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The New Representative Action Directive – strengthened collective redress mechanism for EU consumers

Digital transformation and its overly whelming effect threatens to violate consumers' rights and interests. For example, the right to access safe digital services can be put into a jeopardy.

As per the European Commission's report (January 2018) 9 Member States still do not provide any possibility for collective claim of compensations in mass harm situations. In many countries the possibility for collective proceedings is only specific sectors- oriented. Although some jurisdictions have established collective redress system, the mechanism is not frequently used either because it is too rigid or lengthy or because of the requirements for sufficient financial resources of the potential plaintiff.
To address these issues a Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC (Representative Action Directive) was adopted on 24 November 2020. The Representative Action Directive entered into force on 24 December 2020. Member States have two years to transpose it and are required to apply it from 25 June 2023.
Some of the key provisions of the Representative Action Directive are:

Broadened scope of the infringements pursued by collective actions
The sectors' infringements specified in the Representative Action Directive have been seriously extended. Unlike the former directive, the areas now include personal data, audio-visual media services, telecommunications, environment, alternative investment funds, etc. Infringements which were discontinued before the start or the conclusion of the representative collective action, can also by chased.

Judicial or administrative proceedings will serve the collective actions
It is left to the discretion of the Member States whether the representative action can be brought in judicial or administrative proceedings, or both, depending on the relevant area of law or relevant economic sector. Thus, the representative actions can be pursed before a court or an administrative authority. The latter must estimate at the earliest possible stage of the proceedings whether the case is suitable for being brought as a representative collective action or not. This estimation will be grounded on, among others, on the nature of the infringement and characteristics of the damages suffered by the concerned consumers.

Qualified entities can bring collective actions
Only qualified entities can bring domestic or cross border representative actions. In principle, a qualified entity will be a recognized consumer organisation or an independent public authority. Qualified entities will be designated, at their request, by the Member States in advance for this purpose and included in a publicly announced list or it can be constituted for the purpose of a specific action (ad hoc). Consumers can join the action by either opt-in or opt-out mechanisms, depending on the Member State's procedure. The finally adopted texts of the Representative Action Directive provide for several requirements for the qualified entity in order to be an eligible plaintiff for cross-border actions, among which is a previous experience of at least 12 months in actual activities on consumer protection. These criteria can also be applied to organizations that plan to bring domestic representative actions at the discretion of a Member State, if they are consistent with the Directive's objectives.

Financial overview that lists the Qualified entities' sources of funds used to support the representative action remains a bottom-line
The Reputational and Financial Requirements for the Qualified entities correspond in a great extent to the preconditions, which Bulgarian Civil Procedural Code* provides for a designated party to bring a collective claim on behalf of a class of people. In particular:
• Reputational and organization fit - the Qualified entity must be properly established, with non-profitable purpose, and have a legitimate interest in ensuring compliance with the relevant EU laws
• Financial capacity - the Qualified entity which brings a compensatory collective redress actions, must have financial resources to handle the case and must disclose details of the financing. Third party litigation funding is allowed, if national law allows this. Further, the qualified entity must prove in a transparent manner the source of the funds and that it will not interfere with the representative collective action or that the case is not against a competitor of the funding provider.

Types of collective actions and measures

Representative collective actions can seek for different types of protection.
Qualified entities will be able to apply measures through their representative action:
• injunctive relief, which may consist of provisional or definitive measures to cease an infringement, as well as an order for the trader to publish the decision finding an infringement
• other redress, including compensation, repair, replacement, price reduction, contract termination or reimbursement.
The collective proceedings can end by:
• a declaratory decision (which establishes the infringement);
• protection order, which stops the infringement;
• a financial compensation decision; or
• an agreement between the disputing parties.
Declaratory decisions will not be allowed when consumers concerned are easily identifiable or when they have suffered an amount of loss that is so small that distributing it to the consumers would be disproportionate. In such cases, the mandate of individual consumers would not be required, and the redress would be directed to a public purpose serving the collective interests of consumers. Punitive damages or other types of overcompensation will not be allowed.


The "loser pays all" principle remains except for allocation of the costs on individuals. The losing party must pay the other party's litigation costs, according to the national law that applies to court proceedings. Individual consumers represented in the action however shall not pay any procedural costs, except in the case of intentional or negligent conduct.

Member States shall ensure that the costs of the proceedings related to representative actions do not prevent qualified entities from effectively exercising their right to seek the representative action measures. The final texts of the Representative Action Directive allow now qualified entities to require a modest participation fee or similar charge from consumers that wish to be represented in a specific redress action.

Representative Action Directive's purpose is to provide more effective and efficient way of protecting the collective interests of consumers

Cost savings protection for consumers: the expenses for up fronting the collective case will be borne by the Qualified entities, on one hand and on the other, the losing pay principle will not affect the individuals (except in the case of intentional or negligent conduct).
A high level of consumer awareness is achieved:Consumers would have to be informed of the outcome of representative actions and how they could benefit from them. A trader who lost a collective representative case will be obliged to announce on his website or in other way with similar effect to the public, the outcomes of the proceedings.
Easier way for consumers to seek further individual damages: the final decisions of a court or authority establishing that a trader has infringed the law would be considered irrefutable evidence in redress actions (within a Member State) or a rebuttable presumption that the infringement has occurred (for cases brought in another EU country). This opens the door for claiming individual damages of the concerned consumers on local level.

Collective claims in Bulgaria exist as early as of 2007. However, they are not very commonly used instrument, except for collective claims undertaken by recognized organizations for protection of the consumers.

Published on Jun 01, 2020

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About the author

Stanimira Hristova

I have been practising law since 2008. My kickoff start was in energy sector where I gained solid knowledge of renewables (with focus on interconnecting procedures, offtake, energy supply and consumption agreements), being involved in every step of the investment process.

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