Verbatim report of proceedings

Thursday, 26 March 2009 - Strasbourg

3. Collective redress (debate)

  President. – The next item is the Commission statement on collective redress.

  Meglena Kuneva, Member of the Commission. − Mr President, since the beginning of my mandate, redress has, as you know, been high on my list of priorities. I believe that substantive rights show their strength only when they are backed by enforcement and effective redress for consumers. More and more often, large numbers of consumers lose out as a result of the same or similar illegal practices by a trader and do not receive redress.

The Commission has been examining the problem that consumers face in obtaining redress for mass claims. We have commissioned studies, discussed the issue with stakeholders, conducted surveys and an Internet consultation, and recently published a green paper to which we have received more than 170 responses.

Although the consultation officially ended on 1 March 2009, comments are still coming in and I can already tell you that, the more evidence we gather, the more our belief that there is a problem is confirmed. This is why we need to find a solution in the interests of justice and a healthy European economy.

The green paper on consumer collective redress proposed various ways of tackling this problem. A preliminary analysis of the replies received indicates that stakeholders recognise the unsatisfactory present situation on collective redress in the Member States. There is consensus about the necessity of further action to achieve effective redress for consumers and thereby restore their confidence in the market.

Consumer organisations favour binding measures for a collective redress judicial scheme in all Member States in combination with other options, such as the extension of existing alternative dispute resolution (ADR) mechanisms to collective claims. Business would favour ADR mechanisms.

In a few weeks’ time, once we have properly analysed all the responses, we will publish the replies, together with a statement on the feedback we received, and before the summer we will outline the different ways of addressing the problem of mass claims. This will not simply be a repetition of the four options in the green paper. Our thinking is developing further in the light of the responses to the green paper consultation. Based on the outcome of all the consultations, the Commission will carefully examine the economic and social impact on stakeholders, including the costs and benefits generated by the possible options. On 29 May we will hold a hearing to share our preliminary conclusions with stakeholders.

Let me stress that, whatever route we take, we will not go down the path of the US experience. Instead, we will follow our European legal cultures and take into account the existing experiences of Member States. Once the options become clear, the European Parliament, Member States and stakeholders will be convinced, as I am, that not only is there a problem but also that an effective solution must, and can, be found at European level.

Why should reputable businesses suffer at the hands of unfair competitors who profit when consumers are not compensated? And I stress ‘compensated’. This is the very nature of redress that we are aspiring to. Why should consumers give up their legitimate expectations of compensation, and why should society put up with the welfare and justice gap?

I am confident that we will find a solution that strikes the right balance between improving consumer access to redress and avoiding unfounded claims. Effective redress will boost consumers’ confidence in the internal market and in what Europe can do for them. This is particularly important in the harsh reality of today’s economic and financial crisis. As you know, the coming months will be marked by many institutional changes, and this may influence the timing and the delivery of our work on collective redress.

Concerning the initiative taken by the Commission on damages actions for breach of the European anti-trust rules, I can assure you that the Commission shares Parliament’s view that these two initiatives related to collective redress should be consistent. Indeed, being consistent does not mean that different policy initiatives have to use the same tools to reach the same goals. I can equally assure you that I remain personally committed to this issue and will continue to work on it until the end of my mandate with the same energy and vigour that I have devoted to it thus far, and of course with the kind help and support of Parliament.

  Malcolm Harbour, on behalf of the PPE-DE Group. – Mr President, it is a pleasure to welcome Commissioner Kuneva to the House once again. Commissioner, I only need to use your own words about your energy and vigour in pursuing the interests of consumers, which, I think from our side of the House and, indeed, for all members of our committee, we have admired, and we encourage you very much to continue that work.

As far as the collective redress proposal is concerned, I think you are approaching it in exactly the right way. We have consistently said that this is an extremely complex issue. It involves not just European-level measures but also very difficult issues about engagement with national law and regional law and, above all, as you indicated, the consumer has to be at the heart of it.

You have been really consistent in saying that consumer confidence in the internal market and cross-border trading is one of the fundamental issues that we have to raise, because otherwise consumers are not getting their rights of access and being able to use and exercise their choice across borders. I think that remains at the heart of what you are discussing today.

