[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 2.4.2008

SEC(2008) 404

COMMISSION STAFF WORKING PAPER accompanying the

WHITE PAPER on Damages actions for breach of the EC antitrust rules {COM(2008) 165 final} {SEC (2008) 405} {SEC (2008) 406}

TABLE OF CONTENTS

Chapter 1 — Introduction 7

A. The aim of the White Paper 7

1. The background 7

2. The obstacles to the enforcement of the victims’ right to damages 8

3. The need for facilitating measures and the positive effects of an enhanced levelof actions for damages 10

B. A balanced European system which preserves strong public enforcement 10

1. The designing of a balanced European system 10

2. The importance of preserving effective public enforcement 11

3. The interaction between public enforcement and actions for damages: the under-lying objectives 11

C. The measures proposed in the White Paper 12

Chapter 2 — Standing: indirect purchasers and collective redress 13

A. The options in the Green Paper and the results of the public consultation 13

1. Standing of indirect purchasers 13

2. Collective redress 13

B. The acquis communautaire as regards standing of indirect purchasers 14

C. Measures as regards collective redress 15

1. Necessity of collective redress mechanisms and identification of key issues 15

a. Necessity to provide for means of collective redress for all categories of victimsof competition law infringements 15

b. Key issues to be addressed 16

2. Measures ensuring effective collective redress mechanisms in the competitionfield 18

a. A representative action for damages brought by qualified entities 18

b. An opt-in collective action 20

c. The relation between representative actions, opt-in collective actions, and individual actions 21

3. The relationship with other Commission initiatives in the field of collective re-dress 22

Chapter 3 — Access to evidence: inter partes disclosure 23

A. The options in the Green Paper and the results of the public consultation 23

B. The acquis communautaire 24

1. The principles of equivalence and effectiveness 25

2. Community rules on disclosure of evidence in the IP Directive 2004/48/EC 27

C. Measures to ensure effective EC antitrust damages actions 28

1. The problem: need for better access to evidence in antitrust damages cases 28

2. Solutions not retained: lowering the standard of proof or shifting the overall bur-den of proof 29

3. The proposed solution: a minimum level of disclosure based on fact pleading, combined with judicial control of relevance and proportionality 30

4. Conditions for obtaining a disclosure order by the court and its scope 31

a. Fact pleading: presentation of reasonably available facts and evidence sufficientto make out a plausible claim 31

b. Inability of claimant to otherwise access relevant evidence 32

c. Specification of categories of evidence to be disclosed 33

d. Judicial control of relevance, necessity and proportionality of disclosure measure 33

5. Further issues related to the scope of the disclosure order 34

a. All types of evidence 34

b. The disclosure and protection of confidential information 35

c. The disclosure of corporate statements submitted to a competition authority aspart of an application for immunity or reduction of fines 36

d. Investigative privilege of competition authorities 37

e. No possibility to object to disclosure of unfavourable evidence 37

6. Potential addressees of disclosure orders and their right to be heard 37

7. Refusal to turn over evidence and destruction of evidence 38

a. Sanctions for refusal to produce evidence and for destruction of evidence 39

b. Protective measures to preserve relevant evidence 40

Chapter 4 — Binding effect of decisions adopted by competition authorities 41

A. The options in the Green Paper and the results of the public consultation 41

B. Acquis communautaire and possible measures to ensure effective antitrustdamages actions 42

1. Acquis communautaire : binding effect of decisions by the Commission 42

2. Binding effect of NCA decisions finding an infringement of Article 81 or 82 EC 43

a. Irrebuttable probative effect of NCA decisions ensures the coherent applicationof Articles 81 and 82 EC and the effectiveness of antitrust damages actions 43

b. Types of NCA decisions concerned 45

c. Conditions for binding effect of NCA decisions 46

d. Territorial scope of binding effect of NCA decisions 47

Chapter 5 — Fault requirements 50

A. The options in the Green Paper and the results of the public consultation 50

B. Acquis communautaire and measures to ensure effective antitrust damagesactions 51

1. Fault requirement in the case law of the Court of Justice 51

2. Fault requirements under national law as a condition for a victim to exercise hisright to damages 52

a. Member States with strict or irrebuttably presumed liability for infringements of Article 81 or 82 EC 52

b. Member States requiring proof of elements of fault 52

Chapter 6 — Damages 55

A. The options in the Green Paper and the results of the public consultation 55

B. Acquis communautaire and measures to ensure effective antitrust damagesactions 56

1. The definition of damages 56

a. The acquis communautaire 56

b. Measures to ensure effective antitrust damages actions 58

2. The calculation of damages 59

a. The acquis communautaire 59

b. Measures to ensure effective antitrust damages actions 60

Chapter 7 — The passing-on of overcharges 62

A. The options in the Green Paper and the results of the public consultation 62

B. Measures to ensure effective antitrust damages actions 63

1. The passing-on shield against an action brought by a purchaser other than thefinal consumer 63

2. The passing-on sword in an action brought by a purchaser other than the direct purchaser 65

3. The passing-on shield and sword in joint, parallel or consecutive actions broughtby purchasers at different levels in the distribution chain 67

Chapter 8 — Limitation periods 70

A. The options in the Green Paper and the results of the public consultation 70

B. Ensuring the effectiveness of antitrust damages actions 70

1. The acquis communautaire 70

2. Measures to ensure effective antitrust damages actions 71

a. The commencement date of the limitation period 71

b. The duration of the limitation period 72

c. The effect of public antitrust proceedings on the limitation period 72

Chapter 9 — Costs of damages actions 74

A. The options in the Green paper and the results of the public consultation 74

B. Measures to ensure effective antitrust damages actions 75

1. Encouraging settlements 75

2. The allocation of court costs and party costs 76

a. The application of the “loser pays” principle 76

b. Court discretion as regards the allocation of costs 77

3. Legal provisions regarding determination of court fees 80

4. Funding of antitrust damages actions 80

Chapter 10 — Interaction between leniency programmes and actions for damages 82

A. The options in the Green Paper and the results of the public consultation 82

1. Consensus on the necessity to protect leniency programmes and exclude discoverability of leniency applications 82

2. Diverging opinions on whether to grant a conditional rebate on damage claims to successful leniency applicants 83

3. Support for the removal of joint liability for the successful leniency applicant 84

B. Measures regarding the interaction between leniency programmes and actions for damages 85

1. Exclusion of discoverability of corporate statements submitted by applicants for immunity and reduction of fines 85

a. The protection granted should apply to applications for leniency submitted underthe EC and national leniency programmes 85

b. The protection against disclosure granted to corporate statements 87

2. Limiting the scope of the civil liability of the successful immunity applicant 89

Chapter 11 — Conclusions 91

A. Measures to ensure the effectiveness of antitrust damages actions 91

1. The acquis communautaire 91

2. Measures to ensure effective antitrust damages actions 93

B. Instruments to ensure the effectiveness of antitrust damages actions 97

1. The need for a Community instrument underpinning national measures 97

2. The appropriate Community instruments 98

CHAPTER 1 — INTRODUCTION

A. THE AIM OF THE WHITE PAPER

1. The background

1. On 19 December 2005 the European Commission adopted a Green Paper on damages actions for breach of the EC antitrust rules (hereinafter the “Green Paper”).[1] The purpose of the Green Paper and of the annexed Staff Working Paper[2] was to identify the main obstacles to a more effective system of damages claims, and to set out different options for further reflection and possible action to improve both follow-on and stand-alone actions.[3]

2. The adoption of the Green Paper opened a period of public consultation which ended on 21 April 2006. The Green Paper was met with broad interest in the antitrust community, and certainly achieved its objective of raising awareness of victims’ right to compensation, and of the obstacles faced by victims of competition law infringements when attempting to enforce their rights. Practically all the submissions received accepted the complementary role of private actions in the overall enforcement of EC competition rules. Also, most submissions agreed that victims of competition law infringements are entitled to damages and that national rules should enable this right to be exercised effectively. The submissions on the Green Paper, and the range of comments received more informally from stakeholders,[4] highlighted the difficulties involved in bringing damages claims, and emphasised the expectations of respondents regarding an effective system of private enforcement.[5] However, other respondents expressed their concerns about the costs of private enforcement and therefore called on the Commission to refrain from setting up a system leading to excessive and unmeritorious litigation.

3. The European Parliament and the European Economic and Social Committee (EESC) contributed to the debate by adopting a Resolution and an Opinion on the Green Paper. On 25 April 2007, the European Parliament adopted a Resolution calling on the Commission to “prepare a White Paper with detailed proposals to facilitate the bringing of ‘stand-alone’ and ‘follow-on’ private actions claiming damages (…) which addresses in a comprehensive manner, the issues raised in [its] resolution and gives consideration, where appropriate, to an adequate legal framework”. The issues raised in the Resolution are, in particular, the complementary role of actions for damages (and the issue of joint and several liability of the successful leniency applicant), the asymmetry of information and of resources between the parties, the disclosure of evidence inter partes , the binding nature of national competition authorities (“NCA”) decisions, the need for collective actions, the definition and quantification of damages, the promotion of settlements as well as the issues of passing-on defence, costs and limitation periods.[6] On 20 October 2006, the EESC adopted an Opinion on the Commission’s Green Paper.[7] The EESC’s Opinion is positive about the Commission’s efforts to facilitate antitrust damages actions and considers that the Green Paper has opened up a broad and welcome debate on the need to make it easier for those injured by anti-competitive practices to recover damages. The Opinion supports measures at Community level to facilitate damages actions.

