26 September 2008

France Telecom judgment in peril?

Advocate Ganeral Mazák has issued a call for less aggressive use of predatory pricing in his Opinion of 25 September 2008 relating to the Wanadoo decision where the Commission found that the appellant charged predatory prices below variable costs (AVC) until August 2001, and above AVC but below average total cost (ATC) from August 2001 onwards, as part of a plan to pre-empt the market in high-speed internet access during a key phase in its development. However, I think his views should not be followed by the ECJ.

Essentially the appellant won on three grounds:
1) CFI failed to state reasons when commenting on a dominant firm's right to align prices
2) CFI falied to state reasons why recoupment need not be shown
3) Likely recoupment must be demonstrated by the Commission in predatory pricing cases

In addition the AG also said that in his view a dominant firm should, on occasion, be allowed to align its prices with those of competitors.

Each of these four conclusions can be criticised.

1) Failure to state reasons regarding the dominant firm's right to align prices to competitors.
The passage of the CFI under appeal is this: "WIN cannot therefore rely on an absolute right to align its prices on those of its competitors in order to justify its conduct. Even if alignment of prices by a dominant undertaking on those of its competitors is not in itself abusive or objectionable, it might become so where it is aimed not only at protecting its interests but also at strengthening and abusing its dominant position." [187]

The AG's criticism was scathing because the CFI did not apply this paragraph to the facts at hand. In his words the CFI "should therefore have assessed whether or not that (new) formulation applied to the facts in the instant case, something which it manifestly did not do." [49]
With respect, this is wrong. Look at the passage in bold above and the facts of the case. On the facts of the case the CFI ruled that the firm's condct was predatory (below AVC for a period and between AVC and ATC with intention for another period). Therefore the pricing fell squarely withing AKZO [71 and 72]. So the behaviour is in itself abusive. Accordingly there was no need for the CFI to assess the formulation. It is merely an obiter dicta as to what the law is.

2) Failure to state reasons about recoupment
Here the AG notes that in Tetra Pak 2 the ECJ held that proof of likely recoupment was unnecessary "in the circumstances of that particular case" and criticises the CFI for not expaining whether there are also circumstances in this case that allow a finding of predatory pricing without recoupment. [58-60 of the Opinion]
This is a plausible line of attack, but another view can be taken of what the CFI said. It is worth quoting the CFI in France Telecom at length:
226 In relation to the recoupment of losses, the Court of Justice (in Tetra Pak 2) added, in paragraph 44 of that judgment: ‘[I]t would not be appropriate, in the circumstances of the present case, to require in addition proof that Tetra Pak had a realistic chance of recouping its losses. It must be possible to penalise predatory pricing whenever there is a risk that competitors will be eliminated. The Court of First Instance found, at paragraphs 151 and 191 of its judgment, that there was such a risk in this case. The aim pursued, which is to maintain undistorted competition, rules out waiting until such a strategy leads to the actual elimination of competitors.’
227 In line with Community case-law, the Commission was therefore able to regard as abusive prices below average variable costs. In that case, the eliminatory nature of such pricing is presumed. In relation to full costs, the Commission had also to provide evidence that WIN’s predatory pricing formed part of a plan to ‘pre-empt’ the market. In the two situations, it was not necessary to establish in addition proof that WIN had a realistic chance of recouping its losses.

So the reason why in Tetra Pak 2 proof of likely recoupment was unnecessary was because the Commission had proved that there was a risk that a competitor would be eliminated. This means that the risk that a competitor would be eliminated by predatory pricing one relevant circumstance when proof of likely recoupment is unnecessary. And at [227] the CFI gives reasons in conformity with this because the facts showed that the competitor was put at risk.

