Stronger EU-wide rules to safeguard consumers

“Loser pays principle” will act as a protection against abusive lawsuits

Photo: EP Geoffroy Didier.

A political agreement on the first EU-wide rules on collective redress, that aims to make the internal market function better by improving tools to stop illegal practices and facilitating access to justice for consumers, was struck between the negotiators of Parliament and Council.

The directive on representative actions for the protection of the collective interests of consumers repeals the directive of 2009 and introduces a harmonised model in all Member States that guarantees consumers are well protected against mass harm, such as Dieselgate and Facebook/Cambridge Analytica, while at the same time ensuring appropriate safeguards from abusive lawsuits.

Both sides agreed that the scope of collective action would include trader violations in areas such as data protection, financial services, travel and tourism, energy, telecommunications, environment and health, as well as air and train passenger rights, in addition to general consumer law.

Rapporteur Geoffroy Didier (EPP, FR) commented that the Parliament sought to strike a balance between the legitimate protection of consumer interests and the need for legal certainty for businesses. Each Member State has at least one entity qualified to exercise a remedy, while at the same time putting in place safeguards against abusive recourse, he outlined, noting that Europe must become a shield that protects the people. The rapporteur also added that the new legislation offers new rights to consumers in their daily lives and shows that Europe is making a difference.

According to the agreement, at least one representative action procedure for injunction and redress measures should be available to consumers in every EU country, allowing representative action at national and EU level. In addition, qualified entities, such as organisations or public bodies, will be empowered and financially supported to launch actions for injunction and redress on behalf of groups of consumers and will guarantee consumers' access to justice.

Furthermore, on designation criteria for qualified entities, the rules distinguish between cross-border cases and domestic ones. For the cross-border cases, entities must comply with a set of harmonised criteria.

Negotiators agreed that the rules strike a balance between access to justice and protecting businesses from abusive lawsuits through the Parliament's introduction of the “loser pays principle”, which ensures that the defeated party pays the costs of the proceedings of the successful party.

As to further avoid abusive lawsuits, Parliament negotiators also insisted that courts or administrative authorities may decide to dismiss manifestly unfounded cases at the earliest possible stage of the proceedings in accordance with national law.

The agreed texts have to be adopted by the Parliament as a whole and the Council, and the new directive will enter into force 20 days following its publication in the EU's Official Journal. EU countries will have two years to transpose the directive into their national laws, and an additional six months to apply it.

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