4. The Commission, encouraged by the comments received from stakeholders, the European Parliament, the EESC and the Member States, as well as taking into account the recent case law of the European Court of Justice (ECJ or the Court),[8] has decided[9] to adopt a White Paper in order to foster and further focus the ongoing discussions by setting out concrete measures aimed at creating an effective private enforcement system in Europe.

2. The obstacles to the enforcement of the victims’ right to damages

5. The ECJ acknowledged, and recently confirmed, that the right to damages is necessary to guarantee the useful effect of the EC competition rules.[10] However, the exercise of this right in Europe is still facing considerable hurdles. First, the traditional tort rules of the Member States, either of a legal or procedural nature, are often inadequate for actions for damages in the field of competition law, due to the specificities of actions in this field. In addition, the different approaches taken by the Member States[11] can lead to differences in treatment and to less foreseeability for the victims as well as the defendants, i.e. to a high degree of legal uncertainty.

6. A number of factors influence the victims’ choice whether or not to bring a damages action. In balancing the costs and benefits of bringing a damage claim, the victims will often consider that the difficulties of proving their claim, combined with the uncertainty in outcome and the risks associated with a rejection of the claim, make it too difficult or hazardous, or not attractive enough, to enforce their rights in court.

7. The main obstacles have been described and analysed in the Green Paper and the 2005 Staff Working Paper: the rules on access to evidence, the fault requirement, the definition of damages, the availability of the passing-on defence, the question of standing of indirect purchasers, the question of collective redress mechanisms, the costs of actions, the issues of limitation periods and of applicable law.

8. With regard to the latter, the European Parliament and the Council adopted on 11 July 2007 Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations, also referred to as the Rome II Regulation.[12] According to Article 6(3) of that Regulation, the law applicable to a non-contractual obligation arising out of a restriction of competition shall be the law of the country where the market is (likely to be) affected. However, when the market is (likely to be) affected in more than one country, as is often the case when Article 81 or 82 EC is violated, the claimant may also choose to base his claim on the law of the Member State where he is bringing his claim. In order to limit forum shopping, the claimant can only choose that law when the market of that Member State is directly and substantially affected by the restriction of competition that gives rise to the damages claim.[13]

9. The Commission believes that Article 6(3) of Regulation 864/2007 contains an appropriate applicable law rule enabling claimants to effectively use their right to obtain antitrust damages in case of an infringement of the EC competition rules. In particular, these new rules, read together with the rules on jurisdiction,[14] allow for procedural economy as they provide claimants with the option to have their case for antitrust damages heard by one court applying one single law, even in situations where more than one defendant is involved and where the damages occurred in several Member States. The Commission therefore does not consider it necessary to further address the issue of applicable law in the White Paper.

10. In recent years, some Member States enacted legislation aimed at facilitating antitrust damages actions, even though not addressing all the issues identified in the Green Paper. There is no indication however that any sizeable number of other Member States is likely to introduce, in the foreseeable future, legislative changes that ensure an effective legal framework for damages actions of victims of antitrust infringements. In addition, isolated initiatives can not ensure that a coherent level of effective minimum protection of the victims’ entitlement to damages is achieved throughout Europe. Finally, the interaction of measures facilitating actions for damages with various aspects of public enforcement needs to be addressed, and individual action by Member States is not sufficiently capable of achieving this in any consistent manner.

11. Since the Green Paper, one can observe an increase in awareness, leading to more reported antitrust damages cases, especially cases following on decisions of competition authorities, and most probably also to more settlements. Some of these cases have further highlighted the difficulties faced by the victims in bringing a damages claim. The problems identified in the Green Paper remain essentially unchanged and there is thus still a clear need to improve the conditions for effective compensation of victims for harm suffered through EC competition law infringements.

3. The need for facilitating measures and the positive effects of an enhanced level of actions for damages

12. The Commission made clear in its 2005 Staff Working Paper that it does not intend to incentivise victims to bring an action when their actions are not meritorious. It considers it fundamental, though, that those victims who have meritorious claims for damages are able to bring such actions successfully, and are not deterred from bringing an action to court due to the numerous obstacles they face.

13. The Impact Assessment annexed to the White Paper has shown that in the absence of any measures to facilitate actions for damages, most of the harm caused by competition law infringements will continue to be left uncompensated, and victims and businesses that comply with the law will continue to have to absorb that loss.[15]

14. Enhancing the effectiveness of actions for damages will, amongst other effects, mean that compensation of the harm suffered by victims of illegal anti-competitive behaviour will be achieved more often. Compensation of the harm is fundamental so that companies who comply with the law do not suffer from a competitive disadvantage, and victims who are harmed do not bear the costs of the infringements: these costs must be borne by the infringers. Victims have a right to compensation, as confirmed by the ECJ, and it is fundamental that they can enforce it effectively.

15. Even though actions for damages in Europe are primarily about victims effectively exercising Treaty rights, an enhanced level of actions for damages will also have the positive effect of increasing deterrence for potential infringers. Indeed, actions for damages can complement public enforcement by adding to the risk of administrative sanction, the risk of having to compensate the harm caused to the victims, and also by widening the scope of enforcement of EC competition rules to cases not dealt with by the competition authorities. Better enforcement of the law, by increasing the risks associated with a breach of EC competition rules, will encourage companies to comply with the law, thus helping European markets to remain open and competitive. An enhanced level of actions for damages will also help develop a culture of competition amongst market participants and raise awareness of the competition rules.

B. A BALANCED EUROPEAN SYSTEM WHICH PRESERVES STRONG PUBLIC ENFORCEMENT

1. The designing of a balanced European system

16. The Commission’s White Paper takes account of the stakeholder input it has received since the adoption of the Green Paper on the options put forward for discussion. It also gives consideration to the possible economic and social impacts of an enhanced level of actions for damages.[16] In this White Paper the Commission suggests targeted measures which are designed to effectively tackle the identified obstacles. These measures are embedded in, and build on, the European legal cultures and traditions of the 27 Member States. Great care has been taken to strike a balance in order to have effective measures which do not result in a situation where unmeritorious litigation are encouraged or facilitated.

2. The importance of preserving effective public enforcement

17. Since the adoption of the Green Paper many stakeholders have expressed the opinion that it is important to preserve the central role of the public authorities in the overall enforcement of EC competition rules. It was also often underlined that in Europe the main objective of damages actions was different from that of public enforcement, the former primarily pursuing compensation of a loss (even though it also increases deterrence), whereas the latter is primarily pursuing deterrence and overall compliance with the rules by penalising infringements of Articles 81 and 82 EC.

18. As confirmed in the 2005 Staff Working Paper, the aim is not to substitute public enforcement, or parts thereof, with actions for damages. The role of the public authorities will continue to be of crucial importance in detecting anti-competitive practices such as cartels, where the special investigation powers vested in the public authorities are indispensable for effective and efficient enforcement of competition law. When assessing the different options put forward for discussion in the Green Paper, and then identifying the measures contained in this White Paper, the Commission has borne in mind the need to maintain a strong and effective public enforcement system.

3. The interaction between public enforcement and actions for damages: the underlying objectives

19. The Green Paper sought consultation on the interaction between actions for damages and public enforcement, in order to avoid tensions between, on the one hand, rendering the victims’ right to damages effective in Europe, and on the other, preserving the effectiveness of public enforcement.[17]

20. Actions for damages and enforcement by public authorities necessarily interrelate to some extent. Greater enforcement by both public authorities and through private actions will increase deterrence and will increase the probability that infringers bear the costs for the harm caused. This will normally lead to a decrease, in the long run, of the number of infringements.

21. The Commission’s objective is to create an effective system of private enforcement through damages actions as a complement to, and not a substitute for, public enforcement. This notion of complement covers two categories of cases. Firstly, it covers those cases where the public authorities, for reasons of limited resources and public priorities, do not take any enforcement action, or limit their enforcement activities to specific aspects of a particular behaviour. In that case, private actions for damages can extend the enforcement of EC law through what are known as stand-alone actions. Secondly, private enforcement covers cases where a private party claims damages for harm arising from an infringement established by a public authority. These are known as follow-on actions. The Commission ensured that the measures contained in the White Paper are designed in such a way as not to jeopardise public enforcement.

C. The measures proposed in the White Paper

22. In the White Paper, the Commission proposes policy choices in relation to the following issues:

23. standing: indirect purchasers and collective redress (Chapter 2);

24. access to evidence through inter partes disclosure (Chapter 3);

25. binding nature of competition authorities’ decisions (Chapter 4);

26. fault (Chapter 5);

27. definition of damages (Chapter 6);

28. availability of the passing-on defence (Chapter 7);

29. limitation periods (Chapter 8);

30. costs of damages actions (Chapter 9);

31. interaction between actions for damages and leniency programmes (Chapter 10).

