Class actions, or collective actions as they are known in Europe, have long been a mainstay of US law but have never seen EU wide adoption due to an innate European fear of unmeritorious litigation sometimes encountered in the US class action system. However, given the historically low use of these actions and competition litigation throughout Europe, the EU recently proposed a draft Directive intended to encourage competition and collective action litigation throughout European courts, albeit, one which avoids encouraging unmeritorious claims.
In concurrence with this development, there is Belgium collective action legislation currently before the Belgium Parliament which is likely to be passed in spring this year.
In brief, the current bill before the Belgium Parliament allows collective actions in the following circumstances:
• The collective action must be started by the Federal Consumer Mediator, an association authorised by the Minister for Economy or through a member of the Belgium Consumers’ Council (law firms for example cannot act as representatives for the class action).
• By either an opt-in mechanism, meaning claimants have to opt-in to be a part of the class and receive a share of the damages/be liable for a share of the costs, or an opt-out mechanism, where all potential members of a class are presumed to be part of it unless they have opted out. This potentially large pool of claimants is reflected in the damages. However, the decision of whether to operate either mechanism is decided by the judge rather than by the party instigating the collective action. Residents outside of Belgium will not be able to bring opt-out actions, presumably due to a fear of very wide and international pools of claimants.
• On the understanding that the loser of the collective action will bear their own costs as well as some of those of the opposite party.
This bill goes further than the EU draft Directive by recommending opt-out collective actions in certain cases, although as mentioned above, this will still be a judicial decision. Whilst this bill is highly encouraging to Belgium consumers who have been victims of anti-competitive behaviour, the incentive to bring these collective actions is still very low considering the lack of punitive damages meaning damages will be modest and will only gain consumers the probable small overcharge that they were victim to.
It will be down to well funded and informed consumer groups to police markets and start these claims on behalf of consumers. Business victims on the other hand look continually to be left without a collective action mechanism and the monetary incentives necessary to encourage potentially costly litigation.