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EU Parliament Approves Collective Redress Directive

On November 24, 2020, the European Parliament endorsed the new directive on representative actions for the protection of the collective interests of consumers (the “Collective Redress Directive”). The Collective Redress Directive requires all EU Member States to put in place at least one effective procedural mechanism allowing qualified entities to bring representative actions to court for the purpose of injunction or redress. The Collective Redress Directive was presented in April 2018 by the European Commission and is part of the European Commission’s New Deal for Consumers. The Collective Redress Directive was proposed as a response to several scandals related to breaches of consumers’ rights by multinational companies.

Specifically, the Collective Redress Directive aims to allow qualified entities (i.e., consumer organizations or public bodies) to bring representative actions seeking measures such as (1) redress orders and declaratory orders establishing a trader’s liability towards the consumers harmed by a relevant infringement of EU law and (2) to obtain, e.g., compensation, repair, replacement, price reduction, contract termination or reimbursement of the price paid (as appropriate). In order to bring cross-border representative actions to court, qualified entities will have to comply with the same criteria across the EU. Domestic actions will be subject to criteria established under national laws.

The scope of the Collective Redress Directive covers all infringements of EU law by traders that harm or may harm the collective interests of consumers in a variety of areas such as data protection, travel and tourism, financial services, energy, telecommunications and health and the environment―including infringement of the EU General Data Protection (the “GDPR”).

The Collective Redress Directive will enter into force 20 days following its publication in the Official Journal of the EU. EU Member States have 24 months to transpose the directive into national laws, and an additional six months to apply it. The new rules will apply to representative actions brought on or after the date of application of the directive.

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