32. The White Paper is accompanied by an Impact Assessment. It assesses the economic and social impacts of an enhanced level of antitrust damages actions in Europe and of the policy measures contained in the White Paper.

CHAPTER 2 — STANDING: INDIRECT PURCHASERS AND COLLECTIVE REDRESS

A. THE OPTIONS IN THE GREEN PAPER AND THE RESULTS OF THE PUBLIC CONSULTATION

33. In the event of small damages claims, it is unlikely that victims will bring individual actions against the perpetrators of competition law infringements given the costs of litigation in relation to the harm they have suffered. Even when a number of such actions are brought, they do little to deter the perpetrators from violating the law, and the full harm caused to society is not repaired. To make enforcement of the competition rules more effective, the Green Paper put forward two options aimed at encouraging some form of collective actions, such as actions taken on behalf of consumers by consumer organisations and collective actions for businesses.

34. The issue of collective redress is all the more relevant when indirect purchasers are the victims of the violations. Their damage claims face increased obstacles due to the number of layers between them and the infringers (e.g. production, distribution, retail). A possible way of reducing the burden for indirect purchasers’ claims is to allow some form of collective redress.

35. This Chapter analyses the issue of standing with regard to indirect purchasers as well as collective and representative actions.

1. Standing of indirect purchasers

36. In its Green Paper, the Commission indicated that the question of standing for indirect purchasers and the question of how, if these purchasers have standing, their claim can be brought are two issues which are closely linked. Comments were therefore invited on both issues.[18] Some respondents to the Green Paper acknowledged that granting standing to indirect purchasers could run counter to effective enforcement of Articles 81 and 82 EC, given the complexities faced by indirect purchasers’ claims. However, a majority of respondents were opposed to limiting the standing to direct purchasers. Such limitation was usually considered to be contrary to the underlying principle of full compensation.

2. Collective redress

37. The first option[19] put forward for discussion in the Green Paper suggested giving a cause of action to consumer associations without depriving individual consumers of their right to bring an individual action. In their submissions, respondents were invited to consider several issues raised by this option, such as standing (a possible registration or authorisation system), the distribution of damages (whether damages go to the association itself or to its members), and the definition of damages (on the basis of the harm suffered or of the illegal gain). The second option[20] in the Green Paper, which may be used in complement to the previous one, was to enact special provisions allowing collective actions by groups of purchasers other than final consumers.

38. In reaction to the Green Paper, some respondents opposed any initiative which would facilitate collective redress. The objections focus principally on the potential costs of collective redress mechanisms for society, and on the risk of multiple recoveries from infringers. Those opposing any initiative in that field evoke the US system in their argumentation, mentioning the excesses this system has led to, and the resulting costs for business and society as a whole.

39. However, many respondents recognise the need to allow consumer claims to be aggregated in some way, in particular in order to reduce the difference between the costs of the action and the often small value of the damage individually suffered. Among those not opposed to collective redress mechanisms there is some support for allowing actions to be brought through consumer organisations. Such representative actions by consumer organisations are said to serve the purpose of rendering rights under competition law more effective and accessible to citizens, while clearly moderating the excesses and external costs associated with certain types of “class actions” (such as abusive settlements). However, opinions diverge on the standing of consumer organisations, some respondents favouring an authorisation system while others point out that such a system is not necessary in Europe to avoid abuses. On other practical issues, especially the distribution of damages, opinions also diverge but seem to favour the solution where the award would directly benefit the victims themselves, in accordance with the principle of compensation.

40. The question of the special provision for collective actions for groups of purchasers other than final consumers was less commented on. A number of submissions were favourable to such collective means of action for small businesses, with some underlining that collective actions should be available for all types of victims since there was no justification for distinguishing between end consumers and small businesses.

41. The consultation therefore shows that the availability of some form of collective redress for the victims of competition law infringements is supported, but that such a system should be designed in a way that protects against unmeritorious actions. Generally it is believed that actions through consumer associations are less likely to lead to abuses.

B. ACQUIS COMMUNAUTAIRE AS REGARDS STANDING OF INDIRECT PURCHASERS

42. In Courage and Crehan , the ECJ stated that:

43. “the practical effect of the prohibition laid down in Article 81(1) EC would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition”.[21] (emphasis added)

44. Since the publication of the Green Paper, the ECJ has reaffirmed this position in Manfredi , stating:

“It follows that any individual can claim compensation for the harm suffered where there is a causal relationship between that harm and an agreement or practice prohibited under Article 81 EC”.[22] (emphasis added)

45. It can be noted, first, that although the judgment only refers to Article 81 EC because of the facts underlying the case, the reasoning of the Court clearly applies also to Article 82 cases.

46. Second, the wording used by the ECJ (“any individual” having suffered harm caused by the infringement) is such that it encompasses indirect purchasers. In fact, infringements of Articles 81 and 82 EC may cause quite significant harm to indirect purchasers. However, given that the Court emphasised the requirement of causality, the finding of the Court does not exclude national provisions or case law that lead to barring damages actions brought by certain indirect purchasers for reasons of remoteness. The Commission welcomes these clarifications by the Court and does not intend to suggest any limitation on standing of anyone who can show a causal link between his harm and an infringement of Article 81 or 82 EC.

Acquis communautaire: Any individual can claim compensation for the harm suffered where there is a causal relationship between that harm and an infringement of Article 81 or 82 EC. This principle also applies to indirect purchasers. |

C. Measures as regards collective redress

47. On the basis of the results of the public consultation, it appears appropriate to examine possible collective redress mechanisms aimed at defending the interests of consumers and businesses[23] having suffered from competition law infringements. The following sections (1) underline the necessity to provide for such mechanisms for all categories of victims of competition law infringements, and (2) identify effective means of collective redress in the competition field. A final section (3) addresses the relationship between the suggested measures and other Commission initiatives in the field of collective redress.

1. Necessity of collective redress mechanisms and identification of key issues

a. Necessity to provide for means of collective redress for all categories of victims of competition law infringements

48. Individual consumers and small businesses are less likely to bring individual damages claims against the perpetrators of competition law infringements in cases of scattered low-value damages. These victims may be dissuaded from starting an individual action given the costs, delays and burdens involved in actions for damages in this field, compared to the value of their individual claim. Also, the victims are not always aware of the existence of the competition law infringement, often secret or difficult to appreciate, or of the extent of the losses suffered due to this infringement. Moreover, the uncertainty as to the outcome of the proceeding, mainly due to the difficulty of having access to the relevant evidence, also acts as a disincentive. This leads to the unsatisfactory situation that the victims concerned receive no compensation and the illegal gain often remains in the hands of the tortfeasors. Finally, a situation where national courts would have to handle a multitude of scattered low-value individual claims with no possibility of collective redress would lead to procedural inefficiency.

49. Even though some of the difficulties outlined above may to a certain extent be addressed through certain specific remedies (e.g. by alleviating cost rules or improving access to evidence), it remains that the costs and uncertainty in outcome make it necessary for the victims to be able to share the risks and costs associated with the action. Therefore, competition law is a field where collective redress mechanisms can significantly enhance the victims’ ability to obtain compensation and thus access to justice, and contribute to the overall efficiency in the administration of justice. For the reasons set out above, it is essential that collective redress mechanisms are available for competition law infringements.

50. Collective redress for low-value damages can be achieved through a number of different mechanisms, either of a voluntary or compulsory nature, either judicial or non-judicial, either initiated by a group of victims, a representative body or a public authority. A non-judicial voluntary resolution of claims for damages may often be preferable for victims as well as for infringers, since such resolution does not involve the same costs and burden as do judicial proceedings, and usually allows for swift resolution of the matter at stake. However, alternative dispute resolution (ADR) and other voluntary mechanisms can only be effective and efficient if there is another effective option for the victim should no fair resolution be agreed on by the infringer. Judicial collective redress mechanisms, which may usefully be complemented by ADR, are therefore necessary to improve the situation of victims of competition law infringements, even though safeguards should be put in place so as to avoid abusive litigation. By allowing an aggregation of claims for damages that would otherwise not be viable in individual court action, judicial collective redress mechanisms not only ensure the victims’ right of access to justice, but also reduce the inequality between the victims (often the weaker party) and the infringers (often the financially stronger party) in out-of-court/settlement discussions.

51. It is therefore necessary to design facilitating measures enabling consumers and small businesses to effectively seek redress in court for the harm suffered from competition law infringements. These measures would play an important role in rendering the victims’ right to antitrust damages more effective in Europe.

b. Key issues to be addressed

52. The development of collective redress mechanisms in Europe has increasingly attracted attention because of the importance of these mechanisms for access to justice, but also due to the excesses that have been reported from other jurisdictions.[24] It is important to underline that specific features may be designed in order to serve as effective safeguards against misuse of the system. These measures can contribute to ensuring that the collective redress mechanisms for victims of competition law infringements in Europe achieve the objective of improving access to justice and guaranteeing compensation, whilst avoiding imposing unnecessary costs on potential defendants and the judicial system.