Of course you can argue that this is a bad reason. It is bad because it means that as soon as you satisfy the conditions set out in AKZO [71 or 72] then you have shown a risk of elimination and so you never need recoupment. But then perhaps this is what AKZO actually stands for (see below)

3) Likely recoupment in predatory pricing cases
This point is the most relevant for future cases. The AG takes the view that "case-law requires the possibility of recoupment of losses to be proven." [69] The reasoning is based on the fact that because the ECJ in Tetra Pak 2 said that proof of likely recoupment was unnecessary on the facts of that case, that it must mean that as a general rule proof of likely recoupment is necessary.
I think this is wrong. The bold part of para 44 of Tetra Pak 2 (see above) tells you that the rationale for penalising predtory pricing is to avoid the risk that a competitor is eliminated. Therefore whether the dominant company recoups or not is unnecessary, it is the risk to competitors that is the Court's concern.

The AG says that proof of likely recoupmet is supported by AKZO [71]. Let us consider this passage in full:
"Prices below average variable costs (that is to say, those which vary depending on the quantities produced) by means of which a dominant undertaking seeks to eliminate a competitor must be regarded as abusive. A dominant undertaking has no interest in applying such prices except that of eliminating competitors so as to enable it subsequently to raise its prices by taking advantage of its monopolistic position, since each sale generates a loss, namely the total amount of the fixed costs (that is to say, those which remain constant regardless of the quantities produced) and, at least, part of the variable costs relating to the unit produced. "

The passage in bold would seem to me to indicate that there is a presumption that recoupment is likely if a firm prices below cost. A presumption that does not therefore require the Commission to show likley recoupment. But, perhaps, a presumption that may be rebutted by the dominant firm who could try and say that recoupment is unlikely because, for example, it is selling off old stock.

Nor does Hoffmann La Roche [91] support the necessity of recoupment, quite the opposite: it supports a finding of abuse whenever the degree of competition in the market is hindered. This occurs once the rival leaves.

One can however feel for the AG because he aligns himself with the views of AG Jacobs in Bronner that the purpose of Art 82 is to protect consumers, not individual competitors. However not all Advocates General believe this (see AG Kokott for instance).

4) Price alignment by a dominant firm
Should a dominant firm be entitle dto align its prices with those of competitors? The plea is inadmissible, but the AG suggests that "one should allow for circumstances where a dominant undertaking is exceptionally permitted to show that its pricing below average variable cost is objectively justified. " [95]
True, most commentators would say that one such circumstance is when the dominant firm is selling off old stock. The difficult question is whether the dominant firm should do this when it is doing so with the clear intention of damaging a new entrant in a market where it was the incumbent for many years.

The AG is calling for a major change in the law on below cost pricing, by placing a greater focus on the impact on consumer welfare and less on the economic freedom of market participants. The problem is that the case law which seemingly creates the basis for this shift does not support it. AKZO and Tetra Pak 2 are clearly cases where the dominant concern is the preservation of rivalry, of a competitive process. The radical change called for here should be made by advising the Court to change its approach rather than by asking the court to reinterpret its case law.

I hope the ECJ does not follow the AG on the first two points, the CFI gave reasons that can be understood. That they are bad reasons is another matter, so perhaps the ECJ could require proof of likely recoupment. Though it might want to note that the requirement to show this in the US has led to no successfu predatory pricing prosecution as far as I know. Is the ECJ so Chicagoan to want this result?

