Corporate Compliance

EU Tiptoes Toward Mass Torts

Class actions as we know them in the U.S. are virtually unheard of in Europe, and corporations located in the EU would like to keep it that way. Hence, a proposal by the European Commission to allow individuals to hold EU corporations accountable in court for price-fixing and defective products, in much the same way as American counterparts are held responsible by consumers here, is under fire in Germany.

A German employer group and a major London-based international law firm have released a study contending that a proposal to allow private individuals to sue over antitrust violations and defective products would be expensive and counterproductive, reports the Financial Times.

“Strengthening private enforcement will massively increase pressure on companies to agree [to] expensive settlements from which lawyers profit much more than consumers,” said Kurt-Christian Scheel. He heads the legal department for BDI, a German employer group, and is one author of the study.

The BDI wants to see the private enforcement issue left up to member-states of the EU to decide for themselves.

Despite corporate opposition, it appears that business globalization may eventually encourage European adoption of an American-style corporate litigation approach.

In a groundbreaking securities settlement earlier this year, a Holland-based petroleum company voluntarily agreed to pay shareholders who purchased company stock outside the U.S. for allegedly overstating the value of oil and gas reserves. As discussed in an April ABA Journal eReport story, the settlement was arranged in conjunction with a Dutch law that allows court approval of such settlements although it doesn’t provide for class action litigation.

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