Discours d’ouverture de Mme Neelie Kroes (anglais)
Member of the European Commission in charge of Competition Policy
Damages Actions for Breaches of EU Competition Rules : Realities and Potentials
Opening speech at the conference ‘La reparation du prejudice cause par une pratique anti-concurentielle en France et à l’étranger : bilan et perspectives ’, Cour de Cassation
Paris, 17th October 2005
Monsieur le premier Président,
The organisers of today’s conference certainly have a good nose for the latest developments in competition policy. This is one of the very first opportunities to discuss the issues surrounding private actions for damages for breach of European competition rules.
And where better than Paris, the home town of the rights of the ‘citoyen’. The ‘Cour de cassation’, which is the ultimate guarantor of the rule of law and the defence of rights in this country, could not have been a more suitable venue. I therefore consider it a great privilege and an honour to be here with you today.
Let me make it clear from the outset that I am convinced that there is great potential in advancing damages cases for breach of the European competition rules. Not because I think any of us want to go down the track of litigation culture for its own sake. But rather because I think Europe and its businesses and citizens would profit from a stronger competition culture, and an appropriate degree of private enforcement can promote this.
A competition culture helps create a fertile environment for business. It contributes to sustainable growth and economic and social welfare for our citizens. And, in other words, it contributes directly to Europe’s top priorities.
But steps towards more private enforcement of European competition rules would require a solid and balanced legal framework, and a good dose of common sense in the design and application of that legal framework.
The positive effects of private antitrust enforcement
Private enforcement of European rules allows those for whose very benefit the rules have been established – and in particular consumers and businesses – to enforce their European rights directly via a national court.
The first advantage of private enforcement is direct justice, which allows the victims of illegal anticompetitive behaviour to be compensated for the loss they have suffered. In Joseph Joubert’s words, “La justice est le droit du plus faible”. At present the ‘plus faible’ in our markets – the consumers, the smaller businesses – simply find that the hurdles to enforcing their European competition law rights before national courts are too great.
Direct justice is what makes the competition rules instantly relevant for citizens. That instant relevance is something that enforcement by competition authorities can only rarely achieve. Public authorities are there to act in the general interest, and they cannot themselves repair the damage caused by violations of competition law.
On the other hand, national courts can rule on both substantive infringement and subsequent damages claims. Facilitating the bringing of such cases before national courts can considerably increase the overall enforcement of the European competition rules and thus the likelihood of competition law infringements being discovered and sanctioned.
Put frankly, the more likely one is to be caught, the more incentive one has to comply. Compliance with the rules also increases in proportion to the sanctions one risks for violating the rules. It is clear that the risk of having to pay damages for the harm caused by an infringement of the competition rules has a strong deterrent effect. And this is independent of whether or not damages come on top of the sanctions that can be imposed by competition authorities.
Fostering private antitrust enforcement as a complement to public antitrust enforcement can thus be reasonably expected to help make those who might contemplate violating the competition rules think twice. And it goes without saying that a higher level of compliance with the competition rules further develops a culture of competition amongst market participants, including consumers, and thus strengthens the competitiveness of the European economy.
Damages actions for breach of Articles 81 and 82 EC : realities and potentialities
Few people would argue against more justice. Most people would agree that prevention through deterrence is better than cure.
But I am acutely aware that this should not blind us to the risks which are inherent in fostering damages actions for breach of the European competition rules. Nor am I in any doubt about the fact that antitrust damages litigation is currently far from the routine business of our national courts.
Public authorities of course do not have the full picture of private antitrust litigation. A lot of commercial disputes are being dealt with outside of the public courtroom. Yet I remain convinced that here in Europe there is simply not enough damages litigation aimed at repairing the loss that was caused by an antitrust infringement. Why is that the case ?
The reasons for underdevelopment of private enforcement in Europe
First, we have to allow for some degree of information asymmetry on the side of the ‘plus faible’ - European consumers and small and medium sized businesses.
Secondly, it is clear that private enforcement has, until recently, been hampered by the Commission’s monopoly on declaring restrictive market behaviour compatible with the European competition rules. This has meant that actions before national courts were blocked as long as the Commission was considering an exemption decision.
Since speed is one of the main considerations in taking a case before a national court rather then via a complaint to the European or national competition authority, the defendant’s move to ask the Commission for an exemption decision often meant that the national court case became irrelevant. As you well know, Regulation 1/2003 remedied this situation by removing the Commission’s exemption monopoly and empowering national courts to apply Articles 81 and 82 of the EC Treaty in their entirety.
That change undoubtedly constitutes an important step in the encouragement of private antitrust litigation and more particularly when it comes to requests for injunctive relief, but it will not be sufficient to realise a breakthrough in the field of damages actions.
A study produced for the Commission and available on our website showed that there are other obstacles which prevent potential plaintiffs from bringing an action for damages. These include uncertainty as to ability to prove the infringement, given that most of the evidence is usually in the hands of the defendant. Uncertainty as to the result of an action in court, combined with the risk of having to bear all costs that are related to the procedures if one loses the case, is probably one of the main reasons why potential plaintiffs decide against going to court, even when they have a good case.
This is not justice ! Not only because it leaves those who suffered from an antitrust infringement without any recourse, but mainly because it leaves those who infringed the rules untouched.
A public debate
That is why the Commission - as I said, convinced by the potential benefits of damages claims in case of violation of the competition rules – wants to stimulate public debate in Europe on this topic.
