Almunia: EU Antitrust damages directive “most significant”

St. Gallen International Competition Law Forum Remarks Highlight Civil Competition-Law Enforcement & Cartel Victims’ Access to Evidence as Top-of-Agenda for Outgoing Commissioner

Joaquin ALMUNIA, Vice President of the European Commission responsible for Competition policy & enforcement, made the following (excerpted) remarks at the 2014 International Competition Law Forum held in St. Gallen.

From a practitioner’s perspective, the Commissioner’s emphasis on cartel victims’ access to evidence, his subtle reminder that the Directive merely sets a “minimum standard“, and the parallel observation that the upcoming collective redress Recommendation will be applicable across all policy (and legal) fields are important highlights of the prepared remarks.

I will start with the Directive on antitrust damages actions, which I regard as one of the most significant developments in the competition-policy domain in the current mandate.

Infringements of EU competition law are not only bad for the competitiveness of our economy. They also harm companies and consumers directly.

We recognise that every individual consumer and business has the right to be compensated for this damage. However, given the legal systems of EU countries, only a few victims obtain compensation in practice.

The time has come to translate our principles into actual practice.

Last year the Commission tabled a proposal to remove existing obstacles in national rules and make it easier for victims to obtain compensation across the EU through private enforcement.

The European Parliament and the Council have seized the opportunity and reached a political agreement with remarkable speed.

The Parliament voted the final text by an overwhelming majority, and the formal approval by the Council is expected before or shortly after the summer.

This outcome is a major success for a number of reasons.

First, from the perspective of victims, the Directive will make it easier for them to get hold of the evidence they need to prove the damage, because national courts will be empowered to order disclosure of relevant evidence.

The Directive also allows victims to rely on decisions taken by national competition authorities when these find an infringement.

Moreover, it introduces clear rules on several aspects of competition litigation, thus reducing the existing uncertainties, which have a cost for all parties.

From the perspective of the internal market, the Directive sets a minimum standard in all Member States, which means more legal certainty and a more level playing field throughout the EU.

Finally, from the perspective of competition authorities, the Directive fine-tunes the interaction between their work and the compensation claims by private parties. This is thanks to rules that preserve the incentives of companies to cooperate in antitrust investigations.

In parallel to the Directive, the Commission has also adopted a Recommendation inviting Member States to introduce collective redress mechanisms at national level by mid-2015.

The Recommendation includes basic principles that would ensure fair, timely and affordable procedures across the EU. The Recommendation is not limited to competition law but covers all policy fields.

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How a BRICS country defeats EU Commission & the rule of law

A parallel post from sister blog AfricanAntitrust.com:

South Stream pipeline

South Stream pipeline

According to various reports, the European Commission (specifically, its top management in the energy DG [Oettinger] and its president [Barroso], as well as others) has caved to the Russian energy powerhouse GAZPROM.

How does this relate to competition?  The pending antitrust investigation by Mr. Almunia, already hamstrung, is clearly hampered by this development from its adjacent energy DG. One Commissioner has caved, and another (a lame duck by now, who has already announced his retirement from the entire realm of politics) will not even bring a conclusion to his DG’s investigation into GAZPROM. Putin and his friends at the gas giant have (now successfully) challenged the European energy and competition ministers, effectively saying to them: “We will break your laws, and there isn’t a thing you can do about it.”

This is the story of how a BRICS country state-owned enterprise (or at least de facto SOE) is fully capable of defeating the “rule of law” that European proponents of the superiority of Western legal systems often tout. Is EU law hard and fast? Unbreakable? Strictly enforced? Without exceptions, for special friends (or powerful foes)?

Banana Republic Brussels

The answer to the rhetorical questions posed above is – quite clearly as of today at least – a resounding “no“:

The EU has caved. EU laws can be broken. Without any consequences.

Until recently, the GAZPROM contracts for its “South Stream” Project violated EU law, according to prior statements of the relevant EU Commissioners and their spokespeople. The main concerns (here from the energy perspective, not the competition issues) were:

  • ownership unbundling rules violated by Gazprom being both a producer and a supplier of gas that owns simultaneously production capacity and its own transmission network
  • 3d-party non-discriminatory access endangered by Gazprom being exclusive shipper
  • South Stream’s pricing structure violates EU energy tariff rules

Yet, after some diplomatic prodding and economic threats, the Commission now has changed its tune and is literally giving GAZPROM a “get-out-of-jail-free card.”

“Gunther Oettinger, the European Commissioner for Energy, told Vedomosti newspaper that Moscow and Brussels will find a solution to honor previous intergovernmental agreements Gazprom has made with European transit countries.” (Source: Vedomosti newspaper, as quoted by rt.com)

Contrast this with what Mr. Oettinger said back in 2011 (note that he also (1) called South Stream a “phantom project” and essentially didn’t believe the Russians would go ahead with its construction in 2012, and (2) was quite clear in his understanding of how market participants operate: “money talks,” baby!):

I understand that certain EU Member States entered into bilateral agreements with the Russian Federation which may partially contradict these principles. If this is true, these Member States will nevertheless have to apply the internal market rules and they are under an obligation to bring their IGAs in line with the EU legislation. (Source: His own speech)

Even more tellingly, contrast the green light now given to the project with Mr. Oettinger’s spokespersons’ statements from December 2013 and even August 2013:

“The Commission has looked into these intergovernmental agreements and came to the conclusion that none of the agreements is in compliance with EU law,” Borchardt said.

“That is the reason why we have told these states that they are under the obligation, either coming from the EU treaties, or from the Energy Community treaty, that they have to ask for re-negotiation with Russia, to bring the intergovernmental agreements in line with EU law,” he added. (Source: EurActiv)

Lesson (not) learned

How to wrap up a piece that essentially sounds the death knell of the rule of law in the EU, especially in Brussels? The key take-away here may be this:

Very simply put: any BRICS or BRICS-like country negotiator dealing with an official EU delegate as his or her counterparty should keep the “GAZPROM incident” in mind when faced with a lecture on the superiority and objectivity of EU law over whichever domestic judicial system may be at issue.