Bitkom criticises EU proposal on representative actions

  • Dehmel: „The new law leaves the gate to abuse wide open“

Berlin, 11 April 2018 - The EU Commission today published several proposals to amend current consumer rights legislation in the EU. Part of the so-called “New Deal for Consumers” is a directive through which consumers can claim compensation for damages by means of representative actions. “Consumers need viable tools to enforce their rights. In principle, collective redress is a way to achieve this goal”, says Susanne Dehmel, Managing Director at Bitkom.

The current proposal however breaks with the European legal tradition that consumers have to actively register themselves as claimants. According to the proposal, each EU Member State may define the applicable rules for claimants. Should national law allow it, all potential claimants in a case could therefore automatically become part of the representative action procedure. As a consequence, representative action could be applied differently from Member State to Member State. Bitkom believes that the current proposal contributes to legal fragmentation in Europe and creates incentives for abuse. “The new law leaves the gate to abuse wide open”, says Susanne Dehmel, Managing Director at Bitkom. “A procedure without the active consent of potential claimants mirrors the often criticized US model, which mainly benefits lawyers and those financing the legal proceedings.” The legislative proposal therefore contradicts its goal to better protect consumer interests. “In the end we would simply create a new business model for law firms. Such a result does not help anyone, and certainly does not benefit the consumers.” Waves of profit-oriented litigation could prompt companies to compensate for increasing legal costs by hiking prices.

The “New Deal for Consumers” seeks to amend and recast five directives with the goal of benefitting consumer protection. Part of this package is the directive on representative actions for the protection of collective interests of consumers, which repeals the so-called injunctions directive and introduces the instrument of representative action. The Commission proposals will now be discussed by the European Parliament and the Council of Ministers.