Verbatim report of proceedings

Wednesday, 25 March 2009 - Strasbourg

14. White Paper on damages actions for breach of the EC antitrust rules (debate)

  President. − The next item is the report by Klaus-Heiner Lehne, on behalf of the Committee on Economic and Monetary Affairs, on the White Paper on damages actions for breach of the EC antitrust rules (2008/2154(INI)) – (A6-0123/2009).

  Klaus-Heiner Lehne, rapporteur. − (DE) Mr President, ladies and gentlemen, first may I thank the shadow rapporteurs, especially Mr Sánchez Presedo on behalf of the socialists and Mrs Bowles on behalf of the liberals, who worked very successfully with me on the compromise text being tabled today as a report on the Commission’s White Paper. We have managed this time to achieve a very large, cross-group majority and a really viable compromise, which can also be used as a guideline for future work by the European Commission and later, during the law-making process, by Parliament and the Council.

We have made clear in this report – and rightly so – that, where competition rules are infringed, Parliament stands by the view that, according to the European tradition, it is primarily the task of the authorities – both the national competition authorities and the European competition authority – to take action and that this is not creating a second arm, as it were, on an equal footing with official action in the fight against cartels. We have deliberately chosen a different path in Europe from the US, with which the situation is often compared.

There is political consensus in the House that we need a solution for so-called mass claims. If the illegal conduct of individuals damages a very large number of persons who suffer comparatively minor losses, then a separate solution is needed for such proceedings, for which normal procedural law is simply not effective enough. The creation of such an instrument is also part of providing access to law and further developing the internal market. On this we are agreed.

There was also consensus that we do not want a litigation industry to develop in Europe as it has in America, with turnover of USD 240 billion, which is ultimately of no advantage to consumers and, as we all know from simply reading the relevant books, mainly profits American law firms. None of this has much to do with the rule of law, nor do we want it to. We agreed that the procedural torture instruments of the American system should not be adopted in Europe. This applies in particular to the taking of evidence and costs. That is a very important point.

We also agreed that we were basically of the opinion that, from a point of view of principle, legislation at European level can only be an opt-in solution and that an opt-out solution would only be permissible here where the Member States already have a similar solution and national constitutional law so allows. An opt in is not allowed under every country’s national constitutional law and it also contradicts the principle of the adult consumer.

As we insistently complain, the European Commission has completely forgotten to deal with the question of out-of-court settlements in its White Paper. The Directorate-General on Competition and the Commission have gone straight for litigation. However, as we have known for years from the debate in this House on legal policy, that is not always the ideal way forward and, as a rule, out-of-court settlement mechanisms are often much more suitable for resolving problems. Moreover, parallel work by the Directorate-General on Consumer Protection on the same issue has progressed much further. This Directorate-General used a broad margin for these alternative settlement instruments in its Green Paper, which is one consultation stage before this. We are convinced that the European Commission urgently needs to rework this question.

One last point, which is also crucial: we do not want fragmentation of the law. Now competition law is going off and creating such an instrument. Consumer protection is coming along on the same issue. We know that at some point something similar will be considered in relation to capital market law, environmental law and social law. We consider it absolutely necessary for a horizontal approach to be considered as well and for us at least to support the procedural instruments which are more or less the same in all areas with a horizontal instrument. That is also of decisive importance.

  Ján Figeľ, Member of the Commission. − Mr President, I welcome, on behalf of the Commission, Mr Lehne’s report, adopted by the Committee on Economic and Monetary Affairs (ECON) and adopted as a sign of strong consensus across the political groups. We are also pleased that this report strongly supports the white paper.

The Commission notes that the report agrees with the findings of this paper, that victims of European Community competition law infringements currently face considerable difficulties in claiming compensation for the harm suffered by them. We agree that measures must be taken to ensure full compensation of those victims.

We also share the view that collective redress is crucial for consumers and small businesses in order to give them a realistic and efficient possibility to obtain compensation in cases of scattered damage. The Commission also fully agrees with the ECON Committee report, that excessive or abusive litigation must be avoided. To this end, therefore, collective redress mechanisms must include appropriate safeguards.

