damages actions for breach of articles 101 and 102 tfeu · damages actions for breach of articles...

European Commission, DG Competition, Private Enforcement Unit

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Damages Actions for Breach of Articles 101 and 102 TFEU

Daniele Calisti

[email protected]

IDEFF - Lisbon

23 November 2010


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I. Where do we stand?• Court of Justice & Acquis

• The 2008 White Paper

II. Where may we go?• Quantification

• Collective redress


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1. Court of Justice & Acquis

• Case C-453/99 Courage and Crehan &Joined Cases C-295/04 to C-298/04 Manfredi

“the full effectiveness of Article 101 *…+ would be put at risk if

it were not open to any individual to claim damages for loss caused to him by a *such an infringement+”

• Right to compensation for antitrust harm is guaranteed by the Treaty


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1. Court of Justice & Acquis (cont’d)

Acquis communautaire:• Principles of equivalence and of effectiveness

– Indirect purchaser standing – Limitation periods– Access to evidence

• Full compensation excludes caps for the amount of compensation

• “Binding effect” of Commission decisions (Article 16(1) of Regulation 1/2003)


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Role of National Courts* Articles [101] and [102] produce direct effects in relations between individuals,

and create rights that national courts must safeguard (BRT v Sabam, 1974)

*Articles [101] and [102] are a matter of public policy which must be automatically applied by national courts (Eco Swiss, 1999)

* Any individual can rely on a breach of Article [101] [and 102] EC before a national court (Courage v Crehan, 2001)

*Any individual can claim compensation for the harm suffered where there is a causal relationship between that harm and the prohibited agreement or practice. (Manfredi, 2006)

* In the absence of Community rules governing the matter, it is for the domestic legal system of each Member State to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive directly from Community law, provided that such rules comply with the principles of equivalence and effectiveness.


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2. Issues identified in GP and WP– Damages– Standing: indirect purchasers and collective redress– The passing-on of overcharges– Access to evidence: inter partes disclosure– Binding effect of NCA decisions– Fault requirement– Limitation periods– Costs of damages actions– Interaction between leniency programmes and actions

for damages


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General approach

• Compensation as primary objective

• Preserving strong public enforcement

• Effective legal framework for victims to exercise their rights under the Treaty

• Balanced measures based on European legal cultures and traditions

• Legal certainty and more level playing field


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Indirect purchasersObjective

• To ensure compensation for all categories of victims

• Courage 2001, Manfredi 2006:

“It follows that any individual can claim compensation for the harm suffered where there is a causal relationship between the harm and an agreement or practice prohibited under Article [101].”

• Thus, also indirect purchasers shall have the right to bring actions for damages.

• Given that indirect purchasers often suffer scattered and relatively low value (individual) damage, there is a need for an effective collective redressmechanism.


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Collective redressIssues:

• Follow-on or Stand-alone

• Opt-in or Opt-out

• Strict opt-in does not always work, particularly in cases of scattered low value damage

– Which? – Replica football shirts

– Que Choisir – Mobile phone charges

• Opt-out involves a number of risks, therefore need for carefully designed safeguards …

• … and is often viewed negatively in Europe, mainly with reference to (US style) class actions


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Collective redressProposed measures:

• Opt-in collective action

– combining individual damages claims into one single action

• Representative action

– brought by qualified entities on behalf of a group of identified/identifiable victims


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Representative action

Qualified entities:• designated in advance, acting on behalf of a group of victims (not

necessarily their members), or

• certified ad hoc, acting on behalf of their members in relation to a particular infringement

• Key issues:• criteria to be fulfilled by qualified entities

• identified/identifiable victims

• information obligation

• right not to be represented

• distribution of damages


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Evidence

Objective

• addressing the information asymmetry inherent in most antitrust cases

• preventing that victims do not start, or do not win, a case simply because they had no access to the facts


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Evidence (cont‘d)Proposed measures to enhance effectiveness

• Inter partes disclosure based on fact-pleading and strict judicial control

• Claimants must show a plausible case

• Disclosure measure must be necessary and proportionate in scope

• Effective sanctions for refusal to disclose or destruction of evidence


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Effect of decisions by competition authorities

Objective

• Avoiding costly & time-consuming relitigation of issues already settled in finaldecisions of an authority or a review court

• Fostering consistent application of Articles 101 and 102 TFEU• reducing uncertainty of outcome

Proposed measure to enhance effectiveness

• A rule for NCA / review court decisions similar to Article 16 Reg. 1/2003

• Decisions from other MS

• Limitations


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The passing-on of overcharges

Objective

• To ensure as much as possible that

– those who suffered a harm are compensated;

– those who did not suffer any harm do not receive any compensation;

– those who infringed the rules are ordered to compensate


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The passing-on of overcharges (cont‘d)