53. The aggregation of individual claims in court raises a number of issues that are specific to collective redress mechanisms, and also amplifies the practical importance of certain general issues in comparison with individual actions. The actual design of collective redress mechanisms therefore requires that these issues be addressed. At this stage, however, the purpose of this section is to stress the importance of these issues rather than to already set out concrete solutions.

54. The first key issue is the funding of the action.[25] Even if collective redress mechanisms allow for more efficient bundling of claims and sharing of the risks and costs among a greater number of victims, the fact remains that available ways of funding can have a serious impact on the use, or misuse, of collective redress mechanisms. Launching a court action requires initial funding, an up-front cost that may discourage victims from bringing an action, as well as the ability to face the cost exposure, when relevant.[26] Several ways of funding group litigation can be envisaged and they depend on the specificities of the collective redress mechanism in place. The funding may be provided by the victims launching the action themselves, or by the entity representing the latter,[27] by legal aid mechanisms or other publicly or privately administered funds, by insurance companies or other players on the market, or by the claimant’s lawyers working under a contingency fees agreement. In order to limit the cost exposure, early resolution through settlement negotiations may be facilitated or encouraged (e.g . at the initiative of the judge). By limiting the costs incurred and allowing a swift resolution of the case, early settlements are beneficial to the parties as well as to the judicial system.

55. The second key issue is the way the group of victims, whose claims are collectively pursued in court, is (i) defined and (ii) represented, and (iii) what control mechanisms are put in place. First, the way the group of victims is defined influences the practical functioning of the mechanism (e.g . how many victims will participate to the action, the way damages will be quantified and distributed, etc.). Several systems may be envisaged: the group may be strictly defined (e.g. strict identity of harm, named victims) or more loosely defined (e.g. similarity of harm, unnamed victims, etc.). Affiliation to the group may be limited to victims that have expressly stated their intention to be included in the action or, on the contrary, to all those who have not expressly opted out of the action. Finally, inclusion in the group may be possible until the initiation of the action, or on the contrary, be possible until a very late stage in the procedure. Moreover, the way victims can be represented may have practical consequences, for instance on the number of actions that will be brought (depending on how strictly eligibility is defined). Lastly, there may be different degrees of control mechanisms put in place (e.g. through various degrees of court supervision) in order to guarantee an appropriate definition of the group of victims, the adequacy of the representation or to avoid unmeritorious actions being brought.

56. The third key issue is the quantification and distribution of the damages. The more loosely the group of victims is defined, the more difficult it will be to precisely quantify the harm suffered by all the individual claimants, and to actually distribute the damages awards to the victims. Distribution of the award itself may be direct (e.g. by the defendant or by an independent fund, with various possible degrees of action requested from the victims) and may exceptionally be more indirect (e.g. cy-pres distribution,[28] distribution to a public interest foundation).

2. Measures ensuring effective collective redress mechanisms in the competition field

57. Two systems, which are complementary, effectively address the concerns outlined above in the competition field, both for follow-on and stand-alone antitrust damages actions. When further implemented, they should address the key issues outlined in the preceding section and contain sufficient safeguards to avoid abusive litigation in the competition field. These two mechanisms are, on the one hand, a representative action brought by qualified entities, and on the other hand, an opt-in collective action. They would usefully allow victims to enforce their rights, thereby providing them with a minimum level of protection beyond which Member States could decide to go depending on their legal traditions.[29]

a. A representative action for damages brought by qualified entities

58. A representative action for damages brought by entities with certain characteristics may constitute an appropriate collective redress mechanism in the field of competition law. A representative action for damages is an action brought by a natural or legal person on behalf of two or more individuals or businesses who are not themselves party to the action, and aimed at obtaining damages for the individual harm caused to the interests of all those represented (and not to the representative entity). One may think of a consumer association defending consumers’ interests, or a trade association defending the interests of its members active in a given industry. It is obviously important that qualified entities that are about to bring, or have brought, a damages action are under a clearly set out obligation to use effective mechanisms for informing the victims they represent.

59. Such a representative action is appropriate in competition cases because consumer organisations, trade associations or State bodies having as their object to protect specific interests may be less reluctant to start actions against competition law infringers than the individual consumers or small businesses whose interests have been harmed. One reason is that an action for damages against the infringers would be related to their core activity (i.e. the protection of specific interests), whereas especially small businesses may not be able to invest time and resources in an action to the detriment of their usual business activity. Also undertakings, especially SMEs, may be reluctant to start an action against a commercial partner with whom they conduct business on a regular basis. Similarly, for consumers, costs, delays and administrative burdens involved in judicial proceedings may discourage them from bringing an action, in particular if they suffered a relatively small economic loss. While representative actions for damages are appropriate for competition cases, procedures for representative bodies to bring this type of action on behalf of the victims they represent are, for the main part, either not available under national law or not fully suitable.

(i) Definition of qualified entities

60. Standing should be restricted to certain types of entities so as to exercise some public control over the entities able to bring representative actions, e.g. verification of the legitimacy of the interests to be represented. However, the definition of the entities having standing should not be overly restricted so that the possibility of a representative action remains an effective and accessible means of redress. Therefore, standing for representative actions in the competition field should be authorised for two types of entities.

61. The first type would include entities representing legitimate and defined interests, officially designated in advance by their Member State to bring representative actions for damages on behalf of identified or, in rather restricted cases, identifiable victims[30] (not necessarily their members). In order to be designated, these qualified entities would need to meet specific criteria set in the law, which give sufficient assurance that abusive litigation is avoided.[31]

62. The second type would be entities that would be certified , in order to be able to bring a representative action in relation to a particular infringement, on an ad hoc basis according to the procedures laid down in the national law of their Member State. Eligibility should be limited to entities whose primary task is to protect the defined interests of their members, other than by pursuing damages claims (e.g. a trade association in a given industry) and which give sufficient assurance that abusive litigation is avoided.[32]

63. This second type of representative entity ( ad hoc certified entity), as opposed to the first type (qualified entities designated in advance), would only be able to represent the interests of its members, which are identified. The entity may also decide to bring a representative action on behalf of a subgroup of its members, which would be identified or identifiable victims of the competition law infringement.

64. EC competition law infringements are likely to affect consumers and small businesses located in several Member States, and the court competent to hear a damage claim may be located in a Member State different from the one where the qualified entity willing to bring an action is located. Therefore, entities having standing in one Member State should automatically be granted standing in all other Member States, without having to be certified in the latter. This rule should apply both to entities designated in advance and those certified on an ad hoc basis for bringing an action in relation to a particular infringement.

(ii) Distribution of damages

65. The damages would be awarded to the representative entity, who is the party bringing the action.[33] Where possible, it is preferable that the damages be used by the entity to directly compensate the harm suffered by all those represented in the action (e.g. the harm suffered by the producers in a given industry). However, it may be necessary to reflect on the possibility that, exceptionally, the damages awarded to the representative entity are distributed to related entities or used for related purposes.

b. An opt-in collective action

66. In a collective action, claims from individuals or businesses are combined in one single action.[34] A collective action differs from a representative action where only the qualified entity brings a claim. In a collective action, as opposed to representative actions as defined above, the claimant himself has suffered harm. A collective action system improves the situation of the claimants by rendering the cost/benefit analysis of the litigation more attractive, since it allows them to share the evidence obtained as well as the costs, but also more indirectly by reinforcing their position in the litigation and providing moral support. A collective action also differs from the mere joining of individual claims. The joining of individual claims has also some advantages, such as ensuring consistency in the outcome of the individual claims, facilitating the sharing of evidence and providing moral support for the individual claimants, but does not in itself render the cost/benefit analysis more attractive since each action has to be pursued individually.

67. The opt-in collective action system that should be envisaged is a system where the victims have to express their intention to be included in the action. An opt-in collective action system would usually result in a smaller number of victims claiming damages than in an opt-out system, thereby limiting corrective justice, and would have as a consequence that some of the illicit gain may be retained by the infringers, thereby limiting the deterrent effect of the mechanism. By requiring the identification of the claimants (and the specification of their alleged harm suffered), an opt-in collective action may also render the litigation in some way more complex since it increases the defendant(s) possibility to dispute each victim’s harm. However, the analysis in the field of competition suggests that an opt-in collective action should be preferred to an opt-out collective action in which a person can bring an action on behalf of a class of unidentified persons. Combined with other features, such opt-out actions have in other jurisdictions been perceived to lead to excesses. In particular there is an increased risk that the claimants lose control of the proceedings and that the agent seeks his own interests in pursuing the claim (principal/agent problem). Opt-in mechanisms are more similar to traditional litigation, and would therefore be more easily implemented at national level.

68. In accordance with the principle of full compensation, the damages awarded in an opt-in collective action for damages should correspond to the harm suffered by those included in the action. The issue of distribution of damages awarded would not cause any particular difficulty since the claimants would be individually identified.