Above all, I think the timing and complexity of solutions is important, because you have evoked a wide range of solutions here, but it is quite clear that solutions that may involve some new European-level judicial mechanisms will clearly take far longer and potentially be more controversial than picking up some of the alternative dispute resolution measures or also using the existing consumer cooperation measures that have been put in place. I think all of us on this committee recall that, in fact, the enhanced cooperation on consumers was an aspect that was put through our committee in the last Parliament, and we would like to see that become more effective. I think there is a vehicle there that can be used to give consumers the sort of redress that we are looking for, not just in collective claims but also in dealing with cross-border claims themselves much more effectively. If we can get that sense of priority there and timing and speed to come up with the best solutions quickly, I think that is the way that I commend you to think about moving forward.

  Evelyne Gebhardt, on behalf of the PSE Group. – (DE) Mr President, Commissioner, thank you for taking up the Socialist Group in the European Parliament’s initiative and addressing this matter, as this issue is important to citizens.

I have my mobile phone here. I have heard from many young people that they have a lot of problems because, for one contract or another that they have completely unwittingly entered into – for ringtones for example – a sum of money is deducted each month for five, six, seven, eight months. No one goes to court for the sake of EUR 5, but if a million citizens experience the same thing and an undertaking unduly pockets EUR 5 million, that is a case of unfair competition in relation to those competitors within the European Union that behave correctly. For this reason, it is very important that we address this issue.

However, it is also important for the people, for the young people, for parents, who are confronted with this to be provided with legal instruments to truly strengthen their hand. At a time when Europe is growing together, when people are shopping on the Internet, it is important that we establish these as cross-border instruments to enable them to really be used appropriately. Therefore, in the opinion of my Group, it is precisely the group action provided for by such instruments that must clearly be examined in order to ascertain whether they can be used in the European Union. However, as you have also said, Commissioner, we need to design these instruments in such a way as to prevent the extremes seen in the US, for example, from creeping in, and instead tailor them to our own legal system. We must work on this and we wish to pursue this matter further in the coming months.

Commissioner, you know that we are on your side with regard to this matter. When it comes to enforcing the rights of citizens, we Social Democrats are always involved.

  Andreas Schwab (PPE-DE). – (DE) Mr President, Commissioner, thank you very much for the opportunity to contribute to this debate. I am pleased, Mrs Kuneva, that at the request of the Group of the European People’s Party (Christian Democrats) and European Democrats you have been instrumental in getting the proposal relating to collective redress from the DG Competition, which to start with planned to regulate this according to the practice in the US, to be developed using a horizontal approach and to actually treat everyone equally within the European Union – small and medium-sized enterprises, consumers, workers and entrepreneurs. This is an important step forward, which we wish to support in a very constructive and positive manner.

We are aware that in many individual cases, of course, a Community claim for the enforcement of collective rights appears to be more successful than individual enforcement. However, we remain convinced that the way of skimming off summary actions that protects the consumer the most is not collective redress, but public enforcement of such claims, for example by means of a skimming claim as in the German Law against unfair competition, because individual consumers will consider very carefully whether in fact to file a collective action with a lawyer for EUR 4.99 or whether it would actually be more helpful if, for example, these claims were continually monitored at public level by an ombudsman and enforced by appropriate means. Thus, with regard to the question of how to link these two elements, I believe that we need to consider carefully how we can help consumers in the most effective way, as consumers often do not have the time to go to a lawyer, but instead want to find help quickly and easily.

The second point that I see as important – and here, too, your Directorate General has done a very good job – is that the most interesting element was a discussion in the Bavarian representation in Brussels, where in response to the question of whether, by using European legal means, we can actually rule out the type of collective redress found in the US, a representative of your Directorate General clearly said ‘no we cannot’. That in our opinion means that we must not disregard this model completely. We must continue to discuss it, but to do so with great care and to include the Member States and their legal options in the discussion so that ultimately we achieve what it is we all want, and that is a real European model that is particularly attractive to consumers and that also protects small and medium-sized enterprises.

  Arlene McCarthy (PSE). – Mr President, I know the Commissioner is aware that tomorrow 4 000 consumers will go to the High Court in the UK to seek compensation for severe allergic reactions, hospitalisation and death as the result of the use of a chemical in sofas and household goods, which has now been banned in the EU. France, Sweden and Poland have reported similar cases and injuries. Across Europe there are potentially many thousands of consumers who have suffered severe injuries as a result of this toxic chemical.

