November 11, 2007	Sunday	Shawwal 29, 1428

LISBON, Nov 10: The European Union’s consumer chief dispelled industry fears on Saturday that she intends to introduce U.S.-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 20m 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 per cent 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.

GROUP ACTION: 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.

“It should be possible to finance the actions in a way that allows either consumers themselves to proceed with a collective action or to be effectively represented by a third party.”

“The proceeds should be distributed in an appropriate manner amongst plaintiffs and their representatives and introduction of unmeritorious claims should be discouraged,” she added.

Some EU lawmakers in the European Parliament and consumer groups say large U.S. law firms are waiting in the wings to set up shop in Europe unless Kuneva acts swiftly.—Reuters