Victims of competition law infringements should be able to bring an opt-in collective action for damages or to be represented in a representative action for damages brought by qualified entities. Qualified entities, able to act on behalf of identified or, in rather restricted cases, identifiable victims should include (i) entities designated in advance by the Member States according to national procedures, representing legitimate and defined interests; and (ii) other existing entities whose primary task would be to protect the defined interests of their members, other than by pursuing damages claims, which would be certified on an ad hoc basis in relation to a particular infringement according to national procedures. The damages awarded in an opt-in collective action or in a representative action for damages should correspond to the harm suffered by those included or represented in the action. |

c. The relation between representative actions, opt-in collective actions and individual actions

69. Representative actions and opt-in collective actions can act as mutually complementary means of collective redress. First, a qualified entity may not have the resources to simultaneously handle several actions related to distinct infringements and may decide to prioritise its action. The qualified entity may also be prevented from bringing an action because of a conflict of interest, for example when a trade association has as members both victims of a competition law infringement and infringers. Secondly, there may be subgroups of victims which, even though they could theoretically be represented by the same qualified entity, may want to bring distinct claims collectively. Finally, it is possible that the interests of certain groups of victims are not represented by any existing qualified entity (e.g. SMEs active in a new market with no trade association).

70. The coexistence of representative actions, collective actions and possible separate individual claims raises the issue of their interrelationship. In particular, it is possible that the interests of those represented in a representative action for damages, and of those victims having decided to bring a distinct claim, either individually or through an opt-in collective action, coincide. The basic principle should be that individual victims are not deprived of their right to bring an action for damages (either individually or through an opt-in collective action) if they so elect nor from their right not to bring an action at all. It is therefore important that qualified entities inform the victims they represent as stated in paragraph 49. Finally, necessary safeguards should be put in place in order to avoid the same harm being compensated several times through the various means of action available (individual, collective and representative actions).

3. The relationship with other Commission initiatives in the field of collective redress

71. As regards consumer collective redress more generally, the Commission launched, in March 2007, two studies on collective redress, which are not specific to competition law. The first of these studies will evaluate the effectiveness and efficiency of the national collective redress systems that currently exist in EU Member States, assess whether consumers suffer a detriment in those Member States where collective redress mechanisms are not available, and examine the existence of negative effects for the Single Market and distortions of competition. The second study will analyse in detail the problems faced by consumers in obtaining redress for mass claims, as well as the economic consequences of such problems for consumers, enterprises and the market.

72. After receiving the results of these studies, the Commission intends to publish a Communication on consumer collective redress in December 2008. This Communication will be used to consult on the options that are available in relation to consumer collective redress. Following this consultation, the Commission will consider whether, and if so, to which extent an initiative on consumer collective redress is necessary at EU level.

73. Should the further analysis show that a possible broader initiative would not be appropriate to effectively tackle the difficulties encountered by victims of competition law infringements,[35] specific measures may be needed to render these victims' rights to compensation effective.

CHAPTER 3 — ACCESS TO EVIDENCE: INTER PARTES DISCLOSURE

A. THE OPTIONS IN THE GREEN PAPER AND THE RESULTS OF THE PUBLIC CONSULTATION

74. Competition cases are particularly fact-intensive. The finding of an antitrust infringement, the determination of damages and the establishment of the relevant causal links all require the assessment of a variety of often complex factual elements.[36] All these elements must be corroborated by appropriate evidence.

75. Competition cases are characterised by a very asymmetric distribution of the available information and the necessary evidence: it is often very difficult for claimants to produce the required evidence, since many of the relevant facts are in the possession of the defendant or of third persons and are often not known to claimants in sufficient detail.

76. In view of these circumstances, it is widely acknowledged, and the comments on the Green Paper confirm this, that the difficulty for a claimant of obtaining all the evidence necessary to demonstrate his case for antitrust damages constitutes one of the major obstacles to antitrust damages actions. The Green Paper put forward for discussion a range of options aimed at removing this obstacle and improving the effectiveness of the legal framework for actions for antitrust damages across the EU Member States.

77. The Green Paper asked for views on whether there should be special rules on disclosure of evidence and, if so, what form such disclosure should take. The Green Paper described three options to facilitate the disclosure of evidence: disclosing identified individual documents, disclosing classes of documents, and drawing up a list of all relevant documents and making all documents on this list available.[37] Whilst these options differ as to the scope of the disclosure requirement, each is subject to the condition that a party has reasonably described the known facts of the case and has proffered reasonably available evidence in support of its allegations (“fact pleading”).[38]

78. The large majority of respondents agreed that access to evidence is crucial for ensuring effective exercise of the right to seek compensation for antitrust damages. Some respondents argued that special rules concerning access to evidence in competition law litigation were not warranted, as antitrust cases do not present evidentiary difficulties greater than other commercial litigation.

79. Several respondents emphasised that any rules concerning improved access to evidence should avoid unwelcome externalities, such as “fishing expeditions”,[39] “discovery blackmail”,[40] procedural abuses and excessive costs for potential defendants. Some felt that such unwelcome externalities could be kept under control, provided there is sufficient judicial control over the scope, the manner and the relevance of disclosure.

80. A number of respondents stressed that it would not be practical or proportionate to require that the party seeking disclosure must specify individual documents, as this party will often simply have no knowledge of the existence of particular documents, let alone be able to specify them in a sufficiently detailed manner. It was further pointed out that also courts would face practical difficulties to “reasonably identify individual documents”.

81. Several respondents argued that disclosure of classes of documents would strike the right balance: the “classes” of documents to be divulged would have to be defined by the court on the basis of the “fact pleading” by the claimant. This would limit “fishing expeditions” and would be less burdensome on the parties, whilst providing an effective solution to the information deficit on the part of the claimant.

82. The Green Paper also put forward for discussion the option of introducing sanctions for the destruction of evidence and obligations to preserve evidence.[41] Several commentators on the Green Paper argued that both a failure to produce evidence or its destruction should result in adverse procedural consequences for the offending party in the civil damages case and/or should be subject to penalties. The option,[42] however, whereby the unjustified refusal of a party to turn over evidence has the consequence of modifying the burden of proof in favour of the other party was only supported by some.

83. In the context of access to evidence held by other parties, the Green Paper finally presented the option of lowering the standard of proof or reversing the burden of proof as a possible means to address the information asymmetry between the plaintiff and the defendant.[43] In this context, it was pointed out by some that alleviations of proof should not apply to the finding of the antitrust infringement (which should be fully proven by the claimant), but, if at all, only to the issues of damages and causation. Overall, however, there seems to be a preference for measures facilitating disclosure of evidence over alleviations of proof.

B. ACQUIS COMMUNAUTAIRE

84. In order to enhance the effectiveness of actions for damages based on EC competition rules, the Commission considers it indispensable to improve the position of victims as regards their access to the relevant evidence.

1. The principles of equivalence and effectiveness

85. The Court of Justice has repeatedly stated that in the absence of Community rules governing the matter, it is for the domestic legal system of each Member State to lay down the detailed rules governing the exercise of rights which individuals acquire directly under Community law. However, when laying down the applicable rules for the enforcement of Community rights, Member States are under a Community law obligation to respect both the principle of equivalence and the principle of effectiveness. [44]

86. The principle of equivalence requires that the rules governing the enforcement of Community rights are not less favourable than those governing similar domestic actions. This principle constitutes an important support for the enforcement of Community rights, in particular where the Member States have not provided for any specific rules for the enforcement of Community rights. It is, however, of little avail when the applicable rules for the enforcement of the rights under national law are such that they hinder the effectiveness of antitrust damages actions.

87. According to the principle of effectiveness , the domestic rules governing the enforcement of Community rights may not render the exercise of those rights practically impossible or excessively difficult.

88. The effects of the principle of effectiveness on domestic rules can be both negative and positive. The negative effect is that Member States’ authorities — and thus also national judges — cannot apply domestic rules to the extent that they are incompatible with the principle of effectiveness. The positive effect means that Member States are under an active Community law obligation to apply the rules in such a way that they make the exercise of Community rights practically possible and not excessively difficult. This Community law obligation exists independent from whether or not there are domestic rules governing the matter.

89. In the context of access to evidence in civil proceedings for antitrust damages, it follows from the principle of equivalence that Member States must apply to EC antitrust damages actions all rules and mechanisms that are available to facilitate the bringing of evidence in domestic antitrust damages actions or similar cases. This concerns, for instance, all national rules on allowing claimants to obtain knowledge of information and to access means of evidence that are in the possession of the defendant or of third persons. It also concerns any alleviations of the burden of proof or alleviations of the standard of proof that may be available under national law to compensate the consequences of information asymmetry.

