Does the drive to encourage private enforcement of EU Competition Law have a coherent purpose?

Professor Andreas Stephan
University of East ­­Anglia

Much has been written about the EU Damages Directive (2014/104), which has now been implemented in most EU Member States. It has been criticised for not going far enough and failing to address key obstacles that exist at the national level, which make it difficult for consumers and businesses to seek compensation and injunctive relief. Competition Law damages can only be sought in national courts and so there are still significant differences between EU Member States despite the provisions of the Directive. The Directive itself was the product of a decade long consultation process that focused largely on practical challenges to private actions and their effect on public enforcement.

This paper argues that, as well as failing to fully address key issues identified in the consultation process, the EU’s approach to private enforcement lacks a coherent purpose. The original motivation was shaped in part by a comparative glance at the US, where private actions in Antitrust are very common. But in the US, private actions are unequivocally driven by deterrence, as reflected in the availability of punitive treble damages. In Europe, by contrast, the debate originally focused on both the deterrence and compensatory benefits of such actions, but slowly moved away from the latter as the debate on practical obstacles developed. By the time the Damages Directive was adopted, its purpose was primarily restorative justice.

The paper seeks to explain why this shift in emphasis occurred and asks whether private actions that do little more than encourage parties to recover actual losses, are worthwhile given that most actions will rely on outcomes of public enforcement actions (follow-on cases) and may risk undermining those actions.