Brussels, 10/06/2013 (Agence Europe) - To bring about a system of class action suits at European level, allowing the victims of the same infringement of European law - be they consumers or businesses - to engage in legal proceedings as a group in order to obtain compensation for the damages or losses they have suffered, it is a non-binding recommendation that the European Commission will publish this Tuesday 11 June, the European consumers' organisation (BEUC) laments. Though this came as no surprise (see EUROPE 10862), BEUC is disappointed that the Commission is planning to go no further than to recommend that the 28 member states adopt laws instead of using a binding measure which would oblige them to set in place a single procedure across the whole of the EU. This, according to the BEUC, is a serious blow to consumers, given the stakes and current problems they face in bringing proceedings affordably and to obtain compensation, particularly in the event of cross-border disputes.
Faulty products often result in many victims, such as PIP breast implants, systematic overcharging on telephone costs (for example, Telefónica in Portugal), financial misadvice and mortgage repayment protection insurance sold in the United Kingdom. However, due to the very many complications faced by these victims to defend their rights individually, they very rarely receive compensation. Group action would allow all of the victims to be represented in a single procedure by a consumer protection body.
“It is a pity the European Commission has dragged its feet on this burning issue. The absence of a uniform collective redress mechanism has been a glaring omission of the single market for decades. 79% of European consumers have called for it, lamenting the fact that their rights remain on paper. This is a basic question of access to justice”, said Monique Goyens, the director general of BEUC, on Monday.
Although class action already exists in 16 member states, it is not cross-border. “There has been a degree of scaremongering that this will bankrupt European businesses or prompt a litigation culture, this is nonsense. It simply has not happened in the European countries already benefiting from it. The key safeguards against exorbitant awards are in place. So we are not importing US class actions. This is a basis to ensure victims receive compensation as and when needed. It also boosts the competitive market by reclaiming illegal profiteering. The system recommended by the Commission disappointingly asks each person to sign up - automatic inclusion of all victims should be the norm. After a generation, the Commission has taken this baby step and European consumers expect them to closely monitor the progress and at least fill the gaps where necessary”, she adds.
The controversial plans for collective redress have evolved through many versions. The initial public consultation on the possibility and details of a European group action system was launched in 2008 via a Green Paper, at the time focusing on procedures solely for consumers when large numbers have been harmed by the same infringement of consumer law in the EU. Five years later, it is an entirely different draft of which the European Commission, on the initiative of Commissioner Reding, will present all the details on Tuesday. Readers may recall that, during his hearing, Neven Mimika, the Croatian commissioner designate for consumer policy, declined to express any personal opinion on what the class action procedure should be before the European Commission put its proposal on the table (see EUROPE 10859). (AN/transl.fl)