President. The next item is the report (A6-0133/2007), by Mr Sánchez Presedo, on behalf of the Committee on Economic and Monetary Affairs, on the Green Paper on Damages actions for breach of the EC antitrust rules (2006/2207(INI))

  Antolín Sánchez Presedo (PSE), rapporteur. – (ES) Mr President, Commissioner Kroes, ladies and gentlemen, the existence of economic freedom, the functioning of the internal market and the sustainability of European development are inextricably linked to the competition policy. Since the Treaty of Rome was signed 50 years ago, its importance has continued to grow. Competition is an indicator of European vitality and excellence, a key policy in terms of fulfilling the Lisbon Strategy and achieving the Union’s objectives.

Anti-competitive infringements make the game unfair, impact on flows of exchanges amongst Member States and damage confidence in the rules. They reduce the Union’s dynamism and results. It is important that we have dissuasive and reactive mechanisms.

Infringements have been dealt with principally by means of public actions of an administrative nature. The centralisation of the application of Article 81(3) — through a priori control by the Commission, toned down by means of the exemption regulations from the 1980s onwards — was a victim of its own success; the demand for more and better competition revealed its economic inefficiency and its legal shortcomings.

The role of private actions was stressed by the Court of Justice of the European Communities when the 2001 Courage v. Crehan judgment recognised that anybody could have recourse to national judicial bodies in order to claim damages resulting from the actions of the infringer.

The modernisation of Regulation (EC) No 1/2003 of the Council put an end to the Commission’s monopoly and recognised a more open system, applicable in a decentralised manner by the administrative authorities making up the network of Community competition authorities and also directly by the national judicial authorities.

The possibility of private actions is nothing exotic, but rather a return to the classic jurisprudence according to which Community law imposes obligations on the States and on private individuals, and has vertical and horizontal effects that require judicial protection. Their use in the Member States – according to a study ordered by the Commission – is extremely diverse and entirely underdeveloped – unlike in the United States, where nine out of every ten application procedures are judicial. The rapporteur takes a positive view of the Commission’s publication of a Green Paper to identify the obstacles standing in the way of private actions and to find ways to remove them.

In an advanced system of competition, public action against the impunity of infringer undertakings should be backed with private actions against immunity and indemnity in relation to the damages suffered by the victims of their actions. Facilitating private actions will make the competition rules more effective. The arguments for it include both efficiency and justice. The imposition of fines is insufficient unless accompanied by private actions to prevent the infringer from gaining advantage compared to competitors as a result of the infringement and to compensate the victims of the damages caused. The report takes the view that public and private actions form two pillars with the complementary aim of safeguarding market discipline in the public interest and protecting the private interests of players on that market.

The application of Community competition law by administrative and judicial authorities must not lead to any lack of uniformity in its application. Judgments must not be allowed to vary according to the authority making it. This is a crucial point. The Community acquis and the effectiveness of leniency programmes must be maintained, public and private actions must be coordinated and cooperation amongst all of the competent authorities must be intensified.

The report proposes a Community model in line with the Union’s legal culture, which takes account of the Member States’ legal traditions. It opposes a slide towards the US model, since it is not in favour of introducing that model’s peculiar characteristics, such as judicial bodies consisting of non-professionals, ‘class actions’, punitive damage payments of three times the damage occasioned, strict requirements on the disclosure of documents and the system of lawyer’s fees and litigation costs.

We must compensate for imbalances and ensure that liabilities are met, without violating the principle of equality of arms or artificially stimulating litigiousness. The aim is to encourage the rational use of legal actions and not judicial activism, and above all to promote the amicable and early settlement of disputes.

Community competition is an exclusive competence of the European Union. National administrative and judicial procedures do not alter that and they must not prevent the existence of common guidelines for penalties, in accordance with the principles of better legislation.

I shall end by thanking the rapporteur for the Committee on Legal Affairs, Mr Doorn, for his valuable cooperation, the shadow rapporteurs for their help and the Members who have tabled amendments for their contributions.

I appreciate the constant and exemplary dialogue maintained with the Commission during the drawing up of the report and I would urge the Commissioner to carry on demonstrating her commitment in the next White Paper.

