France to allow class action lawsuits within months
* Class actions rules meant to boost trust, consumer rights
* Pressure on consumers adds impetus to Hollande initiative
PARIS May 2 (Reuters) - The French government said on Thursday it would allow class action lawsuits against companies for misselling and over-charging, part of a package to boost consumer rights after recent scandals including the mislabelling of horsemeat.
The new rules stop short of health and environmental matters which have yielded huge settlements in the United States, and which the law may be revised to cover.
Like his conservative predecessors, Socialist President Francois Hollande had promised since his 2012 election campaign to introduce class action, and pressure on consumers has added impetus. Household spending, the traditional source of growth in the euro zone's No. 2 economy, is falling alongside soaring unemployment.
Presenting the package, Consumer Affairs Minister Benoit Hamon said the threat of such suits would act as a "weapon of mass dissuasion" for companies in conflicts with consumers.
"It will push a lot of companies to seek mediation with consumers rather than settle conflicts in court," he said.
Under the legislation, fines for companies found guilty of fraud could reach 10 percent of their sales.
Corporate fraud has become a sensitive issue after French meat processors were found to be at the centre of a Europe-wide scandal over mislabelled frozen meals containing horsemeat.
Another part of the package of legislation, aimed at encouraging more competition between insurers, allows policyholders to cancel contracts more easily after one year.
The package would also boost consumers rights over purchases on the Internet, and give them powers to contest clauses in contracts deemed by a judge to be abusive.
In an effort to discourage people getting saddled with huge consumer debts, new law also requires lenders offer fixed terms on loans for purchases more than 1,000 euros ($1,300). Fixed-term loans charge lower rates than open-ended credit lines.
Big changes to the legislation are unlikely as Hollande's government enjoys a majority in parliament where the bill is due to be presented in June.
Germany, Britain and about 13 other European Union countries allow class action lawsuits.
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