The European Commission published a proposed directive on representative actions for the protection of the collective interests of consumers in 2018 as part of its “New Deal for Consumers” package of measures to strengthen consumer protection in the EU (covered previously on Productwise here). This is the EU’s model for introducing representative actions across the EU, but with safeguards built-in to avoid abusive actions and there is a prohibition on punitive damages to prevent excessive awards of damages, such as those seen in US-style class actions.

Product manufacturers (among others) risk facing increased litigation if the directive comes into force. The proposed EU-wide rules would enable a consumer organisation to bring a representative action seeking compensation for a defective product or to oblige a trader to repair or replace a defective product, where the same product has caused harm to a large group of consumers. It will apply to domestic and cross-border infringements in the EU.

The proposed directive lays down EU-wide rules to enable “qualified representative entities”, which represent the collective interests of consumers, to bring representative actions for breaches of certain EU laws. The scope of laws covered by the current draft of the proposed directive adopted by the European Parliament is broad and includes the areas of consumer rights, product liability and product safety, data protection, financial services, travel and tourism, energy, telecommunications, environment and health.

Entities entitled to bring representative actions will be designated by Member States and must be non-profit making, have procedures to avoid conflicts of interest and will be required to disclose the source of funds used for its activities in general and the source of funds it uses to support a particular action (amongst other requirements).

The remedies that may be awarded include an injunction, compensation, a replacement product or termination of a contract (as available under national laws of the Member State).

The European Parliament’s Committee on the Internal Market and Consumer Protection issued a draft opinion on the proposed directive suggesting various amendments last year (discussed on Productwise here). Following debate in March this year, the European Parliament adopted an amended version of the proposed directive. It has since been reported that one of the priorities under the current Finnish presidency of the Council of the European Union is to reach agreement on the proposed directive by the end of autumn this year and the Working Party on Consumer Protection and Information has been examining the proposed directive during recent meetings. Once the proposed directive has been formally agreed by both the European Parliament and the European Council and enters into force, Member States will have 18 – 24 months to give effect to these measures.