  Neelie Kroes, Member of the Commission. Mr President, Honourable Members, we are here tonight to debate an issue of fundamental importance: rights.

The Court has been clear: the right to damages is necessary to guarantee the effectiveness of Community competition rules. But consumers and business customers do not use their rights. Injuries are left uncompensated, while society and the economy absorb the loss: that is just reality. That is clearly unjust, incompatible with our Community of law and at odds with our shared competitiveness objectives. The European Commission and, I believe, most Members of this House will not tolerate this situation.

Our Green Paper set out the problems. Finding appropriate solutions requires a very careful, measured approach, grounded in European legal traditions and developed through dialogue with stakeholders and, in particular, with Parliament. That is why the Commission will present a White Paper, accompanied by an impact assessment, for further discussion around the New Year.

Mr Sánchez Presedo’s report provides a wealth of pertinent input into this process. I congratulate the rapporteur wholeheartedly and thank the shadow rapporteurs and the Committee on Economic and Monetary Affairs for all their work. I also thank Mr Doorn and the members of the Committee on Legal Affairs for their contribution. We will give most careful consideration to all Parliament’s recommendations in preparing the White Paper.

I am aware that some are concerned that fostering private damage actions might lead to a US-style litigation culture. We will certainly take this into account in drafting the White Paper. But the scales are currently tipped against the victims. Carefully balanced European solutions need to be found. Common solutions that meet the strict tests of proportionality and subsidiarity should only be developed where national rules do not guarantee the right to damages effectively.

I have also heard it said that more private actions will create additional costs for business. We heard similar arguments years ago as regards the ‘polluter pays’ principle for the environment. The fact is that today cartels and other abuses cause huge but hidden costs. Empirical research shows that international cartels raise prices by over 20%. Recent cartel decisions by the Commission covered synthetic rubber, gas-insulated switch gear and acrylic glass. All these cartels increased input costs for business and harmed European competitiveness. The time has come to introduce the ‘competition-infringer pays’ principle. Let us not forget that, whilst some industries have to create some pollution to do business, in the competition environment there is no need and no excuse for infringements. Infringers may not like having to repair the damage they cause, but they should simply not break the rules in the first place. It is their choice.

I believe that making sure businesses and consumers do not lose out because of the illegal behaviour of some companies is worth fighting for. I sincerely hope that this week Parliament will send a strong message of support for this objective. We will discuss the detail together later, on the basis of a White Paper that will be balanced and measured and subject to the vigorous and very valuable scrutiny of this House.

  Bert Doorn (PPE-DE), draftsman of the opinion of the Committee on Legal Affairs. – (NL) Mr President, I think it is now the third time that I am addressing this House on the topic of competition law around midnight. I am not sure what the reason for this could be, but it is uncanny that it should evidently be regarded as, in some sense, a nocturnal topic.

As draftsman of the opinion of the Committee on Legal Affairs, I should like to make a few observations. The fundamental question is as to whether citizens and businesses that have sustained damage as a result of infringements of cartel law be entitled to damages I think they should, and so does the Committee on Legal Affairs. We think that in such cases, there should be a right to damages in the Member States, which should provide for procedures of this kind, although how they organise them is up to them. In some Member States, the government will need to establish first that an infringement has taken place. In other Member States, this will be done differently, but everything in accordance with the Member States’ procedures. After all, there is also the question of whether procedures of this kind can be imposed from Brussels on Member States in the first place. You may be able to persuade them that these need to be introduced, but whether they can be imposed is, to our mind, a different matter altogether. This is not, after all, about cartel law, but civil law, which, like criminal law, is a preserve of Member States, something in which the European Union cannot intervene. This is why we have serious doubts as to the possible legal basis that should underlie European legal measures in order to introduce procedures of this kind.

The same applies, in fact, to all those other questions and observations in the Green Paper that pertain to the furnishing of proof, for example the hiring of experts or group activities. These are all examples that fall within the scope of national civil law, in respect of which the European Union cannot prescribe any legislation. These are the principal observations that we in the Committee on Legal Affairs have made.

