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Consumer Involvement in Private EU Competition Law Enforcement by Ioannidou, Maria (3rd September 2015)

1 Introduction

From: Consumer Involvement in Private EU Competition Law Enforcement

Maria Ioannidou

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved. Subscriber: null; date: 29 March 2020

(p. 1) Introduction

1.  Background

The past 15 years have seen radical changes in EU competition law enforcement, both substantive and procedural. The European Commission’s (Commission) efforts to imbue EU competition law with a more economic approach began in the late 1990s; these efforts were successful with regard to the enforcement of Article 101 of the Treaty on the Functioning of the European Union (TFEU) and merger control but remained sketchy in relation to Article 102 TFEU. A recurring theme in the Commission’s past efforts has been a rhetorical emphasis on consumer welfare and competition law’s potential to promote consumer interest. In fact, the ‘more economic approach’ was hailed for its potential to bring more benefits to consumers.

At about the same time, the Commission embarked on a substantial procedural reform. Regulation 1/2003 changed the enforcement landscape,1 strengthening the role of national actors: national competition authorities (NCAs) and courts. Central to these attempts was the aim to strengthen private competition law enforcement alongside the primary public enforcement model in the EU.

The debate on the inadequacy of private enforcement was reinvigorated with the publication of the Ashurst study in 2004,2 following which the Commission led the debate regarding improvement of the conditions for bringing damages claims in Europe. Consumers’ inability to raise damages claims in competition law often emerged as a recurring problem during this debate. A decade later, the EU Directive on Damages Actions has finally been adopted.3 This is a welcome development, although the adopted legislation is a watered-down version of previous proposals and does not contain binding provisions on collective actions. (p. 2) The latter are discussed in the Commission Recommendation,4 which discusses non-binding common principles that will arguably prove inadequate for the bringing of collective actions for competition law violations. As such, recent developments in private enforcement of EU competition law render questionable whether they can improve the consumer’s role therein.

The central tenet of this book is located at this juncture, as it explores the role of consumer interest and consumer participation in EU competition law enforcement. It focuses on the private enforcement of competition law and aims to examine the importance of consumer interest in EU competition law with a view to reshaping the enforcement mechanisms in the competition law field. It discusses the justifications for more active consumer participation as well as the necessary remedial and procedural tools to facilitate such participation. The structure and methodology are prescribed by two factors, namely the reported shift in EU competition law towards a consumer welfare-oriented approach (policy and substantive factors) and the EU debate on private competition law enforcement and consumer collective redress procedures (procedural factor).

Building on the identified policy, substantive, and procedural factors, a two-part structure is employed incorporating the individual chapters. The first normative part essentially builds the framework upon which the book is premised. It deals with policy implications and normative justifications for increased consumer involvement in competition law. After the first part has formulated the normative framework and placed the whole debate regarding consumer involvement in competition law in a wider EU law perspective, the second practical part moves on to address the remedial and procedural measures necessary to allow such involvement.

2.  Nature of the Subject Matter

This book deals with consumer participation in private EU competition law enforcement. Its subject matter is addressed primarily from an EU competition law perspective, but in reality it is much broader and has to tackle many challenging issues from the wider EU law discipline. This explains why some broader themes, not confined to EU competition law, recur throughout the analysis. Some of these points concern consumer participation in general, whereas others pertain to the relevant consumer participation either in private or public competition law enforcement. However, all of these aspects help to locate the book’s central topic within the wider contemporary EU law debates. These recurring themes are introduced briefly here, in order to show the wide variety of complex issues involved when trying to justify increased consumer participation in EU (p. 3) competition law enforcement and formulate appropriate measures for facilitating such participation.

2.1  EU competition law enforcement: A fused approach

The first contentious issue concerns the different approaches to the enforcement system in EU competition law, which is comprised of both public and private mechanisms.5 The most pronounced aims of the EU competition law enforcement system are deterrence and compensation.6 While the traditional view suggests a clear attribution of these functions to public and private enforcement respectively, this book advocates a fused and integrated approach to competition law enforcement, as the analysis in the individual chapters will reveal. This approach reinforces the underlying substantive aims of EU competition law, acknowledges the importance of private actors and private claims in the EU legal order, and justifies the increased consumer participation in EU competition law enforcement advocated herein.

