Release of European Commission’s White Paper on Damages Actions for Breach of EC Antitrust Rules

Today, the European Commission (“Commission”) released a White Paper on Damages Actions for Breach of EC Antitrust Rules together with a Commission Staff Working Paper and Impact Assessment Report. The White Paper is another step along the path toward legislative measures aiming to facilitate private enforcement of EU competition law. This process began with a Green Paper issued by the Commission in December 2005.

In the White Paper, the Commission proposes several concrete measures to help damages actions across Europe become more effective and to ensure full compensation for consumers and businesses who are the victims of EC antitrust violations (for example, cartels and abuses of dominance). According to Commissioner Neelie Kroes, the proposals in the White Paper reflect a distinctively European model which is consistent with the Member States’ legal traditions and is thus very different from the American system. The White Paper sets a number of policy alternatives to further implement European private enforcement of EC competition rules in a manner that is complementary to public enforcement.

The recommendations are intended to balance rights and obligations of both the claimant and the defendant and to include safeguards against abuses of litigation, while at the same time maintaining or increasing the attractiveness of the Commission’s leniency program. The main policy recommendations presented in the White Paper are:

• Single damages : The Commission suggests single damages rather than multiple damages for victims of anti-competitive conduct. This would include full compensation for the loss suffered as a result of, for example, anti-competitive price increases or loss of profits as a result of reduced sales, and would also include the right to interest. The Commission intends to publish non-binding guidelines on the quantification of damages at a later stage.

• Collective redress : The Commission recommends both opt-in collective actions in which victims expressly decide to combine their individual claims for the harm they suffered into one single action and representative actions by entities which are either (i) officially designated in advance by a Member State or (ii) certified on an ad hoc basis by a Member State for a particular antitrust infringement to bring an action on behalf of some or all of its members. Opt-out actions (or class actions) brought for an unidentified number of claimants are rejected.

• Disclosure : The White Paper does not propose an automatic right to discovery. Instead, the Commission suggests that access to precise categories of evidence be given to plaintiffs subject to prior control by the court of the plausibility of the claim and the proportionality of the disclosure request. Corporate statements of leniency applicants would be protected against discovery.

• Binding effect of decisions of National Competition Authorities : Like the Commission’s own decisions, final infringement decisions by Member States' national competition authorities based on EC Competition law should be considered sufficient proof of an infringement in subsequent actions for damages.

• Passing on defence : The Commission suggests that defendants should be entitled to invoke the passing-on defence against a claim for compensation of the overcharge. On the other hand, indirect purchasers should be able to rely on a rebuttable presumption that the illegal overcharge was passed on to them in its entirety.

Other policy choices addressed in the White paper refer to: (i) standing; (ii) the fault requirement; (iii) limitation periods; (iv) cost of proceedings; and (v) the interaction between damages and leniency programs.

The White Paper is available for public consultation. Comments should be submitted by July, 15 2008. The Commission expressed its intention to have a legislative proposal ready by the end of the year.

The relevant documents are available at the European Commission web site:

• White Paper on Damages Actions for Breach of EC Antitrust Rules
• Commission Staff Working Paper on Damages Actions for Breach of Competition rules
• Impact assessment
• Summary of impact assessment
• Press release from the Commission