The EU plans to introduce regulations, empowering consumers to take on large companies. Up until now, consumers had little redress against big business, but this is about to change. Although the EU isn't introducing regulations allowing highly profitable actions by law firms like in the United States, Consumer Rights groups will have the right to pursue companies which have trampled on consumer rights and needs. The European Union is planning to introduce fines of up to four percent of the annual turnover. With these plans, EU regulators are targeting tech firms and car makers.
The move follows the Dieselgate scandal, which erupted after Volkswagen was exposed for using special software to cheat in emissions tests. Frustrated about the way some companies have been treating their customers, the EU is intent on providing its citizens with better consumer rights as well as the tools to take action against rule-flouting businesses.
We bring more fairness to #consumers, not more business for law firms, through representative actions in the European way. And with sanctions of at least 4% of annual turnover, #consumer authorities will finally get teeth to punish cheaters. https://t.co/OPo83ubclu pic.twitter.com/jn8McJcYJi
— Věra Jourová (@VeraJourova) April 11, 2018
Consumer rights groups welcome the New Deal for consumers
Although many consumer bodies consider this deal long overdue, the New Deal has been broadly welcomed.
According to Reuters, the European Consumer Organisation (BEUC) has warned that it would ultimately be up to the national authorities and courts to decide whether group action would be admissible. In addition, BEUC also pointed out that the group action process is likely to be lengthy and laborious.
Businesses are critical of the new EU consumer deal
According to a Reuters report, businesses have criticised the European Union's plan, outlining that EU consumers already enjoy the protection of some of the world's best consumer rules. What's more, business representatives have warned of lengthy and costly lawsuits. In response, EU representatives have stressed that the New Deal does not allow US-style class actions.
To win the support of business leaders, EU representatives have highlighted that this deal is also good for business.
It's a #NewDealforConsumers and a better deal for businesses. https://t.co/JyJsUr7ZIn #EU4Consumers #ConsumerProtection pic.twitter.com/plskotCDgO
— EU Consumer Affairs (@EU_Consumer) April 12, 2018
The new deal is set to target food and tech companies
According to Reuters, two industries are at the centre of the New Deal. To begin with, "free" tech companies like Google and Facebook would fall under EU consumer laws. This means any company providing digital services Free Of Charge would in future have to comply with EU consumer regulations. In addition, the European Union plans to introduce rules that allow digital services users to cancel their account within 14 days, even if this service is free of charge.
The second domain covers food ingredients, an area the EU Commission President, Jean-Claude Juncker has been wishing to tackle for quite some time.
With the New Deal for Consumers, the European Union hopes to equip its citizens with the right to take action against big businesses. Food ingredient disparity is to be eliminated throughout the entire European Union, while online shoppers are to be equipped with more transparency. In the words of the European Union vice-president, Frans Timmermans: "Today's is about delivering a fairer Single Market that benefits consumers and businesses."
