Companies and individuals seeking damages from antitrust violations soon will find it easier to do so under a new proposal adopted by the European Commission this week.

The commission's proposed directive will remove several procedural hurdles that victims – whether corporate or individual – currently face when seeking claims from antitrust violations, including cartels and abuse of dominant market positions. Because of varying rules in member states, whether a victim can win damages often depends on where that victim is located. The directive would make the process more uniform throughout the European Union without stripping national authorities of their ability to investigate or sanction infringements.

Commission Vice President Joaquín Almunia, in charge of competition, said infringements of antitrust rules cause “serious harm” to businesses and consumers alike.

“We must ensure that all victims of these infringements can obtain redress for the harm they suffered, especially once a competition authority has found and sanctioned such a breach,” Almunia said. “It is true that the right to claim compensation before national courts exists in all EU member states, but businesses and citizens are not always able to exercise it in practice. Today's proposal seeks to remove these obstacles.”

According to the commission, victims only sought compensation in 25 percent of the antitrust infringement decisions over the past seven years.

The proposed directive includes the following provisions:

·         National courts would have the authority to force companies to disclose evidence when victims seek compensation.

·         Decisions by national competition authorities that an infringement has occurred automatically will constitute proof before all member states' national courts.

·         Rules on limitation periods for when an action can be brought will be clarified.

·         Liability rules will be clarified for cases in which price increases are passed on through the distribution or supply chain.

·         Rules regarding consensual settlements will be enacted to allow faster and cheaper dispute resolution.

Supporters say the proposal will differ from practices in the United States in several ways. It would not leave punishment and deterrence responsibilities to private litigation. Instead, it would facilitate victim compensation once a public authority has ruled an infraction occurred. Also, there are safeguards within the proposal to ensure that incentives for businesses to cooperate with authorities are not diminished, as many cartels are detected based on cooperation between businesses and authorities through leniency programs.

The proposal next goes to European Parliament and the Council for approval. If adopted, member states would have two years to implement the new regulations.

The commission also adopted non-binding guidance for victims and judges as well as a communication providing advice on how to quantify antitrust harm.

In a related move, the commission adopted a non-binding recommendation calling on member states to enact collective redress mechanisms for victims in general, not just in antitrust cases. While 16 member states allow some form of collective redress, there is no single standard for cross-border disputes. That idea, which allows individual claims to be bundled into a single legal case, is being closely watched by industry. Critics claim it will lead to a U.S.-like litigation culture of frivolous and costly class action lawsuits.

Arnaldo Abruzzini, secretary general of the Association of European Chambers of Commerce and Industry, said a non-binding recommendation is “the least bad approach.” His group, known as Eurochambres, was hoping instead for an alternative dispute resolution approach to collective claims.

“The decision of the commission to recommend member states to adopt collective redress mechanisms is not welcome by the business community,” Abruzzini said. “Besides the absence of a legal basis to take action, this is definitely not the right moment, given the current economic climate, to adopt procedures that will dangerously inflate legal costs for companies.”

Monique Goyens, director general of the European consumer group BEUC, dismissed the criticism.

“There has been a degree of scaremongering that this will bankrupt European businesses or prompt a litigation culture,” Goyens said. “This is nonsense. It simply has not happened in the European countries already benefitting from it.”

Goyens added that there are safeguards in place to prevent “exorbitant” awards. Those safeguards include opt-in systems that require an individual to actively seek involvement in a case rather than being automatically lumped into it. Procedures would be set up to quickly dismiss unfounded actions and avoid systems that allow lawyers' fees to be based on a percentage of awards. The recommendation also advises against courts imposing punitive measures on top of compensation awards.

A 2008 study by the European Commission showed that 76 percent of the consumers polled would be more willing to seek legal remedies if they could join forces with other consumers. The high cost of litigation was cited as a factor as to why individuals are reluctant to take matters to court. Viviane Reding, the EU justice commissioner, said the recommended action would bring cohesion to EU laws while respecting the differing practices of member states.

“This recommendation is a balanced approach to improve access to justice for citizens while avoiding a U.S.-style system of class actions and the risk of frivolous claims and abusive litigation,” Reding said.

Consumer advocate Goyens said she was disappointed the commission approved just a recommendation rather than a binding regulation.

“The absence of a uniform collective redress mechanism has been a glaring omission of the single market for decades,” Goyens said. “This is a basic question of access to justice.”

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