Green Paper On Consumer Collective Redress
Date: 2008-11-27
Institutions: European Commission
Subjects: Community acquis, civil proceedings, competition, consumer policy, consumer protection, public contract, right of action

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.11.2008 
COM(2008) 794 final 

GREEN PAPER 

On Consumer Collective Redress 

(presented by the Commission) 

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GREEN PAPER 

On Consumer Collective Redress 

INTRODUCTION 

in 

the  markets  and 

In  an  increasingly  consumer-oriented,  globalised  and  digital  economy,  a  single 
market  that  responds  efficiently  to  consumer  demands  also  helps  to  deliver  an 
innovative and competitive economy. Encouraging active participation of citizens in 
the  good  functioning  of  markets  helps  protect  healthy  competitive  conditions.  In 
particular,  access  to  redress  by  consumers  when  consumer  rights  are  violated  by 
their 
traders  promotes  consumer  confidence 
performance. 
The  Commission  Consumer  Policy  Strategy1  fixes  the  objective  of  promoting  the 
retail internal market by making consumers and retailers as confident shopping cross-
border  as  in  their  home  countries  by  2013.  This  objective,  however,  can  only  be 
achieved if consumers know that if they have a problem, their rights will be enforced 
and  they  will  receive  adequate  redress.  76%  of  the  consumers  who  have  low 
confidence in cross-border purchasing feel that it is very or fairly important for their 
confidence to be able to bring a cross-border case to their national courts under their 
national  law2.  This  points  to  a  lack  of  trust  in  other  legal  systems,  both  regarding 
substantive rights and the means of satisfactory redress. The proposal for a Directive 
on Consumer Rights3 will address the issue of legal certainty on substantive rights. 
However, the efficacy of cross-border redress needs to be addressed independently. 

improves 

In  its  Strategy,  the  Commission  underlined  the  importance  of  effective  redress 
mechanisms  for  consumers  and  announced  its  intention  to  consider  action  on 
consumer collective redress. The European Parliament, the Council and the European 
Economic  and  Social  Committee  welcomed  the  Commission's  intention  to  improve 
consumer  redress  and  in  particular  to  consider  action  on  collective  redress4.  The 
OECD  in  its  recommendation  on  consumer  dispute  resolution  and  redress5 
encouraged  its  member  countries  to  provide  consumers  with  access  to  different 
means of redress, including collective redress mechanisms. 

COM (2007) 99 final 
Flash Eurobarometer (EB) 57.2 – Spring 2002 
COM (2008) 614 final 
In  their  resolutions  on  the  Consumer  Policy  Strategy,  the  EP  asked  the  Commission,  after  careful 
assessment  of  the  issue  of  consumer  redress  in  the  Member  States  "…to  present,  as  appropriate,  a 
coherent  solution  at  European  level,  providing  all  consumers  with  access  to  collective  redress 
mechanisms  for  the  settlement  of  cross-border  complaints"  (A6-0155/2008);  the  Council  invited  the 
Commission "…to carefully consider collective redress mechanisms and come forward with the results 
of on going relevant studies, in view of any possible proposal or action", OJ C 166, 20.7.2007, p.1-3. 
The  EP  request  was  re-iterated  in  the  resolution  on  the  Green  Paper  on  retail  financial  services  (A6-
0187/2008). The EP committee of inquiry on Equitable Life also had requested the Commission "… to 
investigate  further  the  possibility  of  setting  up  a  legal  framework  with  uniform  civil  procedural 
requirements for European cross border collective actions…" (A6-0203/2007). The EESC in its own-
initiative opinion of 14 February 2008 INT-348 – CESE 258/2008 put forward proposals in respect of 
the legal arrangements for CR mechanisms 
http://www.oecd.org/dataoecd/43/50/38960101.pdf 

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The purpose of this Green Paper is to assess the current state of redress mechanisms, 
in  particular  in  cases  where  many  consumers  are  likely  to  be  affected  by  the  same 
legal  infringement,  and  to  provide  options  to  close  any  gaps  to  effective  redress 
identified in such cases. As economic market integration at retail level increasingly 
leads to consumers participating in retail markets beyond their borders and therefore 
being  affected  by  the  same  practices  as  national  shoppers,  it  is  not  found  useful  to 
make  a  distinction  between  cross-border  mechanisms  for  mass  claims  and  purely 
national  mechanisms.  Another  issue  arising  is  whether  instruments  possibly  to  be 
chosen would apply only to cross-border or also to national cases. 

The  present  Green  Paper  does  not  address  collective  redress  for  victims  of  EC 
antitrust  law  infringements  because  of  the  specific  nature  of  antitrust  law  and  the 
wider  scope  of  victims  which  includes  also  SMEs.  In  this  regard,  the  Commission 
has  suggested,  in  its  White  Paper6,  a  set  of  specific  measures  to  ensure  that 
consumers as well as businesses across the EU Member States can obtain effective 
compensation for the harm they suffered as a result of infringements of EC antitrust 
law. These measures include two collective redress mechanisms that are tailored to 
overcome 
the  particular  difficulties  encountered  by  victims  of  antitrust 
infringements,  i.e.  an  opt-in  collective  action  for  several  victims  who  expressly 
decide  to  combine  their  individual  claims  in  a  single  action  and  a  representative 
action, which can be brought by qualified entities such as consumer organisations or 
state bodies on behalf of a group of victims.  

