Volume 3 - Issue 1
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Editorial - After the Green Paper: The Third Devolution in European Competition Law and Private Enforcement
The European discovery of the merits of private antitrust enforcement, and the objective to enhance private actions both at the Community and at the national level, has raised the question of the relationship between public and private enforcement. There is a common misconception that public enforcement serves the public interest while private enforcement is only driven by the private interest of litigants. Yet private actions enhance the effectiveness of the competition law prohibitions and do not vary from the basic aim of the competition rules; the protection of competition. Thus, any private interest is subsumed within the public interest in protecting effective competition. A related misconception is that public enforcement is hierarchically superior and that decisions by competition authorities should always bind civil courts. Yet public and private enforcement are two separate limbs of antitrust enforcement independent of each other. The fact that certain recent national legislation or the proposals of the Commission Green Paper on Damages Actions convey or favour a binding effect of such authorities’ decisions over civil proceedings, does not bring into question the principle of independence since such measures are only intended to function as incentives for follow-on civil actions. At the same time, the current Community principle that national courts must not contradict decisions by the Commission is not indicative of a primacy of public over private antitrust enforcement but rather of Community over national measures, always under the final control of the Court of Justice.
Any significant growth in private damages claims for breaches of competition law will push to the fore the question: how far such actions are in the public interest? Both courts and competition regulators will have to develop new ideas and policies to ensure there is an optimal balance between private and public enforcement. For courts, there needs to be a recognition that damages litigation must not be allowed to be conducted in a manner which is at the expense of the public interest. This may mean courts adopt new rules that treat some cases as a form of public interest litigation. This would entail, for example, rules on costs being relaxed to protect weaker parties. It may require that any settlement is given closer scrutiny by courts to ensure no anti-competitive collusion has occurred. In addition, courts should allow limited intervention by competition regulators during proceedings to provide advice to the court on the public interest and to protect the regulator’s wider policy goals. For competition regulators, the primary question is how much assistance to give to complaints who seek help to pursue damages claims, given limited agency resources and the potential damage to public enforcement that some forms of help may entail? Competition authorities need to establish clear and defensible guidelines on investigation of complaints, disclosure of documents, and settlement short of prosecution. Such guidelines should protect the essential functions of the agency so that it can pursue its public enforcement role. Failure to do so will lead to inconsistent decisions and maladministration. Private litigants should expect clear and predictable interactions with public enforcers so that a damages Bar can develop autonomously within Europe. Agencies also need to map out their broader policy goals and justify levels of assistance or non-assistance to private litigants by reference to them. The European Competition Network would be a good forum for developing common policies on these questions.
In 2000 the Italian Competition Authority took action against a complex horizontal agreement in the motor-vehicle insurance market where there had been collusion for years to fix premium prices. Hundreds of follow-on civil actions were brought by consumers seeking compensation for damages they had suffered as a consequence of the anticompetitive conduct. For the first time the Italian legal system faced large scale enforcement of competition law by private parties. This paper describes the development of the Corte di Cassazione case-law on the controversial issue of consumer legal standing and explains why the Court’s decisions act more as a disincentive to private enforcement than an incentive. Moreover, the paper analyses the Court of Justice’s decision in Cases C-295-298/04. In that case the Court commented on several procedural aspects of civil actions based on violations of Article 81 EC: the entitlement to rely on the invalidity of a prohibited agreement or practice and the concomitant right to claim damages; the limitation period for seeking compensation for harm caused; and, the ability of the national courts to award punitive damages. The paper concludes that the solutions presented by the ECJ seem even better than the European Legislator’s intervention because they respect the legal tradition of each Member state and do not contrast with the structure and scope of national private law remedies already in force.
EU law requires that individuals who have suffered loss or damage as a result of breaches of EU law should have an effective legal remedy. This article considers whether English shareholders have an effective legal remedy for harm caused to the companies in which they have invested where this loss has arisen from clear breaches of Article 81 or 82 EC Treaty in the light of the Factortame litigation and Courage v Crehan. The article focuses on the European Commission’s Green and Staff Working Papers on private actions and concludes that corporate, rather than consumer, actions are the most likely source of damages claims for breaches of European competition law. It examines the position of directors’ duties under both US and English law, having regard to both the Walt Disney litigation and the English law changes introduced by the Companies Bill. It reviews the issue of shareholder standing in US antitrust actions under the Sherman Act and the regulation of corporate actions under English law. Consideration is given to the issue of derivative actions for antitrust harm both in the US and in English courts. It is concluded that the English law rules which prevent direct standing for shareholders and which severely limit the possibility of bringing a shareholder derivative action mean that a shareholder does not have an effective national remedy for harm caused by breaches of Articles 81 or 82 EC.
This article considers the prospect for third party recovery of damages arising out of anti-competitive practice. Amongst a background of a positive substantive law regime for potential claimants under section 47A of the Competition Act it focuses on one area of difficulty in bringing cases: the financing of litigation and the potential costs liabilities arising from it. It examines the cost regimes in the High Court and the Competition Appeal Tribunal and suggests the latter will be a more benign environment for prospective claimants, particularly, coupled with the procedural innovation of Specified Body proceedings.
• ©2003-2011 Angus MacCulloch & Andrew Matthews •