Monti to tackle courtroom crisis in competition cases

By Peter Chapman

Date: 09/09/04

MARIO Monti has had more than his share of bloody noses at the hands of judges in competition cases. But while the European Court of Justice (ECJ) and the Court of First Instance are full of appeals against competition rulings, Monti is keen to plug a hole elsewhere in Europe's court system.

He wants to make the national courts more effective in punishing the perpetrators of cartels and abusers of monopoly power.

To do that the Italian wants to make it easier for victims to seek and win damages in the member states for breaches of EU rules on competition.

Currently, most action on the competition front comes from the Commission or its national counterparts, who levy fines. "The threat of such litigation can have a strong deterrent effect and result in a higher level of compliance with the competition rules," Monti told a conference in Dublin, in April.

However, a Commission-funded study by law firm Ashurst shows just how far away this vision is.

The report, released this week, says there is little experience in member states of citizens or companies taking legal action. Damages were only awarded in "around two dozen cases" in the old EU-15. The countries with most experience, Italy and France, only had four or five cases each.

Co-author Denis Waelbroeck says the reasons for the justice deficit can be boiled down to a handful of key problems.

First, he says, is the legal uncertainty facing companies or citizens making a complaint to national courts. Feeding this is the courts' lack of experience and interest in competition issues, not to mention competence, in many member states - although the UK, for instance, has set up a special competition tribunal.

Given the high costs of going to court, companies are often loath to take legal action if they are uncertain about the process, let alone the outcome.

Another trouble-spot is the lack of rules guaranteeing plaintiffs "pre-trial disclosure" of documents from the defence pertaining to their case. Many jurisdictions limit the amount of information that plaintiffs can see. For example, in Belgium, they can only request documents that they can identify in advance.

Winning a court case is hard without evidence of a "smoking gun" - such as a memo between cartel members.

Even if you can convince a court that a cartel exists, problems still abound if you want to win compensation, says Waelbroeck.

Unlike in the US, many member states allow the defence to argue that the corporate victims of anti-competitive behaviour were able to "pass off" the extra costs to consumers.

And, finally, even if you win your case, the levels of compensation (usually limited to the amount of harm that was inflicted) may not make the battle worth the hassle. In the US, treble damages are the norm.

Monti plans to grapple with these issues in a forthcoming green paper on the obstacles facing private litigants. In the meantime, his aides are keeping their options open.

"Commissioner Monti has been saying for some time that the European competition rules will be fully effective only if would-be cartel members are subject to private claims as well as regulatory fines - no matter how high the latter have become," said spokeswoman Amelia Torres.

"The study confirms what we already knew, which is that private enforcement is lagging a long way behind public enforcement," she added.

Potential solutions range from tinkering at the edges to radical surgery, says Waelbroeck. Tinkering would include improving the publicity of court judgements and offering judges special training in competition cases.

More radically, the Commission might call for treble damages or for member states to create specific competition courts. But the experts say radical solutions would be harder to pass than changes to the law governing competition.

Monti will be gone from the Commission by the time concrete proposals, if any, are launched. His successor, "nickel Neelie" Kroes may have to live up to her nickname if she is to instigate major reforms.

A Commission-funded study by law firm Ashurst has revealed that the under the present conditions claims for damages in case of infringement of EC competition rules are very rarely made by individuals or companies.

European Commission: DG Competition: Anti-trust: Other documents: Private enforcement http://ec.europa.eu/competition/antitrust/overview_en.html

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