Proposed measures to enhance effectiveness

• To allow the passing-on defence while putting the burden on the defendant;

• To lighten the victim’s burden by a rebuttable presumption that the overcharge was entirely passed on;

• To avoid under- or over-compensation in case of joint, parallel or consecutive actions


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Fault

Objective

• overcoming difficulties for victims to show negligence in behaviour within the sphere of the defendant

• limiting costly & time-consuming litigation where a breach of Article 101 / 102 has clearly been established

• reducing uncertainty of outcome

Proposed measures to enhance effectiveness

• Presume fault once an infringement has been established; • Limit the possibilities of exculpation to excusable errors


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Interaction with leniency programmes

Objective • Creating an effective private pillar of enforcement while at the same

time maintaining a strong public enforcement system• Maintaining the attractiveness of leniency programmes

Proposed measure to enhance effectiveness• Exclusion of discoverability of corporate statements submitted by leniency

applicants

Continued reflection on • The limitation of liability for the immunity recipient


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Public consultation on the WP

• 2008 & 2009: Public debate on the White Paper• March 2009: Opinions of the European Parliament and EESC• Large agreement on

– existence of obstacles to compensation– something needs to done to foster effectiveness of right to damages– focus on compensation as primary objective (complementary to deterrence as achieved

by public enforcement)

– preserving strong public enforcement– need to have balanced measures rooted in European tradition– need for more legal certainty

• Divergent views on – some specific measures (views cover the full spectrum from general scepticism to

strong support and calls to go further)– who should act


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Opinion of the European Parliament (1)

• 1. Welcomes the White Paper and stresses that the EC competition rules and, in particular, their effective enforcement, require that victims of breaches of the EC competition rules must be able to claim compensation for the damage suffered

• 4. Recalls that individual consumers but also small businesses, especially those who have suffered dispersed and relatively low-value damage, are often deterred from bringing individual actions for damages by the costs, delays, uncertainties, risks and burdens involved; stresses, in this context, that collective redress, which allows the aggregation of individual actions for damages for breaches of the EC competition rules and enhances victims' ability to obtain access to justice, is an important deterrent; welcomes, in this respect, the Commission’s proposals that mechanisms be set up to improve collective redress while avoiding excessive litigation


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Opinion of the European Parliament (2)

• 5. (…) stresses that measures at Community level must not lead to arbitrary or unnecessary fragmentation of procedural national laws and that, therefore, careful consideration should be given to whether, and if so to what extent, a horizontal or integrated approach should be chosen to facilitate out-of-court settlements and the prosecution of actions for damages; (…)

• 6. (…)is of the opinion that a horizontal or integrated approach could cover procedural rules that are common to collective redress mechanisms in different areas of law, and stresses that this approach must not delay or avoid the development of proposals and measures identified as necessary for the full enforcement of EC competition law; notes, furthermore, the more advanced analysis of civil competition law redress and the advanced framework for competition authorities, including the European Competition Network, and that, at least in regard to some issues, this justifies moving forward rapidly, taking into account that some of the measures envisaged could be extended to non-competition law sectors; takes the view that such sectoral measures could already be proposed with regard to the particular complexities and difficulties encountered by victims of breaches of the EC competition rules;


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II. Where may we go?• Quantification

• Collective redress: next steps


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1. Quantification of harm suffered

• 2008 White Paper/SWP

“the Commission intends to *…+ provide pragmatic, non-binding assistance in the difficult task of quantifying damages in antitrust cases, both for the benefit of national courts and the parties.”

• January 2010: Publication of external study

• January 2010: Workshop at the Commission


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1. Quantification of harm (cont’d)

• Core problem: estimation of a counterfactual situation without infringement

• Commission Work Programme 2011

• Possible content of Commission guidance

– Available methods & techniques

– Economic insights


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2. Collective redres: next stepsRecalling the issue• ECJ: Need to ensure realistic chance of compensation

for all categories of victims– victims further down the distribution chain (indirect

purchasers)– victims with scattered low value damages (e.g. small

businesses; consumers)

• −> access to justice presupposes efficient forms of action

Recent developments in the Member States


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2.Collective redress (2)

Actions at EU level: possible next steps• Collective redress may also be an issue in other areas than

antitrust• 2010 Commission Work Programme:

“the Commission will, starting in 2010,– analyse in depth the issue of policy coherence in the field of collective

redress– hold a public consultation on general principles and issues of

collective redress

which should guide any future proposals for collective redress in EU legislation”


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Vice-President Almunia in Valladolid

- Any future initiative:• Effective compensation

• Avoid abusive litigation

• Opportunities for ADR

• Enforce collective judgments throughout the EU

• Adequate financing

- Public consultation end 2010

- 2011: Framework for specific initiatives


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Further information:

http://ec.europa.eu/competition/antitrust/

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