Renato Nazzini, Ali Nikpay, Nov 01, 2008
The paper considers the case for reform of the system of private actions in the European Union. In doing so, it seeks to identify the central changes which would need to be made if private actions are to play a more significant role in the competition regime. Contrary to recent statements made by the European Commission, the paper argues that any changes made must recognize that private actions perform a dual function in EC competition law: they not only compensate those who have been harmed by anticompetitive behavior but also contribute to the overall level of deterrence generated by the competition regime.
Going further, it argues that whilst increased deterrence and compensation almost always go hand in hand, the primary objective of private actions is to support effective competition enforcement. Building on this, the paper identifies and examines the main pillars of any effective reform program in Europe: enhancing the role of collective actions, clarifying the issues surrounding indirect purchasers standing and passing-on, and ensuring, as far as possible, that public and private enforcement operate in harmony where they clash, the paper argues that the former must take precedence over the latter. In light of this discussion, the paper goes on to assess the proposals made by the European Commission (Commission) and the U.K. Office of Fair Trading (OFT) for reform of the system. It concludes that the proposals made, if implemented, would appreciably increase the incentives of businesses to comply with the EC competition rules while at the same time achieving higher levels of compensation. In addition the reformed system would retain significant safeguards to guard against the risk of unmeritorious or speculative claims. However both sets of proposals are cautious in particular in relation to the availability of opt-out collective actions. This is an issue which policymakers in Europe may need to return to in the future.
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