2.2  The consumer’s role in EU competition law enforcement

The consumer’s role is influenced by the fused approach to EU competition law enforcement that was briefly described above. This book does not treat the consumer as a self-interested motivated individual seeking to redress damage flowing from EU competition law violations. On the contrary, the consumer’s role is systemic. In this book, the assumption is that competition law is relevant to consumers, and that consumers are equally relevant to competition law. Through appropriately formulated enforcement mechanisms, consumers could assume an instrumental role in competition law enforcement, further promoting the aims of the system as a whole. Arguments to this end are first drawn from the contemporary debates in EU consumer and competition law. Consumers not only stand to benefit from well-functioning markets but also assume a more active role in promoting and sustaining them. Their participation both in private enforcement and in EU competition law enforcement in general could be viewed as a means (p. 4) to achieve this end and fits well with proposals and efforts to increase consumer empowerment.7

2.3  Function of tort law

Another, related, contentious issue is whether the fused approach to competition law enforcement and the functional consumer role therein can be reconciled with the principal compensatory function of tort law.8 Notwithstanding its principal function, tort law is also attributed a deterrent function.9 In fact, neither compensation nor deterrence can solely explain the multiple applications of tort law.10 Ideally the two functions should be reconciled but, even in the case of conflict, it is possible that deterrence may be the preferred function for certain forms of economic behaviour. This book argues in favour of a primary deterrent function of damages actions for low-value consumer claims that further allows a partial fulfilment of the compensatory function. Arguments to that effect are drawn from the EU institutions’ approach to private EU competition law enforcement, as well as from the nature of consumer claims.

2.4  Harmonization: Unity or diversity?

The pertaining different Member States’ approaches towards tort law and civil procedure raise the issue of how much harmonization is permissible or even desirable. Even if the relevant need is identified and the legal issue of the EU’s competence to introduce harmonized measures on consumer participation in private competition law enforcement is resolved, the different approaches of national legal systems with regard to remedies and procedures remain a significant issue. One is then confronted by bottom-up pressures exerted by individual Member States claiming that they are protecting their national legal systems and opposing any harmonized measures proposed. Part of this opposition could be seen as an attempt to protect national legal systems in their cultural context, and much has (p. 5) been written on the culturally embedded nature of legal systems and the impossibility of successful legal transplants.11 At the same time, however, part of this opposition is an expression of political opportunism. Ultimately, how to satisfy this opposition is a complex political matter that may, at times, impede the adoption of effective legal solutions.

3.  Methodology and Terminological Clarifications

In developing a theoretical framework on consumer involvement in EU private competition law enforcement and suggesting remedial and procedural measures for its realization, this book examines both EU institutions’ and individual Member States’ approaches. It also takes due account of the opinions of other stakeholders, such as businesses and consumer organizations. The aim is to address the diverse legal and political hurdles that permeate the analysis.

First, the relevant EU legal sources and policy documents are reviewed. EU legislation and the relevant EU case law, as well as the Commission’s approaches to date, are also examined. The Commission’s past efforts in advancing private enforcement of EU competition law, culminating in the adoption of the EU Directive on Damages Actions, can serve as a useful starting point, since these show a tendency to adopt modest measures and may well influence future initiatives in this field. The Commission’s Recommendation in the field of collective redress can also be read in this vein. The measures proposed in this book reflect the approaches of the Union’s institutions with regard to the aims and functions of private competition law enforcement.

At the same time, however, any proposed measures need to attract Member States’ consent; if they do not, any proposals to adopt harmonized legislation will be doomed to fail. Therefore, the analysis also takes into account Member States’ approaches towards remedial and civil procedure rules, as well as the US federal class action model. However, it does not present itself as a comparative venture. It draws upon publicized materials on private competition law enforcement and collective redress, comprising Commission reports, national reports, stakeholder comments, and other academic reports that present quantitative and qualitative data on Member States’ legal systems and litigation levels. In addition, personal contacts with consumer organizations are helpful in discerning the consumer view. The aim is to unravel different national trends that could potentially serve as examples and guidance for future steps to be taken at the EU level.

