The ETD limits freedom of contract and personal freedom
Freedom of contract is the basis of civil law. It means that individuals and groups are free to enter into contracts – or refuse to do so – with whomever they choose, without government restrictions. Under the ETD, this freedom is substantially limited.
The ETD puts contracts under close governmental control. This control could go so far as to amend or even annul contracts. It could also condemn a provider of goods or services for not entering into a contract with someone.
This is shown in article 13 of the ETD, which states that (emphasis added):
- “Any laws, regulations, administrative provisions contrary to the principle of equal treatment are abolished;
- Any contractual, internal rules of undertakings, and rules governing profit-making or non-profit making associations contrary to the principle of equal treatment are, or may be, declared null and void or are amended.”
Citizens should be free to enter into contractual agreements without coercion. They should also be free to differ in their convictions and worldviews, which stand behind entering or refusing to enter into a contract. But by creating abstract legal obligations, the ETD would lead to contractual censorship and severe limitations to voluntary arrangements or the refusal to enter into a contract.
In short, the ETD limits both freedom of contract and personal autonomy in an unprecedented manner.
The ETD imposes huge costs on governments and businesses
From the requirements outlined in the ETD, it’s clear that it would involve high costs for governments, businesses, and SMEs alike.
Costs to governments
There are strong indications that the ETD would seriously impact the economy of each Member State.
The greatest costs would come from setting up and running the government bodies required for promoting equal treatment (article 12 Draft ETD) . While it’s true that such bodies already exist in almost all EU member states, the provisions of the ETD involve extra costs such as:
- hiring and training additional personnel (EP 2014 Impact Assessment, p 168)
- conducting surveys about discrimination (article 12(b) Draft ETD)
- scrutinizing the business sector so as to identify, avoid or remedy discrimination (articles 5 and 12 Draft ETD)
- publishing reports (article 12(c) Draft ETD)
What’s more, “the relatively short time frame for implementation of such a broad Directive (5 years) is likely to increase costs” (EP 2014 Impact Assessment, p 91).
Costs to businesses and SMEs
Compliance with the ETD would mean high costs for business owners. Employers would have to make sure that their employees stick to its regulations at all times, from initial contact with customers, through negotiations and discussions, all the way up to closing the deal (article 3 Draft ETD).
This is likely to lead to:
- a mass of bureaucratic burdens
- slowing down the pace of business
- consulting costs (especially regarding the possible discriminatory character of new marketing strategies)
- severely increased legal uncertainty
- difficulty with long term business planning
These factors could lead to a chilling effect, where businesses choose not to advertise their services, or avoid deals with people who are possible victims of discrimination, all to avoid possible legal trials (this concern was particularly raised, inter alia, by the German Organisation of Skilled Crafts and Trades).
Even when companies do go ahead with deals, they will have to constantly check with lawyers whether they are complying with the demands of the ETD. Correspondence with customers and new marketing strategies would all need to be checked. This process will be expensive and time consuming.
The EP Impact Assessment also underlines the significant costs to businesses that the ETD would trigger:
- “following an initial screening, only for three grounds of discrimination (disability, age and sexual orientation) it is expected that remedial action could entail significant costs for SMEs and public goods and services providers” (EP Impact Assessment, p 11)
- “whilst EU legislation can result in internal market savings through reduced administrative burdens on businesses, this is unlikely to be the case due to the open-ended nature of the proposed Directive” (EP Impact Assessment, p 91)
- “most if not all businesses serving the public will have to take account of measures imposed by national legislation to implement the proposed Directive. They will therefore face additional costs on that basis” (EP Impact Assesment, p 92)
Costs of increased litigation
The ETD would open the door for frivolous litigation against businesses. The ETD itself makes it plain that using litigation is “a primary means of achieving change” and that “broader non-discrimination enforcement action (is made) through courts” (EP Impact Assessment 2014, p 102).
The ETD even encourages states to take “positive action” in order to “combat discrimination”. This would be done by establishing new bodies for the “promotion of equal treatment” (articles 5 and 12 Draft ETD). These bodies would introduce claims on behalf of alleged victims of discrimination, then provide them with legal assistance to pursue their complaints.
The UK gives us some idea of how these state-funded, strategic “anti-discrimination” lawsuits work. There, it is common practice for NGOs with sufficient financial power to target alleged offenders with lawsuits. Litigation Associations are willing to provide support, since they receive part of the compensation fee and use this money to seek further lawsuits.
This kind of ‘bounty-hunting’ causes:
- loss of time in courts
- high costs of litigation for businesses and SMEs
- a negative impact on corporate image, cultivated through media
- the closing down of small businesses which are not able to cope with long, expensive trials, or the cost of fines
The ETD creates added bureaucratic burdens
Under the provisions of the ETD, governments, businesses and citizens would all have to deal with extra bureaucratic measures.
Governments would have to monitor access to and supply of goods and services (including housing), access to social protection, and access to education.
The bodies set up for the promotion of equal treatment (based on the ETD’s call for “positive action” in article 5) would repeatedly require service providers and clients to document their offers, strategies, target groups or requests in order to check whether discrimination has occurred.
This leads to a raft of new bureaucratic measures, which would be extremely time consuming and costly for:
- goods and service providers, who would need to document all their transactions, contracts, strategies, business plans, etc.
- customers, who would need to wait longer for services and goods which are delayed by “discrimination checks”
- society at large, which pays the price for less efficient and responsive services