A Fleet Without a Captain? Taking Stock of European Antitrust Litigation Post EU Directive

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Hans Friederiszick, Michael Rauber, Jan 21, 2015

Private antitrust enforcement and cartel damages actions are on the rise, with a concentration of damages actions in the United Kingdom, Germany, and the Netherlands. To facilitate this development, the EU Directive on Antitrust Damages was adopted and signed into law in November 2014 and Member States will need to implement it in their legal systems by December 27, 2016. The EU Directive introduces a number of changes to achieve its main aims, which are effective compensation of victims of antitrust infringements and optimization of the interaction between public and private enforcement. It will lead to partial harmonization of national law,and thereby incentivize a broader, pan-European coverage of legal action.

The EU Directive, together with a recent judgment by the Court of Justice, substantially bolster the scope of civil redress by formally introducing the concepts of “passing-on” and “umbrella effects” at European level. We argue that while these are economically correct concepts, in line with the paradigm of effective compensation for every victim of antitrust infringements, in a context of a partially harmonized, multi-jurisdictional environment the complexity of litigation will increase significantly. Different national approaches to collective redress add further complexity.

From an economic point of view there is a single total damages amount related to a pan-European cartel, which is distributed along the supply chain in dependence of pass-on and customer substitution effects. Quantification thereof is an exact but stochastic science. Quantification of partial components and multidimensional divisions add further challenges to the empirical work (and thereby transaction costs). The vision behind the EU Directive, to incentivize parallel damages actions throughout Europe—that is to have parallel assessments of the single total damages amount—requires a balancing of the risk of over- or under-compensation due to cross-national claims on the one hand and increasing transaction costs in a decentralized framework on the other hand.

Overall, the multi-jurisdiction landscape in Europe, paired with partial, but incomplete harmonization across Europe and correct, but complex economic damages concepts are likely to lead to interlinked multinational damages actions in Europe. It will require—in addition to legal instruments to assure cross country consistency—pro-active and well trained national judges to steer this fleet to its common goal: an effective, but balanced private litigation system in Europe.

In the following we first describe the current litigation activity throughout Europe. We focus here on all follow-on claims related to European cartel cases with a EU Commission decision dated between 2006 and 2010. Thereafter, we describe briefly the various components for quantification of damages (passing-on, quantity and umbrella effects and calculation of interests) and the relevant legal concepts for multinational claims. Finally, we discuss the particular challenges in the context of multinational claims.