(p. 6) Furthermore, some terminological clarifications are needed. This book often refers to the consumer role in competition law enforcement and the formulation of the necessary facilitating remedial and procedural measures. A broad approach to ‘enforcement’ encompasses mechanisms and procedures that permit the application of the substantive competition law rules (Articles 101 and 102 TFEU and their national equivalents) by public authorities and national courts (procedural enforcement), as well as the actual enforcement standard itself (substantive enforcement). The enforcement standard refers to the fulfilment of the aims of EU competition law (retaining a competitive market structure, market integration, consumer welfare, etc).12 Unless otherwise stated, in this book ‘enforcement’ refers to the former, and encompasses both public mechanisms (Commission and NCA actions) and private mechanisms (damages claims before national courts).

Clarifying the content of procedural measures and distinguishing them from remedial measures is a complex task.13 A ‘right’ constitutes a legal position that a person, recognized as such by law, may have and which can be enforced by that person by means of ‘remedies’ according to the relevant ‘procedures’ intended to make such remedies operational.14 The distinction between rights and remedies has a common law flavour in the sense that, in civil law countries such as Germany, once a person is granted a legal right this also entails the power to pursue the enforcement of that right.15 Remedies are inalienable from rights.16 The category of procedural rules is narrower, and encompasses rules on judicial organization, jurisdiction, and the rules of procedure before the courts.17 When reference is made in this book to ‘remedial and procedural’ measures, this is to (p. 7) distinguish these rules from the directly effective EU competition rules and the substantive rights granted by them. The challenge is to formulate ‘remedial and procedural’ rules to permit the application of substantive EU competition rules before the national courts.

4.  Structure

In Chapter 2 the following questions are addressed: Who is the consumer and what is meant by ‘consumer interest’ in the context of EU competition law? How is ‘consumer interest’ depicted in the substantive competition law analysis? The chapter first addresses the relationship between consumer and competition law. A consideration of the role of competition law vis-à-vis consumer law facilitates the subsequent discussion on ‘consumer interest’ in EU competition law. In relation to ‘consumer interest’ it points to the inconsistencies between its frequent presence in the Commission’s policy documents and its rather limited role in the Court of Justice of the European Union (CJEU)18 case law and the Commission’s substantive enforcement practice. This finding points to the need for more active consumer involvement in actual competition law enforcement as an alternative route for bringing consumer interests to the fore. In addition, it links the policy and substantive elements with the advancement, in Chapter 3, of concrete normative justifications for increased consumer involvement.

The analysis in Chapter 3 first discusses the ‘endemic/functional’ aims of damages actions as these are discerned in the CJEU jurisprudence and Commission policy documents. These ‘endemic/functional’ aims comprise deterrence and compensation and are reflected in the structure of the procedural mechanisms for bringing damages actions. It is argued that even though they both constitute equally valued objectives, in the case of conflict, deterrence should be ranked first. This is supported by the CJEU case law; a closer reading of the respective case law, together with the Commission’s early statements, also advocates in favour of ranking deterrence first when formulating the procedural measures. Provided that a correct balance is achieved between the ‘endemic/functional’ aims, consumer damages actions may account for wider institutional benefits, contributing to consumer empowerment and the legitimization of EU competition policy.

Chapters 2 and 3 thus provide the theoretical justifications for the increased consumer participation advocated herein. Chapters 4 and 5 then move on to formulate practical proposals that could enable consumers to assume a more active role—or, to put it in accurate terms, which would actually allow consumers to assume a role in private competition law enforcement. The analysis in Chapter 4 embarks on a discussion of the characteristics of consumer claims, as opposed to (p. 8) customers’ and competitors’ claims, which justify a more enabling approach in the formulation of procedural measures for the bringing of such actions. The procedural measures discussed in the chapter concern offensive and defensive passing on and access to evidence problems.

In Chapter 5 the formulation of effective collective action procedures for low-value consumer claims is addressed and the difficulties in reaching a political consensus for the adoption of such a solution by individual Member States are also underlined. Thereafter, Chapter 6 examines alternative consumer participation avenues in the field of public enforcement that could potentially be more acceptable to the Member States as well as EU institutions. Finally, the analysis in Chapter 7 examines whether a legal basis exists in the Treaty for the introduction of the measures proposed herein. In addition to the partial harmonization of civil procedural rules (strict approach), it addresses alternative soft law instruments that have the potential to increase the role of consumer interest and consumer participation in competition law enforcement.

