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Collective Redress: A Breakthrough or a Damp Sqibb?

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Abstract

In June 2013, the European Commission issued its long-awaited policy on collective redress. The proposal is in fact about collective actions and omits a holistic assessment of other options for redress. The proposal is a Recommendation not a proposed legislation. A related proposed Directive on competition damages does not mention collective actions. The proposed framework is not a model as too many aspects remain subject to national rules and contexts. Empirical evidence from collective actions in Member States suggests that this does not herald a new dawn for litigation or redress, although it may fuel more litigation in some Member States and thus forum shopping. In threatening to introduce legislation unless Member States introduce collective actions for all types of claim, the Commission opposes the majority of the Council and seems to have overplayed its hand.

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Notes

  1. Communication from the Commission “Towards a European Horizontal Framework for collective Redress”, COM(2013) 401/2, 11.6.2013 (“Communication”).

  2. European Parliament Resolution of 2 February 2012 “Towards a Coherent European Approach to Collective Redress”, 2011/2089(INI).

  3. Commission Recommendation of 11 June 2013 on common principles for collective redress mechanisms in the Member States for injunctions against and claims on damages caused by violations of EU rights, COM(2013) 3539/3, 11.6.2013.

  4. Proposal for a Directive of the European Parliament and of the Council on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, COM(2013) 404, 11.6.2013.

  5. Directive 84/450/EEC, Art 4.1. Most Member States have accorded consumer associations the right to bring actions under this provision: Green paper: Access of consumers to Justice and the settlement of consumer disputes in the single market, COM(93) 576, 16.11.1993, p10.

  6. Directive 93/13/EEC, Art 7.

  7. Directive 2005/29/EC, Art 4.

  8. Directive 2011/83/EU on consumer rights.

  9. Directive 98/27/EC, Arts 1-3.

  10. Regulation 2006/2004, Arts 4.2 and 8.3.

  11. Unfair competition is enforced in Germany by the Wettbewerbzentrale, a business association, and the Verbraucherzentralen, consumer associations.

  12. Memorandum from the Commission: Consumer redress, Commission of the European Communities, COM(84) 692, 12.12.1984; see also Supplementary Communication from the Commission on Consumer Redress, COM(87) 210, 7.5.1987; Council Resolution of 25 June 1987 on consumer redress, OJ No C 176/2, 4.7.87; Green Paper: access of consumers to Justice and the settlement of consumer disputes in the single market, COM(93) 576, 16.11.1993; Directive 2002/8/EC of 27 January 2003 to improve access to justice in cross-border disputes by establishing minimum common rules relating to legal aid for such disputes; Council Decision of 9 November 2004, 2004/844/EC on the standard form for legal aid applications and their transmission.

  13. Green Paper on Consumer Collective Redress, COM(2008) 794, 27.11.2008, para. 12.

  14. See http://ec.europa.eu/consumers/redress_cons/collective_redress_en.htm#Benchmarks.

  15. Green Paper on Consumer Collective Redress, above fn 13.

  16. MEMO/08/741, 27.11.08.

  17. Study regarding the problems faced by consumers in obtaining redress for infringements of consumer protection legislation, and the economic consequences of such problems (Civic Consulting and Oxford Economics, 2008).

  18. Study on the Evaluation of the effectiveness and efficiency of CR mechanisms in the European Union, (GHK, Civic Consulting and Van Dijk Management Consultants, 2008).

  19. The German government maintained its strong opposition to any action: see the Response of the Federal Government to the Green Paper (English translation on file with the author).

  20. At http://ec.europa.eu/consumers/redress_cons/docs/consultation_paper2009.pdf.

  21. Consultation Paper, para. 42. The options that were stated set out elements of the three pillars, individually and in combination.

