Class action for the protection of consumers' collective interests

Björn Tidland (SD)

Madam Speaker! I move for the adoption of the committee's proposal in the Committee on Civil Affairs' report 2023/24:CU4, which means that the Riksdag adopts the Government's proposal to the Act on Consumers' Collective Interests.

Madam Speaker! The origin of this bill is a directive from the European Parliament. The purpose of the directive is to ensure that collective redress for the protection of consumers' collective interests is available in all Member States on equal terms, while the regulatory framework prevents abuse of justice.

What then is a representative action? According to the directive, a representative action refers to an action to protect consumers' collective interests initiated by an approved entity.

What then is an approved entity? Well, it is an organisation or a public body that represents consumers' interests and which has been designated by a Member State to bring a class action in accordance with the directive.

How does one become an approved entity? Firstly, one must conduct activities aimed at the public in order to protect consumers' interests, and one must have done so for at least twelve months prior to the application. Secondly, one must not be profit-driven. Thirdly, one must not be insolvent. Fourthly, one must be independent and not be influenced by anyone other than consumers. Fifthly, finally, one must post all information about its activities on its website, and this also applies to organization and finances.

Who then decides which ones become approved entities? Yes, it is a deciding authority that shall also establish a list of approved entities. The authority shall also review all entities every five years and issue a fine for those who misbehave. The deciding authority shall notify the European Commission of those who are approved in order to initiate cross-border group actions.

Are there additional rules? Answer yes. The government's bill contains 28 paragraphs which are reproduced in the report. I refer to the documents for details on these.

Madam Speaker! I find no reason to question that the law will fulfill its purpose, namely that class actions for the protection of consumers' collective interests will become available in all member states on equal terms.

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Anna-Belle Strömberg (S)

Madam Speaker! Thank you, Member Björn Tidland! We share the Member's view regarding the proposal. We think the proposal is good. But the question remains when it comes to opt-out. We write in our motion that we would like to investigate that part.

Our view is that the new law will increase and improve the protection for consumers and that unscrupulous business operators will find it more difficult to act on the market. The Government itself has expressed that there are advantages to investigating an opt-out system. Why does the member not want to approve that proposal?

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Björn Tidland (SD)

Madam Speaker! Thank you, Anna-Belle Strömberg, for the question!

In this motion, you have referred to SOU 2022:42, where you find your information. I read aloud from the investigation, where it is answered why an opt-out is not proposed: "Designing a well-functioning system that meets the current needs of strengthening consumers' legal protection and that fulfills necessary legal certainty requirements, however, requires a proper review and analysis of the situation in the consumer area. Such an analysis would need to include consultations with both organizations representing consumer interests and business interests. There are also a number of limitations of an opt-out system that would need to be considered, as well as which legislative solution would be chosen and how the legal certainty guarantees would be designed."

I am therefore referring to the investigation. It must be my somewhat bureaucratic answer.

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Anna-Belle Strömberg (S)

Madam Speaker! Thank you for the answer, Björn Tidland!

The Group Action Inquiry reports several advantages even with opt-out. It would lead to larger groups, and it would strengthen the individual's legal protection. It would strengthen and protect consumers who do not have the opportunity or ability to be active in the way that the current system requires.

Does the member not think that there are therefore strong reasons to open up for such an investigation?

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Björn Tidland (SD)

Madam Speaker! I refer to further debate. That is the answer to the questions.

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Anna-Belle Strömberg (S)

Madam Speaker! We Social Democrats welcome the proposals contained in the report. Our view is that the new law will provide the conditions to increase protection and improve consumers' access to legal review for collective interests.

Approved entities will be able to bring actions for both redress measures and prohibition orders for affected consumers. Unserious business operators will find it harder to act on the market. We think this is good.

Mr. Speaker, in line with several other referral bodies, we believe that the government should have gone a step further in the proposal, which means that in addition to opt-in, an opt-out should also be introduced, something that is already applied in, among others, Norway and Denmark. The number of class actions that have been conducted over a 20-year period has been small. This argues that some form of opt-out procedure should be reconsidered.

For third-party financing to be relevant at all, it is required that the requirement is of a large scale, and for the new law to now have any real effect in achieving the purpose of the directive, it is required that Sweden also introduces the opt-out model. Such a model entails that consumers can have their case reviewed in cases where it otherwise would not have been the case, and thus create interests from third-party financiers.

