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Cartel Damages Claims in the European Union: Have We Only Seen the Tip of the Iceberg?

 |  December 4, 2013

Posted by Social Science Research Network

Cartel Damages Claims in the European Union: Have We Only Seen the Tip of the Iceberg? by Damien Geradin (George Mason University School of Law ; Tilburg University – Tilburg Law and Economics Center (TILEC) ; Covington & Burling LLP) and Laurie-Anne Grelier (Covington & Burling LLP)

ABSTRACT: The European Union (EU) is a jurisdiction known for being “tough” on cartels. For the past two decades, the European Commission has imposed large fines on cartel members and the level of fines has been consistently increasing. In stark contrast with vigorous public enforcement, until recently, there have been very few damage claims for competition law infringements in the EU. This limited amount of private antitrust litigation in Europe sharply contrasts with the US antitrust enforcement model where private and public enforcement have coexisted since the adoption of the Sherman Act and antitrust law has been primarily shaped by private litigation.

In recent years, however, cartel damage claims have mushroomed in the EU and are clearly on the rise. While the European Commission has so far unsuccessfully attempted to propose an EU framework to promote antitrust damage actions (although a new legislative initiative has been taken), cartel damage litigation has nevertheless developed at the Member State level, with the trio composed of Germany, the Netherlands and the UK attracting most of the cartel damage claims.

The recent exponential growth in cartel damage litigation in the EU has triggered, or at least exacerbated, a number of concerns regarding its interplay with public enforcement, in particular for cartel damage actions that piggy back on antitrust authorities’ infringement decisions (so-called “follow-on” litigation). A significant concern is that the accumulation of private and public liabilities in relation to the same conduct may lead to over-enforcement. Another important concern is that some measures designed to facilitate private enforcement may undermine the effectiveness of public enforcement, in particular leniency programmes.

In June 2013, the European Commission released a proposed package designed to facilitate antitrust damage litigation across the EU, as well as to ensure an optimal balance between public and private enforcement. However, as it currently stands, the Commission’s proposed Directive appears to pay insufficient attention to the need to preserve the effectiveness of leniency programmes and ensure that companies will not have to pay disproportionate amounts as a result of the accumulation of public and private liabilities.

Against this background, this paper first discusses the way antitrust litigation has developed in the EU (Part I). It then critically reviews key propositions from the Commission’s June 2013 package intended to facilitate damages claims while preserving public enforcement’s effectiveness (Part II). Finally, it suggests options to reduce the risks of over-deterrence/over-enforcement (Part III).