Damages Actions

This article was originally published in Competition Law Insight,

3 June 2008.

The state of private enforcement of competition law in the

EU has been under the spotlight ever since the Ashurst Report

concluded in 2004 that the area was characterised by

"total underdevelopment" and an "astonishing

diversity" in the approaches taken by different member

states. Although few people thought that it was either

necessary or desirable to go as far as the United States has

done in favouring private over public enforcement, the Ashurst

Report did provide an impetus for the European Commission to

analyse how the embryonic state of private enforcement in the

EU could be accelerated.

In late 2005, the Commission published a green paper on

damages actions that floated a number of ideas on how the

problems associated with successfully claiming damages for

breaches of EC competition law could be tackled. A consultation

exercise was run the following spring, and an expert report was

commissioned under the auspices of the Centre for European

Policy Studies to evaluate the extent to which the private

enforcement area had developed since the Ashurst Report.

After having prepared a detailed regulatory impact

assessment and a staff working paper, the European Commission

published the long-awaited white paper on damages actions on 2

April 2008.

General points about the white paper

The European Commission is clearly concerned that the

private enforcement landscape in Europe has not moved on

significantly since publication of its green paper in 2005. As

Competition Commissioner Neelie Kroes said in one of her first

speeches after publication of the white paper: "While we

work hard for consumer interests in public enforcement, gaps

and flaws in our legal system mean victims of competition law

infringements are foregoing not just millions, but

billions in compensation."

However, the European Commission is clearly also aware that

it is simply not feasible in a realistic timeframe (or indeed

necessary) to harmonise national procedural rules of 27 member

states to bring about a more effective private enforcement

culture in the EU. Therefore, as a point of principle, the

white paper aims to establish a minimum level of protection for

parties who have suffered loss as a result of anticompetitive

practices and who wish to bring a damages action. This in turn

does not appear to preclude member states from imposing

stricter or more extensive measures in regard to particular

issues than the relevant option suggested in the white

paper.

The remainder of this article analyses the key parts of the

European Commission's white paper proposals, namely:

standing, in particular collective redress;

access to evidence;

damages / the passing-on defence; and

damages / leniency interplay.

Standing / collective redress

The European Court of Justice's Manfredi

judgment in 2006 confirmed that "anyone" who suffered

loss as a result of anticompetitive practices could bring a

damages action. In the white paper, the European Commission

points out that this judgment therefore clearly also deals with

the question of standing for indirect purchasers in the

competition law context. The reason why it is important that

indirect purchasers can also be compensated is that direct

purchasers may well attempt to pass on at least a proportion of

the overcharge further down the supply chain.

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