On 3 April 2008, the European Commission (the Commission) published its long awaited White Paper on damages actions for breaches of EC antitrust rules. The White Paper makes key recommendations on making damages claims more efficient for victims including compensation through single damages and proposals for collective redress, disclosure of evidence and use of final decisions of national competition authorities.

The Commission highlighted in its earlier Green Paper in 2005 on damages actions that in most member states the rules and procedures result in very few damages claims being brought for breaches of antitrust rules. This newly published White Paper sets out the Commission's proposed policy and specific recommendations in respect of such damages actions.

According to the Commission, its recommendations are designed to ensure that victims of antitrust breaches have effective mechanisms for seeking full compensation for the harm they have suffered, whilst seeking to avoid providing over-incentives which could lead to excessive litigation which is perceived in certain countries outside Europe.

The key recommendations proposed by the Commission are as follows:

• Single damages
  The Commission suggests that single rather than multiple damages should be available (unlike the United States where treble damages are available). This is to ensure full compensation of any actual losses suffered as a result of the anti-competitive conduct.
• Collective redress
  The Commission recommends that representative actions should be led by certain specified bodies (e.g. recognised consumer groups) and that collective 'opt-in' actions may be raised where the victims decide to combine their claims. This is designed to ensure that consumers and SMEs can group their claims whilst recognising that safeguards should be put in place to ensure unfounded claims are not raised. 
• Disclosure
  The Commission is concerned that companies thought to have infringed antitrust rules can withhold evidence, making it difficult for third parties to bring successful actions. To alleviate this problem, the White Paper proposes a minimum standard of access to evidence, with the victim being given the power to ask the court to order the infringer to produce essential documents.
• Evidence of final decisions
  The White Paper proposes that the parties bringing an action will be able to rely on national competition authority decisions which finds a breach of competition rules, as binding proof in damages cases, as is currently the case in respect of Commission decisions. This approach seeks to reduce time and cost for litigants. However, only final decisions (that is, those in which there are no remaining course for appeal) will be eligible as evidence. 
  
  In addition, it is proposed that the time periods for bringing damages actions will be amended, improving on the current situation whereby the time period can expire during competition authority's own investigations.
  

John Schmidt, a partner specialising in competition law at Shepherd and Wedderburn, comments:

"These proposals strike a very good balance between providing more effective means of redress for cartel victims, while ensuring that businesses are protected against unfounded claims. If these proposals are implemented I would expect to see an increase in successful damages actions."

The Commission invites comments on the White Paper by 15 July 2008, after which it will consider the responses and consider what action should be taken.

To access the Commission's White Paper please click here .

04 April 2008

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