Representative actions for the protection of the collective interest of consumers (collective redress) - a BusinessEurope position paper

Key messages

• Consumer protection is important for business: strong consumer protection rules across the EU foster consumer trust and commerce. Likewise, competition provides the best incentive for efficiency, encourages innovation and guarantees consumers the best choice.
• BusinessEurope endorsed the Commission’s assessment of the effectiveness of existing consumer rules, which are still generally fit for purpose. BusinessEurope also agreed that effective redress procedures are essential where there are infringements of EU consumer’s rights and that consistent application of EU consumer rules is vital for the integrity of the single market as this provides protection and also legal certainty. Public enforcement, efficient out-of-court dispute resolution and awareness of the many rules among both consumers and businesses all play a key part in this.
• The proposal on Representative Actions for the Protection of the Collective Interest of Consumers is a questionable attempt to find a silver bullet to European consumer redress. Not only does it include features of doubtful effectiveness, but it also seems to be departing from the long-standing tradition of prioritising public against private enforcement. The proposal seems to shift the responsibility of enforcement to private entities (qualified entities) via the court system. Furthermore, it mixes the objective of compensation with elements of punishment which is – to say the least – unfamiliar to European Law. Finally, it omits an important link of any litigation instrument which are the associated legal safeguards (e.g. rights of defence, appeal, coordination of cases) to avoid misuse and frivolous claims. The proposal will thus have a deterrent effect on the competitiveness of Europeans businesses and hamper the EU strategy for jobs, growth and competitiveness.
• Although further assessment on this complex proposal is still required, BusinessEurope has already identified some important elements that cannot be disregarded or underestimated in the upcoming legislative process, including the Commission’s own 2013 Recommendation on Collective Redress. There are many questions/concerns around procedural steps (or lack of them), qualified entities, scope, funding, guarantees and proportionality which we will detail below.
• For the abovementioned reasons, BusinessEurope does not support the proposal.