Finally, we fully agree that its approach to collective redress must be consistent and that compatibility must, therefore, be ensured between initiatives targeted at various areas, such as competition law or consumer protection laws. At the same time, the Commission welcomes the acknowledgement that a consistent approach to collective redress does not necessarily mean that all areas would have to be dealt with in one single horizontal instrument. The call for consistency must not unduly delay the development of measures identified as necessary for the full enforcement of the European Community competition law.

  Gabriela Creţu, rapporteur for the opinion of the Committee on Internal Market and Consumer Protection. – (RO) The Committee on Internal Market and Consumer Protection has formulated its position based on a certain reality: the negative effects resulting from the breach of antitrust legislation can be felt economically very often at the end of the commercial chain, affecting end consumers and small enterprises.

In this case, damages for the losses suffered are important but, at the same time, they are difficult to obtain, as many have been affected and small sums are involved. As a result, we have requested a package of legislative and non-legislative measures to provide the tool which all European citizens affected by such a situation can use to defend their right to full, proper damages.

We support all measures designed to eliminate difficulties in achieving this objective: facilitating access to documents, reducing the costs of legal procedures and reversing the burden of proof.

We welcome the Commission’s proposal to combine representative actions brought by qualified entities with collective actions, with explicit agreement expressed. However, we consider that ‘opt-out’ collective actions must continue to be discussed, given the benefit they provide: a ‘once and for all’ settlement and less uncertainty.

  Ioan Lucian Hămbăşan, on behalf of the PPE-DE Group. – (RO) Although the EU Treaty clearly prohibits cartels and other infringements of competition law, it is still difficult for affected consumers in the European Community to claim their rights to compensation.

In Romania, for example, a cartel set up in the cement industry was recently fined several million euro. However, the current legislation in force does not oblige authorities with the powers to monitor competition to get involved in compensation for victims.

I would like to stress the need for these authorities to take into consideration the compensation paid or which should be paid when they calculate the fines imposed on companies which are found guilty of abuses, so as to prevent discrepancies between the harm caused and the punitive measures applied, and especially to ensure damages are paid to those affected by such practices.

This is why I welcome the Commission’s intention to improve the methods for guaranteeing the rights of consumers affected by infringement of the law throughout Europe.

Parliament stated very clearly that there must not be any ‘opt-out’ system in Europe. Therefore, the victims must be identified as quickly as possible at the time a complaint is made.

The ‘opt-in’ system guarantees that victims affected by the infringement of competition law will actually be compensated. Parliament does not want anyone else, be it lawyers, trade associations or the Consumer Protection Office, to benefit as a result of private actions.

I also believe that Parliament is adding a new important element which the Commission’s proposal has omitted. Alternative dispute resolution mechanisms are in many cases much more effective for victims who are entitled to compensation than judicial procedures. I am referring to the fact that at the time when compensation is being sought, settlements must be initiated first of all outside the courts. They are much less costly than private actions as consumers will be compensated for the losses suffered much more quickly.

  Antolín Sánchez Presedo, on behalf of the PSE Group. – Mr President, Commissioner, ladies and gentlemen, this report has been approved unanimously in the Committee on Economic and Monetary Affairs. Not only is this an excellent outcome, but also, given the difficult, complex and controversial nature of the issues in question, it is an exceptional one, which should give impetus to and solidly cement the new pillar of private actions, which is vital in making the policy of Community competence effective. This is a new step in the direction of a more advanced and effective policy of responsibilities, which will be more respectful of the rights of victims and more effective in imposing liability on the infringer.

I would therefore like, firstly, to congratulate the rapporteur, Mr Lehne, who has had the principal responsibility for bringing this task to a successful conclusion. The quality of his ideas, his open spirit and readiness to engage in dialogue, and his intelligence in extracting the best compromises have been vital in achieving this. I would like to extend my congratulations to the draftsmen of opinions, the shadow rapporteurs and those who tabled amendments, who have made such a positive contribution to enriching the report.

