The Private Enforcement Of Competition Law

Civil Actions To Recover Damages For Breach Of UK And EC Competition Law Are Set To Rise Significantly In The Next Few Years

Competition disputes usually blow up unexpectedly and often as a result of a change of policy or strategies of a trading partner or "sharp" practices of a competitor.

In all cases however they can have enormous financial and reputational consequences for the businesses concerned.

Consequently it is important for companies to be fully aware of how to enforce their rights before the Courts as well as how to safeguard their interests when threatened.

Our considerable experience in this field has made us aware that most businesses are unprepared to tackle these unfamiliar issues and are considerably exposed. With this in mind we have produced this short briefing providing preliminary guidance on the subject together with some attached illustrations as to when private enforcement actions can arise and the nature of damages and other remedies potentially available.

RECENT DEVELOPMENTS

Historically in the United Kingdom few actions for private damages and/or interim relief have been brought, despite the fact that the enforcement of competition law (by means of such actions) has long been available as an effective alternative to regulatory enforcement. It is, however, now widely accepted that there will be a significant increase in the level of civil actions in the national courts as a consequence of a number of key factors including:

Public Policy: As a matter of public policy the EU Commission sees private litigation as a key complement to the public enforcement of the competition rules. As part of a general policy of devolving down enforcement to national level, the EU Commission published a Green Paper setting out its proposals for the promotion of private enforcement of the competition rules. More recently in April and November 2007 respectively the Office of Fair Trading published its own consultation and recommendation documents on how consumers and businesses can gain redress for breaches of competition law. The EU Commission is due to publish a White Paper in the near future to further encourage private enforcement.

The Enterprise Act: Private actions are strongly encouraged by the Enterprise Act 2002. Under this Act once there has been a finding of infringement by the national or EU regulator, this finding will be binding on a court in a civil claim for damages;

Case Law: The judgment of the European Court of Justice in the case of Courage -v- Crehan has confirmed the availability of the remedy of damages in the national courts for breach of the competition rules as well as extending potential liability to co-contractors in certain given situations.

The Modernisation Legislation: Under the overhaul of the competition regulations, implemented primarily in the UK through Council Regulation 1/2003, it is no longer possible for companies to voluntarily notify the EU Commission of agreements that might have anti-competitive effects. One consequence of this is that businesses are stripped of a line of defence, thus opening the door to more private litigation in the national courts.

In essence, victims and perpetrators of anti-competitive behaviour are witnessing the development of a set of coherent rules on private competition actions for damages. This, coupled with a general increasing awareness of seeking damages and/or interim relief through the courts, is likely to result in a marked increase in the number of actions brought. Accordingly, businesses can no longer afford to ignore the opportunities and threats created by these developments.

SOME ADVANTAGE OF PRIVATE ENFORCEMENT

Depending upon the circumstances of the individual case a business may consider that the most appropriate course of action is to seek to use regulatory findings to establish liability as a stepping-stone to a claim for compensation in...

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