Effective Mechanisms of Consumer Protection – A Comparative Analysis of Japanese and German Laws at the Example of Price Adjustments for Utilities

Abstract

The article compares the legal regimes governing price adjustments in utility contracts for consumers in Germany and in Japan. Although the contract between a consumer and the utility provider itself constitutes a civil law relationship, its content is shaped by sector-specific regulation. The degree to which private autonomy is restricted varies between the two countries. German utility markets have been liberalized and the only method for controlling the validity of price increases is the judicial control of the adjustment terms contained in contractual fine print. In Japan, consumer markets remain regulated and price increases must be pre-approved by the government. However, reforms are underway to liberalize the markets. Such reforms will increase the importance of civil law as a means to securing consumer protection. Furthermore, a shift in enforcement paradigms may be necessary. So far, consumer protection lies mostly in the hands of public agencies, with a new Consumer Affairs Agency having been established only five years ago. At the same time, reforms have been undertaken to foster civil litigation, be it by individual consumers or as means of collective redress. Consequently, a mix of ex ante and ex post enforcement is present in Japan. Conversely, enforcement in Germany relies on individuals or consumer organizations bringing a claim in court. No systematic method exists to prevent unfair terms from being used in the market. In addition, the European Directive on Unfair Terms has hardly achieved its goal of allowing traders to use one set of standard terms in the Internal Market because its enforcement was left to the Member States. Therefore, a central institution should be implemented on the European level which collects and disseminates information on national cases. The Japanese Consumer Affairs Agency and its PIO-Net database of cases could be a useful model.