  22. Civic Consulting, Study on the use of Alternative Dispute Resolution in the European Union, 16 October 2009. The most were: Germany 247 (many decentralized schemes), Italy 129 and UK 43, France 35. Civic say that ADR is clearly more relevant in Belgium, UK, Spain, Sweden, Austria, Ireland, Netherlands, Denmark, and Malta than elsewhere. UK seems to have the highest number of cases for any individual scheme, with the FOS often handling over 100,000 pa—most large schemes handle 5,000 to 20,000 pa. There seem to be 530,000 cases in the EU in 2008, and this has increased from 410,000 in 2006.

  23. Directive 2013/11/EU of the European Parliament and of the Council on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR).

  24. Regulation (EU) no. 524/2013 on online dispute resolution for consumer disputes (Regulation on consumer ODR).

  25. Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee of March 14, 2013: First Report on the Application of Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 Concerning Unfair Business-to-Consumer Commercial Practices in the Internal Market and Amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (“Unfair Commercial Practices Directive”; COM(2013) 139 final: European Commission, March 2013).

  26. Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee On the application of the Unfair Commercial Practices Directive Achieving a high level of consumer protection—building trust in the Internal Market (EC, March 2013).

  27. Regulation (EC) 1/2003.

  28. Case C-453/99 Courage and Crehan [2001] ECR I-6297.

  29. The Ashurst study found 60 cases in which judgment had been delivered in member states, but it was not able to report on cases that are brought but settled, nor cases that are not brought (whether settled or not).

  30. In Germany, 900 private law antitrust cases were registered between 2002 and 2006; 68 of 240 decisions between 2002 and 2004 had been asserted offensively, of which 38 had involved damages claims: private enforcement in the european union—pitfalls and opportunities, Bundesverband der Deutschen Industrie e.V. and Freshfields Bruckhaus Deringer, 2007.

  31. COM(2005) 672, 19.2.2005. Proposals relate to access to evidence, burden of proof, calculation of damages, limitation rules, whether claims should be aggregated, whether an opt in or opt out model should be applied, and whether punitive damages should be available.

  32. White Paper on damages actions for breach of the EC antitrust rules, COM(2008) 165, 2.4.2008. Commission Staff Working Paper accompanying the White Paper on damages actions for breach of the EC antitrust rules, SEC(2008) 404, 2.4.2008. Commission Staff Working Document accompanying the White Paper on damages actions for breach of the EC antitrust rules: Impact assessment, SEC(2008) 405, 2.4.2008. Making antitrust damages actions more effective in the EU: welfare impact and potential scenarios, final report submitted to the Commission on 21 December 2007.

  33. Note the counter-argument that the “abuse” criticism is unfounded: see Hensler, “Third-Party Financing of Class Action Litigation in the United States: Will the Sky Fall?” (forthcoming, manuscript on file with the author).

  34. Green Paper on Consumer Collective Redress, COM(2008) 794, 27.11.2008, para. 48.

  35. MEMO/08/741, p. 4.

  36. MEMO/08/741, p. 4.

  37. http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P6-TA-2009-0187+0+DOC+XML+V0//EN. It appeared that political trading on redress and totally different issues led to last minute compromises in wording that enabled several groupings to claim (inconsistently) that the Report supported their position.

  38. Financial Times, 3 October 2009.

  39. European Parliament resolution of 2 February 2012 on ‘Towards a Coherent European Approach to Collective Redress’ 2011/2089(INI), para 2.

  40. European Parliament resolution of 2 February 2012 on ‘Towards a Coherent European Approach to Collective Redress’ 2011/2089(INI), para 4.

  41. European Parliament resolution of 2 February 2012 on ‘Towards a Coherent European Approach to Collective Redress’ 2011/2089(INI).

  42. European Parliament resolution of 2 February 2012 on ‘Towards a Coherent European Approach to Collective Redress’ 2011/2089(INI), para 8.

  43. European Parliament resolution of 2 February 2012 on ‘Towards a Coherent European Approach to Collective Redress’ 2011/2089(INI), paras 6, 9, and 14.