An opt-out procedure does not necessarily need to cover all class actions but can be limited to certain situations, for example in Norway, where a so-called opt-out valve is used which can be used in situations where the individual amounts are so small that they otherwise could not be pursued. In those cases, the court in Norway can decide that the group members are given automatic group membership with the possibility of opting out of the group. Even in Denmark, an opt-out procedure can be applied in public class actions if it concerns small individual claims.

Madam Speaker! The Group Action Inquiry 2022:42 highlights process-economic gains and a reduced risk of repeated proceedings. The inquiry details extensively a long series of advantages with introducing opt-out. It would lead to larger groups, strengthen the individual's legal protection, and better protect those consumers who do not have the ability to be active in the way the current system requires.

Madam Speaker! We Social Democrats therefore propose that the government proceed with this work and return with a proposal for the introduction of an opt-out procedure. The many advantages that the investigation, with the agreement of both the government and several referral bodies, highlights also speak in favor of an opt-out procedure, similar to our neighboring countries. It also needs to exist here in Sweden.

In conclusion, I would like to move for the approval of the reservation by the Social Democrats, the Left Party, and the Green Party.

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Lars Beckman (M)

Madam Speaker! What do opt-in and opt-out mean? Perhaps not everyone watching this TV broadcast knows that.

Opt-in means that the consent of the consumers concerned shall be obtained before a civil law process is initiated. An opt-out system would entail a risk that a person is drawn into a legal process without knowledge of this, which contradicts the fundamental principle that each individual shall have control over their legal circumstances.

Madam Speaker! I am concerned about the Social Democrats. Magdalena Andersson was in the USA and looked at campaign methods. After that, the Social Democrats came home and filed police reports against political opponents. The debate has been brutalized. They do not distance themselves from members who attend the Hamas conference. Last night, Strandhäll spoke up and praised a mob that disrupted a political meeting. And now the Social Democrats in the Committee on Civil Affairs want to Americanize the judiciary.

That is precisely the risk, Madam Speaker, when one does as they do in the USA. You buy a washing machine, and then someone comes up with the idea that you can sue the companies, which costs billions for the companies. Successful law firms collect money, and organizations are created to collect money. That is what opt-out means.

I am concerned about the Social Democrats' development. It would be a very different procedure in the Swedish justice system to go the way that the Social Democrats want.

We completely agree that we should have strong consumer protection. We agree that this legislation is good. But we do not want, Madam Speaker, to have an Americanized justice system in Sweden.

I do not understand that you Social Democrats want to go that way. Consumer protection should be strong, but it is obvious that the person who wants to sue a company and be part of a legal process in advance should be aware of it. Why do you want to Americanize the Swedish justice system with an opt-out procedure?

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Anna-Belle Strömberg (S)

Madam Speaker! Lars Beckman and I do not share the same view. As I said in my speech, I agree with the government's proposal for a new law, but the member does not agree with the Social Democrats' proposal to give consumers an even stronger protection. The consequence of that is that consumers do not have the opportunity or the ability to actively participate in the system that exists now in the way the current system requires. They will not have their cases examined. Small individual claims will not be examined because there are not so many of them.

The Government expresses that there are advantages to some form of opt-out system. What then is it that prevents you from approving our motion?

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Lars Beckman (M)

Madam Speaker! I will tell you exactly, Anna-Belle Strömberg, what is hindering us. We do not want an Americanization of the justice system.

It is not every day that one knows what opt-in and opt-out mean, so I googled and sought help from organizations. I asked them what these expressions mean in the countries where they exist.

The market for third-party litigation funding is estimated at 40-80 billion euros globally. There are therefore professional organizations and companies that engage in legal disputes. We Moderates do not want that system. We want balance in consumer protection, and we want strong consumer protection.

It is possible that the Social Democratic Party thinks that one should invest in a fund that engages in such and thus engages in third-party financing. They have a 30 percent direct return. Their business idea is to track down disputes and consumers, and they use an opt-out procedure which means that they file a lawsuit and then say that everyone who has eaten these cornflakes can contact them to get help and some money. But the system is that if I want to sue the cornflake manufacturer, I must have stated in advance that I want to be involved in suing them. That is the difference between the two proposals.

I do not understand the Social Democrats. Why do you want an Americanized justice system?

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Anna-Belle Strömberg (S)

Madam Speaker! We share the opinion on strengthened consumer protection, and that is why we put forward the proposal. It appears from the report that several referral bodies support the proposal, for example PRO and Sveriges Konsumenter, the university and a good number of other lawyers. They say that it is a good system that should be tested and investigated. The government has also stated in its report that it is a possible solution. Furthermore, both Norway and Denmark and other countries have that system.