The Commission’s White Paper entitled ‘Damages actions for breach of the EC antitrust rules’ is a response to a request made by the European Parliament in its resolution on the Green Paper, the content of which it accepts in large part. This is the case when, among other aspects, it endorses the complementary nature of public and private legal actions, and positions itself in favour of group actions, although avoiding the excess of US class actions, thus facilitating the claiming of damages; when it proposes access to relevant information under judicial control, although avoiding a fishing expedition, and when it recognises and calls for the bringing of independent actions or follow-up actions and a voluntary compensation system.

The report stands up for codecision by the European Parliament in the establishment of the legal framework for the bringing of damages actions for breach of EC antitrust rules. This position should not be understood as a denial of the policy of Community competence as a legal basis for the legislation, but as an upgrading of the requirements of the ordinary procedure in this sphere, to meet the higher values recognised in the Treaty.

When a regulation has a significant effect on a fundamental right, such as the right of citizens to effective legal protection – which forms part of the European system and that of the Member States – the democratic principle and respect for national legal traditions – which require that such matters may only be regulated by means of provisions at the legal level, or, in other words, with action by the direct representatives of the public – demands the legislative participation of the European Parliament.

It also establishes a horizontal, integrated approach for tackling the shared problems which the bringing of private legal actions within competition law may have with other realms, thus avoiding a fragmented, inconsistent approach.

Private legal actions may be brought by a public body and also by individual or group actions. This second arrangement may be carried out directly by the victims or indirectly, through qualified entities, whether appointed in advance or designated ad hoc, such as consumer or business associations. Where actions are brought by qualified entities, the group of victims must be defined in the submission of the application, but the identification of each one can be done later on, although it must be clearly established as soon as possible, avoiding unnecessary delays and complying with the existing legislation. This solution is very important for cases of lower and fragmented damages.

The report raises in a balanced way the question of access to the information necessary for bringing follow-up actions. The protection of business secrets should be safeguarded, as should the effectiveness of clemency programmes, for which guidelines are requested.

Conditions are set so that the decisions taken by an authority which is a member of the Community competition authorities network can become binding in another Member State and so that, with full compliance with the principle of liability, the burden of proof is reversed and it is presumed that fault or blame exist when the existence of a breach has been established.

It is also worth highlighting the acceptance of the ‘passing-on’ defence for indirect victims and a system that simplifies and reduces the costs of proceedings. I would also like to emphasise the positive interaction between public and private actions, both in incentivising compensation for victims and in establishing the five-year period for the bringing of actions.

I would like to end by expressing my gratitude to the Commission for the dialogue that has been maintained throughout this procedure and by asking the Commissioner to submit without delay the initiatives required for its developments.

  Diana Wallis, on behalf of the ALDE Group. – Mr President, I would like to start by thanking Mr Lehne for his report and to confirm that my group will be supporting that report.

I would also like to say that I find it a little odd that we are having this debate late at night when we have a question on the same subject tabled for tomorrow morning. It would have made a great deal of sense to have put both together.

However, in complimenting the report, let me say that my group’s starting point will be ‘doing justice’ – doing justice for SMEs and consumers across the European Union, where they have to face inappropriate and anti-competitive action. A few weeks ago my group organised a seminar at Parliament in Brussels, and I was very struck by certain of our visitors who were at the sharp end of such anti-competitive action, ironically in the cement industry. What did they say? Please, please, get on with this: we need something that will allow us to pursue these inappropriate operators in the European market.

We want a European solution, and we want it sooner rather than later, because, if we do not get it, my forecast and my warning is this: some of our Member States will develop systems that will lead to forum shopping as a result of free movement of judgements. So, please – a European system as soon as possible.

  President. − I shall make sure that your point concerning the agenda is communicated to the Conference of Presidents, which fixes the agenda – sometimes it makes mistakes.

  Nils Lundgren, on behalf of the IND/DEM Group. – (SV) Mr President, the internal market is the EU’s absolute greatest contribution to freedom and prosperity in Europe. Among other things, it requires effective antitrust legislation. What we are now considering is the issue of damages actions for breach of antitrust rules.

There are good fundamental reasons for citizens and companies to be able to claim damages. Mr Lehne’s report indicates, to some extent unintentionally, the problems and the risks involved. The white paper talks of a European legal culture, but this does not exist. We should not create regulations based on wishful thinking. The rapporteur intends us to avoid an ‘Americanised’ compensation culture. This is also wishful thinking. On the contrary, the risks of such a culture occurring are high.

