EU closer to enabling consumers to defend their rights collectively

Consumers will soon be able to defend their rights collectively and more efficiently across the EU. The Council today reached agreement on a draft directive on representative actions for the protection of the collective interests of consumers.

The Single Market can only realise its full potential if EU consumers have access to efficient and affordable tools to enforce their rights in all member states. The text agreed today provides consumers with such tools while also protecting traders against abusive litigation.

Timo Harakka, Finnish minister of employment

The draft directive aims to put in place a system on representative actions for the protection of collective interests of consumers against infringements of Union law in all member states. The system will cover actions for both injunctions and redress. The directive was proposed by the Commission in April 2018 as part of the Commission’s “New deal for consumers” package, which aims to ensure fair and transparent rules for EU consumers.

The directive empowers qualified entities, such as consumer organisations, to seek, in addition to injunctions, also redress measures, including compensation or replacement, on behalf of a group of consumers that has been harmed by a trader in violation of one of the EU legal acts set out in an annex to the directive. These legal acts reflect recent developments in the field of consumer protection. Since consumers nowadays operate in a wider and increasingly digitalised market, achieving a high level of consumer protection requires that areas such as financial services, travel and tourism, energy, telecommunications and data protection be covered by the directive, in addition to general consumer law.

As far as the eligibility criteria for qualified entities are concerned, the Council distinguishes between qualified entities entitled to bring domestic representative actions and those entitled to bring cross-border representative actions. The former will have to fulfil the criteria set out in the law of the member state of designation, whereas the latter will have to fulfil the harmonised criteria set out in the directive itself.

Member states shall, for the purpose of representative actions for redress, be free to choose between an opt-in and an opt-out system. In an opt-in system, consumers will be required to express their wish to be represented by the qualified entity for the purpose of a particular representative action. In an opt-out system, consumers who do not wish to be represented by the qualified entity for the purpose of a particular representative action will be required to make a statement to that effect.

A final judicial or administrative decision establishing an infringement harming collective interests of consumers will be able to be used as evidence of the existence of that infringement for the purposes of any other redress action against the same trader for the same infringement.

Member states will have 30 months from the entry into force of the directive to transpose it into national law, as well as an additional 12 months to start applying these provisions.

The directive will apply to representative actions brought after the date of application.

Next steps

On the basis of the agreed text, the Council will start negotiations with the European Parliament with a view to exploring the possibility of an agreement for the swift adoption of the directive at second reading (“early second reading agreement”).

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