On September 22, 2005, Ms. Neelie Kroes, the European Union’s Competition Commissioner, gave a speech at the Harvard Club, New York, on enhancing actions for damages for breach of competition rules in Europe.
This is one of Ms. Kroes top priorities, and she is personally convinced that private enforcement of the European competition rules will create a more competitive environment for European business and industry. She believes that the threat of having to pay damages for the harm caused by an infringement of the European antitrust rules will have a strong additional deterrent effect over and above the sanctions that can currently be imposed via public enforcement.
Ms Kroes believes that private action will promote a culture of competition enforcement amongst businesses, industry, and consumers, which will, in turn, help broaden the basis of support for the European antitrust rules. This implies a wider scope of enforcement beyond the priorities set by the European competition authorities. The enforcement of the competition rules via the courts will also provide direct justice to the victims of illegal anticompetitive behavior, by providing compensation for the loss they have suffered. Ms. Kroes emphasized that this instant relevance for citizens is something that enforcement by competition authorities can only rarely achieve.
A recent study found that private actions for damages for breach of competition law is totally underdeveloped in Europe. Accordingly, Ms Kroes confirmed that the European Commission is working on a Green Paper, which will set out the options that it is considering in the promotion of private enforcement of EC competition rules. The Green Paper will be used to stimulate discussion on identifying the appropriate incentives for private damage claims, while avoiding unmeritorious and even vexatious claims, and find ways to increase deterrence, while avoiding the situation where defendants settle simply because litigation costs are too high.
The European Commission is keen to learn from the US experience on how to foster a competition culture, and not a litigation culture. Ms Kroes thought that that US experience showed that there is no contradiction between fostering private anti-trust enforcement and preserving an efficient fight against cartels. She felt that private enforcement is complementary to the enforcement actions taken by competition authorities
Nor did she see any conflict between the promotion of private anti-trust enforcement in Europe, and the strengthening of the efficiency of the EC leniency programs. For example, corporations which qualify under the Department of Justice’s antitrust leniency policy are now be able to avoid both treble damages and joint and several liability if they cooperate sufficiently with private plaintiffs, for instance, in the recovery of their losses.
However, Ms. Kroes recognized that is important to have a just and efficient system for final consumers to claim damages, which protects the genuine interests of the final consumer without imposing a disproportionate burden on the defendant. The Green Paper will, therefore, consider the possibilities of collective and representative damages actions. The Green Paper, which it is intended to be published by the end of 2005, will also cover issues of access to evidence; fault requirement; calculation of damages; collective actions; costs of proceedings; pass-on defense; and standing for indirect purchasers.