04 May 2008

Limits to Competition

A peculiar leader in The Guardian of 26 April 2007, When Low Prices Come a a Cost. Commenting on the OFT's recent investigation of price fixing in tobacco and the Competition Commission's emergent thinking on BAA (holder of exclusive rights to several UK airports), it notes how while competition law enforcement might reduce prices and increase consumption, there is a doubtful public interest in encouraging smoking and more flying. It suggests that sometimes competition enforcement that is blind to the negative spillovers of the market being regulated might need tempering. Three responses are possible:
1) Rubbish: it is up to other regulatory fora to deal with the externalities directly.
2) Agreed, and the solution is to give the competition authority a degree of prosecutorial discretion where it can choose not to take a case where the overall balance of the result is negative - so prosecute a cartel in vitamins but not one in the tobacco market. (But a weak line of argument.)
3) Agreed, bu in UK competition law the Competition Act 1998 provides for how this kind of issue should be dealt with. Schedule 3, Paragraph 7 Competition Act 1998 empowers the government to determine that the applicaion of competition law to a given sector can be excluded when 'exceptional and compelling reasons of public policy' exist.
(a) An existing exclusion exists in the context of firms involved in the the development of 'complex weapons', the Competition Act 1998 (Public Policy Exclusion) Order 2007.
(b) The government appear to be considering an exclusion for off licence shops to allow them to compete less aggressively as a means of reducing alcohol consumption, or to allow supermarkets to collude to agree to stop heavy discounts. (Can anyone find some of the Home Office or Dept of Health studies upon which these proposals are based?)

Two questions about this legal basis:
(i) is an exclusion compatible with EC competition law? (cf. Article 3, Regulation 1/2003, internal market laws, Arts 3(1)(g), 10 and 81 EC).
(ii) can the government really secure an exclusion to allow alcohol retailers to restrict competition? Is public health comparable to military security as a public interest ground?

19 April 2008

Wanted: Cartels - reward £100,000 (maybe)

The OFT has recently announced that it is prepared to offer financial rewards of up to £100,000 (in exceptional circumstances) for information about cartel activity.

The sceme is innovative. In the literature I think some had suggested paying the firms, but this scheme is more clever because it pays individuals. Two problems strike me in reading the OFT announcement.

1) The award is entirely at the discretion of the OFT - there may be no investigation if the OFT decides it is not a priority case (no investigation, no reward); and the level of the award is up to them. From an economic analysis of incentives the certainty of a good reward is what gets people interested in taking a risk, so perhaps the OFT is too stingy.
2) The intersection between leniency policy and this 'bounty' scheme. The OFT says that an employee who is involved in the cartel will not (normally) get a bounty but should apply for leniency. But then this is qualified further by suggesting that employees with peripheral involvement with a cartel may get a bounty anyway. Given that leniency works well, do we really want to mess with it?

There is obviously a third risk: revenge. The name Stanley Adams comes to mind, see here for more detail. And there is a good book too: S. Adams Roche v Adams (Jonathan Cape, 1984) which was then made into a film, A Song for Europe, starring David Suchet.

One wonders whether an employee's best interests are to report the cartel to his manager, so that he helps the company deal with the cartel in the best way possible (e.g. apply for leniency etc.) The rewards of such loyalty may be worth more than the uncertain bounty coupled with the risks inherent in calling the OFT.

11 April 2008

Snails in Bottles

After two heavy postings, here is something lighter, and not competition law related; the future of law assignments maybe?

Donoghue v Stevenson

If you aren't an English or Scots lawyer, this is the case being discussed.

10 April 2008

Parallel trade in pharmaceuticals and the quixotic search for meaning in Article 82

On April Fools' Day Advocate General Colomer delivered his Opinion in yet another variation of the GlaxoSmithKline parallel trade saga (Joined Cases C-486/06-C-470/06). The English translation is not yet out, I have had a go at translating a few key passages below. You can get other language versions at the European Courts' website.

This time GSK's refusal to provide Greek wholesalers with sufficient medicines to allow them to export these abroad to Member States where the price is higher was challenged in the Greek courts as an abuse of a dominant position. This dispute had been aired before in Case C-53/03 when the Greek competition authority referred a number of question to the ECJ on the application of Article 82. The ECJ then refused to answer them ruling that the Greek competition authority was not entitled to make a reference. However AG Jacobs had delivered a strong Opinion on the merits of the issues, and it is the merits that AG Colomer also addresses. It will be useful to compare the approaches of the two Advocates General.