90. Rules of this type (i.e. rules on access to evidence in cases of information asymmetry and rules on alleviating the burden or standard of proof) are likely to exist in all Member States. It is true that comprehensive sets of rules on disclosure of evidence in the possession of the opponent or third parties exist principally in Member States whose system of civil procedure is more adversarial in nature (particularly in countries of the common law tradition). Nonetheless, the feedback received on the Green Paper shows that also Member States of the civil law tradition (whose systems of civil procedure are more “inquisitorial” in nature, i.e. where evidence-taking is conducted through and before the judge) contain various examples of facilitations of the bringing of evidence through forms of disclosure or the reversal of the burden of proof. As regards disclosure, many Member States of the civil law/continental legal tradition provide that courts can order opponents or third parties to hand over evidence in their possession, if the claimant specifies this evidence sufficiently and if it is relevant to the case. There are also examples whereby jurisdictions of the civil law tradition reduce, in cases of information asymmetry and under certain conditions, the requirement of specification of means of evidence and allow the taking of evidence in the sphere of the opponent (or third parties) on the basis of more general factual contentions.

91. The principle of effectiveness requires Member States to apply their domestic law in such a manner that the exercise of Community rights is practically possible and not excessively difficult. From this follows, first, that in law suits on EC antitrust damages, Member States must make full use of any rules that may exist under national law so that victims can exercise their right to compensation effectively. This concerns in the present context particularly rules and principles on the facilitation of bringing evidence, for example in situations of information asymmetry such as those mentioned above. The Court of Justice has explicitly held that “if the national court finds that the fact of requiring a [company] to prove that wholesale distributors are overcompensated […] is likely to make it impossible or excessively difficult for such evidence to be produced, since inter alia that evidence relates to data which such a [company] will not have, the national court is required to use all procedures available to it under national law, including that of ordering the necessary measures of inquiry, in particular the production by one of the parties or a third party of a particular document.”[45]

92. The principle of effectiveness secondly requires that any domestic rules making the exercise of this right practically impossible or excessively difficult must not be applied. For example, to the extent that very strict specification requirements under national rules of civil procedure render the exercise of the right to compensation excessively difficult for victims of EC antitrust infringements, national courts must loosen these requirements in situations where the victims have no access to crucial means of evidence which are located in the sphere of the opponent or third parties.

Acquis communautaire: In actions for EC antitrust damages, Member States must apply all domestic rules and principles on the facilitation of bringing evidence available in order to ensure that victims of EC antitrust infringements can exercise their right to compensation effectively. Member States must apply such rules and principles to the same extent as in similar cases based on the infringement of national law. Domestic rules that make the exercise of the right to compensation excessively difficult must not be applied to cases of damages for the infringement of EC antitrust rules. |

2. Community rules on disclosure of evidence in the IP Directive 2004/48/EC

93. There already exists Community legislation, in a specific area of law, on obligations to disclose evidence to the opponent in civil litigation. Directive 2004/48 on the enforcement of intellectual property rights (IP Directive)[46] provides in its Article 6, with regard to the disclosure of evidence:

“Member States shall ensure that, on application by a party which has presented reasonably available evidence sufficient to support its claims, and has, in substantiating those claims, specified evidence which lies in the control of the opposing party, the competent judicial authorities may order that such evidence be presented by the opposing party , subject to the protection of confidential information. […].”

“Under the same conditions, in the case of an infringement committed on a commercial scale Member States shall take such measures as are necessary to enable the competent judicial authorities to order , where appropriate, on application by a party, the communication of banking, financial or commercial documents under the control of the opposing party , subject to the protection of confidential information.” (emphasis added)

94. The IP Directive also addresses the issue of ensuring the preservation of evidence which is located in the sphere of the opposing party. Article 7(1) provides in this respect that:

“Member States shall ensure that, even before the commencement of proceedings on the merits of the case, the competent judicial authorities may, on application by a party who has presented reasonably available evidence to support his/her claims that his/her intellectual property right has been infringed or is about to be infringed, order prompt and effective provisional measures to preserve relevant evidence in respect of the alleged infringement, subject to the protection of confidential information. […] Those measures shall be taken, if necessary without the other party having been heard, in particular where any delay is likely to cause irreparable harm to the rightholder or where there is a demonstrable risk of evidence being destroyed. […].” (emphasis added).

95. These rules provide useful points of reference when considering ways to improve access to evidence in competition cases. They also illustrate that in certain areas of law the presence of specific problems, such as a very asymmetric distribution of the available information and pronounced difficulties for claimants to produce the required evidence, can require solutions that differ to some extent from the general legal regime in civil litigation.

C. Measures to ensure effective EC antitrust damages actions

1. The problem: need for better access to evidence in antitrust damages cases

96. The feedback received on the Green Paper confirmed that national rules on evidence often have the effect of making it very difficult, if not impossible, for claimants to bring a successful action for antitrust damages. This appears to result from a combination of three factors: first, competition cases are particularly fact-intensive due to the economic nature of antitrust law. The second factor relates to the “information asymmetry” that typically exists in competition cases, namely the situation in which the comprehensive factual information and the corresponding means of evidence required to prove a case of antitrust damages are located within the sphere of the opponent or third persons. The third factor is the fact that in many Member States there are strict rules requiring claimants to assert in detail all the facts of their case and to proffer exactly specified pieces of evidence in support of these assertions; the limited alleviations of these requirements currently applied are insufficient to ensure effective redress in situations of information asymmetry typical in competition cases.

97. In relation to the first and second factor it is important to recall that cases on antitrust damages often require an unusually complex assessment of economic interrelations and effects. This analysis is not only a very extensive and often difficult exercise. It presupposes the knowledge and the ability to prove a wide range of underlying factual elements, which are often not known to the claimant. For example, to establish an infringement of the competition rules, proof is often required of the defendant’s trading practices, commercial strategy, pricing policy, cost structure or his positioning on the market. In many competition cases it will be necessary to show negative effects on prices, output or innovation on the relevant market. In some cases, notably cartels or other restrictions of competition by object, such negative effects can be presumed, but the establishment of the conduct will, in the absence of an infringement decision by a competition authority, be all the more arduous. In fact, the undertakings involved in the gravest antitrust infringements usually employ efforts and sometimes sophisticated means to conceal their illegal conduct. This is not only an issue in secret cartels, but it often also occurs in other cases of serious antitrust infringements, for instance in the context of Article 82 EC.

98. Even where claimants are in a position to describe and prove the factual elements necessary for finding an infringement,[47] having to demonstrate in detail the causation and quantification of their damages remains a particular difficulty in competition cases. To establish their damage, claimants have to compare the anti-competitive situation to a situation which would have existed in the absence of the infringement, i.e. a hypothetical competitive market. In a breach of contract case, a claimant can normally use market prices at the time of the breach of contract as the benchmark for calculating his loss. However, in a typical competition case, the claimant cannot rely on the prices at the time of the infringement and has to establish what the price would have been in the absence of the restriction of competition. For this purpose, he will often depend on information that is in the sphere of the defendant and possibly their partners in the infringement: for example, notes on the price overcharges agreed secretly between cartel members, details on how and when they influenced price and other parameters of competition, or internal documents of the infringer showing his analysis of market conditions and developments. Also the reconstruction of a hypothetical competitive market to quantify the damage caused by the infringer usually presupposes knowledge of facts on the commercial activities of the infringer and other players on the relevant market. The same or similar types of difficulty arise in the context of causation, e.g. when claimants try to identify the precise elements of anti-competitive behaviour by an infringer that have caused the claimants damage, or the extent to which several infringers have individually contributed to the damage caused.

99. This high evidential burden on victims of antitrust infringements and the structural asymmetry in the distribution of the information required by claimants render the third factor mentioned above particularly problematic. Indeed, the absence of rules addressing the specific information asymmetry of competition cases often leads to great difficulties for victims to win their antitrust damages cases. As a result, many claimants are discouraged from even trying to bring a meritorious action. A more effective framework for the exercise of the right to compensation for antitrust damage therefore hinges on improved access for victims to evidence in the possession or under the control of the opponent or third persons. Enhanced possibilities of inter partes disclosure are thus crucial. Even in follow-on actions, the existence of evidence on the investigation files of a competition authority does not constitute an equivalent alternative that could effectively remedy the structural deficits in terms of access to evidence: first, much of the specific evidence required to corroborate claims for damages, e.g. as regards the exact quantification of individual damage suffered and the causal link to certain victims, will not have been investigated by the authority and therefore often not exist on its file. Second, rules on public access to documents normally do not constitute an appropriate legal basis for obtaining access to evidence for the purposes of pursuing private damages actions.[48]

2. Solutions not retained: lowering the standard of proof or shifting the overall burden of proof

100. The option of lowering the standard of proof , i.e. to let less evidence and a lesser degree of likelihood suffice to obtain a damages award, would facilitate antitrust actions for damages. However, the described difficulties of claimants in accessing evidence are of such magnitude that a reduced standard of proof would have to be inappropriately low to avoid them: without better access to information and evidence held by infringers, all that claimants can often show is a plausible suspicion that an antitrust infringement has caused them harm. Reducing the standard of proof to such a low level would entail an unacceptably high risk of incorrect judgments and of procedural abuses by the claimant.