I believe that citizens support European intervention when it is seen to give real help to consumers to tackle real problems. Real help in such cases means giving them the right to take action collectively, wherever they buy goods and services. So our committee launched an online consultation on the Commission proposal for consumer rights. We received many responses, many of which – from businesses and consumers – highlighted the need for effective access to cross-border remedies and redress.

There are, I believe, enough cases like the toxic sofa case with enough compelling evidence to prove that a range of options for collective redress is needed, not only to improve access to justice, but equally to deter illegal or unfair business practices. Of course in our committee we want consumers to have access to cheap, affordable means, such as ADR, but I believe today’s debate is first and foremost about identifying practical ways to give real help to our consumers and citizens, to ensure they get a fair deal, real redress and real remedies.

  Klaus-Heiner Lehne (PPE-DE). – (DE) Mr President, ladies and gentlemen, I would like to start by saying that we, too, in principle welcome the European Commission’s proposal and this Green Paper.

As previous speakers have said, there is no doubt that there is a ‘mass’ phenomenon in which relatively small losses affect a large number of people. The individual losses are small, but taken together the overall amount is large. We need an instrument to deal with this problem. In my opinion, it is right to consider something like this.

Staying with the positives, I also very much welcome the fact that, in its Green Paper, the Directorate General for Health and Consumer Protection has also placed a definite emphasis on the issue of alternative dispute resolution mechanisms. That is very different to the White Paper from the Directorate General for Competition, which was also debated in this House yesterday and which has so far completely ignored the possibility of out-of-court dispute resolution mechanisms. I think that the Directorate General for Health and Consumer Protection has come further in its Green Paper than the members of the Directorate General for Competition.

However, I would like to make two things quite clear, which in my opinion should definitely be viewed as critical comments. In a few minutes at noon, Parliament will adopt my report on the White Paper from the Directorate General for Competition. With a huge majority in this House we will demand that the European Commission choose a horizontal approach in dealing with this issue.

We must not end up with sectoral instruments: one for the area of consumer protection, one of the area of antitrust law, another one for the capital market, perhaps another one for the environment, perhaps another one for social affairs, all contradicting each other, all encroaching on the legal systems of the Member States and leading ultimately to legal confusion that can no longer be managed by any practitioner. We have often seen such examples in the past. I am just thinking about the debate on the Professional Qualifications Directive, which we later also combined in a single instrument because this fragmentation was no longer manageable. The Commission should not make the same mistake again in this case. It should advocate a horizontal approach right from the outset. That is the clear position of Parliament, as will become apparent in a few minutes.

One last point: I very much welcome the fact that we have agreed that we do not want a claims industry based on the American model with a turnover of USD 240 billion a year from which ultimately only lawyers profit and the consumers get absolutely nothing. We want the genuine rule of law in Europe and we want to keep our traditional system and our understanding of the law.

  Martí Grau i Segú (PSE). – (ES) Mr President, in a market without borders such as Europe, it is important that, as well as ensuring healthy competition, we equally zealously safeguard consumers.

Throughout the last half century, trade barriers have been breaking down for products, but largely these barriers still stand for the consumers.

Abusive commercial practices are often not reported by consumers or pursued by consumer organisations because of a general awareness that it is difficult to obtain compensation.

Collective redress saves effort when many people are affected and offers a much better chance of reaching a compensation agreement. Due to the cross-border nature of a large part of economic transactions in the European Union, this right of collective action cannot be restricted to national limits

We need a real initiative spanning all of Europe, which would have to bring about a certain degree of harmonisation or alignment among existing national systems in order to be effective. The model of choice must aim to provide easy consumer access to the system, and avoid exaggerated costs and bureaucracy.

Therefore, I consider that we must prioritise alternative conflict resolution procedures, since they offer more flexibility, as well as simplified and less costly legal proceedings.

  Reinhard Rack (PPE-DE). – (DE) Mr President, there is a large consensus in this House that we must provide better protection for consumers, particularly where, in the case of small losses for individuals, large numbers of these losses cause a problem, because they cannot see any possibility of a meaningful individual claim. The question is how should consumer protection and the improvement of the same be organised? In this regard, I think it is very important – and I am very grateful to the Commission for this – that we should quite deliberately say that we want to examine all of the alternatives and all of the aspects of this complex issue and only after careful consideration decide on the solutions.

