are far too often pulled over the table and disadvantaged. With the initiative launched today, we are putting a stop to these practices.
Long contract terms, for example for cell phone contracts, restrict consumers’ freedom of choice and prevent them from switching to more attractive and cheaper offers. With the Fair Consumer Contracts Act, we are creating the conditions for attractive offers with shorter terms and ensuring greater transparency and better comparability of offers. At the same time, we are simplifying the termination of automatic contract extensions. This strengthens competition and the position of consumers in their choices.

We are also providing consumers with better protection against energy supply contracts that are imposed on them over the phone. In the future, supply contracts for gas or electricity outside the basic supply must be concluded in text form. This gives consumers the opportunity to check at their leisure whether they really want to change their energy supplier or their contract. They can also be sure that no contract will be signed against their will – from now on, a telephone call alone cannot lead to the conclusion of a contract!
Another major annoyance for consumers is unsolicited telephone advertising. Most people find it intrusive and annoying. It is already the case that telephone advertising may only be carried out with the prior consent of the customer. We will stipulate that companies must document and retain such consent to telephone advertising in future, otherwise they will face a hefty fine. This is an important step in the fight against illegal telephone advertising.”[9]

Contract durations: Consumer protectionists call for more comprehensive restrictions.

The two-year contract terms and automatic renewal permitted under current law are “no longer in line with the interests of consumers,” counter the consumer associations. The legislator has in mind a maximum term of one year with automatic renewal by three months if the contract is not terminated. The current notice period of three months is also to be reduced to one month. Consumer advocates are not satisfied with this and are demanding more comprehensive restrictions[10]:

  • "a clear cutback in automatic contract renewals,
  • a confirmation in text form for all contracts concluded by telephone indefinitely,
  • the introduction of a right to withdraw for long-term contracts concluded in the store."

The government bill passed by the Federal Cabinet will now be forwarded to the Bundesrat for its opinion and, following a counterstatement by the Federal Government, will be forwarded to the German Bundestag for discussion. The draft law is available here: https://www.bundesrat.de/SharedDocs/drucksachen/2021/0001-0100/18-21.html. It is not yet possible to predict when the planned law will come into force, as the draft bill must first go through the full legislative process.

But it is already clear that not only companies but also end customers will face headwinds. The 25 percent difference in prices between one-year and longer-term contracts was arbitrarily set by the government [11]. “The government doesn’t even bother to justify it. It could just as easily have been set at 12.5 percent or 50 percent. The obligation will result in many companies cutting back on customer-related upfront investments, as well as raising their prices for two-year contracts, and indirectly those for one-year contracts, to compensate for lost profits as a result of the 25 percent rule. It also reduces the ability of creative providers to compete on price and performance. Overall, the measure fails to achieve its goal of securing lower prices for one-year contracts and motivating consumers to enter into such contracts. It is ineffective.”[11]

Even Bitkom criticizes the TKmodG-Amendment

The criticism of Bitkom, Bundesverband Informationswirtschaft, Telekommunikation und neue Medien e. V. (German Association for Information Technology, Telecommunications and New Media), of the comprehensive amendment to the TKmodG, which is intended to create a regulatory framework for telecommunications companies that also ensures extensive harmonization of consumer protection at a high level, concurrent [12]. In any case, Federal Minister of Economics Peter Altmaier is proud of the EECC legislation: “With this law, we are providing important impetus for faster and nationwide expansion of gigabit networks. […] In addition, we are strengthening consumer rights […].”

Best equipped with process digitization

It therefore continues to be exciting and remains to be seen whether the coordinates will shift again. In the meantime, however, companies should not wait idly but actively prepare themselves for the new framework conditions. A good initial insight into the requirements and process flow changes associated with the laws is provided by the best practice explanation on contract summary.[13] The example of the documentation and retention requirements makes it clear how complex the task is: in the future, the provider will need a process-driven logic on offer. Many market participants have not yet recognized the serious changes in process flow, especially in contract creation.

The expected obligations of the coming TKG amendment and the law for fair consumer contracts will affect several industries, as shown. It is expected that the upcoming law revision will have a very significant impact on internal company processes:

  • Before the final conclusion of the contract, a complete summary of all contract details must be provided to a new customer in any case.
  • To safeguard oneself as a company, the customer could confirm their receipt. In any case, however, the provision should be verifiable.
  • Should the written confirmation come for all contracts concluded by telephone, this applies to all channels and for new as well as existing customers.

Such changes will have an enormous impact on previous processes. The companies affected should put all processes to the test as quickly as possible and digitize them as much as possible.

Because:

  • the conclusion of the contract may no longer even be carried out directly in the customer dialog, i.e. it is pending and subject to the customer confirmation of the contract summary.
  • the confirmation of the customer is then asynchronous, i.e. to be subsequently enabled and after the breakpoint to process further.
  • of course, the conditions may still change during this period.

This is how we do it

LionGate is your partner for timely and compliant implementation and utilization of the full potential in contract design

  • We design the technical changes with you so that you can implement the regulatory changes correctly and also harness the corresponding potential in the contract lifecycle with your customers.
  • We manage your implementation for timely and proper delivery.
  • We develop custom-fit cloud solutions for you to map the customer lifecycle.

