textIn this thesis, insights of the law and economics literature were collected in order to develop the features of an optimal group litigation concerning the deterrence of European Competition Law violation and these were then compared to the proposals of the European Commission in the White Paper on damages actions. 

Chapter 1 and 2 provide the basis for the analysis conducted in remainder of this thesis. Chapter 1 provides an overview of the enforcement of European Competition law including the rationale of European Competition Law, the debate about private versus public enforcement in general, and the discussed legal changes to enhance private enforcement. Chapter 2 provides the economic and legal framework used to analyse the efficiency of group litigation mechanisms with regard to deterrence of competition law infringements. This structure is mainly based on economic insights and knowledge developed in the Law and Economics literature. Such an economics based approach entails a choice as to the goal to be pursued by private enforcement to be that of deterrence of unlawful conduct, in this specific case, the (inefficient) breach of competition law and the focus on total welfare. Therefore the insights of the theories on optimal deterrence are applied to the setting of private enforcement of competition law. 

Using the economic framework laid out in Chapters 1 and 2, in Chapter 3 turns to two necessarily slightly abstract forms of existing group litigation mechanisms, i.e.. collective actions and representative actions. These different actions were analysed with regard to their potential to achieve deterrence. Outcomes resulting from an initial analysis showed that the optimal group litigation mechanisms from the point of view of society at large (total welfare approach), would be a stand-alone action brought in the form of a mandatory group litigation, including all losses caused to society at large. The main arguments for that outcome are that to reach optimal deterrence, the penalty imposed on the infringer, in the form of damages to be paid, should be based on total harm caused to society, and therefore include all losses caused to all different members of society. This leads to the conclusion that the optimal group litigation should incorporate all individual losses in one proceeding, to be (cost-) efficient. Therefore, and because free riding problems can be eliminated, the optimal system would be a mandatory one, rather than opt-in or opt-out mechanism. It is shown that stand alone actions are to be preferred over follow-on actions from an efficient deterrence perspective, as only the former increase the rate of detection. This is important as it is increased detection that decreases the amount of the optimal sanction, which otherwise may be prohibitively large, and also when the availability bias leads to a greater value of the risk of detection compared to an increase in the damage awards, i.e. the imposed monetary penalties. Follow-on actions merely contribute to the amount of sanction faced by the infringer when public fines are too low to deter. However, it would be more (cost) efficient in such cases, where the public fine is too low, that the public fine be instead raised sufficiently. Therefore, the analysis continued focusing on mandatory stand-alone group actions.

In the analysis of the two abstract forms of existing group litigation systems of collective and representative actions, problems and obstacles to private litigation for damages specific to certain types of breaches of European Competition Law were taken into account. The analysis suggests that neither collective nor representative actions will be the optimal group litigation mechanism in the sense of the best group litigation to reach the goal of efficient deterrence, unless the existing systems were to be substantially altered. Problems specific to collective actions, such as the necessity of one of the victims (lead plaintiff) to become active on behalf of himself and other victims of the infringement, render that particular system of bundling similar claims into one procedure less efficient. This is especially so in those cases where the information asymmetry on the side of the victims is large. One way to reduce such problems would be to motivate the lawyer representing the group of victims to become the actual driving force and the active party. However, as the analysis shows, problems and large inefficiencies occur when the collective action is not adequately and explicitly designed to have a lead lawyer, rather than a lead plaintiff. Similar outcomes result in the analysis of representative actions brought by associations on behalf of the victims. 

One particular necessity crystallised out of this analysis: the incentives given to the acting agent need to be adequately taken into account and designed in any form of group litigation. In cases where typically individual victims (such as end consumers) will not be the acting agent themselves, this insight has large implications for other goals which one may pursue, such as complete compensation of individual losses of these victims. This important insight is the corner stone of the idea of a market based approach to private enforcement, where agents compete with each other for detection and litigation of competition law infringements. As has been shown, such a market may heal many of the problems and inefficiencies that would remain in the two stylised forms of existing mechanisms described before. Such a market with competing enforcement agents would, however, face similar problems as those unearthed in the discussion of the economic analysis of competition in research and development. Both are characterised by large upfront investments that are necessary in order to gain profits that are highly uncertain. Therefore, under a first-come, first-served mechanism, there will be many resources wasted in the competitive process. Solutions to these market failures presented included the use of auctions for the right to litigate after detection of a certain infringement has taken place. This solution would not only increase the efficiency of the market idea in general, but also those of other systems of collective actions or representative actions when characterised by strong competition and races to the courts. 

