Extending collective action to SMEs

On 22 January 2018, the government filed a bill aimed at extending the Belgian mechanism for collective remedy to SMEs.

The law dated 28 March 2014 introduced into the Belgian Code of Economic Law the option for collective reparation action, confined initially to consumers. The collective remedy could only be sought by consumers for a violation, by a company, of a contractual obligation or of Belgian or European regulations listed exhaustively by law. The consumers must appoint a representative of the group; only a few associations defending the interests of the consumers have the power to do so.

The law was reviewed two years later to determine whether it should be extended beyond consumers. This review recommended the extension of the regulation to SMEs as widely requested.

The application of ratione personae for collective remedy is thus extended to SMEs in the new bill. The SME’s are defined in the same way as in article XVII.86 §2 of the Code of Economic Law, referring to recommendation 2003/361/CE of the European Commission dated 6 May 2003 regarding the definition of micros, small and medium-sized companies, i.e. those employing fewer than 250 employees and whose annual turnover doest not exceed EUR 50 million and whose annual balance sheet does not exceed EUR 43 million.

The representation mechanism of SMEs replicates that in the consumer law and is based on the representation system created by the law dated 24 April 2014 regarding the organization of the representation of businessmen and SMEs. This allows representation by an association with a legal personality, approved by the Minister of the Middle Classes, whose company purpose is directly related to the collective prejudice suffered by the group and which does not pursuit an economic aim an a long-term basis. This could be, for example, the interprofessional organization approved by the Superior Council of Independents and SMEs.

Please note that, at this stage, the application of ratione materiae was not modified. The collective remedy action can thus only be introduced to obtain an indemnity of a prejudice caused by a contractual default or violation of a provisions enumerated in law.

This modification will allow an easier and cheaper defence of SMEs and businessmen subject to strong prejudice. Given the definition of SMEs, the majority of Belgian companies will be concerned by this legislative modification.

Marie Canivet, Counsel, marie.canivet@cms-db.com