American innovation spawned the personal computer, the internet and the Ipod. All radically changed the way the world accessed information. Under a proposed EU Directive, another American innovation—the class action lawsuit—may radically change the way EU consumers’ access justice.
Under the proposal presented by the EU Commission, consumers who suffer at the hands of companies that fix prices or abuse their dominant market position could soon find it easier to launch class action lawsuits for compensatory damages. In an attempt to avoid any abuse of class actions, however, the draft directive underlines that only state bodies or non profit-making organizations appointed by national governments in the EU can bring class action lawsuits in national courts. If adopted as a Directive by the European Commission, EU Member States would be required to implement it or face heavy fines.
In response to increased discontent among EU consumers and entrepreneurs over the rise of antitrust violations, the European Commission published a White Paper, Damage Actions for Breach of the EC Antitrust Rules to explore the utility of class action lawsuits in quelling anticompetitive behavior. The EU Commission wrote:
“With respect to collective redress, the Commission considers that there is a clear need for mechanisms allowing aggregation of the individual claims of victims of antitrust infringements. Individual consumers, but also small businesses, especially those who have suffered scattered and relatively low-value damage, are often deterred from bringing and individual action for damages by the costs, delays, uncertainties, risks and burdens involved. As a result, many of these victims currently remain uncompensated.
Opening the court house gates to private damage actions for alleged violations of EU antitrust law would represent a fundamental shift in EU competition policy on two fronts. First, the proposal would allow victims of EU antitrust violations to recover the estimated billions of Euros they forgo each year under the current enforcement regime.
Second, the proposed change would shift the Commission’s overwhelming workload to private plaintiffs. As reported in the Financial Times article, Brussels accepts Microsoft’s browser offer and in the New York Times article, Europe Fines Intel $1.45 Billion in Antitrust Case, resources dedicated to the EU’s antitrust enforcement efforts have been pushed to the brink.
Opening the doors to class action redress, would best serve the interests of victimized EU citizens in the following ways:
- Consumers would be allowed to create an effective system of private enforcement by means of lawsuits that complement, but do not replace or jeopardize, public enforcement;
- Companies would be persuaded to play by the rules, as a greater number of antitrust violations would be detected, which would greatly increase the costs associated with noncompliance; and
- EU enforcement would become streamlined and produce beneficial effects in terms of deterrence of future infringements and greater compliance with EU anticompetition policy.
While opponents of the proposed directive fear that the EU would become a forum shopping haven for unscrupulous U.S. attorneys, the export of American ingenuity by way of innovative jurisprudence will prove to be a positive evolutionary step in EU anticompetition law.
Trend to Watch: Look for the EU to Implement Collective Redress Mechanisims to Complement Existing Anticompetition Laws