The History of Consumer Protection in Germany
The labour movement
The history of consumer protection in Germany is closely connected with the development of modern industrial society. The process of industrialisation saw the economic balance shift between the producer and the consumer. Consumers no longer bought their goods exclusively from local farmers and small tradesmen, but from large companies operating on a regional or national level. The creation of an industrial working class also led to an increasingly large proportion of the population becoming dependent upon their employer. For the first time in history, mass production helped provide large sections of the population with access to consumer products.
The emergence of the labour movement in the 19th century was accompanied by attempts to provide consumers with protection from producers. The cooperative and reform movements of the early 20th century were effectively consumer protection movements, as the idea behind them was to provide the working man with access to decent, safe and affordable products and to protect him from exploitation.
The consumer cooperatives which emerged from the 19th century labour movement were the forerunners of today's consumer organisations. They represented consumers' interests by purchasing goods and services on behalf of their members. A few years later, the women's liberation movement emerged to become a second pillar of the consumer movement. Organisations like the Catholic Housewives' Union of 1903 and the German Housewives' Federation of 1915 are still around today, and still focus on providing information and advice for their members.
The field of consumer health has been particularly important in providing an impetus to the consumer protection movement. In 1906 for example, the American writer Upton Sinclair published "The Jungle”, an eye-opening description of the unhygienic conditions prevalent in the mid-west's meat industry and of the ruthless exploitation of the workers. The book sparked off a scandal which led to the introduction of legislation protecting consumers and workers. Some sixty years later the topic of food safety was still a talking point and it was no coincidence that Sinclair was present at the White House for the signing of the Wholesome Meat Act of 1967.
In the years following the Second World War and the founding of the Federal Republic of Germany, there was intense debate about how to give public interests more weight in the market economy. A result of this was the formation of the "Permanent Representation for Self-Help” in Cologne in 1949. The Permanent Representation contained representatives from charities, consumer cooperatives, women's organisations and refugee groups. It was soon thought necessary to create a strong consumer organisation as a counter-weight to industrial interests. All parties agreed that such an organisation should combine political lobbying activities with the provision of information and advice for consumers. The church played a major role during this period, offering a theoretical foundation for workers' and consumers' interests in the market economy.
On 30 April 1953 the Arbeitsgemeinschaft der Verbraucherverbände - Federation of Consumer Associations - (AgV) was founded. The AgV was an umbrella organisation which took on central responsibility for political matters, acting on behalf of its numerous member organisations. One of the central concepts behind its foundation was the belief that consumers were not as likely to become active members of a consumer organisation as, for example, of a trade union. During the late 1950s and early 1960s regional Consumer Centres ("Verbraucherzentralen”) were founded in each of West Germany's federal states. All the Consumer Centres had joined the AgV by the early 1970s.
When people think of consumer advice, they often think of one thing - product tests. The first official product test was carried out in Germany in 1961 (on washing powder) in the face of massive protests from industrialists. These tests were supported by the influential Minister of Economic Affairs, Ludwig Erhard, and were modelled upon similar tests in the USA. In contrast to countries like the UK, Belgium and Austria, an independent institute was established to carry out these tests. This was the Stiftung Warentest, founded in 1964.
A year later a reform of the law on unfair trading gave consumer organisations the right to prosecute unfair traders in a court of law. The AgV handed over this task to the newly-created Verbraucherschutzverein - Consumer Protection Association - (VSV).
During the 1960s consumer protection flourished on a worldwide scale. In the USA President John F. Kennedy proclaimed four fundamental rights of consumers:
- the right to safe products
the right to extensive information about products and services
- the right to choose freely
- the right to political representation
During this period lawyer Ralph Nader helped publicise the health risks posed by many consumer products. Nader went on to become one of the figureheads of the American protest culture. At the same time several European Community countries' consumer associations joined forces to found the European Consumers' Organisation BEUC - a pressure group based in Brussels designed to lobby European institutions on behalf of consumers. The environmental movement of the 1960s and 1970s gave additional wind to consumer associations. In 1970 the AgV began to express political demands for the first time, making explicit demands dealing with the ecological consequences of consumption. The energy crises of the 1970s led to high demand for advice on energy matters. 170 energy advice centres were set up and mobile energy advice centres visited 160 cities.