I would like to address one aspect in this context that has not yet been mentioned. We have already found – and in future this may increasingly be the case – that, for many non-governmental organisations and many consumer protection associations, the possibility of arranging mass claims is becoming advertising material. This danger should be included quite deliberately in our considerations so that we do not ultimately help those who do not need help and leave those who do need help out in the rain.

  Meglena Kuneva, Member of the Commission. − Mr President, I should like to thank you for all your valuable opinions. In a way, I am familiar with most of them because we have been discussing, point by point, the most important parts of your concerns and hopes for having collective redress in Europe.

I should like to reiterate once again that I am totally with you in not wanting US-style class actions to be introduced into European culture. I know that is one of your most important preoccupations. As Ms McCarthy also mentioned, this is about damages. This is already happening in the UK, but this has nothing to do with what we are discussing and what I am proposing as our future steps in this direction.

In this respect, I would like to stress the following. Checking to see whether there is a real need for collective redress: yes, we are doing that and we will continue to do so after the green paper. Respecting constitutional constraints: yes. Avoiding US-style class action: yes. Ensuring that damages are compensated, including all costs incurred by the consumer but, at the same time, excluding any element of punitive damage: yes, that is what we have in mind. Discouraging unmeritorious claims, as referred to by Mr Rack: yes. Promoting alternative dispute resolution schemes: of course, because this is less time-consuming, more affordable and easier for both consumers and businesses, and also respecting subsidiarity.

With these few words, I would like to say that we are fully aware of the challenges and we are ready to face these challenges and make a good proposal, step by step, building consensus and common understanding with you.

What I really appreciate today is that all of us recognise that we have a problem and that we are ready to address this problem. So this really is a very good starting point for the next stage of debates. As this is a challenge we face, I would like in particular to stress what Mr Lehne referred to – the common approach, the horizontal approach with Commissioner Kroes. Commissioner Kroes and myself, as well as our respective services, are cooperating very closely in order to ensure that our initiatives are consistent and produce synergies.

The consistency principle does not necessarily rule out that specific situations require specific solutions. Each of the two initiatives has a distinct focus. Whereas the consumer green paper deals with redress for breaches of consumer protection law, the competition white paper is strictly about competition law infringements. Another major difference between the two initiatives is that, whereas the consumer green paper only covers redress for consumers, the redress mechanism suggested in the competition white paper is designed to benefit both consumers and businesses.

So my challenge is to achieve effective redress for our consumers and thereby restore their confidence in the market. From previous discussions, I know that the European Parliament is supporting us in our efforts to achieve this goal. Let me stress again that Parliament, together with Member States and stakeholders, will be convinced that not only is there a problem but also that an effective and balanced solution must and can be found at European level.

I should like to thank you for this fruitful debate and your valuable opinions, and I look forward to working with you on this file over the coming months.

  President. – The debate is closed.

Written statements (Rule 142)

  Ioan Lucian Hămbăşan (PPE-DE), in writing. – (RO) I would like to congratulate the European Commission’s efforts to improve the methods which consumers can use to exercise their rights throughout Europe. The options presented in the Green Paper must be discussed in detail. However, one thing that is already certain is that option No 4, which would introduce a class of ‘opt-out’ type actions, offering consumer organisations a share of the compensation payments, is not sustainable (viable).

If we want to boost consumer confidence in the internal market, we need to consider a combination of options 2 and 3. In other words, we must create a European network of national executive public authorities which will enjoy greater powers to intervene effectively in the case of international claims (abroad). Furthermore, we must review alternative mechanisms for resolving existing disputes and, if necessary, introduce a new mechanism enabling consumer rights to be applied (exercised) more effectively outside the courts too.

I would like to conclude by emphasising that we must ensure that we adopt a horizontal approach with regard to the collective redress mechanism, thereby avoiding the fragmentation of national legislation and establishing a single, common instrument for all Member States.

(The sitting was suspended at 11.35 a.m. and resumed at 12.05 p.m.)

IN THE CHAIR: MR ONESTA
Vice-President