OUTLINE OF THE PROBLEM  

As mass consumer markets expand in size and even become cross-border, very large 
numbers of consumers can be harmed by the same or a similar practice of a trader. 
The effect of a malpractice may be so widespread as to distort markets. For example, 
UK  banks  are  under  investigation  for  having  systematically  imposed  excessive 
charges  on  several  hundred 
thousand  consumers  whose  accounts  became 
overdrawn7.  An  EC  led  enforcement  action  across  the  European  Union  revealed 
widespread abuse in the market for ring tones8: around 60% of websites checked had 
the  obligatory  pre-contractual  information,  but  hid  it  or  presented  it  in  small  print. 
Advertisements claimed to offer "free" ringtones but acceptance of the offer resulted 
in payment and sometimes even a subscription.  

Because  infringements  of  consumer  rights  that  affect  a  very  large  number  of 
individuals  may  create  distortions  in  markets,  the  Green  Paper  focuses  on  the 
resolution  of  mass  claim  cases  and  aims  at  providing  effective  means  of  collective 
redress for citizens across the EU. This means mechanisms by which a large group of 
consumers  affected  by  a  single  trader's  practice  can  effectively  obtain  redress 
wherever the trader is located within the EU.  

White  Paper  on  damages  actions  for  breach  of  the  EC  antitrust  rules,  COM  (2008)  165  final, 
http://ec.europa.eu/comm/competition/antitrust/actionsdamages/documents.html 
http://www.oft.gov.uk/advice_and_resources/resource_base/market-studies/current/personal/personal-
test-case 
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/1169&format=HTML& 
aged=0&language=EN 

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Currently,  when  consumers  affected  by  a  malpractice  want  to  pursue  a  case,  they 
face barriers9 in terms of access, effectiveness and affordability. This is particularly 
true  for  claims  that  involve  small  amounts.  The  sectors  in  which  consumers  find  it 
most  difficult  to  obtain  redress  for  mass  claims  are  financial  services  (39%  of 
documented  cases),  telecommunication  (12%),  transport  (8%)  as  well  as  package 
travel and tourism (7%)10. These are sectors where consumers are increasingly likely 
to engage in cross-border activities. 

Consumers  can  always  go  to  court  to  obtain  individual  redress.  Mass  claims  could 
then in principle be resolved with a large number of individual claims. But there are 
barriers  which  de  facto  impede  European  consumers  from  obtaining  effective 
redress.  These  are  in  particular  high  litigation  costs  and  complex  and  lengthy 
procedures.  One  out  of  five  European  consumers  will  not  go  to  court  for  less  than 
EUR 1000. Half say they will not go to court for less than EUR 200.11 High costs 
and the risk of litigation make it uneconomic for a consumer to pay court, lawyer 
and experts fees that may exceed the compensation. Procedures are so complex and 
lengthy that consumers may find themselves entangled without any clear perception 
of  when  (or  if)  their  case  will  be  satisfactorily  resolved.  Only  30%  of  consumers 
think that it is easy to solve disputes through courts12.  

In  some  instances,  but  not  all,  consumers  can  have  access  to  individual  alternative 
dispute  resolution  mechanisms.  The  state  of  these  mechanisms  across  the  EU  is 
fragmented.  Access  to  it  varies  across  Member  States  and  even  within  Member 
States  it  may  vary  by  sector,  being  for  instance  available  only  for  specific  sectors. 
Only  39%  of  European  consumers  believe  that  resolving  disputes  with  traders 
through alternative dispute resolution mechanisms is easy13. 

Consumers  also  lack  awareness  of  the  different  types  of  enforcement  and  redress 
tools that are available, particularly if they go cross-border, either physically or via e-
commerce. There also seems to be a lack of faith in current systems that discourages 
complaints  and  therefore  prevents  consumers  from  obtaining  redress.  51%  of 
consumers  who  complained  to  a  trader  and  were  not  satisfied  with  the  way  their 
complaint was dealt with, did not take further action.14 A study by the UK Office of 
Fair  Trading  on  consumer  detriment  shows  that  only  62%  of  consumers  harmed 
complain on average in the UK and this percentage drops to 54% for purchases less 
than  GBP  1015.  When  asked  what  problems  they  might  encounter  when  shopping 
cross-border, consumers rated highest the difficulties of resolving problems (33%)16.  

12. 

Thirteen Member States currently have judicial collective redress mechanisms. These 
mechanisms  are  very  different  across  countries  and  have  diverse  results.  The  study 

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Cf.  Study  regarding  the  problems  faced  by  consumers  in  obtaining  redress  for  infringements  of 
consumer  protection  legislation,  and  the  economic  consequences  of  such  problems  (Problem  Study), 
p.42, http://ec.europa.eu/consumers/redress_cons/collective_redress_en.htm 
Problem Study, p.21 
Special EB on Access to Justice, October 2004, p.29; these figures concern only EU-15 
EB survey on Consumer Protection in the Internal Market, September 2008 
However, the situation is different from one country to another. The Netherlands is the country with the 
highest percentage of consumers confident in ADR (57%), followed by Nordic countries (Denmark and 
Finland 47%, and Sweden 45%). On the other hand, Bulgaria has the lowest figure (12%), together with 
Slovakia (17%) and Portugal (19%). See footnote 12 
See footnote 12 
See http://www.oft.gov.uk/advice_and_resources/publications/reports/consumer-protection/ 
See footnote 12 

