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Collective redress: Competition Law - DG COMP

Vice President Almunia (DG COMP) has made clear that he intends to introduce a measure on competition damages when the Commission has declared its policy on collective litigation (see here). 

The following gives background and more details:

  1. Background
  2. Current developments
  3. What has EJF done
  4. Future steps

Background

DG COMP’s 2008 White Paper received great many responses, and the Parliament adopted a Resolution in March 2009. The Report of the Economic and Monetary Affairs Committee (rapporteur MEP Lehne) had expressed strong reservations about any measure relying on collective litigation. It called for a consistent EU policy to avoid inconsistency between different initiatives by different Directorates General. It also insisted on a co-decision process with the Parliament. In fact immediately Herr Lehne's report was issued DG Comp put a draft directive into the internal Commission decision making process. The directive relied entirely citizens using collective litigation to recover damages for breach of EU competition rules.

There was strong reaction against this proposal from the European Parliament; from the member states; and from industry bodies including EJF. We saw this proposal as retrograde and lacking the safeguard that are necessary to avoid abusive litigation. 

EJF strongly opposed the proposal, and we were relived that Commission decided not to push the proposed directive ahead. Not least this decision which influenced by EJF's advocacy.

We await with interest the policy that the new Commission proposes to pursue in this field.

Current Developments

When the new Barroso administration took office in 2010, a tripartite consultation was launched on collective redress. Mr Barroso asked Vice President (Justice) to lend the Consultation jointly with SANCO and COMP. The aim was to determine what policy the Commission should adopt with regard to collective redress, The three options were restated by Vice President Reding on 12 July 2012:

  • Do nothing
  • Publish a recommendation to Member States
  • Issue a proposal legislation instrument

The Commission could adopt a variety of measures on collective redress including ADR (which is being handled separately by SANCO - see here) and litigation. If the consultation results in the Commission leading to adopt policy, that includes collective litigation, if will publish the principles with which any measure a collective litigation would have to conform. This would address Mr. Lehne's concerns about consistency of policy.

If the Commission does decide to introduce EU measures on collective litigation, the should be (e.g. consumer protection in general) or sectoral (e.g. competition damages).

What has EJF done

EJF has consistently fought against EU collective litigation. If a single EU market were created in collective litigation (either sectoral or horizontal), we do not believe it would be possible to shield it from abuse. The attraction to creative plaintiff law firms would be too great. Just as in the USA, they would seek to amount collective claims with the aim of making settlement (regardless of the merits of the claim) more attractive then the costs of defending the action.

EJF submitted a detailed response to the CR consultation (see here for a copy). The first few pages summarise EJF's position).

EJF has submitted its views to the JURI Committee, which is the lead Parliamentary Committee on this dossier and has provided detailed input to the draft parliamentary "own initiative" reports and opinions on this matter.

EJF was also invited to speak at the JURI Committee Public Hearing on collective redress in the European Parliament on July, 12th. (Click here to see a copy of EJF's presentation)

Future steps

EJF continues to debate this matter with stakeholders in Brussels. The Parliament own initiative reports are due to be adopted in plenary session in September. The Commission will publish a "communication" on the outcome of the consultation - probably in December 2011. Any legislative proposals will follow.

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