The Representative Actions Directive (EU) 2020/1828 aims to ensure that consumers are able to protect their collective interests in the EU via representative actions, the legal actions brought by representative entities (so called qualified entities). It provides that all EU countries have in place a mechanism of representative actions. The Directive improves consumers’ access to justice while it also foresees appropriate safeguards to avoid abusive litigation.
Representative actions are actions brought by qualified entities before national courts or administrative authorities on behalf of groups of consumers to seek injunctive measures (i.e. to stop trader’s unlawful practices), redress measures (such as refund, replacement, repair) or both injunctive and redress measures.
The Directive aims to protect the collective interests of consumers in many areas of law and economic sectors, such as data protection, financial services, travel and tourism, energy and telecommunications. The Directive will apply to representative actions brought against unlawful practices (infringements) by traders as provided in the EU rules listed in its Annex I. Member States may also decide to apply the mechanism of representative actions provided by the Representative Actions Directive in other or in all areas of law.
Globalisation and digitalisation have increased the risk of a large number of consumers being harmed by the same or similar unlawful practice. Large-scale abusive practices, such as the widespread use by banks of unfair contract terms in mortgage contracts or massive travels and flight cancellations without reimbursement during the pandemic are just some examples of cases where collective interests of EU consumers might have been affected.
However, the consumers affected may feel powerless and hesitate to take legal actions. They might be confronted to obstacles such as the uncertainty about their rights or about which procedural mechanisms are available, psychological reluctance to take action or the negative balance of the expected costs relative to the benefits of the individual action. Collective redress mechanisms, such as the one provided by Directive (EU) 2020/1828 are therefore needed to overcome the obstacles faced by consumers in individual actions. These mechanisms also contribute to fairer competition as they create a level playing field for traders operating in the EU internal market. They may have strong deterrence effect towards rogue traders.
The Directive is principle based, with a fair margin of discretion left to the Member States on how to implement it. For instance Member States may choose whether the representative actions could be brought before courts or administrative authorities, or both depending of economic sector or a specific area of law. That is why the choices made by the Member States within the transposition process are crucial for its effective application.
Italy has finally implemented the EU Collective Redress Directive. It introduces a new type of action representative bodies can bring against businesses if they breach EU consumers’ protection laws. This action will grant consumers an enhanced protection against domestic and cross-border infringements in a broad range of areas such as product liability, data protection, travel and tourism, financial services, energy and telecommunications, and it will enable consumers to seek for a wide range of remedies, including declarations of law, injunctions, or financial compensation.