Through discussion of the normative grounds for consumer participation, this book highlights how consumer involvement advances the aims of EU competition law enforcement and wider EU aspirations. At the same time, the formulation of practical measures shows that de lege ferenda such participation is possible. However, because the book acknowledges the relevant institutional and political limitations, it also examines the possibilities for consumer involvement in the course of public competition law enforcement. It aspires to reveal that the line between public and private enforcement mechanisms and the respective roles of the different actors is somewhat blurred. This ‘blurring’ may be of benefit to both competition law enforcement and the protection of the ‘consumer interest’. In a multi-level system, as in the case of the EU, it is vital to consider the emplacement of new modes of enforcement and governance in order for the desired policy ends to be achieved19 and, most importantly, to attain acceptance from the ultimate addressees of competition policy.

Footnotes:

1  Council Regulation (EC) 1/2003 on the Implementation of the Rules on Competition Laid Down in Articles 81 and 82 of the Treaty [2003] OJ L1/1.

2  Waelbroeck D, Slater D, and Even-Shoshan G, ‘Study on the Conditions of Claims for Damages in Case of Infringement of EC Competition Rules’ (Comparative Report) (Ashurst Study) (31 August 2004) <http://ec.europa.eu/competition/antitrust/actionsdamages/comparative_report_clean_en.pdf> accessed 30 June 2014.

3  Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on Certain Rules Governing Actions for Damages under National Law for Infringements of the Competition Law Provisions of the Member States and of the European Union [2014] OJ L349/1.

4  Commission (EU), ‘Recommendation of 11 June 2013 on Common Principles for Injunctive and Compensatory Collective Redress Mechanisms in the Member States Concerning Violations of Rights Granted under Union Law’ [2013] OJ L201/60.

5  Regulation 1/2003 (n 1); see also Commission (EC), ‘Notice on Cooperation within the Network of Competition Authorities’ [2004] OJ C101/43; Commission (EC), ‘Notice on the Handling of Complaints by the Commission under Articles 81 and 82 of the EC Treaty’ [2004] OJ C101/65; Commission (EC), ‘Notice on the Cooperation between the Commission and the Courts of the EU Member States in the Application of Articles 81 and 82 EC’ [2004] OJ C101/54.

6  Regarding the aims of the EU competition law enforcement system see W Wils, ‘The Relationship between Public Antitrust Enforcement and Private Actions for Damages’ (2009) 32 W Comp 3, 5. See also A Komninos, ‘Relationship between Public and Private Enforcement: Quod Dei Deo, Quod Caesaris Caesari’ in P Lowe and M Marquis (eds), European Competition Law Annual 2011 (Hart 2014) 141, 141–142. To the deterrence and compensatory elements Wils also adds the task of law clarification: see W Wils, Efficiency and Justice in European Antitrust Enforcement (Hart 2008) 50.

7  Commission (EU), ‘EU Consumer Policy Strategy 2007–2013’ COM(2007) 99 final, 5; Commission (EU), ‘Single Market Act—Twelve Levers to Boost Growth and Strengthen Confidence’ (Communication) COM(2011) 206 final, para 2.4; see Commission (EU), ‘Consumer Empowerment in the EU’ (Staff Working Paper) SEC(2011) 469 final.

8  W van Gerven, J Lever, and P Larouche, Tort Law (Hart 2000) 19, 30, 740. The main opposing approaches to tort law theory stem from the law and economics school of thought and from justice-driven theories. For two interesting collections of essays on these different approaches to tort law see E Weinrib (ed), Tort Law (Ashgate 2002); D Owen (ed), Philosophical Foundations of Tort Law (Clarendon Press 1995). On the law and economics approach see W Landes and R Posner, The Economic Structure of Tort Law (Harvard University Press 1987). For a concise presentation of these two approaches and their main representatives see G Schwartz, ‘Mixed Theories of Tort Law: Affirming Both Deterrence and Corrective Justice’ (1997) 75 Texas L Rev 1801, 1802–1811.

