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Private Enforcement – What for? The perspective of the competition authorities

Private Enforcement – What for? The perspective of the competition authorities. Konrad Ost CLF-Meeting London 15/03/2006. Overview. The valuable role of private enforcement The current situation… …and a misconception Reform of German law Appraisal of current reform proposals

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Private Enforcement – What for? The perspective of the competition authorities

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  1. Private Enforcement – What for?The perspective of the competition authorities Konrad Ost CLF-Meeting London 15/03/2006

  2. Overview • The valuable role of private enforcement • The current situation… • …and a misconception • Reform of German law • Appraisal of current reform proposals • A paradox • Conclusion

  3. The valuable role of private enforcement • Why private enforcement: • compensation (no reason to deviate from other areas of law) • role in the public interest? • competition culture • helps to fill the enforcement gap • In what respect? • deterrence (no need as there are public authorities) • limited resources of the public enforcers

  4. The current situation ... • Bundeskartellamt data on Germany • more than 900 cases decided since 2002 • only 80 pecuniary damage claims between 2000 and 2004 • bulk of cases are on • injunctions (abuse) and • claims for invalidity of a contract

  5. ... and a misconception • Where is an enforcement gap? • hard core cartels – no (in any event, hardcore cartels are virtually never detected by private parties) • grey area – yes • abuse control – yes • What is the current debate aiming at? • follow-on actions after detection of hardcore cartels

  6. The new German Act against Restraints of Competition • private claims to be “on hold” during authority investigations • interest to be paid from the moment an antitrust injury occurs • decisions of EU member state competition authorities or courts binding upon national courts • violator of antitrust laws has to prove passing-on • locus standi for victims of hardcore cartels uncontroversial

  7. Reform proposals under review • Double damages  penalizing element is alien to German law (public policy)  interferes with leniency programs • Pre-trial discovery  violates the principle of “equality of arms”  high risk of abuse  probably not very effective in the case of hardcore cartels • Main problem for follow-on actions (calculation of damages) cannot effectively be solved by a legislative reform

  8. A paradoxical approach ? • weakening of private actions, which contributed significantly to the overall enforcement of competition law, by making the material rules too complex (burden of proof concerning economic data) • strengthening of private actions which have a high potential of abuse and whose impact on enforcement in the public interest is rather limited or even negative

  9. Thank you for your attention! Konrad OstPh.D. (Heidelberg), LL.M. (Cantab.) Head of Unit ‚German and European Antitrust Law Bundeskartellamt Kaiser-Friedrich-Straße 16, 53113 Bonn Tel.: 0228-94 99 – 213 konrad.ost@bundeskartellamt.bund.de www.bundeskartellamt.de

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