(by Sebastian Peyer) The European Commission’s Damages Directive was recently signed into law and the Member States have been given two years to implement the rules of the Damages Directive into national law. In this blog post I argue that the Directive fails to achieve its stated goal of compensation because it does not reduce litigation costs or incentivise the bringing of costly legal actions. Instead, the Damages Directive seeks to safeguard public enforcement from private follow-on actions. It is therefore unlikely to facilitate greater levels of private enforcement. For the Damages Directive to become effective, it should be supplemented with further legislation to incentivise stand-alone actions. Read the rest of this entry »
(by Sebastian Peyer) After a decade of debate, consultation and guidance papers, DG Competition has finally released its draft Directive on actions for damages. It has been driven by the Commission’s desire to encourage private antitrust enforcement, currently deemed too low and mainly restricted to a small number of Member States, and the need to ‘optimise the interaction between public and private enforcement’. This second objective seeks to maintain the incentives for private firms to reveal cartels in return for leniency and engage in settlement procedures. A particular threat is posed by disclosure of leniency documents to third parties (e.g. Pfleiderer and National Grid). However, with rapidly developing litigation on the national level, there is a danger that aspects of the draft Directive are already behind the times. Read the rest of this entry »
(by Sebastian Peyer) Private antitrust enforcement is the least effective part of competition law in the UK. Yesterday, the government said what it intended to do about it. Its outline for a new regime of private actions in competition law followed a consultation on options for reform in 2012. It proposes fixes for a number of well-known litigation problems such as the limited jurisdiction of the specialist Competition Appeal Tribunal (CAT). However, of potentially greater interest to consumers and businesses will be the introduction of opt-out class actions. The debate about opt-out class actions has been fierce on national and EU levels but this is still a surprising move – will it work? Read the rest of this entry »
(by Morten Hviid) Should there ever be the possibility of awarding exemplary damages in a private follow-on action for breach of competition law? To my mind, the answer to this general question should be “NO”. To be a follow-on claim, there must already have been an infringement decision by a relevant competition authority. Where it finds an infringement, the competition authority is tasked with designing an appropriate punishment aimed at deterring and punishing the anticompetitive conduct. When the follow-on case is commenced, the matter of punishment has already been dealt with and non bis in idem [not twice for the same] should rule out subsequent exemplary damages. It should not be for a court or a Tribunal to run the case again as regards punishment unless this is as a result of an appeal of the original infringement decision. With no differences in the standard of proof, arguments that “the defendant should have been fined” belongs to an appeal of the OFT decision, not in a new action for damages.
On the whole this logic has been followed in the UK, for example in Devenish where Lewison J held (at ) that “the imposition of fines and an award of exemplary damages serve the same aim: namely to punish and deter anti-competitive behaviour”. However, based on a logic that, while a zero fine as a result of a leniency programme is still a punishment, immunity from a fine arising from an OFT policy decision is not, the Competition Appeals Tribunal [CAT] in their recent Cardiff Bus decision chose to award £60,000 in exemplary damages. Read the rest of this entry »
(by Duncan Sheehan) One of the issues raised in the BIS consultation on private actions in competition law, is whether legislation should directly address a passing on defence. My controversial claim is that there is no defence in English competition law of passing on, and there should be no defence of passing on either. The law already deals with the problem by other means. Read the rest of this entry »
(by Duncan Sheehan) Several issues come out of the BIS consultation in this area, some of which have been discussed in blog posts by Andreas Stephan and Peter Whelan. Here I focus on the way in which we quantify or measure damages in English private law and ask whether competition law should be treated differently. From a purely practical perspective, differential treatment for one area of law may encourage game playing and attempts to squeeze claims into categories they don’t really belong in order to obtain procedural or substantive advantages. There may of course be good reasons to treat competition cases differently but that needs to be argued and not assumed. Read the rest of this entry »
(by Peter Whelan) The recent publication by the Department of Business, Innovation and Skills of Private Actions in Competition Law: A Consultation on Options for Reform acknowledges that considerable legal issues remain to be resolved concerning private enforcement of competition law in the United Kingdom. One of these issues is the exact status of the passing-on defence (i.e., the defence that allows an infringer to escape liability in a damages action by a given purchaser to the extent of any pass-on by that purchaser). The lack of certainty concerning the status of this defence acts as an obstacle to the initiation of private actions. This problem should be overcome by the express acknowledgment of the passing-on defence in legislation. Read the rest of this entry »