Private antitrust damages actions in the EU Lars Rudolf

1. Private antitrust damages actions in the EU Lars Rudolf June 15-17, 2011, DubrovnikCompetition Law in Transition:Trends and Challenges

2. Trigger for private damages actions in the EU • ECJ Case C-453/99 Courage v. Crehan of September 20, 2001: • “the full effectiveness of EU competition law would be jeopardizedif it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition” • “action for damages before the national courts can make asignificant contribution to the maintenance of effective competition in the Community” • Last institutional obstacle removed by modernization package (Regulation 1/2003, effective as of May 1, 2004) • Abandoning requirement to notify to Commission for individual exemptions under Art. 101(3) TFEU • Granting national courts the power to apply Art. 101(1) and (3) TFEU • Obliging national courts to apply Art. 101 and 102 TFEU 2

3. Commission identified obstacles to private actions • 2004 study by the Commission concluded that the picture of antitrust damages actions in the EU is “one of ... total underdevelopment“ • Only 50 judged cases for damage actions within the EU-25 (12 on the basis of EC law, 32 on the basis of national law and 6 on both) • Only 28 judgments had resulted in a damages award (8 on the basis of EC law, 16 on national law and 4 on both) • Obstacles to damages actions at Member State level stem from • lack of clarity, concerning either the legal basis for such claims or the interaction between specific legal basis and general provisions on conditions for liability • particular characteristics of antitrust damages actions which are often insufficiently addressed by traditional rules on civil liability and procedure • very complex factual and economic analysis required • frequent inaccessibility/concealment of crucial evidence in the hands of defendants and • often unfavourable risk/reward balance for claimant 3

4. Commission initiatives to foster private actions (1) Neelie Kroes, former European Commissioner for Competition (2006) 'If we were serious about protecting the rights of European citizens then we must be serious about removing the obstacles to damages actions.’ 4

5. Commission initiatives to foster private actions (2) • Policy Papers: 2005 Green Paper and 2008 White Paper • Green Paper suggested various options to eliminate obstacles to national litigation that limits scope for effective redress through damages actions • White Paper with more definite proposals designed to “create appropriate incentives for victims to go to court” • 2009 Commission draft Council Directiveleaked / laterwithdrawn • A Commissiondraft Council Directiveleakedwithproposalsdesignedtoestablishcommonminiumguarantees on antitrustdamagesactions in all Member States • Fierce opposition from European Parliament (questionable legal basis, call for co-decision procedure) • Principle of subsidiarity - need for common framework? • 2011: Public consultation on collective redress • Kroes retirement 2010 / new Commissioner Almunia focusing on collective redress • Joint information note with Commissioner Viviane Reding in October 2010 • Consultation launched in February 2011 / period ended in April 2011 5

6. EU Policy on private actions – Draft Directive (1) • Main objective: Compensation for victims of antitrust infringements • Recovery of losses caused by the infringers • Minimum standard set by the ECJ Case C-295/04 to C-298/04 Manfredi v. Lloyd of July 13, 2006: “… it follows from the principle of effectiveness … that injured persons must be able to seek compensation not only for actual loss but also for loss of profit plus interest” • “The proposed Directive takes a compensatory approach” • Deterrence only a welcome side effect – but not main rationale • Effective private actions increase likelihood that a greater number of illegal restrictions will be detected and infringers will be held liable • But no incentives to introduce US-style litigation culture (no “over-enforcement” and no “over-compensation”) • No punitive (treble) damages • No exclusion of passing on defense • No (fundamental) change of costs exposure (i.e., of loser-pays rule) • Limited opt-out collective redress actions (no class actions brought by individual claimants) • No jury trials 6

7. EU Policy on private actions – Draft Directive (2) • 2009 draft Directive identified problems and proposed minimum requirements to be implemented at the Member State level to remove obstacles to damages actions • Access to evidence • Link between public and private enforcement • Collective redress • Limitation period • Passing on defence • Binding effect of national decisions • Fault 7

8. Access to evidence • Problem • Information asymmetry - inaccessibility/concealment of crucial evidence in the hands of defendants • Proposal: Disclosure • Based on fact-pleading and strict judicial control, national courts shall order disclosure of evidence by defendants or third-parties • Criticism since disclosure is alien to most Member State law systems 8

