The civilian consequences of competition law violations Copenhagen 28 September European Commission, DG Competition How can we construe a European Model of Private Enforcement? Emil Paulis Director Policy and Strategy DG COMP

2 European Commission, DG Competition How can we construe a European Model of Private Enforcement? Five basic questions: n The problem definition: why does this question need to be asked? n The foundations of the system: what do we already have? n The objectives: what do we want to achieve? n The difficulties: what should we avoid? n The timing: what are the next steps towards an effective European model of private enforcement?

3 European Commission, DG Competition How can we construe a European Model of Private Enforcement? n General overview of private enforcement in Europe – Exclusive focus on public enforcement over last fifty years – Injunctive relief and contractual liability work fairly well – Actions for damages in Europe: under-developed and big gap compared to other jurisdictions – Significant obstacles block effective repair of harm suffered

4 European Commission, DG Competition I. The problem definition (1) n What are the problems? – Disincentives to bring a claim - significant – Access to evidence – difficult – Calculation of damages – difficult – Passing-on defence – uncertain – Collective redress - unavailable

5 European Commission, DG Competition I. The problem definition (2) n Disincentives to bring a claim – Cost/benefit analysis unfavorable to victims – Uncertainty of outcome n Access to evidence – Investigations in antitrust cases are more complex than in most other civil litigation cases – European disclosure systems « inter partes » are in general weak, particularly in civil law countries – Focus is more on rights of defence than on access to evidence

6 European Commission, DG Competition I. The problem definition (3) n Calculation of damages – In most countries: only compensation, but Member States free to provide for multiple damages (Manfredi) – At least right to full single damages – Quantification of damages in competition cases will always be difficult n Passing-on defence – Possibility for defendants to rely on passing-on defence raises big hurdles to claims by direct purchasers – No consistent approach of passing-on in the different Member States

7 European Commission, DG Competition I. The problem definition (4) n Collective redress - unavailable – Final consumers and small businesses are most often the ultimate victims of anti-competitive behaviour – Often scattered and low value claims – Individual actions are not sufficient to compensate society for the harm caused – Some Member States, incl. Denmark, have engaged in this debate at national level – The discussions on collective redress in the competition field have to take account of this wider discussions on collective redress mechanisms for consumers

8 European Commission, DG Competition II. The foundations of the system: what do we already have? n Articles 81 & 82 EC are directly applicable + enforceable in Court n Reg 1/2003 has removed exemption monopoly of the Commission n Case law of ECJ has confirmed right of victims to claim repair – Van Gend & Loos – 1963 – Courage / Crehan – 2001 – Manfredi – 2006

9 European Commission, DG Competition III. The objectives: what do we want to achieve? (1) n Private Enforcement as second pillar of competition law enforcement  A complement, not a substitute to public enforcement n A more effective private enforcement pillar would – Increase corrective justice by compensating the victims – Increase deterrence – Strengthen competition culture – Promote a competitive economy n Need to build a European Model of Private Enforcement – Solutions tailored to European realities – Solutions firmly bedded in our European cultures and traditions

10 European Commission, DG Competition III. The objectives: what do we want to achieve? (2) n Measured and balanced approach “The Commission does not intend […] to impose a unified European model of antitrust damages that would regulate all the issues identified in the Green Paper” “Some obstacles may be more efficiently tackled at European level, others at national level. Some obstacles may justify legislative solutions and others more informal instruments. The issues are diverse and the solutions will have to take account of this diversity” Neelie Kroes, Commission/IBA joint conference, Brussels, 8 March 2007

11 European Commission, DG Competition IV. The difficulties: what should we avoid? n Inertia – It will not help those injured by anticompetitive behaviour, nor strengthen the European economy – Costs resulting from infringements to the competition rules are currently absorbed by the economy as a whole – These costs should be borne by the infringers, not by the victims and those who comply with the law n Encouraging unmeritorious litigation – We want to encourage a competition culture, not a litigation culture – Step-by-step approach and appropriate safeguards necessary – Principle of effectiveness but also of proportionality

12 European Commission, DG Competition V. The timing n It is time to build up in Europe the private pillar of antitrust enforcement n Commission will publish a White Paper beginning 2008, together with an impact assessment n Public consultation will follow the adoption Thank you for your attention