EUROPE – The European Commission is exploring ways that it might expand consumer access to justice, and in particular increase the availability of “class” or collective civil litigation across the EEA while avoiding what it characterises as US style excess in class litigation.
- Non-legislative options: to enhance qualified entities’ capacity to manage both injunction and redress actions.
- Targeted revision of the Injunctions Directive: amends several key areas, in particular by expanding the scope of the Injunctions Directive to protect consumers in areas such as financial services, energy, telecommunications and environment.
- Targeted revision of the Injunctions Directive + consumer collective redress: aims to introduce further procedural efficiencies such as a “one stop shop” where representative bodies could ask the courts and/or administrative authorities to stop any breach of the law that harms consumers and obtain redress for anyone that has suffered loss.
How This Affects You
The Injunctions Directive could be expanded to allow collective litigation led by representative associations in a number of different economic sectors and so greatly increase litigation risk and exposure where regulatory breaches occur. For example, it would enable collective action on behalf of consumers subject to a future emissions-gate or whose private data has been accessed by hackers. Taken together with the Commission’s broader review of the effectiveness of collective redress mechanisms, it is clear that the Commission is serious about greater enforcement of consumers’ rights across the EU through private litigation.
Effective management of this litigation risk will require a strategic approach coordinated across jurisdictions that accounts for the possibility of claims being made while regulatory investigations remain ongoing.
Background: Deficiencies in Consumer Redress
The Commission is due to publish a review of the effectiveness of collective redress mechanisms before the end of 2017 and, with that review, a recommendation on whether legislative reform is required to expand consumer access to collective actions. Ahead of this, on 31 October 2017 the Commission published a series of alternative proposals on how the existing Injunctions Directive might be amended to allow consumer representative bodies and trade associations to pursue injunctions or damages on behalf of those they represent. The paper is entitled “A New Deal for Consumers – revision of the Injunctions Directive” and can be accessed here.
The Commission published a scorecard of conditions affecting consumers and a “fitness check” of EU consumer and marketing law in the summer of 2017 (see here). These indicate that compliance with, and enforcement of, EU consumer law is not yet satisfactory in the eyes of the Commission. The Commission considers private enforcement of consumer laws to be one method that may improve compliance while also allowing consumers to recover damage where they have been harmed. However, the Commission also finds that current routes to recovery are not satisfactory: the 2017 “fitness check” shows that the injunction procedure is seen as falling short of its full potential; while the review on collective redress is expected to confirm that only a few Member States having introduced or amended legislation and that nine still do not provide any form of collective action.