9. Link between public and private enforcement • Problem • Public enforcement (i.e., detection of cartels) is largely based on leniency applications; to encourage leniency applications, it is necessary to limit the leniency applicant’s exposure to private litigation • Proposal: Exceptions to disclosure to protect effectiveness of public enforcement • No disclosure of corporate statements and settlement submissions • Situation currently unclear: • Referral for a preliminary ruling, C-360/09, Pfleiderer AG/Bundeskartellamt, concerning the requested access to corporate statements provided under a national leniency program (which also intends to enforce Art. 101 TFEU) in the decor paper cartel; Court decided on June 14, 2011 that EU rules do not prohibit granting access to file in cartel cases - it is for the national courts to decide this question • Case T-380/08, Netherlands/Commission, concerning the claim by the Netherlands as a victim of the Dutch bitumen cartel to access to the full Commission decision (and not only a heavily redacted non-confidential version) 9

10. Status quo five years after intensive debate (1) • Despite lack of Community legislation, private damages actions are on the rise • Many Member States have already taken legislative steps (e.g., UK 2002, Germany 2005, Denmark and Italy 2007) • 2007 Follow-up study commissioned by the Commission identified 96 antitrust damages cases between 2004 and 2007 in the EU 27, i.e., in 4 years 100% more cases than in the around 50 years prior to 2004 • Many cases are settled before going to court without any information leaking to the public • No comprehensive statistics, but it seems that (almost?) all private damages actions are follow-on actions • Stand-alone private actions seem to play a role only in Art. 102 TFEU cases, requests for injunctions or in contract-law cases (either in demand or defense) • Doubtful that Commission proposals would have changed this; most of the proposals would mainly improve the effectiveness of follow-on damages actions 10

11. Status quo five years after intensive debate (2) Civil suits publicly reported in at least 12 of 22 recent, large EU (price) cartel cases, including every case with total fines > €400 million in 2006-2009 Legend: Reported civil actions (Jurisdiction of claim) No reported actions 1,400 1,300 All 2006-2009 cartel cases with total fines > €400 million have led to civil litigation in EU Member States Air Cargo (UK and Netherlands) Synthetic Rubber – BR/ESBR (UK and Italy) 1,000 900 Bathroom Fixtures Candle Wax (UK) LCD (UK) Car Glass (UK and Germany) 800 Flat Glass (UK and Germany) Elevators and Escalators (Austria, Belgium, Germany, the Netherlands) Commission Fine Level (per cartel, millions of €) Prestressing Steel Gas Insulated Switchgear (UK, .the Netherlands) 700 Hydrogen Peroxide (Germany) Hard Haberdashery: Fasteners Methacrylates / Acrylic Glass Netherlands Bitumen (Luxembourg) 600 Copper Fittings Netherlands Beer Market Chloroprene Rubber 500 Heat Stabilizers/Plastic Additives DRAM Animal Feed Phosphates (UK) 400 Spanish Bitumen Marine Hoses (UK) 300 Actions in ongoing investigations (EU Fines Not Yet Issued) 200 100 Cathode Ray Tubes (UK) 2007 2006 2009 2010 2008 Notes: Chart covers 2006- 2010 EU Commission cartel decisions in excess of €100 million in total fines. Chart based on press reports; we have confidential information about negotiations in other EU cartels.

12. Status quo five years after intensive debate (3) Statistics based on publicly available information (*) most of the cases are parallel cases for small amounts brought in by customers of members of an insurance cartel

13. Status quo five years after intensive debate (4) • Cartel Damage Claims (CDC) • German Cement Cartel (2003 FCO decision) • CDC purchased cartel-related claims of 36 damaged companies and brought actions in Düsseldorf against 6 companies, claiming damages in the amount of €176 million (without interest) • Hydrogen Peroxide (HP) Cartel (2006 EU decision) • CDC purchased cartel-related claims of 32 damaged companies in the pulp and paper industry (representing more than 50% of demand for HP) and brought actions in Dortmund against 6 companies, claiming damages in the amount of €430 million (without interest) • CDC brought additional action in Finland • Omni Bridgeway • Air Cargo Cartel (2010 EU decision) • Remuneration of 30% of any recovery, purchase price paid to the Air Cargo customers is the remaining 70% 13

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