Let's talk.

Your contact at LionGate: Andreas Grote, Head of Business Process Management


References

[1] Schmid, S. (2021, 29. Januar). Deutscher Bundestag – Glasfaser­netz­ausbau soll schneller vorangehen. Deutscher Bundestag. https://www.bundestag.de/dokumente/textarchiv/2021/kw04-de-telekommunikationsmodernisierungsgesetz-817442

[2] Vgl. zur Diskussion in anderen Ländern z.B. Österreich lte forum, 2020: R. (2020a, Juli 24). Die Vertragszusammenfassung kommt verpflichtend – so wird sie aussehen. LTEForum Blog. https://www.lteforum.at/mobilfunktarife/5959/eu-vertragszusammenfassung/

[3] Lehmann, G. (2021, Januar). Die Zeit drängt – Erheblicher Klärungs- und Nachbesserungsbedarf bei TKG-Novelle. behördenspiegel. http://daten.behoerdenspiegel.eu/nl/Behoerden_Spiegel.pdf

[4] S. (2020b, Dezember 16). Gesetzesentwurf für faire Verbraucherverträge. Arbeitgeberverband deutscher Fitness- und Gesundheits-Anlagen. https://www.dssv.de/news/ansicht/news/gesetzesentwurf-fuer-faire-verbrauchervertraege/?tx_news_pi1%5Bcontroller%5D=News&tx_news_pi1%5Baction%5D=detail&cHash=2688a5775b4828d1df691b7fc462693d

[5] So heißt es beispielsweise im führenden Fachverlag der Fitness- und Gesundheitsbranche „Überraschenderweise hat das Bundeskabinett noch vor Weihnachten den Entwurf für das Faire-Verbraucherverträge-Gesetz beschlossen. Sollte das Faire-Verbraucherverträge-Gesetz auch den Bundesrat und Bundestag passieren und in Kraft treten, hat es gravierende Auswirkungen auf den Abschluss zukünftiger Mitgliedsverträge, so der DSSV.“ Schmidt, F. (2020, 17. Dezember). DSSV klärt über geplantes Faire-Verbraucherverträge-Gesetz auf. fitness Management.
https://www.fitnessmanagement.de/management/gesetz-faire-verbrauchervertraege

[6] bitkom. (2020, 20. Februar). Gemeinsame Stellungnahme der Verbände zum Referentenentwurf des Bundesministeriums der Justiz und für Verbraucherschutz für ein Gesetz für faire Verbraucherverträge. bmjv. https://www.bmjv.de/SharedDocs/Gesetzgebungsverfahren/Stellungnahmen/2020/Downloads/022020_gemeinsame-Stellungnahme_bitkom&Co_RefE-faire-Verbrauchervertraege.pdf?__blob=publicationFile&v=2

[7] Bundeskabinett beschließt Gesetz für faire Verbraucherverträge. (o. D.). Bundesministerium der Justiz und für Verbraucherschutz. https://www.bmjv.de/SharedDocs/Pressemitteilungen/DE/2020/121620_Faire_Verbrauchervertraege.html

[8] Bundeskabinett beschließt Gesetz für faire Verbraucherverträge. (2020, 16. Dezember). Bundesministerium der Justiz und für Verbraucherschutz. https://www.bmjv.de/SharedDocs/Pressemitteilungen/DE/2020/121620_Faire_Verbrauchervertraege.html

[9] Gesetz für faire Verbraucherverträge. (o. D.). Bundesministerium der Justiz und für Verbraucherschutz. https://www.bmjv.de/SharedDocs/Gesetzgebungsverfahren/DE/Faire_Verbrauchervertraege.html

[10] Schmidt, F. (2020, 17. Dezember). DSSV klärt über geplantes Faire-Verbraucherverträge-Gesetz auf. fitness Management.
https://www.fitnessmanagement.de/management/gesetz-faire-verbrauchervertraege

[11] Gerpott, T. J. (2021, 5. Januar). Reform langfristiger Verbraucherverträge: „Ziel verfehlt“. Handelsblatt. https://www.handelsblatt.com/meinung/gastbeitraege/gastkommentar-reform-langfristiger-verbrauchervertraege-ziel-verfehlt/26770172.html?ticket=ST-7423828-beIig2lipxA1qHGrSs6W-ap3

[12] Kriegeskotte, N. (2020, 20. November). Stellungnahme zum Diskussionsentwurf eines Gesetzes zur Umsetzung der Richtlinie (EU) 2018/1972 des Europäischen Parlaments und des Rates vom 11. Dezember 2018 über den europäischen Kodex für die elektronische Kommunikation (Neufassung) und zur Modernisierung des Telekommunikationsrechts (Telekommunikationsmodernisierungsgesetz). bitkom. https://www.bitkom.org/sites/default/files/2020-11/bitkom-stellungnahme_tkmodg-e.pdf

[13] Praxishandbuch zur Vertragszusammenfassung – PDF Free Download. (o. D.). RTR GmbH & Co. KG. Abgerufen am 6. Juli 2020, von https://docplayer.org/193402184-Praxishandbuch-zur-vertragszusammenfassung.html