The European Commission has published its Green Paper on damages for breach of EC competition law. The purpose of the consultation paper is to identify the main obstacles which exist to private enforcement of the competition rules. The paper outlines various ways in which each of the obstacles could potentially be resolved and invites comments from interested parties before 21 April 2006.

The Commission believes that it is essential that private enforcement is facilitated for two main reasons. Firstly, it would make it easier for consumers and firms who have suffered damage as a result of a breach of competition law to obtain redress and secondly, it would strengthen enforcement of EC competition law generally.

Some of the key obstacles that are identified in the green paper are noted below together with a summary of the potential means that have been identified to resolve such obstacles.

Access to evidence – the ability of firms and consumers to access the necessary evidence to substantiate any private claim is recognised as a major factor in facilitating private enforcement. It is recognised that evidence will not generally be (readily) available and often will be in the hands of the party believed to have committed the breach of competition law. The Commission is considering various options to address this problem, each of which is likely to involve significant changes to the rules on disclosure of evidence.

Burden of proof – linked to the difficulty in accessing evidence to substantiate claims, the Commission is considering whether the burden of proof that requires to be met by private litigants should be lowered. For example, the Commission has suggested that it may be appropriate to reverse the burden of proof where an infringement decision has already been taken by a national competition authority.

Level of damages and basis for calculation – the possibility of double damages has been raised by the Commission specifically for the most serious breaches of competition law e.g cartel cases. A key issue in deciding how damages should be calculated will be firstly, determining the objective of private enforcement i.e will it be to compensate the victims or will it be to recover the illegal gains made by the defendants. Both alternatives are put forward in the Commission’s green paper.

Allocation of costs for private actions – the significant costs that will necessarily be incurred by private litigants has been identified as something that is likely to deter private enforcement. If unsuccessful claimants are required to meet the costs of the defendant as well as their own (as is standard in civil court actions) then the issue of costs will become an even greater deterrence. Accordingly, the Commission is consulting upon whether it would be appropriate to seek to alter national rules in relation to cost recovery. The option of taking appropriate steps to facilitate class actions is seen as another means by which to lessen the concerns regarding costs.

The consultation closes on 21 April 2006. Details of the outcome of the consultation will be included in future bulletins.

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