On 20 November 2018, AK EUROPA, together with the European Consumer Organisation BEUC, hosted a panel discussion in the fully packed Permanent Representation on the “New Deal for Consumers” package, which among other things shall enable collective redress throughout Europe.
In his opening remarks, host Dave Keating referred to the impact of scandals such as “Dieselgate” and “Cambridge Analytica”; these had contributed to a rethinking by European decision-makers. Whilst consumers in the USA had received compensation for the false claims made by Volkswagen, Consumers in Europe so far had come away empty-handed.
Ursula Pachl, Deputy Director General of BEUC, made the evening’s opening speech. She fundamentally praised the positive proposal of the Commission, which would mean justice for consumers at last. However, in the current debate, business organisations, notably the “American Chamber of Commerce”, would like to conjure up doom scenarios. The number of corporate insolvencies had not increased in countries, where collective redress systems already existed, and there was no sign that these systems would be exploited. However, in Pachl’s opinion, some issues could still be improved: no deterioration of existing well-functioning national collective redress systems should be accepted; tabled amendments would exist regarding the scope of the Directive, whose aim it would be to significantly restrict it to the disadvantage of consumers. Consumer organisations should in any case be regarded as qualified entities to enable the implementation of collective redress. A failure to enforce this would render the entire proposal useless.
Tatjana Kudria, parliamentary assistant to Geoffroy Didier (EPP), the rapporteur in charge of the Directive, commented on the current state of negotiations in Parliament: one would try to keep to one’s own ambitious schedule (a vote in the European Parliament's Committee on Legal Affairs on 6 December 2018). However, it was crucial that the Council’s negotiations would also move forward more rapidly. From the point of view of Parliament, the vote on the Directive in plenary could take place in February or March 2019. Against the background of the discussed Europe-wide harmonisation one had to ensure that well-functioning national systems would not be undermined. However, the question, which organisations shall be able to lodge collective redress and in what form funding of collective redress by third parties will be possible, is still hotly debated. Regarding this issue, some MEPs demand more detailed criteria to be created.
Els Bruggeman of the consumer protection organisation Test Achats spoke about the Belgian collective redress model. Collective redress had been available in Belgium since 2014 and since its introduction seven claims had been lodged by her organisation. In many cases it had been possible to reach a settlement with the companies before the pronouncement of judgement. It was now important not to endanger the well-functioning Belgian system by the new EU Directive. It was not clear from the Proposal whether harmonisation was on a minimum or even maximum basis. In the case of “Dieselgate” for example, Test Achats had to wait 18 months for the admissibility of the action. If the Commission Proposal would be implemented, it might take even longer. Such long waiting times would extremely affect the trust of consumers – both in the organisations themselves as well as in the institutions; apart from that it would cost a lot of money.
Joanna Lopatowska of EuroCommerce added a corporate perspective. Admittedly, companies would share many of the concerns of consumers; however, it had to be guaranteed that the Proposal would not favour any predatory business models. Companies are not trying to be a stumbling block for consumer justice; their concern rather is to keep any damage for themselves as low as possible. She too misses clarity in respect of many issues, in particular regarding cross-border collective redress. With regard to third party funding, EuroCommerce supports stricter “safety precautions”.
Gabriele Zgubic, head of AK Vienna's consumer policy department, explained that in Austria consumer protection organisations would already possess an instrument to bundled injunctions for one lawsuit for affected consumers. This model would have a lot of flaws though, that’s why a legally binding framework would be necessary. The current rules regarding injunctions would help to force companies to stop their improper actions in the future, but not to compensate already affected consumers. It is precisely this gap that the proposed European collective redress mechanism could fill. However, there is the risk that the present Proposal might make consumer organisations lose power to take legal action in the future. That’s why narrow criteria should be avoided. From the point of view of consumer organisations, the funding of litigation by third parties would be important as otherwise it would not be possible to afford the financing of expensive lawsuits. There also shouldn’t be a necessary minimum number for affected consumers, since it is a significant relief of time and expenditure for the courts to combine 10 affected consumers in one lawsuit.