Corporate Governance

The Global Trend Towards Class Actions

By Jeremy Lieberman

While Corporate America and the Paulson committee are doing everything possible to repeal or severely limit the class action mechanism in the U.S., other nations are slowly embracing the concept.  According to Portfolio Media, the Italian Senate last week passed legislation, backed by prime minister Romano Pradi, allowing consumers to sue companies on behalf of similarly situated individuals. 

Confindustria, which represents the Italian business community, denounced the legislation as antagonistic to business interests.  According to the group, ?it will constitute a new, heavy disincentive to invest in our country that is already at the back of the line in Europe in attracting foreign capital.  It is a rough provision that exposes Italian businesses and their workers to grave risks.  And the benefits to consumers will be minor.? 

Indeed, one might wonder why, in light of the recent negative press regarding class actions in the U.S., other countries are embracing this system. The answer is quite simple.  Given the increasing size and power of corporations in recent decades, the only possible means to counterbalance such power is to allow individuals to gather together and pursue their claims as a class.  Governmental regulation just doesn?t cut it because of their limited resources.  It is for this very reason that the head of the European Union?s antitrust division recently recommended that the EU adopt some form of private class action measure.

Pomtalk anticipates that the trend of European nations adopting class actions is on the rise, and looks forward to monitoring its development.

Full post as published by PomTalk on November 26, 2007 (boomark / email).