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E.U. to pave way for class actions against cartels

Posted On: Jun. 6, 2013 12:00 AM CST

(Reuters) — E.U. antitrust regulators will unveil draft rules next week aimed at helping victims claim compensation from price-fixing cartels, seeing private lawsuits as an additional tool, on top of fines, to deter companies from breaking antitrust laws.

Sixteen countries, including Germany, France, Britain, Spain, Italy and Poland, currently allow victims to sue for damages. However, private lawsuits are rare in Europe because of the disparate rules and procedures in the different countries.

Unrecovered damages of infringements of E.U. antitrust law amount to more than €20 billion ($26 billion) a year, according to an estimate by the European Commission three years ago.

The draft proposal by the European Commission sets common standards and minimum requirements for the 27-country bloc, a Commission document obtained by Reuters said.

"The purpose of this recommendation is to facilitate access to justice, stop illegal practices and obtain compensation in mass harm situations caused by violations of E.U. rights," the paper said.

Antoine Colombani, spokesman for competition policy at the Commission, declined to comment.

The draft rules 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.

These include allowing only state-appointed nonprofit bodies or public agencies to act on behalf of victims and letting claimants decide whether to take action under the opt-in principle.

An opt-out system as practiced in the United States allows for class action lawsuits for a generic group of customers.

A "loser-pays principle," regulated contingency fees and a ban on punitive damages also aim to deter frivolous and abusive lawsuits.

The draft rules show the Commission has attempted to balance conflicting demands from various groups and businesses, said Gerwin Van Gerven, a partner at Brussels-based law firm Linklaters.

"Modest is maybe the right way to describe the proposal. The Commission had built in a number of constraints to avoid U.S. excesses and that is the way to go," he said.

EU Competition Commissioner Joaquin Almunia is expected to unveil the proposals on June 11.