14 March 2008

Our members are 23 national trade associations, at present from 22 European countries, covering all types of retail channels suited for sales at a distance, such as mail order, internet, telephone, interactive TV and mobile devices.

EMOTA would like to share with the European Commission its views on collective redress in general and on the benchmarks under consultation in particular.

We hope they will receive the Commission’s full attention.

A. On collective redress:

There is no evidence that Community action is needed in this field.

EMOTA should express its serious concerns vis-à-vis any initiative aiming at introducing collective redress mechanisms at European level before the need for action is proven. The principles of subsidiarity and better regulation must be respected.

Actually, the European Commission has launched 2 studies the first of which should
- assess whether consumers suffer a detriment in those Member States where collective redress mechanisms are not available,
- evaluate the effectiveness and efficiency of existing collective redress mechanisms in the EU and 
- examine whether the differing approach on collective redress in the Member States results in obstacles to trade or distortions of competition.

The second study should provide for more data on the key problems faced by consumers in obtaining redress for mass claims, and for an analysis of the economic consequences of such problems for consumers.

EMOTA is still missing the results of those studies.

If the Commission wants any support of the distance selling sector for this initiative, it should clearly tell us

-         why action at Community level is justified in the light of the possibilities/ADR mechanisms available at both European and national level,
-         which problems (and how many) have been encountered by consumers in which areas and
-         what the added value of a European collective redress system would be for the consumer in comparison to what is already at his/her disposal.

The following remarks on the Commission’s suggested benchmarks must be considered as preliminary ones and by no way be interpreted as recognition of the need for Community action in this area.

B. On the benchmarks:

·         The mechanism should enable consumers to obtain satisfactory redress in cases which they could not otherwise adequately pursue on an individual basis.

We wonder about what is meant by “satisfactory” redress. There can be many reasons why a consumer does not feel satisfied with the treatment of his claim.

·         It should be possible to finance the actions in a way that allows either the consumers themselves to proceed with a collective action, or to be effectively represented by a third party. Plaintiffs' costs for bringing an action should not be disproportionate to the amount in dispute.

It is not clear who could be such third party. This is however an important point. There should not be a financial incentive for uninvolved third parties to take action.

·         The costs of proceedings for defendants should not be disproportionate to the amount in dispute. On the one hand, this would ensure that defendants will not be unreasonably burdened. On the other hand, defendants should not for instance artificially and unreasonably increase their legal costs. Consumers would therefore not be deterred from bringing an action in Member States which apply the "loser-pays" principle.

We agree that the costs of proceedings for defendants should not be disproportionate to the amount in dispute and that there should be no unreasonable burden for them.

·         The compensation to be provided by traders/service providers against whom actions have been successfully brought should be at least equal to the harm caused by the incriminated conduct, but should not be excessive as for instance to amount to punitive damages.

We welcome this clarification regarding the avoidance of punitive damages. Nevertheless, we question whether the individual nature of claims for compensation is suited for collective redress. The individual claims on which the collective redress is based, must be fit for dealing with in a collective action in the way that they are common and equal for a certain group of consumers or all consumers and fit to be bundled in one.

·         One outcome should be the reduction of future harm to all consumers. Therefore a preventive effect for potential future wrongful conduct by traders or service providers concerned is desirable – for instance by skimming off the profit gained from the incriminated conduct.

There is a punitive element in this statement which goes beyond the aforesaid compensation equal to the harm caused by the incriminated conduct.

·         The introduction of unmeritorious claims should be discouraged.

Yes.

· Sufficient opportunity for adequate out-of-court settlement should be foreseen.

Absolutely. In general, collective actions should not be brought before the court unless the plaintiff can prove that he has made reasonable efforts to come to an out-of-court settlement. There are good ADR mechanisms in place, both at national and European level: by way of example, the European Consumer Centres Network (ECC-Net) is there to promote consumer confidence by advising citizens on their rights as consumers and providing easy access to redress, particularly in cases where the consumer has made a cross-border purchase.

·         The information networking preparing and managing possible collective redress actions should allow for effective "bundling" of individual actions.

The notion of “information networking” is unclear.

·         The length of proceedings leading to the solution of the problem in question should be reasonable for the parties.

Of course.

C. Concluding remarks:

There is a series of further technical details to be considered in this context. For instance, we wonder whether such EU-wide mechanism should apply to cross-border cases only, or not. Further, there is the question of compatibility with other, existing systems and with the Brussels regulation on judicial competences.

Consumer confidence and satisfaction are key elements in distance selling business. Therefore, companies are principally ready to find costumer-friendly solutions to problems. We are not aware of any demand by consumers for a collective redress system so as to help them to get their rights enforced.