101. The option of generally shifting the overall burden of proof does not constitute an as effective general remedy to the consequences of the structural information asymmetry in competition cases as do measures to improve access to evidence.[49] For instance, one could envisage a partial shift of the burden so that the claimant would “only” have to show that there was an infringement of competition rules that may have caused damage to him whilst the defendant would have to demonstrate that his breach of the law did not cause a harm to the claimant. However, such shift would not address the difficulties victims have in obtaining information or evidence necessary to (even roughly) describe and prove the infringement. Even where victims can rely on the finding of an infringement in the decision of a competition authority, the reversal of the burden is of no real help with respect to the quantification of damages, because without access to the relevant information on how e.g. a price-fixing agreement was implemented in the specific case of the claimants, they and courts will often be unable to even roughly estimate a quantum of damage that then has to be rebutted by the defendant. Moreover, generally shifting the burden of proof would produce undesirable results because it would encourage unmeritorious claims as much as meritorious claims. This sets the wrong incentives and would entail the risks of incorrect judgments and procedural abuses referred to above.

3. The proposed solution: a minimum level of disclosure based on fact pleading, combined with judicial control of relevance and proportionality

102. Whilst it is essential to improve in antitrust damages cases access to evidence held by the opponent or third persons, the negative effects of certain systems of disclosure must be avoided. In some (non-European) jurisdictions, opponents or third persons are obliged to cooperate in potentially very wide-ranging, time-consuming and expensive disclosure procedures on the basis of rather low thresholds. In such systems, parties can be required to spend large amounts of time and resources on screening, compiling and disclosing the requested documents, even where there is only a low probability that the case is meritorious. This creates risks of abuses, e.g. through what is called “discovery blackmail” where the threat of potentially immense costs of disclosure procedures may be used to drive defendants to agree on an early settlement even where the claimant has a rather weak or even fully unmeritorious case. The same can occur in reverse, namely the situation where defendants with “deep pockets” use the threat of costly disclosure measures to cause the claimant to settle at a very low amount or even to abandon the case.

103. The Commission therefore proposes, to ensure across the EU a minimum level of disclosure inter partes in antitrust damages cases that avoids excesses in both directions, i.e. on the one hand, overly broad and costly disclosure obligations that are prone to abuses and, on the other hand, high obstacles to revealing the truth just because the relevant evidence happens to be under the control of the defendant or a third person. Claimants suing for antitrust damages should, plausibility of their claim provided, have the realistic possibility to obtain evidence that is indispensable for proving the case.

104. To this end, the Commission suggests to build on the approach adopted in the IP Directive and to follow the legal tradition of the majority of Member States. The accordingly proposed minimum standard for disclosure in antitrust damages cases is described in more detail below. It relies on the central function of the court seised with the damages claim. Disclosure measures could only be ordered by judges and would be subject to strict and active judicial control as to their necessity, scope and proportionality. The Commission thus clearly does not propose a system of overly broad pre-trial disclosure, which may not fit easily with the legal tradition and principles of civil procedure of Member States and which may conflict with public policy principles of some Member States.

105. Member States which currently apply very strict requirements in terms of specification of facts and means of evidence would have to allow for an initial alleviation of these strict requirements in antitrust damages cases. The general standard of proof for ultimately winning a case would, however, remain unaffected. Moreover, any disclosure order would presuppose that the claimant has presented reasonably available facts and evidence that are sufficient to make his claim a plausible one. The Commission considers that such a fact-pleading requirement can have useful functions in safeguarding against unmeritorious claims and in structuring and streamlining civil procedures.

106. For reasons of equality of arms, this minimum level of disclosure in antitrust damages cases should be available not only to support claims of claimants but also defences by defendants (where in the following sections reference is made to “the claimant”, the same shall apply mutatis mutandis to defendants).

4. Conditions for obtaining a disclosure order by the court and its scope

107. The civil procedure systems of Member States should allow, as a minimum level of disclosure in antitrust damages cases, targeted disclosure measures under the condition that (a) the claimant has asserted all the facts and offered all those means of evidence that are reasonably available to him, provided that these are sufficient to make his claim a plausible one; (b) he has shown to the satisfaction of the court that he is unable, applying all efforts that can reasonably be expected, to assert the specific facts or to produce the means of evidence for which disclosure is envisaged; (c) he has specified sufficiently precise categories of information or means of evidence to be disclosed, and (d) the court is satisfied that the envisaged disclosure measure is relevant to the case as well as necessary and proportional in scope.

108. Disclosure would be ordered upon application by a party, or upon the court’s own motion where necessary, and would be tailored by the court to fit the facts pleaded by the parties and the particular circumstances of the case.

a. Fact pleading: presentation of reasonably available facts and evidence sufficient to make out a plausible claim

109. The first condition for any disclosure measure under the system of access to evidence proposed in the White Paper would be reasonable fact pleading by the claimant to the extent possible in the individual case. The facts presented must be sufficient to make out a plausible claim. As regards more specifically the last aspect, a claimant for antitrust damages would have to assert, as a condition for any disclosure, sufficient facts to show that there are plausible grounds to suspect that he suffered some harm through the infringement of competition rules by the defendant.

110. The purpose of requiring from the claimant a minimum level of fact pleading, and be it through rather general factual allegations (and where required reference to less precisely identified evidence), is to provide the court with a basis (i) to filter out manifestly unmeritorious cases, (ii) to assess the adequacy, the relevance and proportionality of the requested disclosure measure and (iii) to tailor the ultimate disclosure order.

111. What constitutes sufficient fact pleading that can reasonably be expected from the claimant would depend on the circumstances of each case, especially the amount of essential information and evidence that is inaccessible to the claimant. Courts should always bear in mind the difficulties of the claimant to assert, in the initial fact pleading, detailed facts to support his case. It is indeed inherent to the information asymmetry in antitrust cases that the claimant cannot be expected to demonstrate any elevated degree of probability that his claim is founded. All that many claimants are able to produce is information and evidence providing plausible grounds for suspecting that an antitrust infringement by the defendant caused them some damage. For example, a claimant may produce an infringement decision showing that the defendant participated in a cartel for product X covering territory Y and for period Z. He may also be able to produce purchase receipts for the same product from the defendant on the same territory and covering the period of the cartel. This makes his claim a plausible one and should be sufficient to allow the claimant to access the evidence necessary to meet the applicable standard of proof required for ultimately winning the case. For instance, the claimant may need access to documents in the possession of the defendant to assist in the calculation of the overcharge arising from the secret cartel. This information can be an important element for the claimant to establish his loss.

b. Inability of claimant to otherwise access relevant evidence

112. An alleviation, in some Member States, of the general procedural rules on specification of facts and evidence will only be justified if there is a real risk that a victim of an antitrust infringement would lose his action for damages just because certain relevant pieces of information and evidence are under the control of the defendant or third persons and inaccessible to the claimant. A disclosure order should therefore only be granted where the claimant shows that he is, despite applying all efforts that can reasonably be expected, unable to assert the specific facts or to produce the relevant means of evidence in another manner than through a disclosure order.

113. In this context, it is important to emphasise that in the Commission’s view Article 255 EC and Regulation 1049/2001 setting out the principles, conditions and limits of public access to documents held by Community institutions normally do not constitute an appropriate legal basis for obtaining access to evidence for the purposes of pursuing private damages actions.[50] The fact that certain information or pieces of evidence may exist in the file of the Commission should therefore not be a relevant consideration for the purposes of assessing, in the context of a request for an inter partes disclosure order, the claimant’s ability to access information or evidence. In any event, much of the facts and evidence needed to corroborate a civil damages claim will not have been investigated by the public authority.[51]

c. Specification of categories of evidence to be disclosed

114. The scope of disclosure orders should be limited to what is genuinely relevant to the case and proportionate with a view, on the one hand, to the burden of the disclosure and, on the other, the nature and value of the claim and the seriousness of the alleged infringement. In order to allow the court to tailor the disclosure order with these objectives in mind, and to render the disclosure order as focused as reasonably possible whilst ensuring the effectiveness of antitrust damages actions, the claimant would have to specify sufficiently precise categories of information, documents or other means of evidence relevant to the claim. These categories should be specified as precisely and narrowly as possible, but as comprehensively as necessary so as not to endanger the effectiveness of the legal framework for antitrust damages actions. The court would need to have a margin of appreciation in this respect given that the appropriate measures would depend on the circumstances of the individual case.

115. In the above example of a cartel relating to product X covering territory Y during period Z, the claimant in the system proposed above may well seek disclosure of documents about the price discussions between the cartelists for the clearly described product, period and territory to the extent that they may concern him. Disclosure could also be requested, for the specified product, period and territory, of facts to enable the claimant to determine what the pricing structure on the market would have been in the absence of the cartel. In this context, details of prices prior to the cartel prices on a comparable market where there was no cartel, or details of price discussions during the life of the cartel may be relevant.

d. Judicial control of relevance, necessity and proportionality of disclosure measure

116. It is a central feature of such a system for access to evidence that any disclosure takes place under the strict and active control of the court seised with the claim for antitrust damages. The court would, in particular, be called upon to verify ex officio that the envisaged disclosure measure is relevant to the case as well as necessary and proportional in scope. The outcome of this assessment, for which courts should enjoy a margin of appreciation, will very much depend on the specific circumstances of the case at hand.

