Toespraak Eurocommissaris Kroes van Mededingingsbeleid bij diner van de Europese Consumenten Organisatie (en)
SPEECH/08/212
Neelie Kroes
European Commissioner for Competition Policy
Consumers at the heart of EU Competition Policy
Address at BEUC dinner (The European Consumers' Association)
Strasbourg, 22nd April 2008
Honourable Members,
Ladies and gentlemen,
It gives me great pleasure to be here tonight to discuss consumer matters, and particularly the Commission's White Paper on antitrust damages actions with you.
In this age of the global economy, the fight to promote consumer rights is one of the great battles of our age
Defending consumers' interests is at the heart of the Commission's competition policy. In concrete terms: competition gives citizens better goods and services, and ensures businesses have more opportunities to sell them.
In the last year there have been some good examples – from Microsoft's dramatically reduced royalty rates, to wins for Telefonica and Mastercard customers.
In fact, we calculate that the direct future customer savings resulting from our cartel, antitrust, liberalisation and merger cases in 2007 alone, is at least 13.8 billion euros. About 30 euros in the pocket for each of Europe's 500 million citizens. And then there are obvious deterrent effects we cannot put a price on.
Another thing we can't yet put a price on is justice.
Justice is a core value of our societies. Victims of competition law infringements have been waiting for justice for far too long in Europe. They are still waiting.
While we work hard for consumer interests in public enforcement, gaps and flaws in our legal system mean victims of competition law infringements are foregoing not just millions – but billions in compensation.
There are serious obstacles in most EU Member States that discourage consumers and businesses from claiming compensation in private antitrust damages actions. As people with political voices at a European level we, and our counterparts in the Member States, are under a duty to find a way to compensate the victims.
And as I hope to outline tonight, we are only going to achieve a solution if you show your support.
The issue at stake
Infringements of competition rules causing harm to consumers are an every day occurrence. That is well known to BEUC members, but to MEPs I say that this is bread and butter issue affecting your constituents. But it is not only individual consumers who are hurt - it is also the law-abiding companies who face competitive disadvantages compared to their lawbreaking competitors who suffer, and it is ultimately the society at large who pays the bill as infringers cream off the extra profits.
It is clearly unjust, and goes against our shared objective of making Europe more competitive.
The White Paper
The European Court of Justice has been very clear: victims of competition law infringements have a right to damages and they must have a realistic chance to enforce this right. The White Paper which the Commission adopted three weeks ago presents various measures that would make effective compensation a reality, not just a right that exists on paper.
The specific policy recommendations set out in the White Paper are based on several years of research, internal reflections, and public discussions and consultations. They take into account the extensive impact assessment study by independent experts that the Commission established. We have now moved past the question of 'should we have a more effective system of antitrust damages actions?' It is clear that something needs to be done. The question now is, and we address this in the White Paper, how a damages action system can be made effective in an appropriate manner.
The White Paper covers the wide range of problems that one faces when bringing a damages action for competition law breaches. These include, for example, difficulties in relation to access to evidence, standing in court, and the proof of the damage suffered. And there is, of course, the issue of collective redress. Let me be clear on this: collective redress is just one element of a package of measures crucial for effectively compensating victims of competition law infringements. But these various measures depend on each other. Take away collective redress and the rest of the package would be worth little; rely only on collective redress and we’d still be failing victims.
Proposals on collective redress in White Paper
Given the costs of bringing a damages action in the competition field and the uncertainty in the outcome, the balance of risk and reward is often unfavourable to consumers. This concerns victims whose damage is of low-value and scattered among numerous individual consumers or small businesses. This is due to the costs, delays and burdens involved in such actions, compared to the value of their individual claim. One would not spend thousands of euros to claim back only 50 euros, for example. Moreover, sometimes the victims are not always aware of the existence of an infringement, often secret or difficult to appreciate, or of the extent of the losses they suffered due to this infringement.
