Class action in Belgium: the People v Large Companies?
Gil Robles – San Bartolome & Partners, Brussels
As with several other European Union Member States, Belgium has only adopted a specific class action legal arsenal in recent years. Since 1 September 2014, consumer representative organisations can file class action lawsuits against any type of business legal person. Over the last six years, several class actions have been brought to court, most of the time resulting in settlement talks.
After 30 years of mergers and acquisitions of then large Belgian-controlled companies which have mostly turned into local subsidiaries of even larger foreign companies, Belgian companies typically consist of family-run small and medium-sized enterprises (SMEs). Recent governments have tried to pay greater attention to SMEs, as the dynamism of Belgium’s economy is heavily dependent on them. Unsurprisingly, in 2018, Belgium extended the scope of its class action legislation by also making it available to SME plaintiffs, thereby leaving large companies aside. A few months later in 2019, Belgium enshrined in its antitrust legislation the concept of abuse of economic dependence, paving the way to future lawsuits, expected to be mainly to the benefit of SME plaintiffs.
This evolution allows us to ask the question whether Belgium’s class action system does not create a legal divide between, on the one hand, consumers and SMEs and, on the other, large companies, in a mock case named The People v Large Companies.
This article outlines the first few years of Belgian class action lawsuits, as well as provides insights into the extension of the class action legislation to SME plaintiffs and the link with the new concept of abuse of economic dependence.
Belgian consumer class action legislation in the mirror
The Law of 28 March 2014 inserted a set of legal provision of ‘collective redress actions’ as Title 2 in Book XVII of the Belgian Code of Economic Law (the 'Code of Economic Law') through which the Belgian legislator codified in 2013-2014 the main material and procedural legal provisions of Belgian economic law. The Belgian concept of ‘collective redress action’ is equivalent to the best-known concept of class action, although the Belgian legal regime makes it less available than in some other countries.
The legislation limits class action lawsuits to violations of specific, mostly consumer related, legislative acts. In order to avoid reckless proceedings, the procedure cannot be initiated by the consumers themselves. They must appoint an official representative, which can only be one of the following: a consumer association part of the Consumer Council; a non-profit group which has been incorporated for at least three years and is licenced by the Federal Minister of Economy; the ombudsman charged with consumer protection; or another organisation admitted to bring class action lawsuits in another EU Member State. The latter category of representative was introduced by the Law of 18 April 2017 which was adopted after the annulment of Article XVII 39 of the Code of Economic Law by a 2017 judgment of the Belgian Constitutional Court. The Constitutional Court had found that the Belgian legislation requirement imposed on organisations admitted in other EU Member States violated EU law, including the recognition mechanism provided in the Commission Recommendation of 11June 2013 on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under EU law.
Since its enactment, Belgium’s class action legislation gave exclusive competence to the Brussels courts to receive class action lawsuits. Until 1 June 2018, lawsuits could be brought before either the French-speaking or the Dutch-speaking Brussels Court of First Instance, both civil courts, as consumers normally have the choice to bring lawsuits either before a civil or commercial court. Since 1 June 2018, class action lawsuits can only be brought before either the French-speaking or the Dutch-speaking Brussels Commercial Court, with the idea of increasing knowledge at these courts levels, especially as SMEs class action lawsuits are also brought before these courts. As Belgium has three official languages (Dutch, French and German) but only Dutch and French are used at every jurisdictional level, the legislator chose to concentrate cases in Brussels where there are both Dutch and French-speaking courts, or chambers of courts at every single court level.
Over the last six years, Belgian consumer legislation led to the recognition of several consumer organisations as class action representatives. One of them, the largest Belgian consumer organisation ‘Test-Achats’ (Test-Aankoop in Dutch) has so far initiated eight class action lawsuits as of 2 December 2020. Five of these have been accepted by the competent court, two still have to be subject to the admission or rejection ruling by the court while the case against Belgian State-controlled telecom giant Proximus has been finally rejected by the Dutch-speaking Brussels Court of Appeal.
The case concerned the end of service of a TV-decoder by Proximus and communications directed to its customers which were misleading according to Test-Achats. In a first judgment rendered on 10 January 2018 in the Proximus case, the Dutch-speaking Brussels Court of Appeal provides interesting guidance as the choice between the opt-in and opt-out systems to determine the class action group. The court set aside the decision in first instance by requiring Test-Achats to implement an opt-in system as it guaranteed, according to the court, the best way to ensure the individual identification of harmed consumers, as the court considered that the individual damage caused to consumers was not self-evident and required further evidence. After the implementation of the opt-in system and failing to settle with Proximus, Test-Achats lost the case as the Dutch-speaking Brussels Court of Appeal rendered another judgment on 30 January 2019 where, after weighting the theoretical total economic loss for the number of Proximus customers concerned by the decoder end of service to confirm that a class action was more legitimate than an individual action, it came however to the conclusion that consumers did not suffer any harm as the court looked in detail to some factors of the commercial relationship, that is, the question of quality of service and free entitlement.
