Private Enforcement of European Competition Law and the Persisting Collective Action Problem
| Date | 01 March 2013 |
| Published date | 01 March 2013 |
| Author | Roger Van den Bergh |
| DOI | 10.1177/1023263X1302000102 |
| Subject Matter | Article |
12 20 MJ 1 (2013)
PRIVATE ENFORCEMENT OF EUROPEAN
COMPETITION LAW AND THE PERSISTING
COLLECTIVE ACTION PROBLEM
R V B*1
ABSTRACT
Several economic criteria may he lp policy-makers in choosing between public and private
enforcement of competition law. e welfare losses caused by infringements of the cartel
prohibition may be better internalized by imposing nes rather than by bringing damages
actions. Public agencies may poss ess information advantages and they may also be able to
remedy the di erence between the private and social motive to sue. Private enforcement
may complement public enforcement by increasing deterrence and guaranteeing
compensation. Both direct and indirect buyers should be g iven standing to bring damages
actions. Given the reluctance to introduce US-style class actions, European policy-
makers favour collective opt-in actions and representative actions brought by consumer
associations. However, the participation rate of opt-in collective actions may remain too
low and actions by consumer a ssociations are also vulnerable to principal-agent problem s.
Moreover, private enforcement of competition law by consumer associations will remain
suboptimal if the funding problem is not solved. is paper argues in favour of an optimal
mix of public andprivate enforcement of competition law and suggests some remedies to
overcome the above mentioned problems.
Keywords: collective act ions; combined use of public and private enforcement; damages;
private enforcement of competition law; representative actions
§1. INTRODUCTION
European competition law is en forced by both public authorities (Europea n Commission,
national competition authorities) and private pa rties (competitors, suppliers, consumers).
* Erasmus University Rotterdam.
Private Enforceme nt of European Competition L aw and
the Persisting Collective Action Problem
20 MJ 1 (2013) 13
In marked contrast wit h the United States of America (US), where the vast majority
of cases under antitrust law are brought by private parties, European competition
law has been enforced mainly by public bodies. In the literature, this state of a airs
is o en explained by the more favourable legal regime of private enforcement in the
US. Remarkable di erences between the EU and the US include: the award of treble
damages (instead of single damages), the possibility of class actions, the availability of
contingency fees, and the pre-trial discovery procedure allowing private parties better
access to the relevant ev idence. In spite of their greater potential to deter i nfringements
of antitrust law, American-style class actions have su ered a bad press in Europe. e
dominant scepticism towards US-style class actions is due to alleged abuses and the
prevailing image of an attorney acting as a private entrepreneur maximizing personal
pro ts without su ciently taking care of the interests of the members of the class.1
e aversion towards American class actions in Europe is so great that it has become
politically incorrect to use this term. Instead, policy makers have proposed to rely on
‘collective actions’ and ‘representative actions’ brought by consu mer associations.2
Before addressing the optimal design of group actions for damages in cases of
infringement of the competition rules, a preliminary question to be answered is why
private enforcement is needed. At r st blush, public authorities appear to have import ant
advantages over private parties as far as the enforcement of competition rules is
concerned. Competition authorities have invest igative powers that allow them to detect
price- xing cartels that the participating rms attempt to conceal; such cartels may
remain hidden to buyers of overpriced goods for many years. Pr ivate enforcement seems
a clearly inferior mechanism due to the information disadvantage of private parties
(lack of investigative powers) and the capacity and quality ( nancial endowment and
expertise) of public compet ition authorities.
However, a few caveats are needed. First, the analysis of optimal enforcement
must be di erentiated by taking di erent types of competition law infringements into
account. Outside the area of hard core ca rtels (price- xing, quant ity limits, bid rigging),
the information advantage may lie with private parties rather than public bodies.
Suppliers or buyers are best aware of restrictions in contractual agreements, which
violate the competition rules on vertical restraints. e same may be true with respect
to exclusionary abuses (refusals to deal, tying) covered by the prohibition of abuse of a
dominant position. However, in spite of their information advantage in ca ses of vertical
1 See the contribut ions in J. Backhaus et al. (ed.), e Law and Economics of Cla ss Actions in Europe.
Lessons from Am erica (Edward Elga r, Cheltenham UK 2012).
2 Under current law, in the major ity of EU Member States consu mer organizat ions already have sta nding
to enforce consumer rights by bringing actions for injunct ive relief. e choice of the European
Commission to ex pand the role of consu mer organiza tions by givin g them the power to sue for da mages,
rather than g iving a major role to ind ividuals (in par ticular, lawyers), thus constitutes a ‘genui nely
European approac h’ that is ‘rooted in Europea n legal culture and t raditions’. See: Commission W hite
Paper on damages ac tions for breach of EC antitr ust rules, COM (2008) 165 na l, p.3.
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