  Jonathan Evans, on behalf of the PPE-DE Group. – Mr President, the Commissioner indicated during her address that she was looking for Parliament to give a strong measure of support to action in this area. I want to make it clear, on behalf of my group, that we welcome the publication of the Green Paper and we are looking forward to the publication of the White Paper. We think that people’s rights in this area are not properly applied and, certainly, we want to ensure that more is done than is currently being done.

However, as the Commissioner herself has indicated, that is going to require a delicate balance, not least for the reasons that Mr Doorn has outlined, and because of the hearing organised by Mr Sánchez Presedo, in which we devoted half a day to considering these difficult issues.

For my own part, I am very committed to regarding progress in this area as an integral part of the whole of the Commission’s agenda in terms of modernisation of competition policy, so let nobody be in any doubt about our encouragement of further action by the Commission.

However, as the Commissioner has made clear, both within Member State governments and amongst the business community, there is real concern to avoid the experiences of the United States. It is not good enough just to say ‘we are not going to do what the United States did’, especially when, it must be said, after giving a considerable amount of detailed consideration to the issue, Mr Sánchez Presedo’s report goes into seeking to resolve, as it were, all these difficulties by changing the burden of proof, introducing punitive damages – at least in relation to cartels – and cost-free litigation, confusing EU and national competences, changing the rules in relation to disclosure, and cutting out of the assessment of the costs of this litigation any principles in relation to subsidiarity, proportionality or whether there is a proper legal base.

Therefore, when people ask why we are concerned about this report, it is because it has become a Christmas tree with too many bells hanging on it. We are in favour of opening the door, we are certainly not in favour of encouraging a process which may lead us down the US route, against the wishes of the Commission and against the wishes of all of those who have worked on this report.

  Ieke van den Burg, on behalf of the PSE Group. – (NL) Mr President, the Socialist Group in the European Parliament is happy to embrace the initiative taken by the Commissioner in this Green Paper. This is the very reason why we would argue that it is wise not to specify at this stage that the scope of a number of points should not be looked into further. We want the Commission to be given ample opportunity to examine a number of things properly and to follow them up with impact assessments to study their effects. After all, I can imagine that with regard to the Green Paper, we too will reach the conclusion that that is not the most obvious route to take and that indeed, a number of things need not be further elaborated or fleshed out; we do not wish to take a decision on this at this moment though. This is why we are calling on the Group of the European People’s Party (Christian Democrats) and European Democrats to reconsider a number of those points or possibly to provide a formula which leaves slightly more room for what the conclusion should be, so as to in any event give the Commission the opportunity to look into this further. We will then also look at our own amendments in a critical light. I would hereby like to invite you to take another closer look at this tomorrow.

As for me, I should also like to address this point from a Dutch angle as we in the Netherlands are having a heated debate on this very topic at the moment; finally, people are experiencing what competition policy at European level means and how we fight these cartels, because in a recent Dutch case, the Commissioner has charged high fines to beer brewers. This is, of course, a topic on which the whole of the Netherlands assumes to be an authority. It was a very telling example, because this beer cartel involved price agreements among beer brewers, who also have enormous influence on the hotel and catering industry and as a result of which people, the eventual customers, paid over the odds for their beers, something which was already subject of discussion in the Netherlands ever since the introduction of the euro. This example, though, demonstrated once again that the fines that are then levied are first fed to the European Commission before they are channelled back to the Member States, and do not end up directly with these consumers. Hotel and catering entrepreneurs are likely to take legal action against these beer brewers to see if they can recover any of the damage, but this is of no use to the consumer, the end user. In that sense, it is very interesting as an example to see how headway can be made; after all, the eventual end user is being conned by cartels of this kind. This example also proves my point, and so I should like to call on this House to keep the door open and to find out how we can let the consumer, the end user, benefit more from this cartel policy.

  Sharon Bowles, on behalf of the ALDE Group. – Mr President, when we first discussed the Commission’s Green Paper, I felt like a kind of latter-day Cassandra forecasting all kinds of woes. Perhaps I fared better than Cassandra in that you, Commissioner, and the rapporteur took some of my concerns seriously – I hesitate to call them ‘predictions’. My concerns, though perhaps only gently – maybe too gently for some of my colleagues – are embedded in the report that we are debating. So I can support giving you scope to explore the options of both follow-on actions and stand-alone actions. I can share a vision of mutual recognition of decisions, but I make it clear that that lies in the future, not right now.

