Dyson to appeal European General Court Decision
Today the European General Court ruled that Dyson would not be awarded damages over Energy Labelling Regulations that were highly misleading to European shoppers and put Dyson at an unfair disadvantage. This follows a five-year legal battle that ultimately saw the regulation annulled in 2018. Dyson will appeal today’s decision.
The Commission’s Energy Label, introduced in September 2014, misled shoppers by overstating the energy efficiency of bagged vacuum cleaners, leading people to buy inferior products. It disadvantaged Dyson’s technology resulting in lost sales, and increased costs - including those associated with engineering, research and development.
Commenting on the ruling, a Dyson Spokesperson said,
In 2017 the European Court of Justice, Europe’s highest court, set out in clear terms that the Commission cannot validly test a vacuum cleaner when empty of dust and that, in unlawfully stipulating an empty test, the Commission had broken its own laws and ignored Dyson’s evidence. Now, ruling on Dyson’s damages claim, the lower-tier General Court, despite accepting the European Court of Justice’s ruling, seems to want to rewrite history. It is trying to argue that the dust loaded testing of vacuum cleaners is inaccurate. This is simply untrue. The Court has accepted the Commission’s tortuous and weaselly excuses to avoid accepting liability for its wrongdoing.
The General Court has chosen to turn back from the earlier decision of the European Court of Justice and seems unconcerned that the Commission broke their own law and ignored Dyson’s evidence – they declare it is not obvious enough for them to justify damages. This is an insult to the millions of shoppers who were misled and totally ignores the substantial harm – running to £150 million – caused to Dyson. Meanwhile the Commission walks away scot-free despite having favored the European bagged-machine lobby, including the major German manufacturers, throughout.
Dyson will appeal, as we disagree with the Court’s claim that there was doubt about dust-testing. These test methods were adopted decades ago by international standards organisations and applied by testing houses, laboratories, advertising standards bodies and courts across Europe and the world, without question. This judgment sets a very concerning precedent for future regulations across Europe and risks consumers being misled once again.
Bad regulation fails consumers, stifles innovation, hits jobs and slows growth. Dyson technology was significantly disadvantaged by the Energy Label leading to lost sales and significant engineering, research and development costs, not to mention five years of legal challenge to see it overturned. It diverted precious time and resources away from what we should have been doing – inventing and developing new energy efficient products. Is this really the best way to focus technology companies on developing more environmentally friendly products?
The labelling regulation, drawn up by the European Commission, stipulated that vacuum cleaners were tested for grading empty and with no dust. Unlike some cyclonic machines, vacuum cleaners which rely on bags and filters to separate the dust from the airflow can become clogged with dust as soon as the machine is used, often leading to a loss of suction. As such, consumers would buy a machine which claimed to have an A grade (per EU testing without any dust) but when it was used in the home and filled with dust that performance could drop down to a G grade.
Following Dyson’s five-year legal challenge (2013 – 2018), and appeal through the European Court of Justice, the regulations were found to be unlawful and the label removed from vacuum cleaners. In this most recent case, Dyson was seeking damages of £150m through the European General Court.
Dyson has consistently argued that caps on motor wattage, along with technological advancements that lead to rising levels of energy efficiency, are a far more effective way to spur innovation and reduce environmental impact. Power caps challenge companies to innovate in order to use each joule of energy more efficiently. Such regulations set a clear objective, then allow companies the freedom to work out how to achieve it.
Timeline of events
September 2014: The Energy Label for corded vacuum cleaners came into effect across Europe despite Dyson having argued that a cap on motor wattage was the most effective way of reducing the energy consumption of vacuum cleaners.
11 November 2015: The EU General Court dismissed Dyson’s claims and asserted that dust-loaded testing is not reliable or “reproducible” and therefore could not be adopted. This decision overlooked the fact that a dust-loaded test method was devised by the International Electrotechnical Commission (IEC), an international standards organisation, and has been adopted by consumer test bodies and manufacturers worldwide. It also ignored the fact that other appliances, such as washing machines, ovens and dishwashers are tested full. We pointed out that Dyson conducts testing with multiple varieties of real dust and debris from the home including dog biscuits, Cheerios (both European and US versions), dust, fluff and grit. We also undertake simulated use testing, including dropping our machines, slamming them in doors, and throwing them down the stairs…repeatedly.
25 January 2016: Dyson appealed the General Court judgment to the European Court of Justice (CJEU).
11 May 2017: The court upheld Dyson’s appeal against the decision of the lower court stating in its judgement that the test must adopt, where technically possible, “a method of calculation which makes it possible to measure the energy performance of vacuum cleaners in conditions as close as possible to actual conditions of use”. The case was passed back to the General Court for them to reconsider.