9  S Deakin, A Johnston, and B Markesinis, Markesinis and Deakin’s Tort Law (Clarendon 2008) 50–52; P Cane, The Anatomy of Tort Law (Hart 1997) 217–225.

10  Schwartz (n 8) 1801; I Englard, ‘The Idea of Complementarity as a Philosophical Basis for Pluralism in Tort Law’ in Owen (ed), Philosophical Foundations of Tort Law (Clarendon Press 1995) 183.

11  P Legrand, Fragments on Law as Culture (W.E.J. Tjeenk Willink 1999); P Legrand, ‘European Legal Systems are not Converging’ (1996) 45 ICLQ 52; P Legrand, ‘The Impossibility of Legal Transplants’ (1997) 4 Maastricht J Eur & Comp L 111; G Teubner, ‘Legal Irritants: Good Faith in British Law or How Unifying Law Ends Up in New Divergencies’ (1998) 61 MLR 11. For the opposite view see A Watson, Legal Transplants: An Approach to Comparative Law (2nd edn, University of Georgia Press 1993).

12  See Chapter 2 (‘Consumer Interest’ and the Aims of EU Competition Law), text to nn 17–61.

13  W van Gerven, ‘Of Rights, Remedies and Procedures’ (2000) 37 CMLRev 501. On the difficulties in distinguishing between procedural, remedial, and substantive rules see also FG Jacobs and T Deisenhofer, ‘Procedural Aspects of the Effective Private Enforcement of EC Competition Rules: A Community Perspective’ in CD Ehlermann and I Atanasiu (eds), European Competition Law Annual 2001: Effective Private Enforcement of EC Antitrust Law (Hart 2003) 187, 188. The difficulties in distinguishing between rights and remedies are further aggravated by the different common and civil law approaches: see S Prechal, ‘Does Direct Effect Still Matter?’ (2000) 37 CMLRev 1047, 1053–1054. See also J Jolowicz, On Civil Procedure (CUP 2000) 60, 61, 65–69, which points to difficulties in distinguishing procedural law, proceedings, and substantive law.

14  Van Gerven (n 13) 502. See also T Tridimas, The General Principles of EU Law (2nd edn, OUP 2006) 500–501, where he notes that based on the ubi jus, ibi remedium maxim, ‘the value of a right is determined by the legal consequences which ensue from its violation, namely the remedies available from its enforcement’.

15  M Ruffert, ‘Rights and Remedies in European Community Law: A Comparative View’ (1997) 34 CMLRev 307, 332–333. As common law countries emphasize remedies as rights protected by a cause of action, they seem to arrive at the same conclusion: Prechal (n 13) 1053–1054.

16  See van Gerven (n 13) 503 in a similar vein, who points to the Latin maxim ubi ius, ibi remedium as enshrined in the EU law principle of access to a court, which is also reflected in Articles 6 and 13 ECHR. Contra JS Delikostopoulos, ‘Towards European Procedural Primacy in National Legal Systems’ (2003) 9 ELJ 599, 611, arguing that ‘the fact that remedial rights are often—but not always—determined not by their own nature but by the nature of right which they serve to protect does not lead to a conceptual identity between right and remedy’.

17  M Tulibacka, ‘Europeanization of Civil Procedures: In Search of a Coherent Approach’ (2009) 46 CMLRev 1527, 1532 with further references to M Storme (ed), Approximation of Judiciary Law in the European Union (Kluwer Rechtswetenschappen 1994) 1; Jolowicz (n 13) 61.

18  The CJEU includes the Court of Justice, the General Court, and specialized courts. See Article 19(1) of the Treaty on European Union (TEU). In this book ‘CJEU’ refers only to the Court of Justice (ECJ) and the General Court (GC).

19  ‘Multi-level’ governance refers to the vertical relations between different levels of government. It also includes a ‘horizontal’ component, namely the relationship between private and public actors. S Smismans, ‘Civil Society and European Governance: From Concepts to Research Agenda’ in S Smismans (ed), Civil Society and Legitimate European Governance (Edward Elgar 2006) 3, 8.