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launched by the Commission17 and the consultations conducted18 show that the vast 
majority  of  the  existing  collective  redress  mechanisms  tend  to  have  some  elements 
that work, and some that do not. Almost all existing collective redress mechanisms 
have  some  added  value  compared  to  individual  judicial  redress  and  alternative 
dispute  resolution  schemes19.  But  their  efficiency  and  effectiveness  could  be 
improved. The mechanisms have been applied in relatively few cases.20 The lowest 
number of consumers using a collective redress mechanism is in Germany where on 
average only four in ten million people every year have participated in a collective 
redress action.21 The collective redress mechanism that reached the most people in a 
single  case  is  that  of  Portugal  where  a  case  against  a  telecommunication  company 
gave  redress  to  some  3  million  consumers  affected  by  the  same  overcharging.  The 
compensation  to  these  consumers  was  largely  in  kind  and  non-monetary.  The 
average  benefit  to  consumers  in  collective  redress  mechanisms  have  ranged  from 
EUR 32 in Portugal to EUR 332 in Spain.22 

Elements which contribute to the effectiveness and efficiency of a collective redress 
mechanism  include  political  and  financial  support  from  governments,  high  media 
coverage  (which  can  act  as  an  incentive  for  traders  to  settle  and  can  also  help  in 
finding  financing  companies;  in  general  it  can  have  a  deterrent  effect  on 
wrongdoers), no or low litigation fees for consumers, no or reduced litigation fees for 
representatives,  flexible  solutions  regarding  lawyers'  fees  and  bypassing  the 
formalities of normal civil procedures.  

On  the  other  hand,  elements  which  hinder  the  effectiveness  and  efficiency  of  a 
collective  redress  mechanism  include  insufficient  funding,  lack  of  expertise  and 
resources  of  consumer  organisations,  the  fact  that  the  risk  of  paying  high  litigation 
fees  often  falls  on  consumer  organisations,  the  complexity  of  collective  redress 
mechanisms,  very  strict  prerequisites  regarding  admissibility  and  standing  (which 
deter  from  access  to  the  mechanisms),  the  length  of  proceedings  and  the  ability  of 
defendants  to  delay  proceedings,  lack  of  media  coverage,  the  inability  to  distribute 
the  proceeds  of  the  actions  effectively,  the  dependence  of  alternative  dispute 
resolution  mechanisms  on  the  trader's  willingness  to  cooperate  and  the  use  of  one 
collective redress mechanism for all claims, without tailoring the mechanism to the 
value, needs and specificities of each particular claim.  

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As  a  consequence  of  the  weaknesses  of  the  current  redress  and  enforcement 
framework  in  the  EU,  a  significant  proportion  of  consumers  who  have  suffered 
damage do not obtain redress. In mass claim cases that affect a very large number of 

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part 

p.47 

Study), 

(country 

Study on the Evaluation of the effectiveness and efficiency of CR mechanisms in the European Union 
(Evaluation 
reports); 
http://ec.europa.eu/consumers/redress_cons/collective_redress_en.htm 
The Commission organised a workshop in Leuven in June 2007 and it held three more workshops with 
consumers,  business  stakeholders  and  legal  practitioners  in  May-June  2008.  At  the  Portuguese 
Presidency Conference on CR in Lisbon in November 2007, a consultation on draft benchmarks for an 
effective and efficient CR system was launched, 
http://ec.europa.eu/consumers/redress_cons/collective_redress_en.htm 
Evaluation Study, p.93 
326  cases  were  documented.  A  number  of  mechanisms  (the  Bulgarian,  Danish  and  Finnish  group 
actions and the Greek test case procedure) were introduced too recently to be properly evaluated. The 
Italian mechanism is under revision  
Evaluation Study, p.116 
Evaluation Study, p.116. These figures exclude the results for the Netherlands which are distorted by a 
few cases which involve large companies and significant amounts  

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consumers, although sometimes the harm may be low for the individual consumer, it 
can be high for the size of the market. As these markets become more cross-border in 
nature, effective cross-border access to the mechanisms of redress become necessary. 
Today, close to 10% of collective redress claims have a cross-border element23. For 
example,  a  UK  company  recently  distributed  scratch  cards  in  Irish  newspapers 
offering "free" holidays, whereas in reality this offer cost each consumer a minimum 
of EUR 13024. With further integration of the markets this percentage is likely to rise. 

EXISTING EUROPEAN INSTRUMENTS 

Some  instruments  specifically  designed  for  consumer  redress  already  exist  at 
European  level.  There  are  two  Commission  Recommendations25  to  facilitate 
alternative  dispute  resolution  through  simple  and  inexpensive  procedures.  Both 
recommendations  set  out  principles  for  the  good  functioning  of  out  of  court 
settlements.  The  Injunctions  Directive26  provides  a  procedure  enabling  consumer 
associations and public authorities to stop infringements abroad. Public enforcement 
was  recently  strengthened  through  the  Regulation  on  Consumer  Protection 
Cooperation27  which  allows  named  national  authorities  to  request  another  Member 
State  authority  to  act  on  an  infringement.  Neither  the  Injunction  Directive  nor  the 
Consumer Protection Cooperation Regulation provide for consumer compensation. 

The  overall  performance  of  the  existing  consumer  redress  and  enforcement  tools 
designed  at  EU  level  is  not  satisfactory.  The  Consumer  Protection  Cooperation 
Regulation is relatively new but indicates that public cross-border enforcement is not 
yet  satisfactory.  Alternative  dispute  resolution  mechanisms  are  not  available  to 
consumers in all Member States or in all sectors. For example, in nearly no Member 
State there is an alternative dispute resolution schemes in the airline transport sector. 
Only  two  cross-border  cases  have  been  brought  since  the  Injunctions  Directive 
entered into force in 199828, the main reasons being the financial risk for the entity 
bringing  the  case  as  well  as  the  complexity  and  diversity  of  national  injunctive 
proceedings.  