1. Refusal to supply as an abuse (paras 39-46)
The AG rightly notes that the closest precedents are two old cases, Commercial Solvents and United Brands: (a) like the facts at hand, there was a refusal to continue to supply (not a refusal ab inito), (b) like in Commercial Solvents whose termination was followed by its entry in the downstream market, GSK had reorganised its sales through its exclusive distributor in Greece; (c) United Brands set out a principle that a dominant firm cannot terminate a contract with a long-standing client whose orders are not abnormal. Drawing these strands together at para 46: "... we can infer that an undertaking holding a dominant position that refuses to supply goods - especially in the absence of alternative products..., reserving to itself the market for parallel imports adops a form of behaviour that is an abuse under Article 82."

This passage is closer in spirit to Commercial Solvents than United Brands. This is to be welcomed because the ratio of United Brands is more akin to a contract doctrine than a competition law rule. The AG instead notes that the refusal to continue to supply has an adverse effect on the market for parallel trade. (We can debate whether this is an adverse effect but at least he looks for one...). Note also that the passage requires that the dominance held is significant - the wholesaler must be unable to find a substitute. This is different from United Brands where Olesen could easily find alternative suppliers of bananas. So market definition is crucial.

2. Intention and abuse (paras 47-54)
This is a strange part of the Opinion. The AG starts by noting that abuse is an objective notion but this is subject to two important aspects: (1) subjective elements can indicate that the dominant firm is pursuing ends contrary to competition; (2) (with reference to British Airways)since Article 82 does not contain any reference to the anticompetitive effect of the practices, it is sufficient to show that the abusive conduct tends to restrict competition, or in other words can have anticompetitive effects. I don't see how point (2) has to do with intent; nevertheless the AG continues to say that GSK never denied that its real objective was to eliminate parallel exports and (paras 53-54): "It is obvious that the intetion of GSK is in contrast with the obectives of the Treaty, because it affects the freedom of trade among Member States in a manner that can damage the internal market, according to the case law and Article 3(1)(g) EC, because it indisputably isolates national markets and modifies the structure of competition in the common market. In sum, these observations show that GSK has committed a grave violation of the Treaty that would deserve the label of an abuse 'in itself and per se' given that the basis of the behaviour has no other economic foundation than the intetion of elimitaing parallel trade from its competitors, the Greek wholesalers."

This analysis is unnecessary but the AG is obviously keen to participate in the debate on the reform of Article 82, so he has a go here at doing two things: first it seems he tries to find a role for intent to reconcile the case law; and this is to be welcomed, esp in that the observation about 'gravity' might suggest that intent is relevant also to the fine imposed. But second he seems to be crafting a theory of abuse akin to the 'no economic sense' test by which conduct is an abuse if it is not rational for the defendant absent a tendency to eliminate competition. (See
Gregory J. Werden 'Identifying Exclusionary Conduct Under Section 2: The "No Economic Sense" Test' (2006) 73 Antitrust Law Journal 413). I don't know if he intended to do this or not, but if he did, then it seems to run against the Commission's view in the Discussion Paper on Article 82 that seemed to apply an 'as efficient competitor' test to determine abuse (at least for predatory pricing, see para 63).
Also interesting how the AG construes the market relations: he treats GSK and the wholesalers as competitors in the market for selling pharmaceuticals to health care providers. So the abuse harms intra-brand competition. This is obviously a concern when there is an absence of inter-brand competition. But this has nothing to do with intent, instead it has to do with effects. Would it not be better to ground abuse on anticipated effects than upon intent?