So these victims rarely if ever go to court - a very rational reaction on one level, but one that means no compensation for the consumers, and no action against the illegal gains for the companies concerned. This is why the White Paper includes suggestions for collective redress mechanisms. Such a mechanism is essential if we are going to deliver access to justice in an efficient manner. On this latter point, I believe that the representatives of UFC Que Choisir present tonight can easily confirm that over 10 000 separate individual actions is highly inefficient for all involved, the claimants, the defendants and not least the court.
Not everyone likes the idea of more court proceedings. But what is better? 10,000 cases heard before a judge or one group claim? Of course out-of-court settlements can be even simpler, fairer and cheaper than just one court case, but what if the company is not willing to settle? Out-of-court settlements can only really work if they are coupled with a realistic chance of effective court action. That threat must be real if we are to achieve fair settlements.
For competition cases, the Commission suggests, in the White Paper, a combination of two complementary mechanisms: (1) representative actions, which are brought by qualified entities certified for this purpose by the Member State concerned, and (2) opt-in collective actions, in which victims expressly decide to combine their individual claims for harm they suffered into one single action.
In relation to the first type of collective redress, representative actions, I do not have to look far for suitable entities. Consumer associations are obvious candidates to represent victims in this way. And I am very interested to hear from you tonight about your reactions to that opportunity for consumer associations. The opportunity to represent victims in such cases may well change some of your operations? Is this something you are prepared for? Could we make it simpler for you? These sorts of questions will make for interesting dinner conversation!
But we should also not forget business victims. This is why the White Paper mentions the possibility of for example trade associations being authorised by the Member State to bring representative actions on behalf of their members.
The second type of collective redress proposed in the White Paper is opt-in collective actions. This complementary mechanism is necessary because representative entities will not always be able or willing to pursue every case.
Consumer associations have - as many of you will know all too well - limited resources. Trade associations may face the additional problem of conflicts of interests, for instance where some of its members were part of a cartel and others suffered damage. There must therefore be an alternative form of collective redress to representative actions by which victims of competition law infringements combine their individual claims for harm they suffered into one single action. But let me be crystal clear on this: we are not proposing an American-style opt-out class action, where basically anyone can bring a claim on behalf of a group of unidentified victims, who are in the boat unless they explicitly decide to be out. What the White Paper proposes is an opt-in collective action, where victims have to actively decide whether or not they want to be part of the action. Besides, much of the US class action litigation excesses in competition cases is due to other factors such as treble damages, jury trials, contingency fees and overly broad and burdensome pre-trial discovery. None of this is part of the White Paper’s proposals.
Also, we have designed our representative action proposals to guard against excessive litigation and the risk of abuses. Member states will be able to issue the mandate to bring representative actions to trustworthy entities only. The mandate must not be given to an uncontrolled litigation vehicle set up by lawyers who may be pursuing primarily their own financial interests. The body in charge of representative actions must rather be an entity that acts exclusively for the protection of legitimate and defined interests (e.g. consumer interests). The threat of a withdrawal of the mandate to bring representative actions by the Member State acts as an additional safeguard against abuses of the mandate.
You may be asking: 'how does the White Paper fits into the bigger picture?' To answer that question, we see the White Paper as part of the Commission’s wider initiative to strengthen collective redress mechanisms in the EU; and they may develop further within this context. I will continue my close relationship with Meglena Kuneva on all issues concerning consumers and competition.
Recalling the guiding principles behind the White Paper
I will not monopolise your time much longer! Let me conclude by briefly recalling the main guiding principles behind the White Paper:
Our first and foremost objective is full compensation for victims. Member States and the Commission will have to work together on this. But with the balanced way forward that is offered, rooted in European legal cultures and traditions, we can do it. And crucially we remain committed to strong public enforcement of the competition rules. I can assure you this White Paper is not going to soften our approach to our existing work, we will remain tough with fines.
The next steps
But we have a long way to go with this White Paper. If you want to see it benefit consumers, benefit your constituents, and then you will need to make your voice heard.
Your valuable input after our Green Paper added considerably to the White Paper you see today.
I hope we can work as well together in the coming months. This work will make a real difference for many people and businesses – your constituents and the members of your organisations – so let's make it a positive difference.
I am happy to address any questions you may have now, or later in the evening.
Thank you.