German government slammed over delays in class-action reform | Germany| News and in-depth reporting from Berlin and beyond | DW | 17.10.2016
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German government slammed over delays in class-action reform

Critics have accused the grand coalition of dragging its feet over reforms to allow class-action suits that would benefit consumers. The focus is on the VW emissions scandal. The government claims it's doing all it can.

The German government has denied allegations raised by the public television station ARD and the "Süddeutsche Zeitung" (SZ) newspaper that it is purposely delaying legislation to permit the equivalent of class-action suits in Germany.

Such suits are not currently admitted under German law, but in late September 2015, in the immediate wake of the Volkswagen emissions scandal, the Justice Ministry said that it was examining "with particular interest" the possibility of changing that. Citing internal ministry memos, ARD and the SZ reported that the parameters for draft legislation were readied in late November 2015, but that the initiative has been put on ice. Justice and Consumer Protection Ministry spokesperson Piotr Malachowski rejected that contention and said draft legislation was in the pipeline.

"The draft legislation isn't finished yet," said Malachowski at the government's Monday press conference in Berlin. "We're still intensively investigating the possibilities of class-action lawsuits. We intend to stick to the plan of putting forward legislation this year. I can't say why it's taken so long."

But that's precisely one of the questions that consumer advocacy groups and the political opposition would like answered - sooner rather than later.

Volkswagen Abgasskandal Symbolbild (picture-alliance/dpa/J. Stratenschulte)

Volkswagen programmed cars so as to flout emissions regulations

A ticking clock?

In late June 2016, Volkswagen paid out the record sum of $15.3 billion (13.9 billion euros) to settle the various public and private legal actions, including class-action lawsuits, in the US and Canada after it was proven that the car-maker had manipulated emissions data for some of its diesel models.

In Germany, VW has offered car owners free adjustments to their vehicles, but no financial compensation. For Renate Künast, Green Party deputy and former German consumer protection minister from 2001 to 2005, that's an unacceptable situation.

"This government doesn't really represent the interests of consumers vis-à-vis VW," Künast told DW. "It's a continuing story of government failure. No one is standing up and saying: Consumers here should have the same rights as consumers in the US."

At a conference hosted by the Federation of German Consumer Organizations on September 28, 2015, just 10 days after the emissions scandal broke, Deputy Justice and Consumer Protection Minister Gerd Billen expressed enthusiastic support for introducing a suitable legal instrument in Germany. But despite the ministry's assurance that legislation is on the way, the Federation's director of consumer policies Jutta Gurkmann doubts that anything will happen before Germany's national election next September.

"Everyone agreed last year that we needed something, and the deputy minister announced that the ministry would work on it," Gurkmann told DW. "We're still waiting. We hoped that something would come in the second quarter of 2016. You always calculate how much time legislation needs in order to be passed in this legislative period. If it only goes to the cabinet at the end of this year, it would be quite a feat to get it through by next summer."

Schlüsselanhänger mit US-Flagge (picture-alliance/dpa/K.J. Hildenbrand)

Volkswagen has paid out billions to customers in the US

Playing for time?

Both the Greens and the Left Party accuse the government of deliberately stalling reforms in the interests of VW and the entire German automotive industry.

"I think it will be delayed into the next legislative period because this situation is about preventing people who have grievances from getting compensation," Karin Binder, the consumer affairs spokesperson of the Left Party, told DW.

Künast says that it would be possible to pass class-action suit legislation, if the government were to present a draft law.

"We are capable of passing a law right now with no problems," Künast said. "We deal with much more complicated legislation in much shorter periods of time. We have all the time in the world."

Both Künast and Binder argue the possibility of launching class-action lawsuits is essential to protecting consumers' rights. Consumer advocacy groups agree and say all sides in conflicts like the emissions scandal would benefit if plaintiffs were allowed to bring legal cases collectively.

"There are lots of advantages from my perspective," Jutta Gurkmann said. "The courts' workload would be reduced, and it's easier for a business to go up against a large group instead of confronting every single individual in a trial. But maybe part of the story is that it's well known that individual consumers rarely take their cases to the courts."

Berlin Große Koalition Kabinett 17.12.2013 Vereidigung (picture-alliance/dpa)

Critics say the coalition favors carmakers over consumers

Applying the brakes?

The SZ report also alleges that the Transport Ministry, which is headed by a member of the conservative CSU, intervened with the Social Democrat-led Justice Ministry to delay and water down possible class-action-suit legislation.

On Monday, Transport Ministry spokesperson Vera Moosmayer vigorously denied any activity on behalf of Volkswagen or the auto industry as a whole.

"By no means would we block measures aimed at protecting consumers," Moosmayer said.

But Künast thinks that differing perspectives among the members of Germany's governing grand coalition could indeed be holding up legislative reform.

"The Transport Ministry is doing everything in its power to protect VW from the customers," Künast said. "And I wish German Justice Minister Heiko Maas would stand up for them." 

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