3. No per se abuse (paras 62-77)
First the AG notes that the case law seemed to have classified three abuses as per se unlwful (exclusive dealing, loyalty rebates and predatory pricing under the AKZO rule), but that the more recent case law (British Airways) suggests that firms may offer justifications even for what may be per se abuses (loyalty rebates in that case). So the question of whether any practice is abusive per se is open. He then quickly shuts the door on any suggestion that we should develop a category of per se abuses, on legal and economic grounds.
Legal grounds: the absence of a provision for exemption like Art 81.3 meants that (para 67): "the analysis of abusive behaviour reqires a dialectical debate between the dominant undertakings and the competent authorities, whether national or EC, and also interested parties. ... (para 69): "In this scenario if certain behaviour were always togive rise to an irrebuttable presumption of abuse, dominant firms would be denied the right of defence."
Economic grounds: (1) per se abuses would be contrary to the need to examine each case on teh basis of its economic context; (2) the approach would commit the 'sin' of 'excessive formalism' (para 72). There is a third ground at para 74-5 which is somewhat opaque and possibly circular and seems to say that because there are two types of abuse (exploitative and exclusionary) and there is no hierarchy, the defence for a dominant firm must be based on the economic effects.

I disagree with this analysis. Per se abuses can be useful as a time saving device: granted we can formalistically condemn some efficient behaviour but the reason we put behaviour in a per se illegality box is because experience teaches us that normaly such behaviour is harmful and it is cheaper to condemn some procompetitive behaviour than run a full scale economic inquiry in all cases. The sound administration of justice can sometimes justify denying defendants a right to offer a justification, after all any legal system tolerates strict liability rules. A contrario we should also tolerate safe harbours, or per se legality.

4. Objective justification (paras 78-119)
This is the good bit. We start with something remarkable at para 79: "There are three justifications that can be invoked by firms in a dominant position that are accused of abuse: reasons related to the market in which they operate; legitimate defence of their commercial interestsl and proof of a positive balance." The first one is related to one suggested in the Discussion Paper (para 80 thereof) but the AG wants to widen it. This is remarkable because it is a bold, exhaustive formulation of what objective justification means which seems to be wider than the existing jursprudence.

(a) market conditions: The suggestion is that the Court should be willing to take into consideration the way in which a market is regulated (e.g. here the fact that prices are fixed by Member States and that there are statutory requirements about the quantity of medicine that should be available). The AG says this can be a plausible defence but it fails on the facts because while prices are set by the Member State, the undertakings are involved in discussions over price, and the obligation to keep minimum quantities does not explain the refusal to deal with wholesalers. (This defence seems to be a variation of the state action defence whereby if the Member State requires an infringement, then the undertaking is not responsible (the MS is under Arts 10 & 81/82)).
(b) defence of legitimate interests: This is apparently a well defined defence (para 99, exemplified by BP v Commission and United Brands) but this is subject to the principle of proportionality. I prefer to see BP as a case of force majeure, see Ekaterina Rousseva's analysis. This line of cases is applied to the following argument: that parallel trade reduces the profits of pharmaceutical companies and this does not allow them to recoup the R&D expenditures. On the facts this is rejected for lack of evidence of a causal link between parallel trade and the damage to the firm's profits. Also it is suggested that GSK could have chosen a different method of distribution, full vertical integration, which would then perhaps not have constituted an abuse. Further, it is argued that this line of argument is more about the incentive effects (that is, parallel trade may dent the incentives to invest in future medicines), but this is rebutted by stating that the EU offers a friendly environment for firms and R&D...
(c) positive economic balance: this is an efficiency defence, and GSK raises the argument that parallel trade does not benefit patients, nor the health service providers who buy medicines, but only serves to benefit the wholesaler. The response is amusing (para 118): "Aside from the description of the 'horrors' provoked by parallel trade, GSK does not indicate any positive aspect resulting from its decision to limit supplies to wholesalers save the recovery of its profit margins, something which is irrelevant." And so this fails for lackof evidence.

