EU strikes deal on new law to spur damages lawsuits

31 January 2017 9:56am

18 March 2014. By Lewis Crofts.

The EU’s three main institutions struck a deal this evening on the shape of new legislation aimed at helping the victims of price fixing sue for damages.

Negotiators agreed on a compromise to ensure that sensitive cartel information won’t be disclosed to plaintiffs. A further agreement covers how national judges should view cartel decisions reached in other European countries.

After a shorter-than-expected meeting tonight, representatives of the European Commission — which drafted the bill — members of the European Parliament, and the Greek ambassador representing EU governments agreed on the final form of the legislation.

The compromise provisions maintain a “black list” of whistleblower evidence that won’t be handed over to plaintiffs. But they allow national judges to review the documents, to ensure that they fall within the given category.

Under the compromise, cartel decisions in one EU state will also be given the weight of “prima facie” evidence before foreign judges.

The commission proposed the law in June 2013. The bill seeks to facilitate damages actions across Europe but also to protect whistleblowers, who are important in the fight against price fixing.

After a series of technical talks earlier this year, the three sides found common ground on many of the provisions in the law. But two main sticking points remained: how to protect the confessions of whistleblowers; and how judges in one EU country should view a cartel decision from another state.
The commission and EU governments were keen to create a “black list” that would protect from disclosure the confessions of whistleblowers and the voluntary submissions of companies seeking cartel settlements. This was crucial, they said, to ensuring that public enforcers could continue to hunt down price fixers.
Some lawmakers opposed such an absolute rule, saying it was illegal and could make claims more difficult.

This evening, all sides discussed a compromise under which a judge would be able to review documents to ensure that they fell within the “black list.” Although the judge wouldn’t be able to disclose the document, the review would act as a further judicial check.

This formulation was agreed on by all sides, participants told MLex after the meeting.

During discussions, EU governments had also watered down a provision that originally required a judge in, say, Hungary, to be bound by a cartel decision in, say, Slovakia. This endangered the independence of judges, the governments argued.

The commission said the provision was needed to ensure that cartel decisions, which were made in one country, weren’t disputed all over again before a foreign judge.

This evening, the EU’s three institutions agreed on a compromise under which a foreign cartel decision would count as “evidence,” but wouldn’t tie the hands of a judge.

“This is a very important step forward for the enforcement of competition policy,” EU antitrust chief Joaquín Almunia told MLex after the meeting.

“Public enforcement needs to be complemented by a strong private-enforcement legal framework,” he said. “It exists in some EU states, but we badly needed EUwide legislation for private enforcement.”

Andreas Schwab, a center-right lawmaker in charge of drafting the parliament’s version of the bill, told MLex: “We struggled to find the right balance, but in the end we did it.”

After tonight’s agreement, lawmakers and the Greek government must take the compromise back to their institutions — the European Parliament and EU Council respectively — for formal approval.

Tomorrow, the Greek government is expected to present the compromise to ambassadors. But they may need more
time to review the text in full.

Bernhard Rapkay, a center-left parliament member who shared responsibilities with Schwab on parts of the dossier, said he was “unsatisfied” with the outcome.

But he said he would need to look at the dossier as a whole to decide on the next steps.

The full assembly of the European Parliament is expected to sign off on the law next month. But if there is dissatisfaction on certain parts of the bill, some lawmakers could push the plenary session to vote again on some sections.

This could cover provisions dealing with curtailing the exposure of
whistleblowers to larger payouts, for example. There are said to have been some sharp exchanges on this point during the meeting.

Today’s agreement marks the last step in a lengthy discussion over whether Europe needs legislation to help the victims of anticompetitive lawsuits. This has featured several policy papers from the European Commission as well as a 2009 report from Schwab suggesting legislation action.

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