EU: Protecting victims’ rights from cartels and market abuses

Joaquín Almunia, Vice-President of the European Commission in charge of Competition, gave a press conference on two antitrust decisions. The European Commission found that 11 producers of underground and submarine high voltage power cables operated a cartel. The Commission imposed fines totalling €301 639 000 for these producers. (EC Audiovisual Services, 02/04/2014).

Joaquín Almunia, Vice-President of the European Commission in charge of Competition, gave a press conference on two antitrust decisions. The European Commission found that 11 producers of underground and submarine high voltage power cables operated a cartel. The Commission imposed fines totalling €301 639 000 for these producers. (EC Audiovisual Services, 02/04/2014).

It was high time that the European Union took care of citizens and companies, usually SMEs, who have suffered economic losses and other damages from infringements of the EU antitrust rules, such as cartels and abuses of dominant market positions. Until now it was very difficult for the victims to substantiate their claims for damages in national courts, due to the lack of hard-core evidence protected by privacy laws and other rules blocking access to evidence.

To this effect, last Thursday 17 April, the plenary of European Parliament approved in first reading a draft Directive proposed by the Commission. This was the final step in the Parliamentary procedure. Now a swift approval by the Council will complete the legislative procedure. Once the Directive has been officially adopted, Member States will have two years to implement the provisions in their legal systems. The agreement between the Parliament and the Council was not as easy as it sounds.

Long negotiations

Difficult negotiations have been conducted between the two legislative bodies for months. A number of member states wanted to protect their multinational firms, which are prone to be implicated in infringements of the EU antitrust rules. The Parliament, from its side wanted a transparent, easily used and low-cost legal tools to facilitate citizens’ and small business’ action to claim their rights. However, the compromise reached makes sure that once this new Directive is introduced in the legal systems of member states, it will facilitate greatly the claims for damages by citizens and SMEs.

In this way, the possible costs to the offenders for violating the EU antitrust laws, may become very high and very difficult to estimate from the beginning, when plotting the formation of a cartel or abuses of dominant market positions. Consequently, this Directive will also act as a new extra-strong disincentive for scheming violations of the EU antitrust rules.

Trilateral agreement

The initiative for this Directive must be credit to the Commission. In June 2013, the EU’s executive arm submitted a relevant proposal to the European Parliament and to the Council. After both co-legislators discussed the proposal and suggested amendments, informal meetings between the three institutions (in the so-called trilogue) were launched in February 2014 to achieve a compromise text. Representatives of Member States’ governments and of Parliament agreed to the final compromise text at the end of March. Then, the approval of the MEPs sealed the procedure. The adoption of the approved text by the Council is now considered a standard process.

Joaquín Almunia, Commission Vice President in charge of competition policy, after the Parliamentary vote stressed that, “The vote by the European Parliament is great news for European citizens and businesses harmed by antitrust violations. The Directive will help to make the right to full compensation a reality in the EU, by removing the practical obstacles that victims face today. When the Directive is adopted and implemented, obtaining redress will become easier for them, especially after a competition authority has found and sanctioned an infringement”.

A practical guide

It’s worthwhile reproducing here the Commission’s tips to victims of infringements of the EU antitrust rules:

*National courts can order companies to disclose evidence when victims claim compensation…

*A final decision of a national competition authority or of the Commission finding an infringement will automatically constitute proof before courts of the same Member State in which the infringement occurred.

*Victims will have at least 1 year to claim damages once an infringement decision by a competition authority has become final.

*If an infringement has caused price increases and these have been “passed on” along the distribution chain, those who suffered the harm in the end will be the ones entitled to claim compensation.

It’s certain that after the new Directive is fully applied by all member states, the cost of forming a cartel or abusing dominant market position may become incalculable and immense for the infringing parties.

 

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