Lovells

Even without further reform, companies found to be in breach of EC and European national competition laws increasingly face claims for damages in addition to the fines imposed by the Commission or national authorities in Europe.

Background:
Claims to recover damages caused by infringements of EC and English competition law have been a theoretical possibility for some time, but such claims must now be regarded as a commercial reality.  Businesses operating in Europe need to take stock of this change and assess the risks and opportunities that it creates.

This change has been brought about by policy changes in the way in which competition law is applied and enforced in Europe and developments in case law.  The European Commission and European national governments are encouraging private damages claims to be brought and to this end changes are being made in some countries to remove obstacles to successful claims.

This comes at a time when there is likely to be a rise in the number of infringements detected by the authorities as a result of leniency programmes, offering total or partial immunity from fines to those who provide evidence of infringements.  There is, however, no parallel protection from claims for damages.

In England, although claims may still be brought without there having been a finding of infringement by the OFT or the Commission, such a finding can be used by a claimant seeking damages as conclusive proof of the infringement.  Damages claims are, therefore, now very likely to be filed in the wake of any finding of infringement, and the damages that can be recovered are not reduced by any fines imposed by competition authorities. 

The exposure of businesses found to have infringed EC and European national competition law has never been greater.

Businesses operating in Europe (whether based there or not) should consider whether they have been the victim of anti-competitive behaviour and whether they may have a claim for damages.  They should also consider if their business practices taken in isolation or together with the activity of others could amount to an infringement.  If this is a possibility there may be steps they can take to minimise their exposure to both public enforcement and private litigation.

The Green Paper
Some of the key policy issues that are likely to be considered in the Green Paper and the subsequent debate include: 

• Whether damages should be recoverable only if a claimant can demonstrate some degree of "fault" on the part of the defendant in addition to the infringing conduct.  This is not currently the case in English law.

• Should claims be encouraged by allowing claimants to recover "double damages" (ie £2  for every £1 of loss they suffer) or "double legal costs" if successful?  This compares with the position in the USA, where triple damages can be recovered.

• Should it be a defence to a claim to show that the claimant has, in fact, suffered no losses as a result of the infringement because the claimant has passed on to its own customers the addition expense it incurred as a result of the infringement?  Further, in these circumstances, should both the claimant and its customers be able to bring claims against the infringers?

• What reforms are necessary to facilitate groups of consumers bringing claims?

The outcome of the forthcoming debate may well have a significant impact on the exposure to potential liability of businesses operating in Europe.  

Further information
For a more detailed consideration of the current position in English law in relation to antitrust damages claims please click here.   For a specific consideration of the issues likely to arise in relation to damages please click here.

For an overview of Lovells' experience in this area please click here. 

This is one area in which the law in the USA is considerably more developed.  Our client note considers the US legal position in relation to cartel related claims.

Contact information
Susan Bright
Nicholas Heaton