The Private Enforcement of Competition Law: developments and persisiting problems

In the past ten years, thanks to some important and innovative rulings by the European Court of Justice (“ECJ”) the right to damages for infringements of competition law has been recognized to private parties. The European Union (”EU”) case law has thus introduced along with the public enforcement of the European Commission and the National Competition Authorities (“NCAs”), the possibility for private parties to bring actions for infringements of Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”) or of the relevant corresponding provisions of national law (i.e., private enforcement). However, to date, most victims of cartels and collusions have not received compensation for their losses. Although established by the TFEU, the practical exercise of the right to full compensation has been hampered by the lack of homogeneity between legal systems and operational uncertainties as to the applicable procedure. Indeed, there are regulatory differences between Member States that make some jurisdictions (such as Germany, England and the Netherlands) more attractive than others when it comes to initiating an antitrust litigation, such differences often entail forum shopping. In Italy, although the number of civil actions initiated as a result of NCA decisions has gradually increased, the number of private enforcement actions is still far from the expected and desired enforcement levels. In light of the context described in the first part of the thesis, after a detailed analysis of some preliminary issues, namely what private enforcement of competition law is, why it is necessary, and what is its systematic and normative foundation, I will analyze the legal provisions and the remedies implemented in recent years and currently available to consumers in Europe for the purposes of ensuring the compensation of the damage suffered as a result of infringements of competition law. I will then move to the developments at the national and European level, focusing on one hand, on the very recently approved Directive of the European Commission and, on the other hand, on the evolution of private enforcement in the main EU Jurisdictions. At the European level, there were many efforts made by the institutions to increase the use of private enforcement to protect and raise the level of effectiveness of the rules in place to safeguard the market. Against this background, an essential role must be undoubtedly recognized to the European Commission and its initiatives in the field to remove barriers that make it difficult for businesses and consumers to sue for compensation for damages suffered. After the formal recognition of the right to compensation for victims of antitrust behaviors, several studies and legislative proposals were published in order to overcome the significant differences between the various remedies across Member States and eliminate unequal treatment between EU undertakings, ensuring this way the proper functioning of the internal market. First, the Green Paper on “Damages actions for breach of EC antitrust rules” in 2005 was published with the intent to facilitate private enforcement and lay down the foundations for a common EU approach, and then the White Paper was published in 2008 with the primary objective, unfortunately not reached, to clarify the conditions for the exercise of the right to compensation by individuals. In November 2014, the Commission finally approved a Directive and established new rules to facilitate claims by the victims of violations of antitrust infringements, thereby managing to overcome the different positions among Member States, which in the past had prevented to reach the consensus on the matter. A first attempt by the Commission to present a legislative proposal in the field of private enforcement was, in fact, aborted for lack of consensus on certain aspects of the discipline that were considered particularly crucial, such as the introduction of an American-type collective redress mechanism, that is to say a mechanism based on an opt-out system, the pre-trial disclosure, and the cumulative compensation for damages. The thesis delineates the most recent legislative developments across Member States and briefly analyzes the remedies available in the main European jurisdictions. In particular, it focuses on the English legislative proposal (i.e., Consumer Rights Bill), which introduces a new opt-out system with respect to collective actions (as opposed to the opt-in recommended by the Commission) and that broadens the jurisdiction of the Competition Appeal Tribunal (“CAT”), making it the main venue for private actions in the field of competition law, as well as the new French law (known as Loi Hamon), which came into force in March 2014, thereby introducing for the first time class action rules with peculiar characteristics compared to those found in other states Members). The new French law established an “expressed opt-in system” and a specific remedy for infringements of competition law (the so-called “actione de groupe en réparation des Causes Prejudices par une pratique anticoncurrentielle”). However, such remedy is available only for follow-on actions, i.e., after a decision by the NCA. The Loi Hamon also introduced a simplified class action in cases where the victims have been or would easily be identified. Finally, the analysis focuses on the Directive adopted in November 2014 and enacted with the aim to harmonize and ensure the effective application, throughout the EU, of rules on damages actions caused by infringements of competition law. The Directive is an important milestone, which improves and updates the European competition law in light of the current challenges. It is still hard to predict what will be the impact that the Directive will have within the single Member States. Certainly the Directive, together with the recent national legislative developments in relation to class actions (such as the French and English ones) is evidence of the efforts to overcome the poor results achieved so far by Member States with respect to private actions by indirect victims and to the various causes that have for a long time prevented consumers from bringing such actions. Nevertheless, we can rest assure there are still several problematic aspects that the Directive decided not to address. The paper concludes, therefore, with a reflection on the unsolved problems and proposes new solutions in this respect. Among the unresolved issues that seem to undermine the system of private enforcement, of particular interest are those related to the funding of collective actions. Unfortunately, a class action can entail really high costs. In particular, class action claimants in an opt-in system must bear, besides the traditional legal fees, the costs required in order to give publicity to the class and to collect the signatures of those consumers interested in joining the action. Following the analysis of several proposals and initiatives taken in the most advanced systems of private enforcement, amongst all possible funding solutions to ensure effective access to justice for consumers, the thesis favors (the most discussed and controversial, but also the most effective) solution of third parties funding of class actions.