The division of responsibility between the EU institutions and the Member States has been ignored. There is no objective analysis of what is required by the subsidiarity principle. The principle is quite simply not taken seriously.

There are also many other unclear points and points that are at risk of being completely arbitrary. Paragraphs 7 and 11 together instil a sense of misgiving. An obvious starting point must be damages actions on the basis of a breach of antitrust rules. It requires the crime to have been established in court, after which res judicata would presumably have to apply, even in the context of an individual claim, so that judgments relating to a single case cannot be revisited.

Paragraphs 15 and 18 together allow the plaintiff to choose the legal system that is most favourable. This creates legal uncertainty and will result in ‘forum shopping’, which will be a real threat.

The information asymmetry is to be reduced by forcing companies to provide information to the plaintiff. This will result in the subjective handling of important business information, which can be misused.

There are far too many risks and points that are unclear at this stage. The Chamber should therefore reject this report and request a more detailed analysis of the issue before we take a decision.

  Andreas Schwab (PPE-DE). – (DE) Mr President, ladies and gentlemen, first a very big thank you to the rapporteur, Mr Lehne, who has done a magnificent job and has found appropriate solutions to a very difficult question in agreement with the Members from the other groups.

I see from the debate that we are all agreed that we need a horizontal approach for all collective claims and I therefore ask the Commission not to table separate proposals by individual Directorates General for each separate area, but at best to give us a truly collective legal redress mechanism covering all areas for the European internal market and for European citizens and of course – as Mrs Wallis said – for European SMEs. We are united in the thought that the interests of those damaged by a cartel must be effectively upheld and that we must subject the European economy to cartel control in accordance with the principle of the social market economy. Nor do we want any abuse of the various national regulations in the form of forum shopping.

However, this evening’s debate has not afforded me very much information on the most effective way of achieving this, because I believe that the potential of collective claims is often overestimated. That is why it is important to lay down again certain benchmarks against which we have to measure all collective claim procedures. We must answer the question of whether additional legal protection for consumers or victims in mass claims, cross-border litigation and litigation which affects more than one Member State really is necessary. We must allow for the Member States’ procedural constraints – opt out, opt in and numerous other points – in the European procedure. If this is simply not possible, as the Commission itself has already partially conceded, then we need the Member States’ legal instruments on board and a common procedure with the Member States’ parliaments in order to serve the interests of European consumers.

We definitely want to avoid collective claims in Europe along the lines of the US model. We want to ensure that compensation is awarded, but only to those who actually sustained losses. We want to advise as emphatically as possible against unjustified claims and we want to promote alternative settlement procedures.

  Olle Schmidt (ALDE). – (SV) Mr President, I, too, would like to thank Mr Lehne for a constructive and thorough report, which addresses important issues within competition law and increases consumer protection.

The European Court of Justice grants individuals and companies the right to damages for breaches of the competition rules, but in spite of that fact the reality is that individuals who have suffered loss as a result of a breach of EC antitrust rules rarely receive compensation. We must therefore create mechanisms that increase trust and make it easier for individuals to be able to assert their rights across borders.

We know that consumers and small businesses are frightened of instigating proceedings because of concern about long drawn-out processes and, in particular, high costs. Changes in this regard will promote cross-border trade.

If we are to have a functioning internal market throughout the EU where people can rely on their case being examined in a legally certain manner and on receiving full compensation for the damages caused, in other words the loss, we must also find new mechanisms to facilitate group claims.

When we talk about group claims, the subject of the US and its experiences and extremes always comes up. We must, of course, learn from this, but we should not allow ourselves to be intimidated. Europe must have a European system, not an American one. If we do nothing the situation will only get worse.

  Ján Figeľ, Member of the Commission. − Mr President, thank you all for very interesting contributions, especially the introductory exposé of Klaus-Heiner Lehne. This was very interesting, and I now see why you are so consensual and working not only together in committee but also in plenary on these issues.

