Great Googley moogley!  Google and other big firms that operate under the glare of the European Commission competition spotlight may now have many, many more individual spotlights upon them, heating up the stakes for potential antitrust abuses.  On June 11, 2013, the European Commission proposed a Directive to facilitate damages claims by individual victims of antitrust violations.

Although each EU Member State provides for the right to claim compensation in their respective national courts, there are usually practical impediments to exercising that right.  Only 25% of all Commission antitrust infringement decisions in recent years have been followed by civil claims for compensation by individual victims.  According to a 2008 Commission study [PDF], unclaimed compensatory damages for victims of antitrust infringement in the EU range from EUR5.7 billion ($7.6 billion) to EUR23.3 billion ($31 billion) each year.  Those victims able to obtain redress are usually large firms with the time and resources to dedicate to the suit, and to navigate the procedural red-tape, despite the legal uncertainty of recoupment.

The Commission’s proposal aims to remove these obstacles to ensure access to fair compensation for individual consumers and small-to-medium-sized enterprises throughout Europe.  Joaquin Almunia, Commission Vice-President responsible for Competition, explained: “Infringements of the antitrust rules cause serious harm to European consumers and businesses.  We must ensure that all victims of these infringements can obtain legal redress for the harm they suffered, especially once a competition authority has found and sanctioned such a breach.”

Proposed measures to facilitate damage actions include:

  • Providing easier access to evidence
  • Utilizing infringement decisions of one Member State’s competition authority as proof of infringement in the national courts of all Member States
  • Clarifying the statute of limitations for victims’ claims
  • Clarifying the “downstream” effects of infringement in order to better identify actual victims
  • Establishing a rebuttable presumption that cartels cause harm
  • Encouraging settlements
  • Providing advisory guidelines on quantifying harm

Although a stated purpose of the proposal is “to facilitate damage actions,” the Commission has been quick to distinguish the policy from that of its litigious US counterparts.  “Contrary to the US system, the proposal does not seek to leave the punishment and deterrence to private litigation. Rather, its main objective is to facilitate full and fair compensation for victims once a public authority has found and sanctioned an infringement.”

In other words, public enforcement by competition authorities at the EU and national levels focus on developing the antitrust prohibitions and investigating and deterring (by sanction) any infringement.  And the private actions for damages are aimed squarely at compensation rather than deterrence.

Notably, the Commission’s recent investigations into the potentially anti-competitive behavior of dominant firms have been less forgiving than those in the US.  Google, in particular, has been forced to offer multiple concessions in a prolonged and ongoing negotiation with the Commission regarding its dominant market power as a search engine. (Google successfully settled a similar antitrust inquiry with the FTC in January without any major operational concessions.)

If the directive is adopted, will the EU have achieved what it apparently promotes as the optimal antitrust enforcement system–public enforcement mechanisms for investigation/deterrence and private actions for compensatory corrective justice?  Will the safeguards against abusive litigation, large punitive payouts, and law firm opportunism be sufficient to avoid a “US-style” litigation culture?  Or is this  a “gateway”  class action policy that is  just going to increase the bottom-line legal costs of big businesses in Europe?

–Elizabeth Maratea

($1 = EUR0.75)

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