Since we have had the opt-in system for over 20 years, and it has not led to so many dispute resolutions, we should try something else. In that case, opt-out is something to look at.

(Applause)

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Lars Beckman (M)

Madam Speaker! Today we are therefore debating the report Group Actions for the Protection of Consumers' Collective Interests. I would like to begin by moving for the approval of the proposal in the Civil Affairs Committee's report.

There is a broad majority in the Swedish Riksdag for this new legislation. The new law is based on an EU directive that aims to achieve a high level of consumer protection as well as improve consumers' access to legal review of violations of consumer protection provisions. Through the new law, rules are introduced regarding the approval of entities that shall be able to bring an action for measures for both injunctive relief and compensation. Just as it has emerged in another debate, there is now a difference between the majority in the Swedish Riksdag and, among others, the Socialdemokraterna.

We want strong consumer protection, and we also want a balance in the legislation. Today, we have good opportunities for consumers to get justice, for example in the National Advertising Board, where the voluntary correction rate is high.

What we do not want is an Americanized justice system. We heard in a previous exchange of remarks that lawyers are positive about the Social Democrats' proposal with opt-out. It is clear that the lawyers are very positive. It is probably the Bar Association's best friend to create a new market for the possibility of lawsuits in Sweden. That is what the Social Democrats' proposal means in the reservation that S, V and MP have written together.

We do not, therefore, want such a system, but we want strong and good legislation that is the same throughout the EU. That is why we are implementing the EU directive. Svensk Handel, in its consultation response, has stated that it is a good system to have an equivalent legal protection throughout the EU. But Svensk Handel, like Svenskt Näringsliv and other organizations, warns against a system where we create a profitability in engaging in - I was about to say defiance - a system where companies start to be sued via class actions, just as in the USA. That is what we do not want in Sweden.

The possibility of lawsuits is a profitable market. One of the funds that finances third-party funded lawsuits is extremely profitable with a 30 percent direct return. I therefore understand why the lawyers are positive that the Socialdemokrater want to introduce that system in Sweden, but the majority in Sweden's Riksdag does not want that.

It is good that we strengthen consumer protection, it is good to have uniform conditions in the EU, but we do not want an Americanized justice system.

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Katarina Luhr (MP)

Madam Speaker! Today we are dealing, as you have heard, with a matter concerning EU legislation for consumers. It is legislation that becomes more important the more global we consumers become. When the market for consumers widens and becomes more individual and global, the freedom of choice becomes greater, but at the same time, it can become harder to choose correctly. It is also difficult to know how to act when one has not received what one has paid for.

Today's report concerns class actions to protect consumers' collective interests with the aim, among others, of improving consumers' access to legal review. In this case, it concerns that there should be a mechanism in all EU member states to be able to initiate class actions for both measures for injunctive relief and measures for redress, for example compensation, price reductions or rescission, or both of these things. Through the class action directive, all EU countries shall receive a mechanism for class actions, and Miljöpartiet thinks that the majority of the proposal is good.

The bill also, as you have heard, is based on the idea that groups receive a definition which means that the person bringing the claim in the group litigation names the different group members and that these persons indicate that they wish to be part of the group before a group litigation is initiated. That is what is called opt-in. It is precisely here that our objection lies. We believe that it will lead to many missing the opportunity to stand behind a group claim, which could leave them without compensation or result in the total compensation from the company being small.

In several countries, as we have also heard, for example the United Kingdom, Norway and Denmark, it is possible under certain conditions to bring a claim for a concerned group, which is constituted automatically without each individual person having signed up for the group in advance. Those who wish can instead state that they do not want to be part of the group. It is then called opt-out.

This means that more people can collectively make demands in cases where the amounts are small but affect many. It would also have a preventive effect so that companies strive to a greater extent to do right from the beginning. On an individual level, it can lead to more people engaging in class actions.

It could also reduce the risk that consumers miss the opportunity to participate because they have not made a notification themselves. An opt-out procedure would therefore better protect those consumers who do not have the opportunity or ability to be active in the way that the proposed opt-in system requires.

Therefore, we believe, just like the Consumer Agency and several other referral bodies, that an opt-out system would better meet the needs of many consumers. I therefore move for approval of the reservation in the report from Miljöpartiet, Socialdemokraterna, and Vänsterpartiet.