Since  there  is  evidence  that  commercial  malpractice  affecting  multiple  consumers 
often  goes  unsolved  and  since,  where  it  exists,  collective  redress  can  potentially 
provide a useful complementary means of reducing consumer detriment, the present 
Green  Paper  focuses  on  collective  redress  as  a  tool  that  could  help  solve  the 
problems that consumers face in obtaining redress for mass claims both in national 
and cross-border contexts. 76% of consumers would be more willing to defend their 

Evaluation Study, p.44 
Problem Study, Annex 3 
Commission Recommendation 98/257/EC on the principles applicable to the bodies responsible for the 
out-of-court  settlement  of  consumer  disputes,  OJ  L  115,  17.04.1998,  p.  31  and  Commission 
Recommendation  2001/310/EC  on  the  principles  for  out-of-court  bodies  involved  in  the  consensual 
resolution of consumer ADR, OJ L 109, 19.04.2001, p.56 
Directive 98/27/EC of the European Parliament and of the Council of 19 May 1998 on injunctions for 
the protection of consumers' interests, OJ L 166, 11.6.1998, p. 51 
Regulation (EC) No 2006/2004 of the European Parliament and of the Council of 27 October 2004 on 
cooperation between national authorities responsible for the enforcement of consumer protection laws, 
OJ L 364, 9.12.2004, p.1 
Report 
the  Commission  concerning 
from 
http://ec.europa.eu/consumers/enforcement/injunctions_en.htm 

Injunctions  Directive, 

the  application  of 

the 

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rights in court if they could join together with other consumers29. Businesses would 
avoid losses through unfair competition, gain more legal certainty and reduce some 
of  their  litigation  costs  by  being  able  to  bundle  the  claims  against  them30.  At  the 
same  time,  the  necessary  safeguards  have  to  be  taken  not  to  burden  business  with 
unmeritorious claims, punitive damages, or excessive costs. 

OPTIONS 

The  current  consumer  redress  situation  in  the  EU  is  unsatisfactory  and  is  not 
allowing large numbers of consumers affected by a single breach of the law to obtain 
redress  and  compensation.  The  Commission  has  identified  a  number  of  options 
which  could  be  used  to  address  this  issue,  which  is  important  for  the  protection  of 
healthy  and  integrated  retail  markets  within  the  EU.  The  goal  is  to  have  effective 
mechanisms  that  work  for  both  consumers  and  traders.  The  options  below  are 
presented  according  to  an  increasing  degree  of  EU  involvement.  These  options  as 
well as different elements within the options could also be combined.  

Option 1 – No EC action 

This  option  involves  no  new  EC  action  and  relies  on  the  existing  national  and  EC 
measures  to  achieve  adequate  redress  for  consumers.  National  judicial  redress 
schemes,  either  individual  or  collective,  coupled  with  alternative  dispute  resolution 
mechanisms  and  complaint-handling  systems  set  up  by  traders/services  providers, 
provide redress for consumers with mass claims. The extent to which this redress is 
effective varies, depending on the different systems in place. 

At  EU  level,  legal  instruments  capable  of  helping  to  resolve  cross-border  mass 
claims  will  either  have  to  be  implemented  in  the  near  future  or  come  into  effect 
shortly.  The  Mediation  Directive31  must  be  implemented  by  2011,  and  the 
Commission  will  report  on  its  application  in  2016.  The  European  Small  Claims 
Regulation32 will apply from 1 January 2009, and the Commission will report on its 
application  in  2014.  However,  both  instruments  have  limited  application  to  mass 
claims. The Mediation Directive can only help in cases where the parties are willing 
to  mediate.  The  Small  Claims  Regulation  concerns  cross-border  disputes  not 
exceeding  EUR  2.000  and  whether  it  applies  to  collective  redress  will  depend  on 
national  procedural  rules.  These  rules  may  allow,  for  example,  the  possibility  of 
grouping  together  several  individual  claims  against  the  same  trader,  each  not 
exceeding the threshold envisaged by the Regulation. It may be desirable to await the 
assessment of the impact of these EU measures on mass claims.  
Option 1 would mean waiting until more information33 is available on the effect of 
the  national  and  EU  measures  in  place  or  about  to  be  implemented.  It  has  the 

This figure even presents a slight increase compared with the previous EB in 2006 (74%). See footnote 
12 
Problem Study, p.96 
Directive 2008/52/CE of the European Parliament and of the Council of 21 May 2008 on certain aspects 
of mediation in civil and commercial matters, OJ L 136, 24.5.2008, p.3 
Regulation  (EC)  No  861/2007  of  the  European  Parliament  and  of  the  Council  of  11  July  2007 
establishing a European Small Claims Procedure, OJ L 199, 31.7.2007, p.1 
In  order  to  gather  evidence  about  the  functioning  of  the  different  redress  systems,  the  Consumer 
Markets Scoreboard will be used to present data collected on redress issues 

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advantage of not imposing any additional implementation costs for Member States or 
businesses. It has the disadvantage of leaving different means of redress available to 
consumers, depending on their place of residence or on the Member State where the 
transaction took place or the damage occurred. This fragmented situation could lead 
to distortions of competition and give consumers across the EU a different level of 
redress. This option would possibly not provide satisfactory redress to a number of 
consumers concerned or remedy obstacles to the Single Market.  