The election of Willy Brandt as Chancellor of a left-of-centre coalition government ushered in a golden age for German consumer organisations. In 1971 the government published its first paper on consumer policy and a standing committee for consumer affairs was established in the Ministry of Economic Affairs. Major milestones during this period included the amendment of the Monopolies Law (1973) and the Hire Purchase Law (1974), a complete overhaul of the Food Law (1974), reforms of the Pharmaceuticals Law (1976), the Law on General Terms of Business (1977), the Travel Contract Law (1979) and new version of the Machine Safety Law (1979). These laws were a reaction to serious defects in the system, such as the scandal surrounding the availability of the sedative drug Contergan (thalidomide), which was rushed out laboratories as soon as rules would allow but was eventually found to be responsible for serious deformities in thousands of new-born babies. The stringent controls introduced in the Pharmaceuticals Law would never have been implemented had it not been for the thalidomide scandal.
European consumer policy
As the European Community - or European Union - expanded, so did the development of an independent European consumer policy. Initially consumer affairs had taken a back seat in Europe, with "major” issues like free trade and the common market being given priority. Nevertheless the European Commission passed its first consumer protection programme in 1975. This contained a "consumer charter” proclaiming five fundamental rights. These were:
- the right to the protection of health and safety
- European consumer policy
- the right to the protection of economic interests
- the right to compensation for damage
- the right to education and information
- the right to representation
A special committee responsible for consumer matters was set up in the European Parliament in 1977, and in 1983 the first meeting took place between ministers responsible for consumer policy in the Member States. As a whole, European consumer policy was initiated by the Commission or Parliament and had to fight its way through the Council of Ministers.
While the Treaty of Rome (1957) did not provide a foundation for an independent European consumer policy, the Single European Act of 1987 created an internal market with high levels of protection in the areas of health, safety, the environment and consumer affairs. The Treaty of Maastricht (1992) elevated consumer affairs to the rank of a "community policy” with independent goals enshrined in the Treaty.
For a long time the AgV followed a "back to the roots” policy, helping educate consumer advisers, teachers and economists. In 1978 a separate institution was created to meet these needs - the Stiftung Verbraucherinstitut - Consumer Institute Foundation - (VI). Its aim was "to establish principles, create models, publish material and organise courses” for the education of consumers and consumer advisers.
In 1985 the Verbraucherinitiative (Consumer Initiative) was founded and presented a conscious alternative to the established consumer organisations. The Consumer Initiative dealt mainly with questions of fair trade, as well as ethical and ecological consumption. In the same year the magazine "ÖKÖTEST” (Eco Test) went to press providing an ecological alternative to the product test magazine published by Stiftung Warentest.
During the 1980s the AgV intensified its work in the field of financial services. The fruits came in the form of three ground-breaking court rulings in 1989 covering redemption clauses, value dates and ten year insurance contracts. These rulings reflected the fact that consumer issues had started to play an increasingly important role in legislation. The focus on financial services also led to the publication of a new personal finance magazine known as "FINANZtest”.
An alteration of the Legal Advice Law in 1980 meant that the Consumer Centres could now provide out-of-court legal advice. A year later, a Supreme Court judgement on the reliability of price comparisons bought a long legal battle to an end in favour of consumer organisations.
The downfall of communism in Eastern Europe and the reunification of Germany in 1989-90 brought about major changes in the field of consumer affairs. The implosion of the German Democratic Republic (GDR) can partly be put down to the centrally-planned economy's failure to fulfil the needs of consumers. The lack of consumer items available for purchase in East German shops represented a complete disregard for citizens' rights.
Monetary union in 1990 brought several million East German citizens into contact with the market economy for the very first time. In the next few years, inexperienced East German consumers were targeted by unscrupulous businesses keen to take advantage of their "naivety”. This created a massive need for consumer advice and reliable information. The Consumer Centres immediately reacted to this challenge and founded a Consumer Centre in every East German federal state during 1990. All five East German Consumer Centres joined the AgV in December 1990.