There is not much I can add, except perhaps on the legal bases. Of course it depends on the objectives and the content of the action proposed, and I want to assure you, as a Commissioner – for another portfolio, perhaps, but I speak on behalf of the Commission – that, in principle, we seek very close cooperation with Parliament. How to establish this with regard to a practical, concrete item or issue remains to be seen, but we will strive for close cooperation or as close cooperation with Parliament as is possible under the applicable legal basis.

On what you have said about fragmentation and a horizontal approach, I think the answer from the Commission – and it is very visible in the white paper – is a consistent, coherent approach, and I think that the European legal tradition and the roots of our legal culture are different from the oft-quoted American ones. But I think that we can learn from the others and further build up our system.

On public enforcement and justice, of course, I think it is very important that we are not going towards lessening this enforcement, and, of course, Articles 81 and 82 are very important pillars of the EU single market and policies. They are about justice, and damages actions are complementary to this law enforcement.

Last – but maybe not least – what was said about out-of-court settlements. The Commission is in favour, but the precondition or the base for such an approach, which would be welcome, is an existing and functioning efficient litigation system on damages actions at the level of Member States. So I think we need to not only encourage but help our Member States so that such issues and systems are running in the EU of 27. Then I think we may also come to these points.

But, in principle, thank you very much for what was, for me, too, a very interesting debate, and all the best.

  Klaus-Heiner Lehne, rapporteur. − (DE) Mr President, Commissioner, first may I thank my honourable friends for their very helpful contributions. I think that we all pulled together and achieved a good result.

However, I also want to say quite clearly to the Commission, in order to avoid any misunderstanding: from Parliament’s point of view, there is no question of your tabling a bill that is probably already fit for nothing. Absolutely no question. We expect the Commission to take account of what we have decided today and for it to be included in the actual legislation proposed.

The horizontal approach is not only an important aspect on the basis of the arguments which I expounded earlier; the Commissioner personally also addressed the question of the legal basis. With such an important project, an approach must be chosen which ultimately guarantees that Parliament is involved as a legislator on an equal footing. If an approach based purely on competition law is chosen, that would not be the case under the Treaty of Nice currently in force. This is also a very fundamental political argument in favour of why we consider a horizontal approach to be the right one. I think the Commission should consider this very seriously.

Another decisive point in my opinion is that we still need something on the question of out-of-court settlements. You spoke earlier of convergence with the work of the Directorate-General on Competition. However, if one compares the Green Paper on consumer protection with the White Paper on competition, one does not necessarily get the impression that there is really any such convergence. The most blatant example is the different treatment – or to be more exact the lack of treatment – of out-of-court settlement mechanisms in the White Paper.

There is still a series of other problems which we expect to be resolved. I just want to refer briefly to the question of access to the European Commission’s files. It is possible in all criminal proceedings in which compensation is being claimed to inspect the public prosecutor’s case files. Why does this not apply to the European Commission? It is beyond me.

The same applies to the question of fixing penalties: this also needs to be taken into account from the point of view that it must be possible to claim compensation in future. Here too the Commission urgently needs to rework the text and table more specific texts and proposals than those included so far in the White Paper. May I say quite clearly from Parliament’s point of view, in order to avoid any misunderstanding: we expect more than what is contained in the White Paper and we also expect the Directorate-General on Competition as a whole to follow our suggestions, otherwise there will be resistance in this House.

  President. − I should like to thank you all for your contributions on this important topic and also thank the Commissioner, the staff and the interpreters.

The debate is closed.

The vote will take place on Thursday, 26 March 2009.

Written statements (Rule 142)

  Katrin Saks (PSE), in writing. – (ET) Parliament’s report emphasises the usefulness of leniency programmes in exposing cartel agreements, and I am glad to be able to say here that a draft leniency programme is presently being discussed in the Estonian parliament. This should become an important part of the struggle against cartels, which is important both for the better functioning of the common market and in order to protect consumer rights, because consumer prices may rise as much as 25% due to cartel agreements.

I do, however, believe that representative actions can also play an important role in the effective implementation of competition law and the improvement of consumer protection, and thus we must also devote attention to this, both at the Estonian and European Union levels. Research has proven that representative actions would significantly improve consumers’ willingness to stand up for their rights, and in countries where consumer activeness is low because of the fear of the complexity and cost of such undertakings, measures such as representative actions are of crucial importance.