Italian Consumer Law Update Penalties and means of redress
28 September 2022
On 26 August 2022, the European Delegation Law 2021 (Law 127/2022, the "EDL") was published in the Italian Official Gazette. The EDL implements the Omnibus Directive (Directive (EU) No. 2019/2161) which is designed to modernise consumer protection rules and improve enforcement of these rules in the EU. See here for further details on the Omnibus Directive.
A key aspect of the Omnibus Directive is harmonising the rules on penalties across the four directives governing EU consumer protection law: the Unfair Commercial Practices Directive (2005/29/EC), the Consumer Rights Directive (2011/83/EU); the Price Indications Directive (98/6/EC) and the Unfair Contract Terms Directive (93/13/EEC).
The new provisions seek to ensure that penalties will be effective, proportionate and have a deterrent effect (particularly in relation to the most serious and widespread infringements and those with an EU dimension) and will therefore entail a significant strengthening of the potential monetary fines and enhanced means of redress for consumers.
Key takeaways
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Overview of the key changes
To harmonise the approach to penalties across the EU, the Omnibus Directive has introduced (common) non-exhaustive and indicative criteria to be taken into account when considering penalties.
In essence, penalties should reflect the nature, gravity, scale and duration of the infringement, and any redress provided by the trader to consumers for the harm caused. Aggravating and mitigating circumstances may also be taken into account: for example, authorities may consider recidivism, financial benefits gained or losses avoided.
To ensure that effective, proportionate and dissuasive penalties can be imposed across the EU for widespread infringements and/or infringements with an EU dimension, the Omnibus Directive establishes that fines may be imposed up to a maximum of 4% of the trader's annual turnover in the Member State(s) concerned.
In addition, Member States should ensure that remedies are available to eliminate all the effects of any unfair commercial practice(s). Consumers should have access to compensation for any damage suffered and, where relevant, a price reduction or the option to terminate the contract in a proportionate and effective manner. Member States may also maintain or introduce other remedies such as repair or replacement for consumers harmed by unfair commercial practices in order to ensure full removal of the effects of such practices. When imposing remedies, the gravity and nature of the unfair commercial practice, damage suffered by the consumer and other relevant circumstances (such as the trader’s misconduct) may be taken into account, where appropriate.
Comment
In Italy, penalties (including monetary fines) may be imposed for violations of consumer rights. Consumers may also rely on various means of redress, including the ability to launch a class action to seek compensation for the harm suffered.
Following implementation of the Omnibus Directive, the value of fines being imposed may increase. In particular, we expect to see an increase in monetary penalties in the context of proceedings brought by the Autorità Garante della Concorrenza e del Mercato in relation to unfair commercial practices that constitute widespread infringements or infringements with an EU dimension. Where the unfair commercial practice(s) only takes place in Italy, the current cap of EUR 5 million per violation will continue to apply.
It remains to be seen whether the existing tools, including the ability to launch class actions, to seek compensation for harm caused by unfair commercial practices will be enhanced in order to provide more effective remedies to consumers.