I want to stress that we have no preconceived ideas at this stage. We want to create the appropriate incentives for private damage claims, while avoiding vexatious and unmeritorious claims. We want to increase deterrence, while avoiding the situation where defendants settle simply because litigation costs are too high.
Green Paper on facilitating damages actions for breach of Articles 81 and 82
Developing appropriate incentives for antitrust damages claims is a delicate exercise indeed. Not only because of the difficulty in identifying what should be done to achieve the most adequate level of encouragement. But also because one may rightly wonder who should develop these incentives and how can they be most properly developed.
At this stage the latter two questions are far too premature. We first need to know what keeps plaintiffs today from filing an antitrust damages claim and which changes in the system could persuade them to file such a claim. It is only then that we can sensibly reflect on how these changes can be brought about.
The study was a helpful first step in identifying the barriers. But the Commission would have been most ill-advised had it taken the results and tried to cook up the magic solutions in private. Devising procedural incentives for damages claims is a sensitive business. We therefore chose not to present a ready-made proposal for a Community measure dealing with all the identified difficulties and uncertainties.
A debate based on open options
In order to structure such an open debate, the Commission is preparing a Green Paper which will set out a number of possible means to modify the current framework for antitrust damages claims where that framework is considered to hamper litigation. The Green Paper will outline various alternatives and assess their potential impact on antitrust damages litigation.
Aside from access to evidence and inherent financial risks, the study revealed a wide range of other reasons why plaintiffs do not bring antitrust damages claims. The nature of the barriers does vary from one Member State to another, but there seem to be hindrances which most, if not all, Member States have in common.
One of those reasons is that domestic procedures do not allow or make it very difficult for a group of people to bring a claim, the so-called collective or representative claims. The damage of an individual consumer will only exceptionally outweigh the litigation costs. If we are really serious about giving justice to consumers, we have to facilitate the use of collective claims.
A further concern is the degree of uncertainty around the nature and the quantification of damages. I know that most Member States exclude damages which go beyond what is necessary to compensate the victims for the losses they have suffered. But I do think we need debate on how to create appropriate incentives for victims to go to court. Damages which go beyond pure compensation may be a necessary tool in this respect.
I have already mentioned the difficulties associated with access to evidence for the plaintiff. Here it is useful to distinguish between the situation where a competition authority has already taken a decision, finding an infringement of the European competition rules, and the situation where that is not the case.
In the former situation, the plaintiff subsequently starts proceedings before a national court in order to be compensated for the damage caused by the infringement – follow-on actions. Here the issue is one of being able to rely on the decision of the competition authority as evidence of the infringement.
With regard to Commission decisions, the Court of Justice came to the plaintiff’s aid by declaring in the Masterfoods case – and this has been codified in Regulation 1/2003 - that a national court cannot take a decision which runs counter to the Commission’s decision. The plaintiff could thus use the Commission decision finding an infringement to stand as evidence of the violation. Why shouldn’t we take the logic of this system a step further and apply the Masterfoods case law to decisions of NCAs ?
Since Regulation 1/2003 became applicable, EU competition rules are enforced both by the Commission and by the national competition authorities, the NCAs, working in close cooperation through the ECN, the European Competition Network. This coordination means that all partners have the opportunity to comment on the draft decisions proposed by one, and if justified the Commission intervenes by opening its own proceedings.
Looking at the ECN system with its inbuilt coherence checks in mind, one could argue that in terms of evidential value, it shouldn’t matter whether a decision finding an infringement was taken by the Commission or by an NCA. NCA decisions finding an infringement of the European competition could be recognised as having evidential value in national courts. One could envisage this only for domestic NCA decisions or, as Germany recently decided when amending its competition law, also for foreign NCA decisions – a type of mutual recognition.
This is an interesting idea, but clearly requires further reflection on the scope, the conditions and the limits of the evidential value of decisions of the competition authorities. That is exactly why we want to listen to the views of all stakeholders before we even think about how such a concept could be made concrete.
And there are of course many cases which are not dealt with by competition authorities. If we want to extend the scope and the range of competition law enforcement beyond what competition authorities are doing, we also need to encourage ‘stand alone’ actions. It is well known that access to evidence is one key barrier to stand-alone actions. We will need to look carefully at how that evidence, which is usually in the hands of the defendant, can be disclosed without imposing a disproportional burden on the defendant.
Apart from these hindrances to bringing antitrust damages claims, there are a number of other issues the Green Paper will have to consider. One of them is the interaction between damages actions and the enforcement activities of the competition authorities. More private enforcement does not equal less public enforcement. And I believe it is possible to design a system in which the obligation to compensate the victims of an antitrust infringement has a stimulating, rather than a chilling effect, on the leniency programmes of the European competition authorities.
Mesdames, Messieurs, the issues and options the Green Paper must cover are numerous : access to evidence for plaintiffs ; the financial risk assessment of the plaintiff ; the possibility to bring collective or representative damages actions ; whether the passing on defence should be admitted ; and whether or not there is a need to prove intent or negligence on top of proving the infringement. I look forward to discussing these points in greater detail once everyone has had the opportunity to read the Green Paper.
I would like to conclude my introduction by inviting all of you, judges, NCAs, academics, business representatives to actively participate in the public consultation and debate that will follow the publication of the Green Paper. Your input will help us in assessing what is necessary and what is feasible to encourage plaintiffs to go to a national court and claim damages for the loss suffered because of an antitrust infringement. I look forward to hearing your views.