  44. European Parliament resolution of 2 February 2012 on ‘Towards a Coherent European Approach to Collective Redress’ 2011/2089(INI), paras 15 and 16.

  45. European Parliament resolution of 2 February 2012 on ‘Towards a Coherent European Approach to Collective Redress’ 2011/2089(INI), para15.

  46. European Parliament resolution of 2 February 2012 on ‘Towards a Coherent European Approach to Collective Redress’ 2011/2089(INI), para 20.

  47. AHRC Research Project on EU Competition Law: Comparative Private Enforcement and Collective Redress in the EU 1999-, led by Professor B. Rodger of Strathclyde University, see www.clcpecreu.co.uk; results were reported at a conference in London on 15 September 2012.

  48. Case C-360/09 Pfleiderer AG v Bundeskartellamt (2011) ECR I-05161.

  49. Commission Communication “Action Plan Implementing the Stockholm Programme” COM(2010) 171, 20.4.2010, and The Stockholm Programme—an open and secure Europe serving and protecting citizens, adopted by the European Council on 9.12.2009, OJ C 115/1, 4.5.2010.

  50. Directive 2009/2218C, OJ L 110, 1.5.2009, p. 30.

  51. Directive 2013/11/EU of the European Parliament and of the Council on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC.

  52. Collective Redress: Where and how it works (BEUC, 2012).

  53. Communication, para 1.1.

  54. Communication, para 3.

  55. Communication, para 2.2.2.

  56. Communication, para 2.1.

  57. Communication, para 3.

  58. Regulation (EC) No 4412001 on jurisdiction, recognition and enforcement of judgments in civil and commercial matters ('the Brussels I Regulation'), as amended by Regulation (EC) no 1215/2012 that will enter into application l0 January 2015. OJ L 351, 20.12.201.

  59. Points 27–30 of the Commission Recommendation.

  60. This is already the case for mediation in cross-border disputes, where, in accordance with Article 5 of Directive 2008/52/EC on certain aspects of mediation in civil and commercial matters, courts before which an action is brought may invite the parties to use mediation in order to settle the dispute.

  61. Point 30 of the Commission Recommendation.

  62. Recommendation, paras. 4 and 7.

  63. Recommendation, para 13.

  64. Recommendation, para 32.

  65. Recommendation, para 21.

  66. Recommendation, para 30.

  67. Global Class Actions Conference, Oxford, summarized with later papers at http://www.globalclassactions.stanford.edu; presentations at the Danish Presidency “Conference on collective redress in a European perspective”, Copenhagen, 22–23 March 2012 (“Copenhagen conference”); presentations at Conference "Building Effective Markets—The Role of an Integrated Legal System” 29th—Wednesday 30th January 2013 Swiss Re Centre for Global Dialogue, Rüschlikon, Switzerland (“Rüschlikon conference”), available at http://www.csls.ox.ac.uk/Buildingeffectivemarkets.php.

  68. A. Ferreres Comella, Copenhagen conference and Rüschlikon conference.

  69. Sweden Group Proceedings Act 2002.

  70. Government Document (Ds 2008, p. 74). The statistics, and hence need, were not overwhelming: some eleven private class actions were brought under the Act in its first six years, only one of which had been concluded, plus one public action taken by the Consumer Ombudsman.

  71. Finland Consumer Protection Act 34/1978, Act on Class Actions 444/2007.

  72. Denmark Class Actions Act 2007; Administration of Justice Act Pt 23, amended 2007. The major case, against Bank Trelleborg, failed in the Supreme Court after several years.

  73. A. Nordby, Copenhagen conference.

  74. Kapitalanleger-Musterverfahrensgesetz (KapMuG) (Capital Market Model Proceedings Act), 2005; amended by Law of 19.12.2012.