117. The envisaged disclosure measure would have to be, in the first place, relevant for the case brought by the claimant. This means that the court would therefore have to assess whether the information or evidence to be disclosed is suitable to support the allegations in the initial fact pleading by the claimant. In the second place, the disclosure measure would have to be necessary, i.e. there would have to be no other equally suitable but less onerous measure available. For being “equally suitable”, the other measure that is the reference point would have to be certain to produce in all likelihood equivalent results to render the action for antitrust damages effective.[52]

118. In the third place, the court would, when defining the disclosure obligation, have to take into consideration the burden of disclosure and maintain the proportionality of the disclosure ordered to the nature and value of the claim and the seriousness of the underlying infringement. The disclosure measure must not imply disadvantages to the legitimate interests of the other party that are manifestly out of proportion to the objective pursued. The specific issue of confidential information is addressed separately in paragraphs 112 to 117 below. In the proportionality assessment that implies a balancing of legitimate interests, account should be taken of the likelihood (and possibly certainty) that the addressee of the disclosure order is the one who infringed competition law and thereby gave rise to the damages action in the first place. In this context, courts would also have to pay particular attention to the legitimate interests of third persons and the burden a disclosure order may impose on them.

As a minimum standard of disclosure in actions for antitrust damages, national courts should under specific conditions have the power to order disclosure inter partes of precise categories of information or evidence relevant to the claim. Conditions for a disclosure order in actions for antitrust damages should include that (a) the claimant has asserted all the facts and offered all those means of evidence that are reasonably known and available to him, provided that they show plausible grounds to suspect that he suffered harm through the infringement of competition rules by the defendant; (b) he has shown to the satisfaction of the court that he is unable, applying all efforts that can reasonably be expected, to assert the specific facts or to produce the evidence for which disclosure is envisaged; (c) he has specified sufficiently precise categories of information or evidence to be disclosed, and (d) the court is satisfied that the envisaged disclosure measure is relevant to the case as well as necessary and proportional in scope. |

5. Further issues related to the scope of the disclosure order

a. All types of evidence

119. The objective of disclosure orders is to assist the parties in revealing the truth and obtaining the evidence necessary to underpin the allegations supporting their case (either as claimant or as defendant). Disclosure orders should therefore cover all types of evidence that are admissible in the Member State concerned where these means of evidence are under the control of the opponent or third persons.[53]

120. This would mean that a court may order parties or third persons to produce any information, irrespective of the medium on which it is stored. Besides that, the court could also order parties or third persons to give oral testimony, in accordance with the applicable national rules. The latter should determine whether it is the court that is hearing the parties and interrogating third persons or whether the parties themselves are allowed to examine and to cross-examine. Member States whose procedural systems are based on the centrality of the judge would therefore remain free to prevent any hearing of witnesses outside the courtroom.

b. The disclosure and protection of confidential information

121. In actions for antitrust damages, the information and evidence relevant to prove the case is likely to be in large part commercially sensitive. Confidential information may be relevant for determining whether there has been an infringement (e.g. data on the market position of the defendant and his cost structure) or for determining the quantum of the harm caused (e.g. pricing data of the defendant or third parties or pricing strategies).

122. It is a general rule of Community law that confidential information, in particular business secrets, should in principle be protected. Community law nonetheless also recognises that there may be specific circumstances in which confidential information may be made public. For instance, the obligation of the Commission under Regulation 1//2003 to protect the confidentiality of information acquired through such intrusive coercive measures as unannounced on-site inspections is subject to the exception that the Commission may rely on and disclose confidential information to the extent that this is necessary to prove an infringement of Articles 81 or 82 of the Treaty.[54]

123. The likelihood that confidential information plays a central role in proceedings for damages makes it indispensable that the protection granted to confidential information is not disproportionate and does not de facto preclude the exercise of the right to compensation. If addressees of a disclosure order were to be able to invoke a general confidentiality defence to block disclosure of any commercially sensitive information, the access to evidence that is essential for establishing the truth would often become practically impossible. A protection against disclosure without exception would almost inevitably lead to the loss of the damages action by the claimant.

124. In a different context, namely that of the IP Directive, the Court recently confirmed in its Promusicae judgment[55] that the right to judicial protection of victims of infringements of EC law and the right to privacy of the infringer are both fundamental rights under Community law that must be balanced carefully by national courts and other authorities. This balance becomes particularly delicate when, as in that case, the right to privacy refers to the personal data of natural persons.

125. When Member States apply the rules and principles existing in their national laws on civil procedure to protect business secrets and other confidential information, they should therefore ensure that the exercise of victims’ right to compensation remains effective in practice, and that the two conflicting groups of interests are balanced in an assessment of proportionality. This should be part of the proportionality test mentioned above (paragraphs100 to 109). Relevant considerations include, on the one hand, the nature and value of the claim for damages and the degree of relevance the contentious piece of information or evidence has for the claimant to substantiate his case for damages. Account should also be taken of how likely it is that the owner of the confidential information infringed competition law, i.e. that it was his breach of law that put the claimant in the situation of having to claim damages in court which necessitate access to evidence under the control of the defendant. On the other hand, the proportionality assessment should consider the nature and the value of the interests at stake for the owner of the information. The harmful consequences to be considered are likely to differ significantly between a disclosure to the public at large and a disclosure to the claimant only. For an exclusion or limitation of disclosure to be justified, the interests in the protection of confidentiality would have to clearly outweigh the interests of the claimant, which normally coincide with the public interest, in an effective compensation of damage caused through antitrust infringements.

126. In the appreciation of the conflicting interests and the proportionality of disclosure, possibilities to reduce the scope of disclosure or to limit its impact are likely to be of paramount importance. Various possible solutions, which achieve both objectives of protecting confidential information and of making this information useable in the proceedings for damages, are conceivable and are already applied in Member States. For instance, it may be sufficient to protect information from the wider public whilst it is not harmful for the claimant to take note of it, because the information is not confidential vis-à-vis him. This could be achieved by a court order that court hearings are to be in private, that the parties are obliged not to use the information for other purposes than the ongoing court proceedings and that any public access to the file is limited. There would have, in all cases, to be an obligation that any confidential information or evidence disclosed must not be used for any other purposes than the ongoing proceedings for damages. Member States may also consider limiting direct disclosure to the parties’ lawyers or to exclude direct disclosure to the parties and make the information directly available only to experts (e.g. certified accountants) who would produce a summary of the information in an aggregated or otherwise non-confidential form. The rules of civil procedure for some Member States already provide for such solutions.

c. The disclosure of corporate statements submitted to a competition authority as part of an application for immunity or reduction of fines

127. In order to avoid an applicant for immunity or for a reduction of fines (“leniency applicant”) being placed in a less favourable situation than the other infringers only due to the fact that he applied for leniency, leniency applicants should be protected against court orders requesting disclosure or reproduction of certain documents and information they have submitted to the competition authorities. This protection would cover the voluntary presentations, by or on behalf of an undertaking to the competition authority, of the undertaking’s knowledge of a cartel and its role therein, drawn up especially for submission under the Leniency Notice (hereinafter “corporate statements”), and should be applicable both before and after a decision is taken by the authority.

d. Investigative privilege of competition authorities

128. With respect to evidence other than corporate statements, it may in specific circumstances be that its disclosure would unduly interfere with an ongoing antitrust investigation by a competition authority. This may occur, for example, if during the investigative phase an applicant for leniency would be ordered to disclose documents submitted in addition to the corporate statement to the competition authority, and if these documents were to become known to other members of the cartel in the course of an action for damages or a request for a settlement. Consideration should therefore be given to a possible rule that courts should temporarily refrain from adopting a disclosure order if the Commission or an NCA shows to the court that an order obliging the disclosure of certain pieces or categories of evidence during a specified period of time would jeopardise an ongoing antitrust investigation.

e. No possibility to object to disclosure of unfavourable evidence

129. The mere fact that the disclosure of evidence may entail unfavourable consequences for the addressee of the disclosure order in the civil proceedings, cannot constitute a reason to object to the disclosure order. On the contrary, it is inherent to the need to overcome the information asymmetry in antitrust damages cases that defendants would have to reveal all relevant evidence, within the specified categories, ordered by a court, including facts that are unfavourable to their own case. Concepts that may exist in certain national laws such as the old maxim nemo tenetur edere contra se [56] therefore could not be invoked against the disclosure mechanisms for antitrust damages cases. To the extent that such maxims are intended to prevent overly broad and unfocused disclosure requests (“fishing expeditions”[57]), the requirements of fact-pleading, the need to specify sufficiently precise categories of evidence and the judicial control of relevancy and proportionality of the disclosure measure (see paragraphs 107 to 109 above) constitute adequate safeguards in this respect.

Disclosure orders can cover all types of evidence under the control of the opponent or third persons. Adequate protection s