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REUTERS

E.U. lawmakers smooth way for class actions against cartels

April 17, 2014 - 11:49am


(Reuters) — European lawmakers on Thursday eased the way for cartel victims to claim compensation from companies under new rules that also shield price-fixing whistleblowers from being the main target of million-dollar lawsuits.

The green light from the European Parliament came nine years after the European Commission broached the idea, seeing it as an additional tool, on top of fines, to deter companies from breaking antitrust laws.

According to the commission, only one in four cartels and antitrust infringements faced damages claims in the last seven years. Its 2010 estimate put the cost of unrecovered damages of infringements at over €20 billion ($27.77 billion).

The rules, drafted by the E.U. competition authority, need the blessing of the 28 European Union countries before they can come into force.

At least 16 E.U. countries currently allow cartel victims to sue for compensation, but procedural obstacles, the high cost of litigation and the difficulty of getting evidence of price-fixing mean few victims actually take action.

The new E.U.-wide rules set common standards and minimum requirements across the bloc. European Competition Commissioner Joaquin Almunia welcomed the lawmakers' vote.

"The directive will help to make the right to full compensation a reality in the E.U., by removing the practical obstacles that victims face today," Mr. Almunia said in a statement.

"When the directive is adopted and implemented, obtaining redress will become easier for them, especially after a competition authority has found and sanctioned an infringement."

The new rules are fairly lenient towards whistleblowers, said Bernd Meyring, a partner at law firm Linklaters.

"The fact that whistleblowers have often been the first victims of damage claims is counterbalanced by a limitation of their liability to their own customers. This should further strengthen the incentives to apply for immunity," he said.

Whistleblowers have been crucial in helping the commission uncover price-fixing in areas ranging from financial market benchmarks to TV monitor tubes and vitamins, resulting in fines of more than €22 billion ($30.55 billion) in the last 14 years.

Under the new rules, cartel victims will be barred from getting access to documents with evidence of wrongdoing provided by whistleblowers.

The rules also contain safeguards against abusive litigation, massive payouts and law firms and third-party funders hunting for potential claims and claimants, to avoid creating a U.S. style litigation culture.

 



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