My main remaining reservations concern the question of how much of a carrot has to be offered to get the system to take off, particularly for stand-alone actions. And you may note the report on that subject that has just come out in the UK. If the carrot is too large, whether for the consumer, the lawyers or competing companies, I fear that, however we craft our rules, we are at risk of being pushed towards some of the worst aspects of damages actions that we hear about from the United States. I say ‘pushed’ because that is how it happens. Nobody goes there voluntarily. With the whole of the EU as the territory for the victor, a very fine balance has to be struck.

Another of my priorities would be to ensure that actions are well founded and that we do not end up with the kind of blackmail actions that happen in the United States. I agree it will be difficult to get it right and account will have to be taken of national differences in legal practice and tradition, but if we can succeed it will be a very useful tool and well worth having. I look forward to the White Paper too, but I warn you that I may not have put my Cassandra’s robes away yet.

  Pervenche Berès (PSE). – (FR) Mr President, Commissioner, you have a difficult task ahead of you because I can see that opinions will differ greatly on both sides. On the one side, you will have the support of a number of consumer associations, which will welcome your proposal. On the other side, you will have many interest groups, which will denounce the risks of such an approach in the field of competition law.

Nevertheless, since you are proposing an initiative in an area of yours relating to anti-trust, you are operating at a level at which the Commission’s inaction will no doubt be challenged less than it would elsewhere. I am thinking in particular of the way in which the Commission assesses a given merger proposal.

In the area of anti-trust, there is, in a way, more scope for a broader agreement between the Member States and the public players. The basic idea, then, is to supplement public action with private action. We are still only at the preliminary stage, and we can clearly see that the path will be full of pitfalls. There are those, like Mr Doorn, who imagine that the Commission does not have to give its opinion on initiatives in this area, because all of that is meant to come under the civil law of the Member States. Then, there are those – I believe that all of this evening’s speakers have voiced opinions along these lines – who are worried about the potential for such an initiative to be abused and, when we think about abuses in this area, everyone has in mind the abuse of the US system, where the victims whom the defence claims to help are in reality – if I dare say so – the cash cow of the legal professions. Clearly, no one in this Chamber wants to see European competition law engage in such a scheme.

You have announced to us a White Paper, and you have announced to us an impact study: once again, we shall examine your proposals with the aim of helping you, with the desire to make competition law better able, by way of these proposals, to address Europeans’ concerns and to fulfil what they might normally expect from a just application of competition law.

Once again, however – and I am not the first person this evening to have said this – anything that is liable to involve us in an abuse of procedures that helps put money into professions which, incidentally, find many other ways of guaranteeing turnover, would not have our support. It is in this spirit of openness and with the concern, often demonstrated in this Chamber, to protect consumers’ rights, that we shall support and examine your proposals.

  Diana Wallis (ALDE). – Mr President, I would like to thank the Commissioner for her initiative, and the rapporteur for his report. I want to concentrate on possible consumer actions, so-called collective or representative actions. These should not be the big bogeyman for business that they are often portrayed as. If we want informed and responsible consumers who do not need over-nannying by the state, then the companion of that approach of treating consumers like grown-ups is that we must allow them to take action together to get redress. After all, why should the state alone be the enforcer in anti-competitive matters? It is the consumer who loses as a result of anti-competitive behaviour, but often gets no redress or compensation.

There is nothing astounding in proposing this: the right to take action is already acknowledged by the ECJ. What we have to do is to facilitate this, make justice accessible to those who lose and ensure that compensation is distributed in an equitable manner, not just to the privileged few.

This has to be the complementary approach to having informed consumers, giving them real power through increasing justice and redress. Indeed, this should assist the better functioning of our internal market. Consumers are often the best judges of what is anti-competitive. We should have no fears about harnessing this force for the general good.

Everyone is absolutely clear that we do not want US-style class actions, so now is our unique opportunity to design something European which respects European values of our society and justice.