During the 1990s a debate took place about a possible financial and structural reform of the consumer organisations. The reform process began in 1992 when the central government handed over responsibility for the funding of the Consumer Centres to the federal states. The structural debate also led to a reappraisal of the roles of the different consumer organisations. It was decided that resources should be pooled and responsibilities centralised. At the same time a new umbrella organisation was created to lobby more effectively on the national and international stage.
The result was the merger of the three major German consumer organisations (AgV, Verbraucherschutzverein and Stiftung Verbraucherinstitut) into the Verbraucherzentrale Bundesverband - Federation of German Consumer Organisations - (vzbv) in November 2000. Professor Edda Müller was nominated as Executive Director. The new umbrella organisation took over the AgV's role of political lobbying and took on additional responsibility for legal matters and for the education of consumer affairs workers.
Coincidentally the vzbv was founded at precisely the same time that news broke of Germany's biggest ever food scandal. The BSE scandal led to the immediate resignation of the Ministers for Health and Agriculture and resulted in increased importance being attached to consumer affairs. On 11 January 2001 a new Ministry for Consumer Affairs, Food and Agriculture was created. This was the first time that a federal ministry explicitly referred to consumer affairs in its title, and it took all responsibility for consumer affairs away from the Ministry of Economic Affairs. It is too early to say whether this will result in a permanent improvement of consumer rights, but the vzbv is working its hardest to make sure that this will be the case.
1844 Foundation of the first consumer cooperative in Great Britain
1854 Establishment of an agricultural cooperative in Germany by Friedrich Wilhelm Raiffeisen
1903 Foundation of the Catholic Housewives' Union
1915 Foundation of the German Housewives' Federation
1919 Foundation of Bauhaus in the city of Weimar
1933 Rise to power of the National Socialists and banning of Bauhaus
1949 Establishment of the "Permanent Representation for Self-Help” in Cologne
1953 Foundation of the Arbeitsgemeinschaft der Verbraucherverbände - Federation of Consumer Associations - (AgV) in Bonn
1961 First comparative product test in Germany
1962 Foundation of the European Consumers' Organisation BEUC in Brussels. The AgV is a founding member.
1964 Establishment of the Stiftung Warentest product testing institute in Berlin
1966 Founding of the Verbraucherschutzverein - Consumer Protection Association - (VSV)
1970 AgV publishes its first list of ecological and political demands
1971 Publication of the first government paper on consumer policy. Every Consumer Centre is now a member of the AgV
1972 Establishment of a Standing Committee for Consumer Affairs in the Ministry of Economic Affairs
1973 Amendment of the Monopolies Law
1974 Amendment of the Hire Purchase Law. Overhaul of the Food Law
1976 Reform of the Pharmaceuticals Law
1977 Reform of the Law on General Terms of Business. Setting up of a committee responsible for "environment, public health and consumer affairs” in the European Parliament
1978 Establishment of the Stiftung Verbraucherinstitut - Consumer Institute Foundation - (VI) in Berlin
1979 Passing of the Travel Contract Law and drafting of a new version of the Machine Safety Law
1980 Alteration of the Legal Advice Law
1981 Supreme Court judgement on the reliability of price comparisons
1985 Foundation of the Verbraucherinitative - Consumer Initiative - in Bonn. Publication of "ÖKOTEST” magazine
1989 Supreme Court judgements on redemption clauses, value dates and ten year insurance contracts
1990 Foundation of Consumer Centres in each of East Germany's five federal states
1991 Publication of the personal finance magazine "FINANZtest”
1992 Federal government begins withdrawing funding from the Consumer Centres
2000 Foundation of the Verbraucherzentrale Bundesverband - Federation of German Consumer Organisations - (vzbv) and nomination of Professor Edda Müller as Executive Director
2001 Establishment of the Federal Ministry for Consumer Affairs, Food and Agriculture. The AgV, VSV and VI merge into the vzbv.