Bizer, K., M. Führ & T. ProegerThe economic consequences of improving the German warranty law

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Kilian Bizer, Martin Führ & Till Proeger

Release date:
September 2016

Federation of German Consumer Organisations (vzbv), Team on law and trade

The warranty law represents an important aspect of consumer protection in Germany. As a result of implementing the guideline 1999/44/EG in May 1999, the warranty law within the German Civil Code has been reformed substantially in order to better integrate the interests of consumer protection.   

As part of the project group "Warranty and guarantee" of the ministerial conference of consumer protection and the conference of ministers of justice, there are now considerations to change the warranty law anew in the direction of strengthening the claims of consumers and thereby weakening the position of suppliers and sellers. One of the key arguments against expanding warranty obligations is seen in the negative overall economic consequences. This line of arguments suggests that additional warranty rights of consumers result in increased costs for producers and sellers, since they are obligated to fulfill these warranty claims. These additional costs are then integrated in commodity prices causing respective increases. 

The study at hand provides an empirical analysis and examines the price effect of the guideline 1999/44/EG in the years of its implementation in Europe. For this, the economic discussion is portrayed and the different arguments are summarized. What follows is the definition of the research area, especially the product groups in question, as well as the country-specific implementation of the guideline and the empirical strategy. After the empirical analysis of price developments, it will be examined in what way markets between private entities in Germany without guarantee obligation exist, that could compensate for regulation-related price increases. The summary concludes the key results and presents policy implications. 

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