  75. See settlement notice at http://securities.stanford.edu/1016/USD00/200544_r02n_00CV9475.pdf.

  76. 7th Amendment to the Law against Restraints of Competition (Gesetzgegen Wettbewerbsbeschränkungen–GWB); personal communication with S Peyer and the BKA.

  77. The aim was to make a settlement in the DES case binding on all parties.

  78. Regulatory Enforcement and Sanctions Act 2008; Legislative and Regulatory Reform Act 2006, s 23; Regulators Compliance Code, rev 2013.

  79. The Environmental Civil Sanctions (England) Order 2010.

  80. Financial Services and Markets Act 2000, s. 404F.

  81. Consultation. Civil enforcement remedies: consultation on extending the range of remedies available to public enforcers of consumer law (BIS, 5 November 2012).

  82. Private and Actions in Competition Law: A consultation on options for reform - government response (Department for Business Innovation and Skills, 2013).

  83. Law of 12 December 2007 No 224, Art.2, para. 446. Apart from polarised views on whether such a solution is a good thing or not, the original mechanism was universally widely criticised as being technically defective.

  84. See fn. 13 above.

  85. Multiplex Funds Management Ltd v P Dawson Nominees Pty Ltd (2007) 164 FCR 275.

  86. Directive 2004/80/EC of 29 April relating to compensation to crime victims, OJ L 261/15, 6.8.2004, arts 1 and 2. See also Council Framework Decision of 15 March 2001 on the standing of victims in criminal proceedings (2001/220/JHA), and Proposal for a Directive establishing minimum standards on the rights, support and protection of victims of crime COM(2011) 275 final, 18 May 2011; and Proposal for a Directive on the freezing and confiscation of proceeds of crime in the European Union, COM(2012) 85, 12.3.2012, at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0085:FIN:EN:PDF. See also Council of Europe Recommendation no. R(85) 11 on the position of the victim in the framework of criminal law and procedure; Recommendation No. R(87) 21 on assistance to victims and the prevention of victimization; Recommendation No. R(2000) 19 on the role of the public prosecution in the criminal justice system; and the European Convention on the compensation of victims of violent crimes (1983). In UK, see the Victims of Violent Intentional Crime (Arrangements for Compensation) (European Communities) Regulations 2005/3396.

  87. Press release: Antitrust: Commission market tests commitments proposed by Deutsche Bahn concerning pricing system for traction current in Germany (European Commission, 15 August 2013), IP/13/780. The company proposed to pay railway companies that it does not own a one-time retroactive refund of 4 % of their latest annual traction current invoice, and to provide the Commission with the necessary data to assess if the price levels charged under the new pricing system would lead to a margin squeeze.

  88. Annual Review 2011–2012 (Financial Ombudsman Service, 2012).

  89. Communication, para 1.3.

  90. Communication, para 1.3.

  91. Communication, section 2.1.

  92. Bulgaria, Greece, Poland, Portugal, Italy with some reservations.

  93. Austria, Czech Republic, France, Germany, and Hungary.

  94. Denmark with regard to cross-border collective redress, the Netherlands with regard to private international law aspects of collective redress, Sweden in policy fields with harmonized substantive rules, such as competition, the UK in the competition field; Latvia in consumer and competition law for cross-border cases.

  95. Business did object to the proposal just before it was adopted, citing that it would do nothing to achieve the paramount policy of achieving growth: Letter from Association française des entreprises privées, Deutsches Aktieninstitut, Mouvement des entreprises de France, and the US Chamber of Commerce Institute for Legal Reform to President Barroso, 31 May 2013.

  96. Communication, para 3.1.

  97. Recommendation, para 33.

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  1. Centre for Socio-Legal Studies, Oxford University, Oxford, UK

    Christopher Hodges

  2. Erasmus University, Rotterdam, The Netherlands

    Christopher Hodges

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Hodges, C. Collective Redress: A Breakthrough or a Damp Sqibb?. J Consum Policy 37, 67–89 (2014). https://doi.org/10.1007/s10603-013-9242-0

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