Fostering A Competition Culture, Not A Litigation Culture - The European Commission's “Damages” White Paper

Originally published April 23, 2008

Keywords: European Commission; private antitrust damages; antitrust rule; Green Paper; full compensation; damages; representative actions; opt-in collective actions; indirect purchasers; competition law

The European Commission's White Paper on private antitrust damages actions for breach of the EC's antitrust rule was published on April 3, 2008. In it, the EC addresses a number of policy proposals designed to improve the availability of full compensation for loss resulting from an infringement of the EC prohibitions on anti-competitive agreements and abuse of market dominance. The EC takes the view that this will, in turn, enhance the deterrence of infringements and make public enforcement of EC competition law more effective. The White Paper refines the options presented in the Commission's December 2005 Green Paper. The consultation closes on July 15, 2008.

A SYSTEM ROOTED IN EUROPEAN CULTURE AND TRADITIONS

The Commission has clearly considered those responses to its 2005 Green Paper that expressed concerns about modeling the European Union system on the US system. It refers to its White Paper proposals as consisting of balanced measures, "rooted in European legal culture and traditions," and it has rejected many features of the US system that were examined in the Green Paper, notably multiple damages, exclusion of the passing on defense, wide disclosure requirements and opt-out actions. The result is a package of proposals that are considerably more favorable to defendants, and considerably less favorable to complainants, than the Green Paper suggested might be the case.

The Nine Policy Areas

The White Paper addresses nine policy areas.

1. STANDING

Proposals:

Indirect purchasers should have a right to claim damages.

The right of individuals with small claims to recover compensation should be safeguarded by introducing two complementary mechanisms of collective redress:

representative actions, brought by bodies designated in advance or certified ad hoc on behalf of identified or, in restricted cases only, identifiable victims, and

opt-in collective actions, where claimants expressly decide to combine their individual claims.

These mechanisms should not exclude individual actions, and they should include measures to prevent the same loss from being compensated more than once.

Comment:

Indirect purchasers suffer when anti-competitive surcharges are passed down the distribution chain. Granting them a right to sue for damages is consistent with the principle established by the European Court, that any individual should be entitled to claim compensation for harm suffered where there is a causal relationship between that harm and a breach of EC competition law. The Commission's decision to prompt opt-in, rather than opt-out, actions may limit consumer redress, particularly because representative actions may generally be brought on behalf of identified, rather than identifiable, victims. However, these mechanisms are designed to be incorporated into an initiative to improve collective redress throughout the European Union.

2. ACCESS TO EVIDENCE

Proposals:

To overcome an asymmetry of information between claimants and defendants, but also to safeguard defendants against onerous or abusive disclosure obligations, there should be a minimum level of...