On 15 July 2011, the European Parliament published a draft report on collective redress (the "Draft Report") prepared for its Committee on Legal Affairs (JURI Committee). This follows the public consultation launched by the European Commission in February 2011 aimed at identifying common legal principles which any possible EU initiatives on collective redress would respect (see VBB on Competition Law, Volume 2011, No. 2). The Commission's consultation was concluded at the end of April 2011.
In a speech delivered on 12 July 2011 at the Economic and Monetary Affairs Committee of the European Parliament, Joaquin Almunia, Commissioner for Competition, stated that the Commission received over 300 replies from "institutional" stakeholders as well as over 18,000 letters from citizens. Commissioner Almunia announced that the Commission plans to issue a Communication on the general principles of collective redress by the end of this year and that the Commission will discuss how to continue action in this domain, once this Communication is adopted.
In another speech delivered on the same day at a public hearing held by the JURI Committee, Viviane Reding, Commissioner for Justice, specified that three options are left to the Commission: (i) take no further action after the adoption of this Communication if it would appear that no further intervention at the EU level is compelling; (ii) try to steer developments in the Member States by issuing a Recommendation; or (iii) adopt a EU legislative instrument, either a sectoral instrument or a more horizontal one. Following this public hearing, the European Parliament published the Draft Report.
The Draft Report contains a motion for a European Parliament resolution. The proposed resolution welcomes the Commission's horizontal consultation but stresses that the Commission has still not put forward convincing evidence in support of an action at the EU level. However, the proposed resolution recognizes that victims of unlawful practices – citizens and companies alike – must be able to claim compensation for their individual loss or damage suffered, in particular in the case of scattered and dispersed damages, where the individual cost for redress might not be proportionate to the damage suffered.
In the event that the Commission decides that action at the EU level is needed, the proposed resolution asks for a horizontal instrument. The proposed resolution further suggests that limited sectoral rules, dealing with matters such as the binding effect of decisions adopted by national competition authorities in the field of EU competition law, could be laid down, for instance, in a separate chapter of the horizontal instrument itself.
According to the proposed resolution, this horizontal instrument should be available in (i) cross-border cases (where, e.g., the defendant and victims are not domiciled in the same Member State), (ii) where the value of each individual claim does not exceed a certain threshold (proposed to be set at € 2,000), and (iii) where the rights alleged to have been infringed are granted by specified EU legislation. The proposed resolution asks the Commission to identify the exact pieces of EU legislation where problems regarding the enforcement of rights of victims exist and calls for this legislation to be listed, together with the EU competition rules, in an annex to the horizontal instrument.
The proposed resolution also reiterates that safeguards have to be put in place in order to avoid unmeritorious claims and misuse of such a horizontal instrument. The proposed resolution stresses that these safeguards should include, inter alia, the following points:
- The use of an opt-in procedure, according to which only a representative body may bring an action on behalf of a clearly identified group, and identification of the group members must have taken place before the claim is brought;
- The freedom for victims to seek the alternative of individual compensatory redress before a competent court;
- The grant of compensatory damages only (to the exclusion of punitive damages) and the rejection of contingency fees for lawyers;
- The absence of an obligation at the EU level to disclose documents to the claimants (discovery);
- The freedom of Member States to determine their own rules on allocation of costs, such that the unsuccessful party must bear the costs of the other party.
Further, the proposed resolution encourages the setting-up of alternative dispute resolution schemes at the EU level and calls for a legal obligation for the parties involved first to seek a collective consensual resolution of the claim before launching collective court proceedings.
Finally, the proposed resolution stresses that the horizontal instrument should itself lay down rules to prevent forum shopping and suggests that the courts of the place where the defendant is domiciled should have jurisdiction.
This proposed resolution has to be put to the vote of the European Parliament, which will take place after the summer recess.
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