Option 2 – Cooperation between Member States 

This option involves developing cooperation between the Member States in order to 
ensure  that  consumers  throughout  the  EU  are  able  to  use  the  collective  redress 
mechanisms that are available in different Member States. This option would ensure 
that Member States having a collective redress mechanism open up their respective 
mechanisms to consumers from other Member States and that Member States who do 
not  have  a  collective  redress  mechanism  establish  one.  This  could  be  achieved 
through  either  a  Recommendation  or  a  Directive.  In  parallel,  a  Recommendation 
could lay down a set of benchmarks which all Member States systems should satisfy.  

Thirteen  Member  States  currently  have  some  form  of  collective  redress 
(representative  action,  group  action,  test  case  mechanism).  These  actions  can  be 
brought  by  consumer  organisations,  individuals  or  public  bodies.  For  example,  if  a 
trader in a Member State having a representative action committed an infringement 
of  consumer  protection  legislation,  the  Member  State  concerned  should  ensure  that 
the competent national entity also represents consumers from other Member States, 
or  should  allow  entities  from  other  Member  States  to  bring  a  representative  action 
before  its  courts.  In  the  case  of  a  group  action,  the  relevant  Member  State  should 
allow  consumers  from  other  Member  States  to  join  actions  brought  by  its  own 
consumers or  should  allow consumers from  other Member States to initiate actions 
before  its  courts.  Finally,  a  Member  State  with  a  test  case  should  allow  consumers 
from other Member States to bring a test case before its courts, and ensure that the 
effect  of  any  test  case  is  extended  to  all  consumers  affected,  regardless  of  their 
nationality or residence. 

The  opening  up  of  national  collective  redress  mechanisms  could  be  facilitated  by 
establishing a cooperation network bringing together the entities that have the power 
to bring a collective redress action in those Member States having such mechanisms, 
including public bodies and consumer organisations.  

For  representative  actions,  the  cooperation  could  involve  the  competent  entities  in 
the  trader's  Member  State  either  bringing  a  representative  action  on  behalf  of 
consumers located in other Member States upon request of their counterpart entities 
in these Member States, or assisting these  counterpart entities to take direct  action. 
For  group  actions  and  test  cases,  members  of  the  network  in  the  Member  State 
concerned  could  co-operate  in  assisting  harmed  consumers  to  bring  or  join  group 
actions or test cases before the courts in the Member State of the trader. 

Assistance  provided  could  include  launching  information  campaigns  about  pending 
collective  redress  actions,  gathering  claims,  assisting  with  the  translation  of 
documents,  explaining  national  judicial  proceedings  and  helping  to  find  national 
legal practitioners and experts.  

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28. 

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Member  States  with  collective  redress  mechanisms  might  be  hesitant  to  grant 
resources  to  their  entities  for  bringing  collective  redress  actions  on  behalf  of  or 
assisting  consumers  from  other  Member  States  before  their  courts  when  entities  in 
Member  States  without  collective  redress  mechanisms  do  not  have  such  an 
obligation.  Informal  consultations  with  consumer  organisations  in  such  Member 
States seem to indicate that they would not be willing to develop such activities due 
to a lack of resources. An equitable mechanism for bearing the costs of proceedings 
would  need  to  be  introduced.  Member  States  could  also  be  encouraged  to  provide 
sufficient resources to their entities for this purpose. 

The work of the cooperation network could be facilitated by the European Consumer 
Centres Network (ECC-Net). The advantage of using the ECC-Net is that it is an EU-
wide network which is already in place. However, since it currently works mainly on 
individual  cross-border  out-of-court  actions,  different  expertise  and  more  resources 
would be needed34.  

Alternatively,  a  new  specific  collective  redress  network  could  be  created.  The 
funding necessary for such a network would depend on its workload which would in 
turn  depend  on  the  number  of  entities  belonging  to  the  network,  their  competence 
and expertise, the exact tasks assigned to them and the number of cross-border cases 
that would arise.  

31. 

Issues  relating  to  jurisdiction  and  the  law  applicable  to  contractual  and  non-
contractual obligations (see paragraphs 58-60), would also arise under this option. 

Option 3: Mix of policy instruments 

32. 

33. 

34. 

Option 3 envisages a mix of policy tools, non-binding or binding, that can together 
enhance consumer redress by addressing the main barriers identified earlier, namely 
high  litigation  costs,  complexity  and  length  of  proceedings,  consumers'  lack  of 
information  on  the  available  means  of  redress.  It  involves:  improving  alternative 
dispute  resolution  mechanisms,  extension  of  the  scope  of  national  small  claims 
procedures  to  mass  claims,  extending  the  scope  of  the  Consumer  Protection 
Cooperation Regulation, encouraging businesses to improve their complaint handling 
schemes  and  taking  actions  to  raise  consumers'  awareness  of  existing  means  of 
redress. 

When  consumers  decide  whether  to  take  action  or  not,  the  value  of  a  claim  is  an 
important  parameter.  Consumers  are  not  likely  to  act  when  their  claim  is  below  a 
certain  threshold.  Alternative  dispute  resolution  schemes,  small  claims  procedures 
and  cooperation  between  national  public  enforcement  authorities  may  be  more 
efficient for different levels of claim value. 
When both parties have sufficient incentives35 to go to alternative dispute resolution 
schemes, this tool has proved an efficient alternative to court proceedings in low and 
medium  value  cases,  as  it  may  be  quicker,  less  expensive  and  more  flexible. 
Alternative  dispute  resolution  schemes  may  be  less  suitable  for  high  value  claims, 
which  often  involve  complex  facts  and  evidence  gathering.  For  very  low  value 

34 
35 

This may lead to possible additional costs to be decided in agreement with the Member States  
For instance media attention or the availability of effective judicial redress 

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35. 

