The European Commission is next week expected to take its first formal steps towards a European Union-wide system enabling groups of people to pursue claims for damages from companies.

Falling short of a full legislative proposal, the “general principles” for a “framework for collective redress” will include a recommendation that the 11 EU member states that do not have a collective redress regime should introduce one within the next two years. It will also urge all national systems to be made more “consistent”.

Many leading businesses are worried about the effect of the proposals. A joint letter from business groups to José Manuel Barroso, the president of the Commission, said that the ideas would be costly to companies and have an adverse effect on Europe’s competitiveness.

“Should collective redress mechanisms be implemented in all member states across all sectors, it could lead to a dramatic increase in litigation and forum-shopping in favour of jurisdictions considered to have the most claimant-friendly mechanisms for collective redress,” said the letter, sent on 31 May by the US Chamber of Commerce, FEP (the French association of private companies), MEDEF (the Movement of Enterprises of France), and DAI (the German association of stock-exchange-listed companies).

The Commission’s recommendation is expected to include some safeguards to prevent vexatious claims, punitive damages and ‘forum-shopping’ – where litigants take their case to the court where they expect to win the most favourable decision. But the business groups claim that the protection proposals would be “too vague and too weak”, allowing too many exceptions.

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However, for consumer groups, and many in the European Parliament who voted in February last year in favour of legislative proposals, the recommendations, which are expected to be published on Tuesday (11 June), do not go far enough.

Beuc, the European consumer organisation, said that consumers would have been better served by binding legislation and an ‘opt-out’ regime in which all victims are automatically included in compensation claims. The Commission will say that member states should establish ‘opt-in’ systems, where people have actively to request to participate in any group action.

The Commission has hesitated for many years over making proposals on collective redress. Different directorates-general have launched a series of consultations since 2008 but, until now, they have not resulted in any substantive proposals.

The recommendation is expected to say that the Commission will assess the situation after two years, at which point it could decide to propose binding legislation.

Mimica’s in-tray

Neven Mimica, the Croatian who has been nominated to become European commissioner for consumer policy once Croatia joins the EU on 1 July, is expected to make work on collective redress one of his main priorities (see page 9). “Collective redress proposals should draw from best practice from national legislation with a legal tradition of collective redress; there are a few examples of such legal tradition in Europe,” Mimica said after a hearing with MEPs on Tuesday (4 June).

Next week’s recommendation will be put forward jointly by Joaquín Almunia, the European commissioner for competition, Tonio Borg, the commissioner for health and consumers, and Viviane Reding, the commissioner for justice.

Almunia will make associated proposals for a directive to set up an EU-wide system allowing individual victims of breaches of anti-trust laws to pursue damages claims.