04 February 2008

Commission consultation on consumer collective redress benchmarks

The Commission started a consultation on the consumer collective redress benchmarks. In recent months, the Commission's services have identified benchmarks that should be respected by effective and efficient collective redress systems in order to ensure satisfactory redress for consumers.

Benchmarks:

- The mechanism should enable consumers to obtain satisfactory redress in cases which they could not otherwise adequately pursue on an individual basis.

It should be possible to finance the actions in a way that allows either the consumers themselves to proceed with a collective action, or to be effectively represented by a third party. Plaintiffs' costs for bringing an action should not be disproportionate to the amount in dispute.

- The costs of proceedings for defendants should not be disproportionate to the amount in dispute. On the one hand, this would ensure that defendants will not be unreasonably burdened. On the other hand, defendants should not for instance artificially and unreasonably increase their legal costs. Consumers would therefore not be deterred from bringing an action in Member States which apply the "loser-pays" principle.

- The compensation to be provided by traders/service providers against whom actions have been successfully brought should be at least equal to the harm caused by the incriminated conduct, but should not be excessive as for instance to amount to punitive damages.

- One outcome should be the reduction of future harm to all consumers. Therefore a preventive effect for potential future wrongful conduct by traders or service providers concerned is desirable – for instance by skimming off the profit gained from the incriminated conduct.

- The introduction of unmeritorious claims should be discouraged.

- Sufficient opportunity for adequate out-of-court settlement should be foreseen.

- The information networking preparing and managing possible collective redress actions should allow for effective "bundling" of individual actions.

- The length of proceedings leading to the solution of the problem in question should be reasonable for the parties.

- Collective redress actions should aim at distributing the proceeds in an appropriate manner amongst plaintiffs, their representatives and possibly other related entities.

The Commission would like to know whether you:

-agree with these benchmarks;

-consider other benchmarks to be important;

-consider that more benchmarks or fewer benchmarks are necessary;

-have experiences with existing mechanisms of collective redress, especially in relation to specific sectors and/or in relation to cross-border disputes.

Contributions should be send to Sanco-consumer-collective-redress@ec.europa.eu

Deadline for consultation is 3 March 2008.

© European Commission