Claims Ireland

The Independent Service that Assesses Compensation Claims

EU: Group lawsuits to recover losses should be allowed

19-Oct-2010


CONSUMERS who suffer food poisoning from contaminated products that breach EU safety standards or people overcharged for services by price-setting cartels should be able to take class-actions to recover their losses, according to the European Commission.

They estimate consumers lose out on more than €20 billion a year in compensation from price-fixing and similar arrangements by cheating firms.

However, US-style multi-million euro compensation is being ruled out by the commission, which wants legislation that will compensate people for what they have lost rather than to penalise business.

The Consumers Association of Ireland has been campaigning for the introduction of such legislation here, saying people are being frustrated or discouraged from taking action against traders when they have a genuine complaint.

Previous attempts to introduce legislation that would give citizens across the EU the right to pursue claims against companies in other member states were shelved because of fears that it would result in massive US-style damages.

Victims banding together to take a business to court is relatively rare in Europe and Ireland, as the legislation makes any such attempt almost impossible.

Competition Commissioner Joaquin Almunia said he supported effective compensation for everyone who has suffered damages and that group claims are cheaper and more effective than a large number of individual claims.

He gave examples of French mobile operators who created a cartel and overcharged up to 20 million subscribers for two years. A consumer association tried to represent a group of them in court, but because of the French rules, did not succeed.

Similarly, Dutch brewers operating as a cartel raised the price of beer for a lot of bars and cafes in the Netherlands. The establishments tried to bring the brewers to court, but failed under Dutch law.

"In both cases the aggregate economic harm was large but the harm caused to each victim was too small to justify individual and separate lawsuits".

A public consultation will be launched next month and will run until the end of February.