ACTIONS FOR DAMAGES FOR BREACH OF EC COMPETITION LAW

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ACTIONS FOR DAMAGES FOR BREACH OF EC COMPETITION
LAW

• D.Waelbroeck
• ASHURST
• Brussels

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THE CONTEXT

• The Commission desires to promote
• - deterrence
• - awareness of competition rules
• - compliance
• - and justice through compensation of the victim
• But also
• ? it is aware of a need to avoid excesses and to
  ensure the right balance

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THE FIRST STEP THE  DIAGNOSIS 

• THE ASSIGNMENT TO ASHURST
• 1. Give a  photographic picture  of the
  situation. Be neutral Not taking sides
• 2. - Discuss damages actions only and not
  injunction nor  Eurodefense 
• - 800 pages giving a wealth of details (but
  some cases may still have been missed)
• - The  methodology  one general
  rapporteur 25 national reports one economic
  report questionnaire of the Commission (strict
  deadlines, and permanent review by the
  Commission)

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THE MAIN FINDING

• In 50 years of EC law, in the whole EU (25
  Member States)
• 12 successful actions
• 12 unsuccessful actions
• (and a couple of actions under national
  competition law)
• (settlements are not taken into account as
  they are not public and there is no record of
  them)

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II. THE BENCHMARK COMPARISON WITH THE US

• More than 800 federal antitrust cases every year
• In addition, many indirect purchasers cases are
  filed in state courts each year
• Most cases are settled, but there are several
  antitrust trials each year (at least 10-15 of
  antitrust cases are tried to judgment)
• CONCLUSION
• In the US 90-95 is  private enforcement ,
  whilst in the EC, it is probably the reverse

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WHY THIS DIFFERENCE AND WHY SO FEW IN THE EU?

• Partly  cultural  (US is more litigious)
• Partly not the incentives that exist in the US
•  astonishing diversity  of rules

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III. THE SECOND STEP THE REMEDY

• Clarify the rules (both procedural and
  substantive rules)
• Clarify the facts (facilitate evidence gathering,
  burden of proof)
• Readjust the balance of the law

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A. CLARIFY THE LAW

• Astonishing diversity of rules, even on most
  basic procedural rules, e.g.
• Competent court (e.g. Italy)
• Standing (e.g. Schutznorm in Germany)
• Is infringement a fault?
• Clarify also substantive rules (direct link
  between private enforcement and per se rules)

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B.  CLARIFY THE FACTS Evidence gathering and
burden of proof

• THE FINDINGS
• No pre-trial discovery (except in the UK, Ireland
  and Cyprus) and need to mention specific
  documents (see p.52 et seq, and 108 and seq of
  summary of the report)
• THE QUESTIONS
• Should the EU follow the US model? But
• Pre-trial discovery can be burdensome and
  intrusive
• This is a major change in the procedural system
  of most Member States
• Even in the US, 50 of cases are  follow on 
  and the others are  section 2  cases (no
  discovery of big cartels)
• Alternatives instead introduce  presumption ?
  Reduce standard of proof?
• Should  fault  be proved if there is an
  infringement?
• Should other methods of proof (such as
  cross-examination) be more widely allowed?

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C. MAKE THE LAW MORE BALANCED?

• Introduce incentives? Reduce costs?
• Many highly controversial issues
• Pass on defense/indirect purchaser
• Collective actions
• Punitive damages or other incentives
• Contingency fees? And who bears costs?

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1. PASS ON DEFENCE / INDIRECT PURCHASER

• THE FINDINGS
• So far, very little case-law on this (see p.77 et
  seq., 110 et seq., 126 et seq of the summary of
  the study)
• Basic principle in all Member States damages
  should be restitutive only
• THE QUESTIONS
• Should the EU exclude the defence?
• In favour  probatio diabolica  risk of
  endless and uncertain litigation where do you
  end? (cascades of indirect purchasers, suppliers
  upstream, suppliers of complementary products,
  customers of companies not participating in the
  cartel but beneffitting from the  umbrella 
  effect of the cartel)
• But excluding the defence as in the US would give
  a windfall to purchasers and risk of double
  compensation
• ECJ case law allows the defence (and
  Courage/Crehan requires compensation)

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2.COLLECTIVE ACTIONS

• THE FINDINGS
• Joint actions are generally possible, but not
  class actions in the US sense (see p.42 et seq.,
  105, 119 of summary of the report)
• Tendency however to move into a facilitation of
  group actions, representative actions (e.g.
  Sweden, discussion in France, the Netherlands,
  GLOs in the UK)
• THE QUESTIONS
• Does the EU want to promote collective actions
  and what type?
• Risk of  ambulance chasing . See US  Class
  Action Fairness Act 

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3. PUNITIVE DAMAGES OR OTHER INCENTIVES

• THE FINDINGS
• In most Member States, damages are only
  compensatory punitive damages are contrary to
  public policy
• Only UK, Ireland and Cyprus recognise
  exceptionnally some form of punitive damage (see
  pages 12, 46 et seq, 83 et seq, 110 et seq and
  127 of summary report)
• THE QUESTION
• What further incentive need to be built into the
  system?
• Double or treble damages?
• Cost rules (plaintiff never paying costs of
  defendant)?
• Contingency fees?
• Pre-judgment interest?

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4. CONTINGENCY FEES AND WHO BEARS COSTS?

• In most EU Member States, contingency fees are
  prohibited contrary to US.
• In the US, the plaintiff never pays the costs of
  the defendant.

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IV. CONCLUSION

• Many basic questions unresolved.
• Commission has created a momentum but
  clarification will only come slowly and will have
  to be carefully balanced.