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Lars Beckman (M)

Madam Speaker! Thank you, Katarina Luhr, for your speech!

At the core, we agree. We agree that we strengthen consumer protection and that it is good that we have the same rules in the EU. What concerns me is that Miljöpartiet joins the Socialdemokraternas Americanization of the justice system.

We heard the Social Democrats say earlier that lawyers are very satisfied with your reservation. That is clear; it is not so strange when they can see profitable legal proceedings ahead of them.

A company, or it is actually a fund, called Burford is one of the largest publicly traded litigation financiers. In one year, they invested 443 million dollars and received 772 million dollars back. They thus had a return of 31 percent. In these litigation cases, lawyers receive an average of 1 million dollars per claim while the consumers receive 36 dollars.

It is a development, Madam Speaker, that we do not want to see in Sweden. We do not want an Americanization of the Swedish justice system. We do not want it at the EU level either, so I believe that at the EU level one must be extremely vigilant against the lobbying directed at, among other things, political parties.

It is easy to say that this is a strong consumer protection. "Go for it! If we get the right, you can come along afterwards and help share the cake." That is the difference between these two proposals.

I would like to ask Katarina Luhr: Does the member not see any risks with the procedure that lobbyists, lawyers and others want in order to be able to bring mass lawsuits in Sweden?

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Katarina Luhr (MP)

Madam Speaker! Lars Beckman is taking a hard line in the case where we want to go further with this investigation than the government has. He speaks of an Americanization.

The opt-out procedure is something we see in both Norway and Denmark, where it has been introduced. It is also something that has been proposed in the investigation to proceed with because it can be a way to protect individual consumers who perhaps do not have the opportunity to engage in civil society. They may not be part of the debate where it is seen that a process or an appeal will be initiated and therefore do not have time to sign up. It is also something that several referral bodies have suggested that should be proceeded with and investigated, for example, both the Consumer Agency and Sveriges Konsumenter.

I can think it is a bit strange that the government does not want to investigate this issue further at all. We are not even saying that it needs to be introduced in this regulatory framework, but we are saying that an investigation needs to be appointed to see if such a procedure can be introduced in the future.

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Lars Beckman (M)

Madam Speaker! I understand that Sveriges Konsumenter think that this would be good. They could, after all, see it as a business idea to identify disputes and mass-sue companies or organizations or service companies to then, if they win in court, tell people: Please, come here!

It is precisely what we do not want to see. That is the Americanization of the justice system, Madam Speaker, and I note that Katarina Luhr and Miljöpartiet do not see any risks whatsoever with it.

The downside of this is that it will be cost-driving. If a well-known Swedish car manufacturer in Gothenburg receives a mass lawsuit - let's say they are ordered to pay 1 billion in fines or 1 billion in damages - it will make every car thereafter more expensive. It is extremely cost-driving. The one who is on the right side, the one who is on the correct side, is therefore against the Americanization that the Social Democrats want to see because it is cost-driving.

On the other hand, it is good for some organizations. We heard the Social Democrats themselves say that the lawyers would praise this system. Yes, it is entirely possible. And if we look at the funds whose strong lobbyists want this at the EU level, we see that they are extremely profitable - 31 percent in direct yield. But for the consumers, it is not particularly good that a lawyer gets 1 million and a consumer gets 36 kronor. It is cost-driving, and that is bad.

If, on the other hand, one regulates this strongly at the EU level and really does implement strong regulation at the EU level, yes, then perhaps one can consider it. But there is no such EU regulation.

It is positive that we agree that we are strengthening consumer protection. It is negative that you want an Americanization of the Swedish justice system. I wish, Katarina Luhr, that you could see some problems with your reservation. But clearly, you do not.

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Katarina Luhr (MP)

Madam Speaker! I think this has become a very strange discussion. The issue is about strengthening consumers' rights, for example when someone has sold a product that does not meet the requirements. One might have been harmed by a product that one has purchased. The idea is that all those consumers who have been affected by, for example, a substandard product should be able to receive compensation.

In this case, it is about more people being able to participate in a lawsuit if someone is convicted for a substandard product. If someone somehow highlights that this will be bad for the companies, I think the idea is to strengthen consumer protection, nothing else, and that all individuals - or as many as possible - should be able to share in the compensation that the company is to pay out.

I think it is very, very strange that Lars Beckman talks about consumer protection but at the same time does not want everyone who has been affected to be able to receive compensation.

(Applause)

The deliberation was hereby concluded.

(Decisions were made under § 20.)

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