Tuesday, 28 June 2011

Class action, group action, collective redress... however you call it, will EU ever get it?

A recent article in EU Observer "EU needs 'class action' law suits, consumer rights groups say" draws attention to the problem of lack of EU regulation of collective redress. It is therefore not a recent development that I'd like to comment on in this post, but lack of that recent development that needs some further description. Only 14 out of 27 Member States allow their consumers to come together and bring one joint claim against a company who has harmed them all. This is a relevant legal measure of consumer protection, since many times the infringement of consumer rights even if significant results in little material damage, which in turn means that consumers are reluctant to claim compensation for that damage. Who would go to court to receive 10 euro compensation? But if the company has hurt hundreds of consumers in the same way, it, of course, can get a substantial profit out of it. Such actions should be discouraged, and what better way of discouragement than allowing lawyers and consumer organizations to represent hundreds of consumers united against a particular seller or service provider who had hurt their rights. The article in EU Observer quotes data gathered by the consumer organization Beuc: 20 billion Euro of unclaimed damages in 2010. That's a substantial amount, indeed.

Of course, it is for the Member States who have not yet regulated a possibility of consumer collective redress to introduce it to their own legal systems. At the same time, however, we need EU initiative within this field, as well, in order for a more effective prevention of cross-border infringements to take place. Still, European Commission does not intend to bring a proposal of the new law on collective redress any time soon. There is a public consultation taking place at the moment (we mentioned before on this blog public hearings organized in Brussels), which should end this year still, but it is likely to end just in further communication of European institutions and not in a legislative proposal. However, with the end of the regulation process on Consumer Rights Directive in sight, it is feasible that consumer collective redress directive could become the next project of the DG Justice and DG Sanco. Let's hope that also in this case the need for protection of consumer interests will win over the lobbying of the business environment to maintain the status quo. Hopefully, articles like the one in EU Observer and other publications drawing attention to this problem will speed this process up.

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