This case was certainly more straightforward than other class action lawsuits as it dealt with the monthly cost of television decoder rental. We are still missing case law guidance in Belgium as to how damages in the form of a lump sum are awarded by a court.
The creation of a Belgian exceptionalism: the extension of class action mechanisms to SME plaintiffs
The extension of class action mechanisms to non-consumers is nothing new. Countries such as Australia, the Netherlands or Italy allow companies to file class action lawsuits. The Belgian Law of 30 March 2018 extended the class action category of plaintiffs to SMEs, and which came into force on 1 June 2018 is however exceptional. Instead of setting aside the divide between consumers and business, it extended the legislation only to SME plaintiffs, thereby excluding large companies from its benefit and leaving them as the most obvious target of any type of class action lawsuit, whether brought by consumer or SME representatives. The Law of 30 March 2018 does not define SMEs and merely refers to the Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises. That recommendation defines SMEs as those which ‘employ fewer than 250 persons and which have an annual turnover not exceeding €50m, and/or an annual balance sheet total not exceeding €43m’. According to the latest statistics published on 30 October 2020 by Statbel, the Federal Bureau of Statistics, 99.8 per cent of Belgian companies are SMEs and they account for two thirds of employment nationwide.
The Law of 30 March 2018 only slightly amended the Belgian Code of Economic Law, as most of its provisions on class action procedures are also made applicable to lawsuits initiated by SMEs. These can be represented in court procedures by one of the following representatives: an inter-professional organisation member of the self-employed and SMEs council; a non-profit group which has been incorporated for at least three years and is licenced by the Federal Minister of Economy; or another organisation admitted to bring class action lawsuits in another EU Member State. While Belgian SMEs, like consumers, can be part of the group either de facto (opt-out system) or by their own decision (opt-in system), non-Belgian SMEs (also like non-Belgian consumers) actively need to decide to join the class action.
The other particular change mentioned above was the further limitation of jurisdictional competence for all class actions lawsuits brought in Belgium to the two Brussels Commercial Courts.
The new concept of abuse of economic dependence: are SME class action lawsuits on the rise?
On 1 December 2020, the provisions of the Belgian law of 4 April 2019 prohibiting the abuse of economic dependence came into force. Unlike the antitrust concept of abuse of dominance which requires the existence of a dominant position to demonstrate the abuse of economic power by an undertaking, this new concept extends to cases of abuse of economic power even if the abusive undertaking does not have a dominant position. It specifically aims to fight business customers’ dependence on suppliers that is, making it costly for the customer to switch supplier, but also small suppliers’ dependence on large customers, for example agricultural and food suppliers facing pricing constraints from large wholesalers or retailers. Even if the Belgian law of 4 April 2019 also allowed large companies to complain about a case of economic dependence and we cannot exclude that a large company could be subject to some sort of economic dependence from another large company, we consider that economic dependence of large company from a SME would be rather uncommon, with the possible exception of technological dependence.
Economic dependence is often structural and it is very likely that a business customer complaining about its co-contractor’s abuse of economic dependence will find that the latter’s other customers are in the same situation, therefore making the class action procedure more interesting if plaintiffs are mainly SMEs.
We can argue that the introduction in Belgian law of the concept of abuse of economic dependence will give SMEs the legal instrument which was missing when the class action legislation was extended to SMEs plaintiffs as antitrust damages lawsuits covered only part of the economic harm SMEs usually face in business. With this new concept and with the availability of class action mechanisms, Belgian SMEs will have a less costly and probably more efficient legal avenue to challenge economically the damaging practices of large companies.
Belgium’s extension of consumers-oriented class action mechanisms to SMEs has increased large companies’ exposure to lawsuits from so-called weak economic operators. The Belgian legislator has given the same standing to consumers and SMEs, although these could also face class actions from consumer organisations. However, the first consumer class action lawsuits demonstrate that SMEs are not the likely targets of these court collective procedures. With the new ban on abuses of economic dependence, the legal gap is greater than ever between consumers and SMEs on one hand, and large companies on the other. Although it could be summarised with a catchy case name like The People v Large Companies, Belgian legislation remains balanced. We can certainly expect that both consumer and SME class actions will become increasingly popular in Belgium in the near future.
 Published in the annexes of the Belgian Official Gazette, 22 May 2018.