Private Competition Law Claims in Europe

by | Jan 23, 2023 | Antitrust

Private enforcement of a competition law claim is one of the most increasingly common forms of litigation in the European Union. Many factors are, together, driving this litigation explosion. First, the European Commission is increasingly bring competition law cases. This public enforcement has led to an increasing number of court judgments, be it from a national court or a European court. And after such a court has decided a public enforcement claim, claimants then bring a follow-on private enforcement claim. Claimants base their private enforcement infringement claim on the evidence and case law the European Commission developed in its public enforcement claim. This greatly lowers the cost—and risk—of private enforcement. The European court, or national court, will already have found a violation of EU competition law before claimants even begin their follow-on litigation.

Second, the EU damages directive, directive 2014104EU, has made it easier for a claimant to bring a damages claim. The EU damages directive requires each EU member state to offer minimum legal protections. The EU damages directive, for example, requires each member state to allow discloser in a claim for antitrust damages. Thus, for example, in cartel damages claims the accused companies must give claimants the information they need to calculate cartel damages. Without such a disclosure requirement, claimants would, very often, not have the information they need to prove their cartel damages claims, and thus would lose the entire infringement litigation.

Competition litigation is also increasing because claimants can increasingly use collective action techniques to combine their claims. When the European Parliament recently enacted the Collective Redress Directive it chose, oddly, not to specifically apply the Directive to competition litigation. But the Directive does not stop a member state from applying its collective redress rules to competition law infringement claims. And it is now not uncommon for a member state to do so. Collective redress rules allow many individual claimants to combine all their claims into just one claim, making litigation much more economical.

If a member state does not allow collective redress of antitrust damages actions, then it most probably does allow claimants to transfer their claim to a special purpose corporation, which will then bring one private damages action. This, another form of collective action, similarly combines claims and thus makes litigation economical.

A specialized competition law court will also encourage claimants to bring damages actions. A competition appeal tribunal will often know more about competition law than even the supreme court, or other high court, of an EU member state. This increased legal certainty regarding private antitrust enforcement encourages claimants–and those who finance litigation–to bring private enforcement actions.

As this implies, litigation finance is also driving the current boom in competition law litigation. Relying on the certainty follow-on cases offer, increased competition law competence, and the efficiency of collective action proceedings, litigation financers are increasingly willing to pay to prosecute EU competition law cases. In return for financing these expensive, time consuming legal proceedings, these litigation financers recover a portion, sometime a significant portion, of the antitrust damages award. And, with this help, claimants successfully bring competition infringement cases which they would otherwise never be able to bring.

Many have said these rules and practices make a damages claim under EU law as easy to bring as one in the United States. But private antitrust litigation in the European Union relies much more on follow-on cases. And European competition law remains unique. The European Commission, for example, enforces Article 101 TFEU very differently than a competition authority in the United States would enforce the Sherman Antitrust law. Thus while there are more private enforcement actions in the European Union than ever before, there are still more private enforcement actions in the United States.