Economic and Legal Aspects of the Planned Damages Actions for Breaches of Ec Antitrust Law

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Abstract:

This paper investigates the planned damages actions for breaches of EC antitrust law in order to assess their impact on consumer welfare. It first examines the current legal situation and concurs that the European Union needs to regulate damages actions for breaches of EC antitrust law so that a higher number of consumers could be compensated for their losses. This paper then discusses the main legal provisions proposed by the Commission in the Green and in the White paper on damages actions for breaches of EC antitrust law. The analysis of these proposed legal provisions is done using arguments specific to the economic analysis of law. It is demonstrated that most of these proposed legal provisions will enhance consumer welfare but that there are also proposed legal provisions which will damage consumer welfare. The paper concludes that the planned damages actions for breaches of the EC law will be an improvement compared to the current situation. However, the Commission should amend some of the proposed legal provisions in order to help consumers further.

Keywords: antitrust law, White Paper, EC law, consumer welfare

INTRODUCTION

Competition policy is one of the main areas of European Union law because it affects every citizen and undertaking in the European U nion since they are all consumers. The role of competition law is to ensure that competition between several undertakings exists on the market. Competition is beneficial for all types of consumers because it ensures a greater choice of products and lower prices. If only one undertaking were present on a market, that undertaking would decrease its production in order to increase prices and thus obtain a monopolistic profit which would harm consumers. Due to this wide impact, breaches of EC competition law harm a great number of consumers and thus decrease consumer welfare. The damage done to consumer welfare by breaches of EC competition law is difficult to measure but the Commission publishes estimates. For example, in the period 2005 - 2007, the economic harm caused to consumers by cartels was estimated to amount to 7.6 billion euros1. The problem is that the victims of these infringements are rarely compensated for their losses2. In order to change this, the Commission has proposed to regulate damages actions for breaches of EC antitrust law at the European Union level.

Enhancing consumer welfare is one of the reasons for regulating competition law in the European Union3. Allowing consumers to introduce damages actions for breaches of EC antitrust rules and to be compensated for their losses is in accordance with this objective. However, there is no standardized way of regulating these actions and thus the Commission must choose between several options available for each legal aspect. This paper will investigate the impact on consumer welfare of the choices proposed by the Commission. The importance of this topic at the present time is given by the fact that the consultation process has ended and the Commission is planning to introduce a legislative proposal. This legal act will affect millions of consumers and, depending on its provisions, the consumers might be better or worse off than before its adoption. Due to space limitations, this paper will provide only an overview look of the proposed changes and their implications without analyzing every legal provision and its effect. The method used is the analysis of legal documents, in particular the Green and the White Paper published by the Commission, using arguments specific to the economic analysis of law. It will be shown that the planned damages actions for breaches of the EC law will be an improvement compared to the current situation. However, the Commission should amend some of the proposed legal provisions in order to help consumers further.

In order to answer the research question, the first part of the paper looks at the actual content of the EC antitrust rules and the current legal provisions and principles applicable to damages actions for breaches of these provisions. …

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