In this post I will dwell on the new collective actions for the protection of consumers’ interests provided for in the EU proposed legislation named the “New Deal for Consumers”.
“Up Patriots to Arms, engagez-vous! Contemporary music gets me down!“
This verse is a sort of commander’s exhortation to (emblematically) take the weapons and fight for a common cause. Similarly, the new EU rules on consumer protection allow people to unite in collective actions to exercise their rights.
The “New Deal for Consumers”
My colleagues Alessandro Ferrari and Laura Borelli in two previous posts (available here and here) gave an introduction about the “New Deal for Consumers“, i.e. the new package of proposals that aims at raising the level of protection afforded to consumers and decrease administrative burdens for companies operating at EU level. This package is composed of, inter alia,
- A proposal for a directive that amends Directive 93/13/EEC, Directive 98/6/EC, Directive 2005/29/EC and 2011/83/EU as regards better enforcement and modernisation of EU consumer protection rules; and
- A proposal for a directive repealing Directive 2009/22/EC and implementing representative actions for the protection of the collective interests of consumers.
The need to protect citizens against infringements of EU laws
EU has already established solid rules affording consumer protection, that make the EU consumers’ legal framework one of the strongest in the world. Nonetheless, tricky cases such as the Dieselgate scandal have revealed that it is hard to concretely enforce them. In particular, in a recent report, the EU Commission found out that the risk of infringements of EU law affecting the collective interests of consumers is increasing due to economic globalisation and digitalisation.
Businesses infringing EU laws may affect thousands or even millions of consumers with misleading advertisement or unfair standard contract terms in different economic sectors. Because of the increase in cross-border trade and EU-wide commercial strategies, these infringements gradually also involve consumers not just in one, but also in different Member States. Furthermore, the need for strengthening EU action on collective redress has also been identified by the European Parliament on several occasions (see, amongst other things, its 2012 Resolution “Towards a Coherent European Approach to Collective Redress“).
More efficiency for consumers’ representative actions
The Proposal clearly aims at reinforcing the current framework on collective actions of consumers in a wide range of industries, such as financial services, energy, telecommunications, health and the environment.
The true motto of the Proposal is the efficiency of the procedure, since EU Member States will have to ensure “due expediency” of civil procedures and that procedural costs do not represent a financial obstacle to bringing representative actions. In this regard, consumers will have to be appropriately made aware of the outcome of such proceedings and how they will benefit from them.
Furthermore, according to the Proposal, an alternative of the judicial decision will be represented by collective out-of-court settlements, aiming at restoring harmed consumers. Such extra-judicial solutions should be encouraged both before the representative action is brought and at any stage of the representative action.
Access to consumers’ actions will not lead to abuses
The Proposal is pursuing a balance between enabling access to justice to safeguard consumers’ interests and ensuring appropriate safeguards from abusive litigation. Indeed, the representative actions may be brought only by qualified entities that must meet minimum reputational criteria – e.g. they must be regularly based non-profit entities and pursue a legitimate interest in safeguarding compliance with the relevant EU law. These high thresholds strongly ensure that frivolous actions are brought to attention of the judges.
The Proposal will also allow such qualified entities to bring representative actions seeking different types of adequate measures, depending on the circumstances of the case (i.e. injunctive or compensatory redress).
These innovations will significantly change the EU legal framework. With a bit of luck, the legislative actions of the “New Deal of Consumers” will become law in May 2019. At that point, the EU Member States will be required to implement the provisions of the Directive in their domestic legal framework.
Let’s see if consumers will exercise their rights together. Consumers, engagez-vous!
Contact me, Tommaso Fia, if you wish to receive more information about this topic.