Consumers from across the European Union may in future be able to join forces and file class-action lawsuits with a view to getting compensation from companies that break the law.

Under a proposal made by the EU executive Wednesday, consumers' rights are to be strengthened considerably. Calls for the EU to introduce collective lawsuits, a tool used extensively in US litigation, had grown after Volkswagen clients were outraged to learn that the German car giant had cheated on emissions tests.

"In a globalized world where the big companies have a huge advantage over individual consumers, we need to level the odds," EU Justice Commissioner Vera Jourova said in a statement.

Adding firepower

Brussels actually proposed two instruments. One would be for situations in which a limited group of people suffered comparable harm. The second would be for low-value cases in which many consumers suffered a small loss which would be hard to compensate.

In the first case, consumers would be able to collectively sue and receive compensation.

In the second category, any payout would go to a public cause benefiting consumers.

Separately, the European Commission is proposing EU-wide fines of up to 4 percent of a company's annual turnover in each member state for firms found guilty of widespread infringements.

"Consumer authorities will finally get teeth to punish the cheaters," Jourova said, adding that "it cannot be cheap to cheat."

Abusive litigation ahead?

Business organizations warned Brussels against introducing a US-style lawsuit culture. "EU collective redress would only enrich law firms," argued Markus Beyrer of the BusinessEurope industry association.

The EU executive insisted it was taking a balanced approach by only allowing recognized consumer groups and independent public bodies to file class-action lawsuits, thus avoiding the risk of abusive litigation.

The proposals are part of a package of laws called New Deal for Consumers and require the approval of EU governments and lawmakers to come into effect.

hg/ap (AFP, dpa)

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