‘A chain reaction’ or the necessity of collective actions for consumers in cartel cases
| Date | 01 April 2018 |
| DOI | 10.1177/1023263X18760549 |
| Published date | 01 April 2018 |
| Author | Franziska Weber |
| Subject Matter | Articles |
Article
‘A chain reaction’ or the
necessity of collective actions
for consumers in cartel cases
Franziska Weber*
Abstract
As a particularity of competition law, damage caused by a legal violation generally travels down
the supply chain. An overcharge incurred by the direct purchaser is often at least partially
passed on to the next level in the supply chain, and so on, ending with the final consumer.
Damage is typically widespread once it reaches the consumer level. Thus, the consumer’s
rational response is not to initiate an individual lawsuit. The classical solution is to improve the
incentive structure with some form of collectiveredress.Theprincipleofeffectivenessas
defined in Article 4 of the Antitrust Damages Directive requires an effective procedural remedy
for each victim of a competition law infringement, but the Directive is silent regarding collective
actions. Drawing on arguments on the rational apathy problem with consumer lawsuits, we
analyse why this ‘silence’ upsets the European principle of effectiveness. We show why this
omission is particularly harmful in the competition law case. We conclude that the time to
introduce collective actions to ensure the effectiveness of European competition law has
arrived. Such mechanisms do not have to be entirely harmonised across the European Union –
different shapes in different Member States or even alternative solutions to the same effect are
perfectly permissible.
Keywords
Competition law, damages regime, cartel overcharge, consumer law enforcement, collective
redress, principle of effectiveness, law and economics
* Junior Professor of Civil Law and Law & Economics, University of Hamburg, Germany
Corresponding author:
Franziska Weber, Junior Professor of Civil Law and Law & Economics, University of Hamburg, Johnsallee 35, Hamburg,
20148, Germany.
Email: franziska.weber@uni-hamburg.de
Maastricht Journal of European and
Comparative Law
2018, Vol. 25(2) 208–230
ªThe Author(s) 2018
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DOI: 10.1177/1023263X18760549
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1. Introduction
In competition law cases, damage that occurs because of an overcharge due to collusive cartel
agreements, for instance, typically spreads out along the whole supply chain affecting various
levels of purchasers.
1
The damages regimes of European competition law as spelled out in the
European Antitrust Damages Directive 104/2014 (Directive) rests on the principle that dam-
age should be claimed by the level of the supply chain where it actually occurred.
2
This
includes the direct purchasers, various levels of indirect purchase rs and finally, the consu-
mers.
3
It envisages a sophisticated system according to which the actual damage that occurred
at each specific level is to be determined and calculated. Some damage has, for instance, been
passed on to the next level and, hence, does not figure anymore at the prev ious level. The
partial amounts at each level can be summed up to the total amount of harm resulting from
the initial overcharge.
4
A precondition for this system to work is, hence, an effective enforce-
ment tool for claimants at every level of the supply chain. Otherwise the cartelist will not be
confronted with the total amount of harm. From a law-and-economics point of view this
would lead to suboptimal incentives to take care ex ante.
5
At the same time the lack of a
working enforcement mechanism would, of course, mean that claimants at the respective level
in the supply chain are not compensated.
This is where the European principle of effectiveness, which is spelled out specifically in Article
4 of the Directive, becomes relevant:
In accordance with the principle of effectiveness, Member States shall ensure that all national rules and
procedures relating to the exercise of claims for damages are designed and applied in such a way that
they do not render practically impossible or excessively difficult the exercise of the Union right to full
compensation for harm caused by an infringement of competition law.
6
This paper argues that collective redress mechanisms for consumers need to be provided to comply
with the principle of effectiveness in competition law enforcement.
7
There are compelling argu-
ments stemming from the law and economics literature that illustrate when individual enforcement
will fail because the incentives of the claimant are not correctly shaped in the light of a cost-benefit
1. This paper will look at cartel agreements rather than other infringements of competition law.
2. See Article 12 et seq. of Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on
certain rules governing actions for damages under national law for infringements of the competition law provisions of
the Member States and of the European Union, [2014] OJ L 349/1 (Directive 2014/104/EU).
3. Umbrella plaintiffs will be excluded from the scope of this article.
4. Although the overcharge is an important component of the damage, it is not the only component. With every price
increase there is also the risk of lost profit. Apparently, this is not a matter for the consumers and will therefore be given
less attention in the context of this article.
5. See, in this respect, the seminal book by G. Calabresi, The Costs of Accidents (Yale University Press, 1970) and the
works of G. Becker, ‘Crime and Punishment’, 76 Journal of Political Economy (1968), p. 169, for deterrence theory
more generally.
6. This is underlined by part of Recital 3 of the Preamble to Directive 2014/104/EU: ‘The full effectiveness of Articles 101
and 102 TFEU, and in particular the practical effect of the prohibitions laid down therein, requires that anyone – be they
an individual, including consumers and undertakings, or a public authority – can claim compensation before national
courts for the harm caused to them by an infringement of those provisions’.
7. Although this is the classical policy advice suggested by law and economics literature, other solutions that increase the
benefit to the claimants like punitive damages are imaginable, too.
Weber 209
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