Thanks to the single market, EU consumers have so far enjoyed
a broad choice of quality products, competitive prices and high safety
standards. Today's agreement paves the way for granting consumers
throughout the EU the right to seek effective judicial protection
collectively when traders harm consumers by violating EU laws.
Christine Lambrecht, German Federal Minister of Justice and Consumer Protection
The directive requires member states to put in place a system of
representative actions for the protection of consumers’ collective
interests against infringements of Union law. It covers actions for both
injunctions and redress measures.
It empowers qualified entities designated as such by member states to
seek injunctions and/or redress, including compensation or replacement,
on behalf of a group of consumers that has been harmed by a trader who
has allegedly infringed one of the EU legal acts set out in the annex to
the directive. These legal acts cover areas such as financial services,
travel and tourism, energy, health, telecommunications and data
protection.
The directive distinguishes between qualified entities entitled to
bring actions in the member state where they have been designated
(domestic representative actions) and those entitled to bring actions in
any other member state (cross-border representative actions). For
domestic actions a qualified entity will have to fulfil the criteria set
out in the law of its member state of designation, whereas for
cross-border actions it will have to fulfil the harmonised criteria set
out in the directive.
As a safeguard against abusive litigation, the directive provides
clear rules on the allocation of judicial costs in a representative
action for redress based on the ‘loser pays’ principle. Furthermore,
with a view to avoiding conflicts of interest, it imposes on qualified
entities a number of transparency requirements, in particular as regards
their funding by third parties.
The directive will apply to representative actions brought on or after the date of its application.
Next steps
In line with the early second reading agreement reached last June,
the European Parliament should approve the Council’s position at first
reading before the end of the year. The directive will then be deemed to
have been formally adopted. It shall enter into force on the twentieth
day following that of its publication in the Official Journal of the
European Union. Member states will have 24 months from the entry into
force of the directive to transpose it into national law, as well as an
additional 6 months to start applying these provisions.
Background
The directive was proposed by the Commission in April 2018 as part of
the Commission’s ‘New deal for consumers’ package, which aimed to
ensure fair and transparent rules for EU consumers. The directive on the
better enforcement and modernisation of EU consumer protection rules,
which was also proposed under the same package, was adopted on 27
November 2019.