Brief comments: first it is nice to see a willingness to develop the law, especially on defences but also (see above parts 2 and 3) on theories of abuse the AG seems to be happy to give dominant firms a chance to prove they are not guilty but the scepticism over the arguments of GSK is a matter of concern, perhaps the national court will have a different view of the evidence. However the concern si that there are defences in theory but not in practice. Second it is unfortunate that the AG does not engage directly with the contrasting Opinion of AG Jacobs (who has slightly different views on the role of intention, a more subtle way of integrating defences (see para 72), and diametrically opposite views on the merits of the justifications proffered by GSK); third I think categories (b) and (c) of the defences are overlapping, it is best to treatthe cases in (b) as instances where the dominant undertaking is faced with no choice but to terminate, so leaving all the economic cost-benefit arguments for the efficiency defence. Moreover I think if you look at the three defences separately you miss the point of GSK's argument - It is a combination of the arguments in the three categories that gives rise to the defence, AG Jacobs' Opinion had recognised this. Accordingly I feel that the analysis of defences is flawed, and the Opinion does not solve the mysteries of Article 82.

07 April 2008

White Paper on Damages Actions for Breach of the EC antitrust rules

On 2 April 2008 the Commission published a White Paper on Damages Actions for Breach of the EC antitrust rules. COM (2008) 165. It is accompanied by a more detailed Commission Staff Working Paper on Damages Actions for Breach of the EC antitrust rules SEC (2008) 404 and an Impact Assessment Report SEC(2008) 405. All three documents are available at: http://ec.europa.eu/comm/competition/antitrust/actionsdamages/documents.html).

It begins by recalling the findings of the 2005 Green Paper that the dearth of private litigation is caused by ‘legal and procedural hurdles’ in Member States and that the primary objective of the White Paper is to lower these hurdles, guided by three principles: full compensation (inherently this leads to greater deterrence); that the legal framework should be based on a genuinely European approach, so the proposals are ‘balanced measures that are rooted in European legal culture and traditions’; and to preserve strong public enforcement so that damages actions complement public enforcement. A brief comment on these three principles is warranted before considering the proposals. The first one confirms the views of some scholars that the action for damage is premised primarily upon the principle of corrective justice and not on optimal deterrence. This means that preference is given to allow as many claims as possible rather than restricting claims to those plaintiffs whose lawsuits are most likely to deter future anticompetitive conduct. The second is designed to allay fears of a US-style approach so there are no proposals for punitive damages, class actions, contingency fees or other procedures that would jar with established civil law cultures. The third is a recognition that that too much private enforcement can undermine the Commission’s leniency programme: if a firm applies for leniency but is then liable to pay considerable sums in damages, it may decide to keep its involvement in cartels secret.

Turning to the detail, the White Paper addresses the following issues:

