The Collective Action Act: Malta Rushes in where others fear to thread

While most EU Member States (MS) and the European Commission itself bickers, the Maltese Parliament and the Cabinet of Ministers, on the recommendation of Minister Jason Azzopardi, approved on June 19th 2012 the Collective Action Act. This marked a sad day for business.

GRTU, together with other national organisations representing business members of EuroCommerce, and as active participants in the Employers Group at EESC through Director General Vince Farrugia, has staunchly supported the view MS should not rush in the approval of this measure prior to an agreement on the necessary safeguards that would not make this additional consumer protection measure an additional burden and threat to existing enterprises and a threat to new investment.

The Commission and all participants in the negotiations on the introduction of a Collective Redress mechanism in those European countries that have opted not to have such legislation have all agreed that this measure will not increase one single job to the already difficult employment situation in most EU countries.

During the only brief consultation session held in Malta on this issue GRTU presented its objections. Primarily these emphasised the irrelevance of this measure for Malta as consumers in Malta are already sufficiently protected. Indeed GRTU believes that if anything it is the Commercial Community that in Malta is today disadvantaged I f one where only to study the numerous judgments of the Consumer tribunals. GRTU also insisted on specific safeguards to ensure that there is no discrimination against business owners and against organisations like GRTU representing enterprise owners. Such discrimination already exists under the already activated Consumer protection legislation where business enterprises face heavy costs while consumers practically pay nothing, inspite of the costs, actual and commercial, that firms suffer as a result of frivolous legal action or spiteful requests.

The new law has at least incorporates some objections made by the GRTU:

• The clause exempting Government Institutions from having action taken against them was not included

• The new act does provide for collective action to be instituted also by organisations like GRTU representing business enterprises.This is a big breakthrough for GRTU as GRTU faces tremendous problems under the interpretation that MCCAA gives to existing legislation when it comes to the right of the business community and individual businesses to be represented by their chosen organisation.

A gross discrimination however remains. While consumers and consumer associations can raise collective redress action without any expense, a constituted body like GRTU representing businesses can only act if it accepts to pay all expenses without exception. Consumers and consumers associations also benefit from a maximum of payment on any losses they may suffer in cases lost at Court. Bodies representing businesses on the other hand have no form of relief from expenses and penalties. GRTU intends to take legal action against this discrimination.

Furthermore there is no threshold as GRTU had demanded. Any firm, micro, small medium or large, can face a class action. In addition it is not abundantly clear as to what extent local firms that are in representation of other EU originating firms are liable to class action.

 GRTU will be providing more specific details as the law comes into action.

Surprisingly, Minister Jason Azzopardi announced that the law will be effective as from this August. The first indication GRTU has from the first survey conducted among members is that this came as a total surprise to all. At EU level discussions have been going on for at least six years and in 2008 a Green Paper was published by the Commission, to which our EU organisations submitted reactions, and the EESC also produced an interesting Opinion on the matter (produced by our own Edwin Calleja, EESC member at the time).

GRTU is advising members on the implications of this very serious addition to the anti-business baggage of laws. Members are advised to inform GRTU of their views and experiences. A special Committee has been set up to monitor this issue.