EU debates new Directive on consumer representative actions

Written on 15 Apr 2020

What?

The proposed Collective Redress Directive aims to protect the collective interests of consumers by allowing consumer group actions for breaches of consumer law. The new rules address concerns raised by recent high profile cross-border scandals.

As part of its goal of ensuring extensive consumer protection, the EU plans to reshape the consumer regulatory framework to provide citizens with a consistent, efficient and effective enforcement system across the Union. This ambition was reflected in the proposal made on 11 April 2018 for a new Directive on representative actions for the protection of the collective interests of consumers. The proposal was adopted by the European Parliament in March 2019. It is currently going through a stage of negotiations between the European Parliament, the Council of the European Union and the European Commission, which will be followed by a second reading and further amendments if necessary.

Impact?

The new Directive will considerably simplify access to legal redress for breaches of consumer protection rights. For example, although it takes the same approach as the Injunctions Directive (which it will replace) in that only "qualified entities" in each Member State are able to bring representative actions on behalf of consumers, the new Directive makes it possible for any qualified entity to bring an action in any other Member State, and for qualified entities from different Member States to jointly bring a representative action in one Member State.

The proposed Directive is wider in scope than the Injunctions Directive and will apply to a much larger number of legal acts, including EU instruments relevant to the protection of collective consumer interests in specific sectors, such as financial services, energy, telecommunications, health and the environment. The draft Directive requires a trader that has committed an infringement to inform affected consumers at its own expense of the final decisions on possible actions for injunctions, remedies and approved settlements, including, where appropriate, by notifying the affected consumers individually.

Businesses will therefore have to reckon with consumers taking more frequent recourse to the courts. For this reason, it is advisable to keep a close eye on current EU consumer protection legislation and to ensure compliance with the relevant regulations.

When?

Once the Directive comes into force, Member States will have 18 months to transpose it into their national legislation and must start applying its provisions six months after the transposition deadline.