The European Union's consumer chief dispelled industry fears on Saturday that she intends to introduce US-style class action lawsuits across the bloc next year as part of her strategy to strengthen consumer rights.
EU Consumer Protection Commissioner Meglena Kuneva announced in March that she hopes to introduce a new system of "collective redress" aimed at giving European consumers more power to bring claims against providers of faulty goods or services.
But she vehemently dismissed claims that she proposes to copy the United States' legal system, where class action laws have allowed lawyers to create a thriving litigation industry seeking colossal damages against companies.
"To those who have come all the way to Lisbon to hear the words "class action", let me be clear from the start. There will not be any. Not in Europe, not under my watch," Kuneva told a meeting of business leaders, consumer groups and leading law firms in the Portuguese capital.
European employers group BusinessEurope - an organisation that represents 20 million small, medium-size and large companies - opposes the US model. "There are problems, but we must be careful not to rush into any decisions and we must look at the current alternatives...," BusinessEurope director Joelle Simon told the meeting, noting arbitration courts are dealing with 90 percent of complaints.
The US system allows individuals to aggregate claims into one lawsuit, giving consumers the incentive to pursue compensation - often for small sums - when it would be too costly or time-consuming to take action on their own. But class actions have been criticised in the United States as enabling enterprising law firms to win big fees while often generating little return for the individuals concerned.
Instead Kuneva said she intends to introduce what she describes as "group action", whereby a group of people with the same complaint about the same company across the 27-member bloc come together, but are represented by their national consumers' body or a new EU consumers regulatory body.
"Options exist, which range from a market-led approach to the establishment of an EU consumer collective redress scheme or out-of-court redress scheme," Kuneva said.
Some EU lawmakers in the European Parliament and consumer groups say large USlaw firms are waiting in the wings to set up shop in Europe unless Kuneva acts swiftly. "My opinion is class action in its pure sense can't work in the EU due to differences in our systems and traditions such as we don't have juries in these matters or award punitive damages," British Liberal MEP Diana Wallis told Reuters.
Fifteen EU countries have no provisions for joint consumer action and in those countries where they do exist, joint action can only take place within their own borders.
According to an EU survey earlier this year, just 26 percent of consumers buy goods and services from businesses established in other EU states and only 6 percent make cross-border purchases via the Internet due to what retailers describe as "perceived insecurity of transactions." Kuneva said bolstering EU consumer confidence will encourage the bloc's 500 million citizens to spend more money across national borders. It would help push up EU retail spending, which represents about 58 percent of gross domestic product, towards the US rate of over 70 percent.
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