36. 

37. 

38. 

39. 

claims consumers are unlikely to seek redress since the individual loss is lower than 
the cost of litigation. 

Small claims procedures are simplified court procedures with low litigation costs and 
relatively quick handling. For these reasons they are a good tool for individual low 
and medium value claims, when the parties refuse to negotiate. 

Action  by  national  public  enforcement  authorities  such  as  those  of  the  Consumer 
Protection  Cooperation  network  could  provide  efficient  redress  in  cases  where 
alternative dispute resolution schemes and small claims procedures are less likely to 
work, particularly in very low value cases where consumers have little incentive to 
take action. 

Existing consumer alternative dispute resolution schemes vary considerably within 
and between Member States. They can be publicly or privately funded, be hosted by 
public or private organisations, by collegiate or individual bodies, have a nationwide, 
regional or local coverage, be responsible for all consumer claims or only for claims 
in  a  specific-sector,  take  binding  or  non-binding  decisions  or  lead  to  agreements 
between the parties. There are also significant gaps in alternative dispute resolution 
coverage,  both  sector-specific  and  geographical.  Not  all  consumer  claims  can 
therefore  be  dealt  with  through  alternative  dispute  resolution  schemes.  Most 
alternative dispute resolution schemes within the EU deal principally with individual 
claims.  Some  Member  States  have  amended36  or  may  adapt37  their  legislation  to 
expressly recognise collective alternative dispute resolution mechanisms. 

The existing EU framework does not exclude collective alternative dispute resolution 
schemes. Although the two Recommendations on alternative dispute resolution were 
not drafted with the resolution of collective consumer claims in mind, their principles 
can  also  be  applied  to  collective  alternative  dispute  resolution  schemes.  The 
Recommendations could be supplemented to respond to specific issues linked to the 
management of collective claims.  

The EU could encourage Member States to establish collective consumer alternative 
dispute  resolution  schemes  making  sure  that  such  schemes  are  available  on  their 
entire  territory  for  all  consumer  claims  and  accessible  to  consumers  from  other 
Member States. Member States could have the choice on how to establish collective 
alternative  dispute  resolution  schemes.  They  could  either  adjust  their  existing 
schemes or establish one or more new alternative dispute resolution schemes to deal 
with consumer collective claims. The existing European networks such as the ECC-
Net  or  FIN-Net  which  already  help  individual  consumers  to  access  an  alternative 
dispute resolution in another country could also help consumers with similar claims 
to access the appropriate collective alternative dispute resolution schemes in another 
Member State. This may lead to possible extra operational costs for these networks. 
Any  additional  costs  would  need  to  be  decided  in  agreement  with  Member  States 
which co-finance the ECC-Net. 

40. 

This could be achieved by a Recommendation or Directive. A Recommendation with 
a result-oriented monitoring process would offer flexibility in its implementation and 
could be designed as a first step. An EU Directive could also require Member States 
to set up collective consumer alternative dispute resolution schemes. Either of such 

36 
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Sweden, Finland 
Slovenia 

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instruments could be more detailed and present the main components of a collective 
alternative  dispute  resolution  scheme  (e.g.  the  composition  of  the  scheme  and  the 
procedure). 

In parallel, the Commission could bring stakeholders together to develop a standard 
model  for  collective  alternative  dispute  resolution  scheme  which  is  easy  to  use,  in 
particular  in  a  cross-border  situation.  This  standard  model  could  present  the  main 
components  of  a  collective  alternative  dispute  resolution  scheme.  Such  a  model 
could  be  used  by  stakeholders  who  want  to  set  up  a  collective  alternative  dispute 
resolution  scheme.  It  would  be  a  voluntary  step  towards  achieving  convergence  of 
collective alternative dispute resolution schemes. 

Another  measure  that  could  help  improve  existing  redress  mechanisms  is  for 
Member States to extend the scope of their small claims procedures, so as to deal 
efficiently also with mass claims in a national and cross-border context. For example, 
when several individuals have the same claim against the same trader for the same 
damage,  all  these  claims  could  be  grouped  together,  ideally  by  the  court,  and  dealt 
with  by  the  simplified  procedures  envisaged  for  individual  small  claims.  A 
Recommendation with a monitoring process could be the appropriate instrument.  

The Consumer Protection Cooperation Regulation sets up an EU-wide network of 
national public enforcement authorities. These authorities can call on other members 
of the network for assistance in investigating possible breaches of consumer laws and 
in taking action against traders who have committed such breaches. The  Consumer 
Protection Cooperation Regulation sets out a non-exhaustive set of investigation and 
enforcement powers necessary for its application which can be exercised only where 
there  is  a  reasonable  suspicion  of  an  intra-Community  infringement,  and  include  a 
power to require the cessation or prohibition of any intra-Community infringement.  