8 November 2018: The European General Court annulled the regulation.
March 2019: Dyson submits application for damages.
January 2021: Oral hearing of damages.
December 2021: Decision handed down.
Sir James Dyson on how EU regulation impeded innovation
In his own words, Sir James Dyson explains the effect of EU regulations on innovation.
Bad regulation misleads people, stifles innovation, hits jobs and is a hidden trade barrier deployed by the European Union – in addition to the six per cent tariff we pay to import into the EU. Dyson has experienced this first-hand over the past seven years, in our drawn-out but ultimately successful legal battle against the EU’s flawed energy labelling regulation, which illegally misled millions of consumers.
The case has not only revealed the complexity of EU regulation but has shone a light on the dark arts of lobbying in Europe. Today it reaches what we hope is the final act. We have already won the case to scrap the regulation in its entirety, but now we find out whether the European General Court will award us damages.
To most people, the regulation in question may seem innocuous. The EU directive stipulated that every vacuum cleaner sold in the EU should display a label designed to show how energy efficient each machine was and help drive down energy usage. A good idea in theory, where the best would be given the highest A-grade and the worst a G-grade.
In reality, however, the testing regime behind the grading was a sham. Flying in the face of logic, science and the EU’s own laws, the Commission decided that unlike washing machines and dishwashers, which are tested when loaded, all vacuums should be tested empty, in dust-free conditions that were nothing like real world use. It created false results and illegally benefited one group, principally the bagged European vacuum cleaner manufacturers.
“At a time when the world needs innovation, governments should be encouraging companies, not tying their hands."
The label overstated the real-world performance of old-fashioned bagged vacuum cleaners, many of which were awarded green A-grade labels. As we found out from correspondence obtained through Freedom of Information requests, this was influenced by lobbying from European industry, including the leading German bagged-machine manufacturers who had much to gain from using regulation to keep unwanted rivals out. The sentiment felt clear. Ignore Dyson, they’re British.
Only once people got their machines home did they discover the truth. Bags and filters would start clogging with dust, meaning the real-world performance of a so-called A-grade machine could be as low as a G. In addition, some manufacturers installed devices to increase the motor wattage as the bag filled with dust. This would not be detected in a test state, therefore circumventing the regulation. Dyson’s vacuums, in contrast, have constant performance and are tested on dust – 60 different kinds, in fact. What you see is what you get.
After a tortuous legal battle involving a lengthy appeal at the European Court of Justice, we eventually won our case in 2018, which had been initially rejected by the European General Court in 2015. The European Court of Justice found that “the General Court manifestly distorted the position taken by Dyson”. It “infringed its obligation to state reasons … erred in law and … distorted the facts and failed to comply with its duty to give reasons”. It was an indictment of how European regulation works.
The flawed label was scrapped – one of only a handful of occasions when an EU regulation has been overturned. Revealingly, the Commission did not appeal this decision.
The energy label is a case study in bad regulation and its insidious effects. It cost Dyson over a hundred million pounds, diverting us away from what we should have been doing – innovating, inventing, and developing new products. Investment destined for research at our two UK campuses, where we employ 3,500 people and support thousands more around the world, went instead into lawyers’ pockets. Dyson fought this case for itself and to protect consumers from misleading regulations devised by EU bureaucrats and the European manufacturers they favour.
Regulation, used sparingly, doesn’t have to be damaging to innovation. Dyson was the first manufacturer to support a regulation that proposed a cap on the energy wattage of vacuum cleaners sold in Europe. This challenges companies to innovate in order to use each joule of energy more efficiently. It is not a tick-box exercise but sets a clear objective, then allows companies the freedom to work out how to achieve it.
At a time when the world needs innovation, governments should be encouraging companies, not tying their hands. Dyson is investing £2.75 billion over the next five years in new technology. Both regulation and the tax system should support those companies taking risks – backing those who invest their own money, rather than bureaucrats picking winners, supporting favourites or directing innovation through regulation. For example, Dyson’s battery-powered vacuums can now do with 200 watts what mains-powered machines did with 2,000 watts – an energy saving that was research-led, rather than government-directed.
I fear EU bureaucrats may still reintroduce an energy label, using a similarly flawed testing regime. Worse still, we could even see the UK Government unwisely adopt it. The whole point of leaving the EU was to give the UK the freedom to create our own regulations. It would be a terrible waste to throw away that opportunity. Nevertheless, Dyson will always fight bad regulation – to defend consumers, boost innovation and develop the best technology in the world.