Diversity & Inclusion
On June 11, 2013, the European Commission (Commission) issued a widely anticipated series of proposals designed to advance private antitrust damage and collective actions in Europe. To accomplish this, the Commission issued both a proposed binding Directive on private antitrust damage actions and a proposed non-binding Recommendation on collective redress mechanisms. The Directive, which must be considered and passed by the European Parliament and Council of the European Union, covers a number of procedural issues in private antitrust damage actions in European Union (EU) Member States, including the disclosure and use of evidence, the effect of decisions by national competition authorities (NCAs), the applicability of joint and several liability, and the availability of a pass-on defense.1 With respect to the Recommendation, the Commission urges Member States to allow private plaintiffs to seek relief for violations of competition, consumer protection, environmental and other laws on a collective basis in certain circumstances, while also advising Member States to impose certain safeguards, such as allowing only pre-approved representative entities to bring collective actions and banning punitive damages, designed to discourage the types of excessive and abusive litigation found in the United States.2
The Commission’s proposals represent the culmination of an almost decade-long process considering how private antitrust damages and collective actions should operate in the EU. The Commission first adopted a Green Paper on antitrust damages actions in 2005, followed in 2008 by a White Paper on antitrust-specific collective redress and another Green Paper on consumer collective redress. In 2011, the Commission carried out a public consultation seeking comments on collective actions in the EU.3 Most recently, in 2012, the European Parliament adopted a resolution calling for a collective redress proposal that would include a common set of principles providing uniform access to justice in Member States. Following is a high-level overview of the Commission’s most significant proposals.
The Commission’s proposed Directive sets out “certain rules necessary to ensure that anyone who has suffered harm caused by an infringement of [EU] or of national competition law, can effectively exercise the right to full compensation for that harm,” as well as “rules for the coordination between enforcement of the competition rules by competition authorities and enforcement of those rules in damages actions before national courts.” These proposed rules would provide, inter alia:
This Directive will become binding in all EU Member States if approved by the European Parliament and the Council of the European Union. If the Directive is approved, Member States will have two years from such approval to bring their national laws and procedures into compliance with the Directive. The proposed Directive on private antitrust damages actions also was accompanied by a non-binding “Communication” from the Commission and “Practical Guide” from the Commission staff on quantifying harm in private actions for damages.5 The Practical Guide, which “explains the particular features, including the strengths and weaknesses, of various methods and techniques available to quantify antitrust harm,” is essentially a roadmap for economic analysis, such as the use of geographic and product benchmarks and regression analysis.
The Commission’s Recommendation sets out its views as to the appropriate mechanisms for enabling citizens to obtain effective redress through collective actions while limiting the potential for excessive and abusive litigation. This Recommendation applies not only to collective redress for infringements of competition law, but also for infringements of, inter alia, consumer protection, environmental and financial services laws. The Recommendation lays out a series of “principles” that all Member States should follow in devising and implementing collective redress regimes, including:
The Commission’s package of proposals follows a series of proposals publicized by the UK government several months ago.6 The UK proposals are similar in many respects to those promulgated by the Commission, for example prohibiting contingency fees for plaintiffs’ lawyers and treble or exemplary damages. Interestingly, however, the UK proposals go beyond the Commission’s in at least one respect: creating a limited opt-out action for antitrust claims. Because the Commission’s proposals are non-binding, the Commission will have to persuade Member States like the UK and others of the desirability of the Commission’s proposals if the Commission is to achieve its aim of bringing consistency to Member States’ collective action regimes.
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As is evident, the Commission’s recent proposals provide ample fodder for discussion and analysis regarding their impact and implications, including for example the impact the Directive’s proposals regarding the disclosure of competition authority materials and the liability of immunity recipients will have on the EC’s leniency program and potential applicants, and on the European Court of Justice’s case-by-case balancing approach to the issue articulated in its 2011 Pfleiderer decision and its Donau Chemie decision issued last week.
Overall, the Commission’s proposals on private antitrust damages actions and collective actions — nearly a decade in the making — make clear that the Commission is committed to promoting such actions in Europe. In any event, the issues raised by the Commission’s proposals will be important not only to determining companies’ exposure in Europe, but also to underscore the importance of having a global approach to antitrust compliance, risk management and litigation strategy. As private antitrust damages actions, including collective actions, become more commonplace outside the United States, it becomes ever more critical for companies, particularly those that operate globally, to coordinate across jurisdictions on issues such as process, privilege and substantive claims.
3 Skadden submitted comments during the consultation. See Skadden, Response to Commission Staff Working Document Public Consultation: Towards a Coherent European Approach to Collective Redress (April 30, 2011), available here. The Commission appears to have taken to heart many of the concerns expressed by Skadden and others, for example, regarding the imperative of an “opt-in” system of collective redress as opposed to an “opt-out” system and the retention of the “loser pays” principle.
6See Skadden, “UK’s Department of Business, Innovation and Skills Proceeds with Private Competition Action Reforms” (March 27, 2013), available here.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.