The  Consumer  Protection  Cooperation  Regulation  could  be  amended  to  include  a 
power  whereby  a  competent  authority,  after  the  finding  of  an  intra-Community 
infringement,  could  require  the  trader  to  compensate  consumers  that  have  been 
harmed38.  The  detailed  working  of  such  a  mechanism  would  be  left  to  Member 
States.  They  would  deal  with  issues  such  as  funding,  how  and  by  which  entity 
affected  consumers  would  be  found  and  informed,  what  type  of  evidence  the 
consumers would need to provide, measures to be taken if the trader does not comply 
with the order to compensate, and possibilities for appeal. Alternatively, such issues 
could  also  be  dealt  with  at  EU  level  via  a  Recommendation  or  a  Directive.  On 
funding, Article 4(7) of the Consumer Protection Cooperation Regulation stipulates 
that "Member States shall ensure that competent authorities have adequate resources 
necessary for the application of this Regulation." 

The  scope  of  the  Consumer  Protection  Cooperation  Regulation  would  need  to 
include  under  "intra-Community  infringements"  acts  that  harm  the  individual 
interests of multiple consumers in addition to acts that harm the collective interest of 
consumers. A threshold of the number of consumers involved would need to be set. 
The  compensation  resulting  from  the  decision  of  a  court  or  public  authority  would 
have to be properly distributed to consumers from other Member States. Especially 

The Commission has informally consulted the CPC network, and it seems that in the vast majority of 
Member  States,  public  enforcement  authorities  do  not  have  the  power  to  order  traders  who  have 
committed  an  intra-Community  infringement  to  compensate  consumers,  while  only  in  a  few  Member 
States do they have the right to sue wrongdoers for damages on behalf of consumers 

41. 

42. 

43. 

44. 

45. 

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regarding  very  low  value  claims,  the  Consumer  Protection  Cooperation  Regulation 
could provide for a power to skim-off the profit from traders who have committed an 
intra-Community infringement. This would imply that Member States would have to 
grant  their  public  authorities  this  power39.  Details  would  be  left  up  to  the  Member 
States. For instance, Member States would decide if the amount skimmed-off would 
go to the State treasury or to consumer-related purposes. The scope of the Consumer 
Protection  Cooperation  Regulation  would  remain  unchanged.  Under  such  a  system 
individual consumers would not be able to obtain a share of the skimmed-off profit. 
Consumers  would  benefit  indirectly  from  the  deterrent  effect  that  such  a  system 
would have on traders. 

Businesses  have  an  interest  in  ensuring  that  their  customers  are  content.  Self-
regulatory  measures,  could  be  encouraged  where  they  do  not  yet  exist.  Existing 
measures  could  be  further  improved.  This  involves  for  example  ensuring  that  all 
businesses  have  an  internal  complaint-handling  system  which  is  credible,  works 
efficiently  and  is  subject  to  independent  monitoring  or  auditing  standards.  The 
Commission could encourage all businesses, particularly in those sectors where more 
mass  problems  are  reported,  to  develop  self-regulatory  measures  in  the  form  of  a 
code and to make this widely known to consumers.  

In  order  to  increase  consumers'  knowledge  of  their  means  of  redress,  awareness-
raising  actions  could  be  envisaged.  These  could  be  in  the  form  of  EU  or  national 
information  activities,  either  in  general  or  tailored  to  specific  sectors.  Possible 
actions could range from information  events carried out by consumer organisations 
to actions promoted by Member States or the EU. 

Option 4 – Judicial collective redress procedure  

This option proposes a non-binding or binding EU measure to ensure that a collective 
redress  judicial  mechanism  exists  in  all  Member  States.  Such  a  procedure  would 
ensure  that  every  consumer  throughout  the  EU  would  be  able  to  obtain  adequate 
redress in mass cases through representative actions, group actions or test cases. The 
issues  to  be  decided  include  the  financing  of  the  procedure,  how  to  prevent 
unmeritorious  claims,  standing  in  court,  the  question  of  an  opt-in  or  opt-out 
procedure  and  the  distribution  of  compensation.  The  purpose  of  this  option  is  to 
provide  a  judicial  collective  redress  procedure  that  is  effective  and  efficient  in 
providing  redress  for  consumers.  In  any  case,  this  option  should  avoid  elements 
which are said to encourage a litigation culture such as is said to exist in some non-
European countries, such as punitive damages, contingency fees and other elements. 

On  the  issue  of  financing,  the  costs  may  prevent  consumers  from  engaging  in  a 
collective  action  and  make  it  very  hard  for  consumer  organisations  to  handle  mass 
cases in representative actions.  

One  -  partial  -  solution  could  focus  on  cutting  down  the  costs  e.g.  by  exempting 
collective actions from court fees or capping legal fees.  

With  regard  to  representative  actions,  the  financing  of  entities  representing 
consumers is crucial. One could consider allocating a share of the compensation to 

The Commission has informally consulted the CPC network, and it seems that such a power does not 
exist in the majority of Member States  

46. 

47. 

48. 

49. 

50. 

51. 

39 

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the organisation to cover its costs. A third party (e.g. banks) or a public body could 
grant a loan to cover possibly needed pre-financing of court proceedings. Litigation 
funding by private third parties (e.g. companies specialising in financing litigation) is 
practised  successfully  in  some  Member  States.  Another  solution  could  be  public 
funding by the Member States. Different funding solutions could also be combined. 

