The European Parliament called on Tuesday 26 March by a very large majority (579 votes in favour, 33 against, 43 abstentions) for the establishment of minimum rules for a 'European-style' collective redress procedure, which would allow consumers throughout the EU who have been deliberately harmed by the same company's unfair and illegal practices to join forces and be represented to assert their rights and obtain compensation for the harm suffered.
On the basis of a compromise negotiated between all political groups, it endorsed and improved the proposal for a Directive on representative actions for the protection of the collective interests of consumers (see EUROPE 12154/4). This proposal was presented in April 2018 by the Commission, after Diesel Gate, which saw Volkswagen compensate American consumers, but not European consumers (see EUROPE 11999/1).
In doing so, Parliament completed its first reading, while the EU Council is still conducting painstaking work at the expert level.
“With all the shadow rapporteurs, we have built a subtle balance that reconciles, on the one hand, the need for greater consumer protection and, on the other hand, the need for legal certainty for companies”, stressed the rapporteur, Geoffroy Didier (EPP, France). Only a few MEPs from the ECR, EFDD, ENF and non-attached groups voted against.
The approved text provides safeguards to avoid the excesses of the American system, which permits unreasonable lawsuits or wrongful slanderous litigation to destabilise a competing company, for example. It also respects the principle of subsidiarity by giving Member States a wide margin of manoeuvre in procedures. Moreover, in order to satisfy the European right, collective redress will only be possible in cases of infringement of European consumer law in order to demand the cessation or prohibition of the same infringement, compensation or a price reduction.
Eligible qualified entities, namely those that are non-profit and free of any agreements with law firms, such as consumer associations or independent public authorities designated by Member States, will represent consumers, either before out-of-court dispute settlement bodies or, as a last resort, before a general court.
“Thanks to the European collective redress procedure, an air passenger, car buyer or washing machine owner will be able, together with others, to take legal action against an illegal practice by their airline, car or household appliance brand. These consumers will have their rights defended by a qualified entity whose financing will be transparent, and will thus obtain compensation for the damages”, Mr Didier said.
According to Parliament, the redress system should be based on three principles: this European collective redress system will not replace those already existing in some Member States, but will add to or create new protections in the nine countries that do not have it; all compensation will go to consumer-plaintiffs; the loser in the proceedings will pay for the procedure and in no case can a consumer be compensated twice for the same damage.
The consumer will be able to choose between the jurisdiction of the country where he resides or the jurisdiction of the country where the company is registered. This future directive opens the door to cross-border redress, with citizens of one Member State being able to bring an action in another Member State.
Speaking before the vote, Luxembourg's Mady Delvaux (S&D), shadow rapporteur, welcomed the fact that “despite fierce lobbying and strong resistance from the right, a good agreement had been reached, thanks in part to Mr Didier” (see EUROPE 12110/20). The text “will guarantee European minimum standards to protect consumers who can join forces to claim compensation due to them”.
However, she lamented that the scope of the future directive was limited to infringements of consumer law. “Citizens are not only consumers. In the event of health or environmental damage caused by unscrupulous companies, wouldn't the victims deserve access to the class action?” she asked. She also deplored the EU Council's lack of position during this legislative term, “which will delay the implementation of an important instrument for consumers”.
The European Commissioner for Justice and Consumers, Věra Jourová, said that the Commission, like Parliament, supports “representative actions that are fair to companies, that are not carried out in a punitive spirit and that under no circumstances move towards the system of American class actions, especially when it comes to entities wishing to take legal action on behalf of consumers”. According to her, this redress “will make it possible to assist vulnerable consumers in particular in their attempt to assert their rights more effectively than they can as individuals, thus advancing the application of consumer law, in full respect of the principle of proportionality and subsidiarity”. (Original version in French by Aminata Niang with Damien Genicot - intern)