  1. Indirect purchasers have standing to seek damages because this is now part of the acquis communautaire, following Manfredi. It means that for example, in a cartel in the cement market where a building company buys from the cartel and passes some of the price increase to the buyer of the buildings, the latter as an indirect purchaser is entitled to damages. No legislative measure on this point seems to be envisaged.
  2. Collective redress should be facilitated because often the harm is diffuse (as in Manfredi, several hundred people are victims of a cartel but each loss is relatively small). Two mechanisms are proposed: (i) representative actions brought by qualified entities (e.g. consumer associations) and (ii) opt-in collective actions whereby plaintiffs can decide to combine their claims in one single action.
  3. To facilitate access to evidence national courts should be empowered to order the defendant to disclose certain evidence (only when specific conditions are met, e.g. the inability to secure the evidence by other means, that specific categories of evidence are identified and that the disclosure is relevant to the case, necessary and proportionate). This should be coupled with penalties if the defendant refuses to comply, including the option to draw adverse inferences from the refusal.
  4. National courts should be bound by findings of any national competition authority in the European Competition Network. This would allow a follow-on claim for example in a Slovenian court after the UK competition authority reached a final decision.
  5. A defendant should be liable for damages unless he proves that the breach was caused by a ‘genuinely excusable error.’ An error is excusable if ‘a reasonable person applying a high standard of care could not have been aware that the conduct restricted competition.’ This is designed to harmonise different approaches in Member States as to the presence of a fault requirement and is said to be in line with the principle of effectiveness.
  6. Codification of the scope of damages is recommended, to clarify that damages can be claimed for: (i) actual loss, and (ii) loss of profits resulting from any reduction in sales. Further a soft law instrument is proposed with ‘pragmatic guidance’ to quantify damages with simplified rules on estimating loss.
  7. In claims by direct purchasers, the defendant should benefit from the passing-on defence so that a claimant who has bought goods from a cartel at a higher price but has mitigated this loss by passing the excess price to downstream buyers would see his damages claim reduced, otherwise he would be unjustly enriched. (So for example if the cartel causes the price to rise by €2 and the claimant resells the goods to the indirect purchaser at a price that is €1 higher than before the cartel, he has passed on half of the overcharge, so damages would be €1, not €2.). But the burden of proof is on defendant to show that claimant has passed on (some of) the overcharge, which seems a tricky burden to satisfy.
    To facilitate claims by indirect purchasers, these ‘should be able to reply on a rebuttable presumption that the illegal overcharge was passed on to them in their entirety.’ (page 8) On the example above therefore the indirect purchaser is entitled to make a claim of €2 even if only a €1 overcharge was passed on to it. This is justified by indicating that indirect purchasers would otherwise find it too hard to prove the existence and extent of the passing on, but it is not particularly fair to ask the defendant to show how much of the higher costs were absorbed by the direct purchaser, so this proposal seems to lead to over compensation of indirect purchasers.
  8. There are two proposals on limitation periods. The most significant is that in cases where anticompetitive activity is subject to public enforcement, a new limitation period of at least two years starts once the competition authority’s infringement decision becomes final. The second is that a limitation period in other instances should not begin to run before the day on which the infringement ceases (even in cases of continuous or repeated infringement) and not before the victim can reasonably be expected to have knowledge of the infringement and of the harm it caused. The duration of this limitation period is not harmonised.
  9. Member States should reconsider their cost allocation rules to ensure that these do not put off meritorious cases, settlements should be considered, as well as limits on court fees, and cost orders that do not always make the losing party bear all the costs of the winning party.
  10. To safeguard the attraction of leniency programmes: the confession made should not be disclosed before or after the adoption of a decision to ensure that the information supplied to the competition authority is as complete as possible, and the Commission considers that those who receive immunity should only face claims from direct and indirect contractual partners, so that by reducing the financial impact of damages claims leniency applications continue to be made. Two comments are warranted on the second proposal: first this qualifies the ECJ case law giving anyone a right to damages in all cases, second given that the defendant is liable to both direct and indirect purchasers (and so merely avoids claims by competitors) it is hard to see that this proposal actually reduces the amount of damages that the defendant would pay.

It will have become apparent that the White Paper is not a blueprint for a single legislative instrument: some of the proposals are recommendations for Member State action (on costs), some are suggestions for soft law instruments (on calculating damages) and some for discrete legislative tools whether directives (on representative actions) or Regulations (on the function of the passing on defence and the fault requirement). (On this, see also A.P. Kmoninos ‘Enter the White Paper for Damages Actions: A First Selective Appraisal’ (4 April 2008) available at http://www.globalcompetitionpolicy.org/)

The Commissioner for competition, Neelie Kroes said that ‘[t]he suggestions in this White Paper are about justice for consumers and businesses, who lose billions of euros each and every year as a result of companies breaking EU antitrust rules. These people have a right to compensation through an effective system that complements public enforcement, whilst avoiding the potential excesses of the US system.’ While the proposals seem well designed to achieve this, from the perspective of tort law, seeing rules designed to facilitate claims by victims of economic losses over other tort victims cannot be justified so easily (e.g. the difficulties faced by victims of asbestos exposure). What makes antitrust victims so deserving? The Commission’s justification seems to be that the estimated cost to antitrust victims ranges between €25 to €69 billion, and that ‘EU-wide infringements are becoming more and more frequent.’However this second finding is troubling: given that Regulation 1/2003 was designed to strengthen antitrust enforcement, has there been a failure of public enforcement? And if so might resources not be best allocated at that end?