A EU mechanism should facilitate meritorious claims and benefit consumers. At the 
same  time,  it  needs  to  discourage  a  litigation  industry  as  mentioned  before,  as  this 
would benefit lawyers rather than consumers and create high costs for defendants. In 
order  to  avoid  the  possibility  of  abuse  of  a  collective  redress  mechanism,  various 
elements  qualify  as  safeguards  and  help  to  prevent  unmeritorious  claims.  The 
judge  can  play  an  important  role  by  deciding  whether  a  collective  claim  is 
unmeritorious  or  admissible.  Certification  of  the  representative  entity  acts  as  a 
gatekeeper,  as  does  the  loser-pays-principle  in  the  Member  States  where  it  exists. 
Public  authorities  could  be  potential  gatekeepers  when  funding  collective  redress, 
refusing to allocate resources to unmeritorious claims.  

The consumers' position in collective redress court procedures could be reinforced by 
giving  legal  standing to pursue a representative action to qualified entities such as 
consumer organisations or ombudsmen.  

An important element of collective redress procedures is the decision of whether an 
opt-in or opt-out procedure should be introduced.  

Opt-in systems could be burdensome and cost-intensive for consumer organisations 
which  have  to  do  preparatory  work  such  as  identifying  consumers,  establishing  the 
facts of each case, as well as running the case and communicating with each plaintiff. 
They also may face difficulties in obtaining a sufficiently high number of consumers 
opting-in in the case of very low value damage, where consumers are less likely to 
act. However, they do not involve the risk of promoting excessive or unmeritorious 
claims. 

Opt-out  solutions  might  mitigate  some  of  the  difficulties  of  the  opt-in  systems. 
However,  they  are  often  viewed  negatively  in  Europe  due  to  the  perceived  risk  of 
encouraging the excessive litigation experienced in some non-European jurisdictions. 
Any collective redress system should be designed to avoid such a risk. In any case, 
the  issue  of  information  dissemination  across  borders  remains  relevant.  Lack  of 
information  could  lead  to  a  situation  where  consumers  would  be  bound  by  a 
judgement  without  their  knowledge  or  without  having  been  able  to  contest  the 
management  of  the  case.  In  addition,  in  opt-out  scenarios  consumer  organisations 
may  face  a  burden  when  they  have  to  identify  the  victims  and  distribute  the 
compensation. 

In an opt-in procedure the said problems could be solved by the court distributing 
the  compensation  and  by  allowing  consumers  to  join  a  mass  action  after  the 
judgement in  a test case has been delivered and giving the judgement  effect for all 
victims. Each consumer would, however, have to follow a specific judicial procedure 
in order to benefit from the judgement.  
In  cross-border  cases  the  Regulation  on  jurisdiction40  would  be  applicable  to  any 
action  including  an  action  brought  to  court  by  a  public  authority,  if  it  is  exercising 

Council  Regulation  (EC)  No  44/2001  of  22  December  2000  on  jurisdiction  and  the  recognition  and 
enforcement of judgements in civil and commercial matters, OJ L12, 16.1.2001, p.1 

52. 

53. 

54. 

55. 

56. 

57. 

58. 

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private  rights  (e.g.  an  ombudsman  suing  for  consumers).  Representative  actions 
would  have  to  be  brought  to  the  trader's  court  or  the  court  of  the  place  of 
performance of the contract (Art. 5 (1)).  

In mass cases where consumers come from different Member States, the court would 
have  to  apply  to  contractual  obligations  the  different  national  laws  of  the  various 
consumers  (Art.  6  Rome  I  Regulation41).  This  would  cause  practical  problems  in 
cases  with  consumers  from  many  different  Member  States.  A  solution  would  be  to 
introduce  an  amendment  to  the  rules  imposing  the  law  of  the  trader  in  collective 
redress  cases.  Other  options  are  the  application  of  the  law  of  the  market  most 
affected or of the Member State where the representative entity is established.  
In similar situations in the area of product liability (Art. 5 Rome II Regulation42) a 
choice  of  law  agreement  after  the  damaging  event  occurred  (Art.  14  (1a)  Rome  II 
Regulation) would help.  

59. 

60. 

Q1: What are your views on the role of the EU in relation to consumer collective 
redress? 

Q2: Which of the four options set out above do you prefer? Is there an option 
which you would reject?  

Q3: Are there specific elements of the options with which you agree/disagree?  

Q4: Are there other elements which should form part of your preferred option? 

Q5: In case you prefer a combination of options, which options would you want 
to combine and what would be its features? 

Q6:  In  the  case  of  options  2,  3  or  4,  would  you  see  a  need  for  binding 
instruments or would you prefer non-binding instruments? 

Q7:  Do  you  consider  that  there  could  be  other  means  of  addressing  the 
problem?  

With this Green Paper the European Commission calls on the interested persons to 
express their views by sending in their replies (marked “Response to the Green Paper 
on Consumer Collective Redress”) no later than 1st March 2009 to: 

European Commission 
Directorate-General Health and Consumers 

41 

42 

Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the 
law applicable to contractual obligations (Rome I), OJ L177, 4.7.2008, p.6 
Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the 
law applicable to non-contractual obligations (Rome II), OJ L 199, 31.7.2007, p.40 

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Rue de la Loi 200 
1049 Brussels 
Belgium 

Or by e-mail to Sanco-consumer-collective-redress@ec.europa.eu 

Contributions  will  be  published  on  the  website  of  the  Health  and  Consumers 
Directorate-General  of  the  European  Commission.  It  is  possible  to  request  that 
submissions remain confidential. In this case, contributors should expressly state on 
the first page of their submission that they oppose publication. The Commission will 
examine the contributions and publish a summary thereof in the first half of 2009. 

On the basis of the outcome of the consultation, the Commission will present another 
policy paper in 2009. 

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