On 26th March 2019, the European Parliament agreed with a clear majority (579 Yes, 33 No, 43 abstentions) to the Directive proposal on collective redress. From the point of view of the Chamber of Labour and the European Consumer Organisation (BEUC), this development is an important step to strengthen the rights of consumers.
More than three years after “Dieselgate” had become common knowledge, the vast majority of the European Parliaments has agreed to the Directive on collective redress. European consumers, who were injured by the same company, shall have the opportunity in future to proceed as a group against the infringement of their rights. Even though there are collective redress systems in several EU countries, including Austria, numerous gaps exist, which were also pointed out by the AK during an event last year. Due to the fact that actions for damages are lengthy and expensive, many injured consumers have so far refrained from taking legal action. However, according to a survey by the European Consumer Organisation BEUC, 79 % of European Consumers would be willing to sue for their rights, if they were able to join forces with consumers, who suffered the same damage.
Decision in the European Parliament - Waiting for the Council
Prior to the vote in the European Parliament plenary, the competent Commissioner Věra Jourová once again pointed out that the Directive would send a message to Europe’s citizens to confirm how important consumer protection is to the EU. The Commissioner rejected the argument raised by the industry that the legal act would create a “complaints industry similar to the US”. Only representative institutions and associations will be entitled to bring claims.
Rapporteur Geoffroy Didier (EPP) and the S&D shadow rapporteur Mady Delvaux were also satisfied with the compromise found in the European Parliament. Evelyn Gebhardt (S&D) too praised the “positive report, which had been greatly improved by Parliament”. However, several MEPs were disappointed that so far the Council has not found a common position, which means that no agreement will be reached in this legislative period.
Key points of the voting result
If the Council also agrees, it will be possible in future for representative institutions and associations, in particular consumer protection organisations, to bring EU-wide collective redress against companies on behalf of injured consumers. Compensation payments may only benefit injured consumers. The Directive may be applied to different sectors. Passenger rights, infringements against data protection or financial services may also be sued for via collective redress; they are not, as had been discussed in the meantime, exempt from the scope of the Directive. However, a problem from AK’s point of view –and in particular for smaller Member States – is the fact that there have to be 50 injured parties to be able to bring collective action. Here, AK hopes that the Council will make improvements within the scope of the trilogue negotiations.
The vote in the European Parliament provides for the choice of an “opt in” procedure (injured consumers must actively register for the collective redress) or an “opt out” procedure. AK insists at least on an Austrian implementation within the meaning of an “opt out” procedure, which guarantees that affected consumers are automatically involved in the collective redress, which has also been proven successful in practice. From AK’s point of view, litigation funding by third parties is of great significance, because funding of expensive actions would be impossible to afford in practice. Following the vote in the European Parliament, litigation funding by third parties is permitted, provided it is transparent, independent and free of conflicts of interest.
“Justice for all consumers in the EU”
Monique Goyens, Director General of BEUC, regards the Directive as a big step forward in the fight for Justice for the consumers in der EU. AK too regards the voting result in the European Parliament as a positive development. It will be important now that the Member States too would send a strong signal concerning consumer protection. AK hopes that the Council too will soon reach agreement in order to no longer prolong legal protection for EU consumers.
Directive on modernising EU consumer protection rules - agreement in trilogue
The Directive on collective redress was part of the “New Deal for Consumers” package, which the Commission presented in April 2018. Regarding the second part of the package, the Directive on modernising EU consumer protection rules, agreement in trilogue has now been reached. The reform includes among other a new sanction regime, which allows national consumer protection authorities to impose effective sanctions with regard to infringements against the EU consumer law (monetary fine of at least 4 % of the annual turnover of the company concerned). The intention is to also extend the Consumer Rights Directive to free online services. New information duties in connection with online market places were enshrined; consumers must in particular be informed about the most important parameters for the rank order of their search results. These reforms too are welcomed by AK as they send an important signal to consumers in Europe.