Damages actions for breach of the EC antitrust rules (Green Paper)

To give substance to what is all too often a purely theoretical right, a Green Paper proposes facilitating actions for damages for infringements of the Community competition rules. A variety of possible solutions are set out to remove the barriers to bringing and winning actions.

ACT

Green Paper of 19 December 2005, Damages actions for breach of the EC antitrust rules [COM(2005) 672 final - Not published in the Official Journal].

SUMMARY

The Green Paper proposes facilitating actions for damages for infringements of the Community rules on restrictive practices (Article 81 of the Treaty establishing the European Community) and abuses of dominant positions (Article 82 of the Treaty).

Enforcement of the Community competition rules by private individuals

Firms and individuals are entitled to claim damages for loss suffered as a result of infringements of the Community competition rules.

The Court of Justice explicitly recognised their right to do so in its judgment in Case C-453/99 Courage v Crehan on 20 September 2001. It stated that the actual exercise of this right not only enables those who have suffered loss as a result of anti-competitive conduct to be compensated but also helps to ensure that the Community competition rules are fully effective and will deter anti-competitive conduct (paragraphs 26 and 27).

Even so, despite the scale of the loss that can be suffered as a result of anticompetitive practices or abuses of dominant positions, there are many obstacles preventing firms or individuals from bringing actions in the national courts for damages for infringements of the Community competition rules.

The actual application of the EC Treaty rules on competition relies on both public enforcement (Commission and Member States' competition authorities) and private enforcement (victims of anti-competitive conduct). Action by competition authorities and damages claims by victims complement each other since they can both a priori deter firms from violating the competition rules and make it possible to compensate a posteriori for loss suffered by firms and consumers.

The European Commission's Green Paper consequently put forward possible solutions to facilitate actions for damages for infringements of the Community competition rules.

Outline of the problem

The Green Paper identifies the main obstacles to a more efficient system of damages claims and sets out different options for further reflection.

Access to evidence, burden of proof and standard of proof

Providing evidence of an offence can be very difficult, as illegal practices are usually engaged in covertly, and the only evidence will be in the hands of the offender.

One of the options considered by the Green Paper to facilitate damages claims is the possibility of obliging defendants to hand over documents to claimants. Another option envisages giving the parties access to documents held by national competition authorities.

The question is also raised whether the claimant's burden of proof should not be alleviated in view of the unequal access to information of claimants and defendants. Decisions by national competition authorities confirming that there is an infringement could then have mandatory evidential status.

The Green Paper also considers the question of determining the degree of fault required for a successful damages claim. The Commission puts several options forward. Fault could be presumed where an infringement of the Community competition rules is confirmed. Alternatively, proof of the infringement could be sufficient in relation to the most serious antitrust law infringements.

Damages

The Green Paper raises the key question of the legal definition of damages. Damages can be defined with reference to the loss suffered by the claimant (compensatory damages) but also to the illegal gain made by the defendant.

Determining the quantum of damages is a key issue. One possibility would be to award interest or to award double damages at the discretion of the court, automatic or conditional, for horizontal cartel infringements.

Defending consumer interests

The cost of a damages claim can be a serious disincentive to bringing an action where a consumer has suffered only minor loss. The Green Paper consequently considers the possibility of collective actions via consumer associations, which would improve the protection given to their interests.

Effect of damages claims on the leniency programme

Public and private enforcement complement each other and therefore should be coordinated in an optimum way.

The Green Paper presents options as to the possible impact of damages claims on the leniency programme to ensure that the two instruments operate properly. The Leniency Notice of December 2006 also provides for protection for statements made voluntarily by firms under the leniency programme against disclosure in civil actions for damages.

The passing-on defence and indirect purchaser's standing

A firm which purchases from a supplier engaged in anti-competitive behaviour could be in a position to mitigate its economic loss by passing the overcharge on to its own customers. The damages caused by anti-competitive behaviour could therefore be passed down the supply chain or even suffered in entirety by the ultimate purchaser, the final consumer.

The Green Paper opens a debate about the question whether the infringer should be allowed to raise such a pass-on as a defence. Similarly, the standing of indirect purchasers - to whom the overcharge may or may not have been passed on - has to be considered.

Background

The Green Paper has been put out for consultation with interested parties, and a White Paper will be issued by way of follow-up.

See also