  Neelie Kroes, Member of the Commission. Mr President, honourable Members, over 40 years ago in van Gend & Loos, the Court gave EU market players and citizens the rights they need to play a central role in our European project. The legal environment in which the victims of antitrust infringements currently find themselves is not acceptable. I got the message that everybody agrees on that. I would like to thank you for the stimulating debate here this evening on how we might gradually improve this legal environment, and I look forward to Parliament’s vote on the report. So far, so good.

I would now like to respond to a few issues raised in our debate this evening. Mr Doorn raised the question of legal base. That is important and quite clear. At the stage of a Green Paper, and in the absence of any Commission proposal, it is rather premature, if you will allow me to say so, to discuss the question of legal base at this stage. The Treaty offers appropriate, specific and general legal bases for measures in this area and I imagine that we could agree upon that. However, a pertinent base, and hence the applicable procedure, can only be identified in line with the nature, objectives and scope of any individual measure possibly envisaged after the White Paper. I will, however, consider the extent to which it may be appropriate to say something about legal bases in the forthcoming White Paper. So, there is still something to look at there.

I am aware of the need to be sensitive as regards national procedural rules. There is no doubt about that. That is quite a clear warning. On substance, we already have one uniform European competition law, and by their very nature, breaches of the antitrust rules have a cross-border impact because they affect our internal market, and that is what we are protecting. It makes sense to me that the right to compensation should also be equally enforceable throughout our internal market.

It is only to the extent that the procedural rules of the Member States do not guarantee effectively the substantive rights conferred by the Treaty that the Commission may seek some approximation of these rules. Any measures proposed would have to meet the strict tests of subsidiarity, proportionality and necessity. The White Paper will be accompanied by an impact assessment, as I have already said.

Mr Evans mentioned the need to avoid encouraging a litigation culture and the risk of unmerited claims being brought. The Commission is encouraging a competition culture compatible with our existing European legal cultures. We will pursue a measured and balanced approach, because like you, we are determined to avoid opening the door to the excesses which some other jurisdictions have experienced. But fear is a very bad adviser. None of the key characteristics of US antitrust litigation is suggested as an option in the Green Paper.

Many of those of support facilitating damage actions, like Mrs Bowles, stressed the need to avoid tilting the scales too much in favour of claimants. However, these same commentators also recognised that the scales are currently tipped against the victims of antitrust damages, and hence that something should be done. The Commission is striving for a proportionate and measured approach developed in consultation with stakeholders.

Mrs Wallis mentioned collective actions for damages claims. Given the costs of litigation, it is unlikely that individual consumers will bring small-value damages claims against the perpetrators of competition law infringements. So it is worth looking at options for collective redress, as she rightly mentioned. The Green Paper looks at representative actions brought by consumer organisations. So let us be clear – and I repeat – US-style opt-out class actions are not on the agenda and will not be on my agenda.

In opt-out class actions, lawyers act on behalf of an unidentified class of persons and mainly pursue their own interests. In representative actions, the latter have no separate interest different from that of the injured parties they represent. The Commission thus believes that the interests of consumers are better served by a representative action than by an opt-out class action, and I hope this will also reassure Mrs Berès.

Your involvement signals the importance of the debate launched by the Green Paper, and is a reason for hope, as we are all aware that there is something to be done. There is no doubt about it: the devil is in the detail.

I should like to leave you with two key messages. First, I hope that this House will send out a strong signal that the current situation is not acceptable and that is what I have got from you. This is all about rights, and this House has been a consistent supporter of rights across all policies and all areas of European cooperation. We have to give European citizens and European businesses the ability to exercise their rights under European competition laws. This is an area in which the Community can show its relevance to the daily life of citizens and to business.

Second, it is by working together in dialogue, through ideas and constructive criticism, that we will be able to make improvements, at the same time avoiding the known pitfalls. I look forward to taking this process forward with the White Paper at the turn of the year.

Thank you for the interesting debate and thank you especially, rapporteur, for your hard work on this important file.

  President. The debate is closed.

The vote will take place on Wednesday at 12 noon.