Position paper - New Deal for Consumers: Collective redress in the EU

The American Chamber of Commerce to the European Union (AmCham EU) supports the European Commission’s efforts to facilitate access to justice and guarantee a high level of consumer protection.

However, the Commission’s latest proposal to create an EU-wide collective redress mechanism could recreate the litigation extremes that we see in the United States. In those cases, the financial stakes in class actions are abusively high and collective claims come easy, resulting in excessive, ill-founded and frivolous lawsuits. Such lawsuits primarily benefit the plaintiff law firms rather than the individuals whose interest they purport to represent. Limits on lawyers’ fees and on the earnings of third-party funders are essential to prevent the abuses seen in the US system.

AmCham EU therefore believes that as it stands, the proposal for a Directive on representative actions for the protection of the collective interests of consumers will fail to meet its objective of protecting consumer rights and will prove to be detrimental to both consumers and businesses. The issue is not if reparation should be provided, but how it can be provided more effectively by building on the achievements of existing and proven EU work in this area.
AmCham EU would like to bring European policy-makers’ attention to four important issues regarding this proposal:

1. Providing sufficient safeguards against abuses;
2. Ensuring a balance of rights and burdens between claimants and defendants;
3. Further encouraging out-of-court settlements before legal action is taken; and
4. Favouring existing solutions at Member State levels.

For more information, please see our full position paper below and/or contact Jarrod Birch (jbi@amchameu.eu).