EU bolsters consumer arsenal for collective redress

The European Parliament approved a landmark set of rules on Tuesday to enable consumers to pursue collective lawsuits against companies in the bloc.

The European Parliament approved a landmark set of rules on Tuesday to enable consumers to pursue collective lawsuits against companies in the bloc. EU lawmakers said the collective redress directive would protect consumers from scandals such as Dieselgate, where carmakers Volkswagen and Audi were caught disguising excessive diesel pollution.

The proposed rules have already been endorsed by EU states, which have two years to tranpose them into national law, with lawyers expecting initial consumer claims from late 2022. JP Douglas-Henry, global co-chair of litigation at law firm DLA Piper, said that such collective redress proceedings - relating to the likes of data protection, energy, telecoms, airline rights and financial services - would be entirely new for much of Europe.

"The big question for businesses is how should they prepare for threats of mass consumer litigation in markets where they haven't previously been a feature of the risk landscape?" Douglas-Henry said. The EPP, parliament's centre-right party, said the rules strike a "fair balance" between the interests of consumers and businesses while avoiding the risks of opportunistic U.S.-style class actions.

"To further avoid abusive lawsuits, we managed to introduce the 'loser pays principle' and insisted that courts or administrative authorities might decide to dismiss manifestly unfounded cases," said Geoffroy Didier, an EPP lawmaker who negotiated an agreement on the new rules.