Antitrust: Commission presents policy paper on compensating consumer and business victims of competition breaches

The European Commission has published a White Paper suggesting a new model for achieving compensation for consumers and businesses who are the victims of antitrust violations (breaches of EC Treaty rules on restrictive business practices and abuse of dominant market positions). At present, there are serious obstacles in most EU Member States that discourage consumers and businesses from claiming compensation in court in private antitrust damages actions. The White Paper includes suggestions to make damages claims by victims more efficient, whilst ensuring respect for European legal systems and traditions. The model outlined by the Commission is based on compensation through single damages for the harm suffered. The White Paper's other key recommendations cover collective redress, disclosure of evidence and the effect of final decisions of competition authorities in subsequent damages actions. The recommendations balance rights and obligations of both the claimant and the defendant and include safeguards against abuses of litigation. Interested parties are invited to comment on the recommendations until 15 July 2008. The Commission will then reflect on concrete measures in the light of responses to the White Paper.

European Competition Commissioner Neelie Kroes said "The suggestions in this White Paper are about justice for consumers and businesses, who lose billions of euros each and every year as a result of companies breaking EU antitrust rules. These people have a right to compensation through an effective system that complements public enforcement, whilst avoiding the potential excesses of the US system."

Effective enforcement of EC Treaty competition rules prohibiting restrictive business practices and the abuse of dominant market positions (Articles 81 and 82) requires that victims of competition law infringements – be they consumers or businesses – have a right to compensation for the harm they have suffered.

Ensuring effective access to justice for victims of competition law infringements requires joint efforts from the EU and Member States.

The White Paper presents a set of recommendations to ensure that victims of competition law infringements have access to truly effective mechanisms for claiming full compensation for the harm they have suffered. These recommendations offer a balanced solution to the current often inefficient compensation systems in place, while avoiding over-incentives that could lead to litigation excesses as perceived in some countries outside Europe.

The key recommendations in the White Paper are as follows:

Single damages: the Commission suggests single damages rather than multiple damages. This means full compensation, including compensation of the actual loss due to e.g. an anti-competitive price increase or the loss of profit as a result of any reduction in sales. Compensation of the real value of the loss suffered also implies a right to interest.
Collective redress: in particular consumers and SMEs with small value claims need better access to justice and should have the possibility to regroup their claims and bring actions via suitable representatives. However, safeguards to avoid that such actions would lead to unfounded claims need to be put in place. In the field of antitrust, the Commission therefore recommends allowing only representative actions led, for example, by recognised consumer groups and actions in which victims can choose to participate, as opposed to class actions run by law firms for an unidentified number of claimants.
Disclosure: to allow judges to get the full picture of a case, parties should not be permitted to keep relevant evidence to themselves. The disclosure of relevant evidence, under the control of the judge, should help to ensure a fair case, where both parties have equivalent access to evidence. However, the Commission does not recommend more far-reaching options, such as an automatic right to discovery, which could lead to procedural abuses, where defendants settle merely to avoid the heavy costs that excessive wide-ranging discovery, can create.
Evidence of final decisions: to avoid the time and cost of re-litigation, the Commission recommends, as is already the case for Commission decisions, that final infringement decisions of Member States' competition authorities should be considered sufficient proof of an infringement in subsequent actions for damages.

Although there are recent signs of improvement in some Member States, over the past decades very few damages claims were brought in Europe.

In its 2005 Green Paper (see IP/05/1634 and MEMO/05/489), the Commission found that the traditional rules and procedures on civil liability in force in most Member States appear to be inappropriate for antitrust damages cases. These cases require a complex factual and economic analysis.
The White Paper can be found at:

http://ec.europa.eu/comm/competition/antitrust/actionsdamages/index.html
Comments on the White Paper can be sent until 15 July 2008 to

comp-damages-actions@ec.europa.eu.