B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO ACTIONS FOR DAMAGES FOR BREACH OF EC COMPETITION LAW D.Waelbroeck ASHURST Brussels

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO 2 THE CONTEXT The Commission desires to promote: - deterrence - awareness of competition rules - compliance - and justice through compensation of the victim But also: → it is aware of a need to avoid excesses and to ensure the right balance

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO 3 I.THE FIRST STEP – THE « DIAGNOSIS » THE ASSIGNMENT TO ASHURST: 1. Give a « photographic picture » of the situation. Be neutral – Not taking sides 2. - Discuss damages actions only and not: injunction nor « Eurodefense » pages giving a wealth of details (but some cases may still have been missed) - The « methodology »: one general rapporteur; 25 national reports; one economic report; questionnaire of the Commission (strict deadlines, and permanent review by the Commission)

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO 4 THE MAIN FINDING In 50 years of EC law, in the whole EU (25 Member States) 12 successful actions 12 unsuccessful actions (and a couple of actions under national competition law) (settlements are not taken into account as they are not public and there is no record of them)

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO 5 II. THE BENCHMARK : COMPARISON WITH THE US More than 800 federal antitrust cases every year In addition, many indirect purchasers cases are filed in state courts each year Most cases are settled, but there are several antitrust trials each year (at least 10-15% of antitrust cases are tried to judgment) CONCLUSION: In the US: 90-95% is « private enforcement », whilst in the EC, it is probably the reverse

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO 6 WHY THIS DIFFERENCE AND WHY SO FEW IN THE EU? Partly « cultural » (US is more litigious) Partly not the incentives that exist in the US « astonishing diversity » of rules

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO 7 III. THE SECOND STEP: THE REMEDY Clarify the rules (both procedural and substantive rules) Clarify the facts (facilitate evidence gathering, burden of proof) Readjust the balance of the law

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO 8 A. CLARIFY THE LAW Astonishing diversity of rules, even on most basic procedural rules, e.g. -Competent court (e.g. Italy) -Standing (e.g. “Schutznorm in Germany”) -Is infringement a fault? Clarify also substantive rules (direct link between private enforcement and per se rules)

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO 9 B. « CLARIFY THE FACTS » Evidence gathering and burden of proof THE FINDINGS: No pre-trial discovery (except in the UK, Ireland and Cyprus) and need to mention specific documents (see p.52 et seq, and 108 and seq of summary of the report) THE QUESTIONS: Should the EU follow the US model? But: –Pre-trial discovery can be burdensome and intrusive –This is a major change in the procedural system of most Member States –Even in the US, 50% of cases are « follow on » and the others are « section 2 » cases (no discovery of big cartels) Alternatives: instead introduce « presumption »? Reduce standard of proof? Should « fault » be proved if there is an infringement? Should other methods of proof (such as cross-examination) be more widely allowed?

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO 10 C. MAKE THE LAW MORE BALANCED? -Introduce incentives? Reduce costs? -Many highly controversial issues: 1.Pass on defense/indirect purchaser 2.Collective actions 3.Punitive damages or other incentives 4.Contingency fees? And who bears costs?

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO PASS ON DEFENCE / INDIRECT PURCHASER THE FINDINGS: –So far, very little case-law on this (see p.77 et seq., 110 et seq., 126 et seq of the summary of the study) –Basic principle in all Member States: damages should be restitutive only THE QUESTIONS: –Should the EU exclude the defence? –In favour: « probatio diabolica »; risk of endless and uncertain litigation; where do you end? (cascades of indirect purchasers, suppliers upstream, suppliers of complementary products, customers of companies not participating in the cartel but beneffitting from the « umbrella » effect of the cartel…) –But excluding the defence as in the US would give a windfall to purchasers and risk of double compensation –ECJ case law allows the defence (and Courage/Crehan requires compensation)

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO 12 2.COLLECTIVE ACTIONS THE FINDINGS: Joint actions are generally possible, but not class actions in the US sense (see p.42 et seq., 105, 119 of summary of the report) Tendency however to move into a facilitation of group actions, representative actions… (e.g. Sweden, discussion in France, the Netherlands, GLO’s in the UK) THE QUESTIONS: Does the EU want to promote collective actions and what type? Risk of « ambulance chasing ». See US « Class Action Fairness Act »

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO PUNITIVE DAMAGES OR OTHER INCENTIVES THE FINDINGS: In most Member States, damages are only compensatory; punitive damages are contrary to public policy Only UK, Ireland and Cyprus recognise exceptionnally some form of punitive damage (see pages 12, 46 et seq, 83 et seq, 110 et seq and 127 of summary report) THE QUESTION: What further incentive need to be built into the system? –Double or treble damages? –Cost rules (plaintiff never paying costs of defendant)? –Contingency fees? –Pre-judgment interest?

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO CONTINGENCY FEES AND WHO BEARS COSTS? -In most EU Member States, contingency fees are prohibited contrary to US. -In the US, the plaintiff never pays the costs of the defendant.

B RUSSELS D UBAI F RANKFURT L ONDON M ADRID M ILAN M UNICH N EW D ELHI N EW Y ORK P ARIS S INGAPORE S TOCKHOLM T OKYO 15 IV. CONCLUSION Many basic questions unresolved. Commission has created a momentum but clarification will only come slowly and will have to be carefully balanced.