Updated: October 2019
To avoid the abovementioned effects a provision could be inserted that compels qualified entities to collect the
mandate of individual consumers (so called ‘mandatory opt in’) or to set a minimum number of consumers to
trigger the procedure, so that entities will not be able to trigger an action if they only represent a small part of
the consumers involved.
Another feasible solution is the adoption of provisions asking qualified entities to comply with certain criteria,
in order to prove that they are not ‘letter box companies’ (e.g., they can be asked by a court to show that their
statutory aim is consumer protection, legitimate interest must be demonstrated and viable, non-profit making
character does not protect against abuse, ad hoc entities should not be allowed – i.e. entities established just
for that specific proceeding - supervision should be established, no regional entities).
Other suggestions would be to stipulate that for a procedure to be initiated the effects of an infringement should
still be ongoing, and in case of imminent infringements, the procedures should only be allowed when proof of
serious harm can be provided. In doing so, there will be no possibility to start a procedure in case of nonmaterial breach, avoiding specious and abusive action.
ESBG welcomes many of the amendments the European Parliament made to the Commission proposal, which goes in the
direction ESBG pointed, and encourages the European Parliament to keep them during trialogues, such as:
Proof of existence in the entity of a legitimate interest to protect consumer (AM 43);
Duty of the court to scrutiny existence and legitimacy of interest of the qualified entity in protecting consumers
Public reporting obligation on qualified entities (AM 47);
Exclusion of the possibility to create ‘ad hoc’ qualified entities (AM 49).
Aim of the Directive not to impair national legislation (AM 34); • Discovery process: it is now provided for both parts (AM 88,89,90);
Probationary value of domestic and cross-border final decisions: the probationary value of final decisions
has been downgraded in comparison to what was provided in the Commission proposal, as they will have
value of evidence and no longer that of irrefutable/rebuttable presumption (AM 83,84,85);
Punitive damages: they have been prohibited (AM 64 and 67);
Third party’s litigation funding: actions will be declared inadmissible, if the court found out that the funding
by the third party would influence decisions of the entity (AM 70, 71).
On another note, ESBG found that some new provisions inserted in the European Parliament report are promising, but still need
further fine-tuning. ESBG therefore supports that Council and European Parliament keep the suggested view during the coming
negotiations to ensure that:
Mandatory opt in: this option is finally provided, but it is left at the discretion of Member States. ESBG would like to
have it compulsory (AM 60, 61);
Providing proof of actual loss or damage in case of injunctions order: the wording is unclear and the
fact that such a proof is required or not is still open to interpretation (AM 55). The wording should be
rephrased in order to avoid any doubt.
Other issues ESBG cares about have not been
addressed by the European Parliament, such as:
Limiting the possibility for the entity to initiate
a procedure only if the effect of the
infringement are still ongoing anymore;
Granting competence only to Courts;
Setting a minimum number of consumer to
start the procedure
Duty for the entities to be legally qualified and
proof of stability/seriousness (e.g. sufficient HR
and financial resources, years of existence not
Forbidding regional entities.
Even though sympathetic with the initiative, ESBG
fears that effective instruments of collective
redress, already provided by many Member
States’ legal systems can be impaired by the
In addition, ESBG believes that the EU rules set
too much of a low threshold for entities to be
entitled to trigger a collective redress (and then
become ‘qualified entities’, according to the new
EU legal definitions), leading to abuse of the right
to a collective action or to frauds or even
Moreover, the EU rules also introduce new
procedures to be complied by traders, bringing a
great risk to overburden SMEs.
The ESBG insists on the importance of having these provisions in the new EU legislation on collective redress,
as they are pivotal in avoiding abuse of right, frauds and specious actions from entities. Therefore, we invite
the Council to take the following observations on board both in its General Approach and during the negotiation
with the European Parliament.
ESBG believes that the proposed, new set of EU
rules could undermine the effectiveness and the
legitimacy of the national judicial systems when it
comes to consumers’ protection, by, for instance,
granting competence not solely to the courts, but
also to administrative authorities, and/or by giving
value of presumption to final decisions adopted
by a judicial or administrative authority from a
different Member State, and it believes that
these provisions should be removed. In addition,
ESBG members consider that the proposed,
new EU rules could diminish the effectiveness of
consumer protection and facilitate abuses and
frauds if no additional fine-tuning is made.
Also, ESBG believes that the current proposal on
collective redress is unbalanced in favour of
plaintiff, putting an excessive burden on
companies, especially SMEs. For instance, the
Commission proposal provides a discovery
process (i.e. the obligation for traders to disclose
any evidence pertinent to the action that ‘lies in its
control’) only in favour of plaintiff, as well as
punitive damages (i.e. an amount of paid damages
to the victim that exceeds the loss he/she
suffered, having the only aim to ‘punish’ traders’).
To enable a fair and well-balanced regulatory
framework, such provisions should be removed.
The idea of providing an EU collective redress mechanism stems from the “New Deal for Consumers”,
an initiative launched by the Commission in 2018. This initiative provided two legislative proposals, amongst
which the proposal for a Directive on representative actions for the protection of the collective interests of
consumers and repealing Directive 2009/22/EC (hereinafter referred to as the ‘proposal on collective redress’).
The European Parliament responsible Committee (JURI, MEP Rapporteur Didier, EPP, while IMCO was the
associated Committee) already adopted its report in December 2018 and its position has been endorsed by
the European Parliament plenary in March 2019, which also voted on the negotiation mandate.
However, as of May 2019, the Council has still to adopt its General Approach, and therefore, trialogues between
the institutions will start only after the Council reaches a position.