After the features of the theoretical optimal system of group litigation with regard to deterrence were determined, the insights gained are used in Chapter 4 to compare and discuss the efficiency of the Commission’s proposal against this benchmark. The analysis shows that the proposed mechanisms do not reach the potential efficiency of the theoretical optimal solution developed in the previous Chapter. This result was no surprise, as the starting point or goal to be achieved though private enforcement in the Commission’s point of view, is presumably not deterrence - at least not the dominating one. Moreover, while the theoretical analysis in Chapter 3 focuses on stand-alone actions, the Commission wants to encourage follow-on actions in addition to stand-alone actions. The examination nevertheless highlights the inefficiencies, necessary trade-offs, and some of the costs imposed on society should those particular mechanisms suggested by the Commission be chosen. These considerations are also relevant for follow-on actions and for achieving other goals. A discussion of the goals other than deterrence also shows that even these goals may not be achieved to the highest degree possible. After all, the choices made by the Commission can be interpreted to stem from compromises made in the issues (e.g. the goals) themselves and in the political arena (e.g. taking harmonisation and implementation costs into account).

The fifth Chapter illustrates the basic features of three selected legal systems, i.e., the group litigation mechanisms as developed in the US, UK and Germany. These are then compared to the features of the theoretical optimal solution developed in Chapter 3. As these existing mechanisms deviate substantially from the theoretical benchmark, they are unlikely to achieve the optimal deterrence results the optimal group litigation mechanisms are argued to achieve. However, the stark differences between the developed systems and their experienced effectiveness and difficulties provide some partial support to the insights gained in the theoretical part of Chapter 3. In very broad terms, it seems that less attention was paid to the question of who would actually have incentives to become active under the current systems, and which problems might occur and what possible regulative remedies to these might be enacted, the less effective the systems turned out to be. This outcome would also hold, if the goal to be achieved would be anything other than deterrence, for example corrective justice as compensation of individual victims. If the incentives structures that the economic analysis highlights are neglected neither deterrence not compensation can be achieved in any efficient or even just effective way.

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Group Litigation in European Competition Law: A Law and Economics Perspective

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Side effects of the modernisation of EU competition law : Modernisation of EU competition law as a challenge to the enforcement system of EU competition law and EU law in general

This dissertation examines the case for harmonising some national rules, relating to the law of damages and civil procedure, which are applied to national proceedings for compensation of losses resulting from breach of Articles 101 and/or 102 TFEU.

Before answering whether such rules should be harmonised, the dissertation examines the broad policy rationale behind private enforcement of competition law, its goals and limits. The findings are that private enforcement plays a positive role both to compensate antitrust victims and deter undertakings from breaching competition law. This provides a sound policy for harmonisation of private enforcement rules.

Subsequently, the dissertation examines the main arguments against and for harmonisation. It is argued that the case for harmonisation is more convincing than the case against. Then, the arguments for harmonisation are tested in respect of some national rules that play a pivotal role in national competition law proceedings. Although few antitrust actions are brought, it is suggested that some national rules might not comply with the EU principle of effectiveness. In
addition, even if such national rules did comply with this principle, the risk of forum shopping and the problem of excessive disparity of the level playing field are likely to materialise. Thus,harmonisation of private enforcement rules is desirable.

The harmonisation of the law of damages and its procedural rules for breach of European competition law: a critical analysis

This report describes the questions a Dutch civil court will ask in assessing the liability of a Dutch legal person for involvement in the violation of fundamental, internationally recognised rights. It focuses more specifically on the liability of a Dutch legal person for subsidiaries operating abroad.

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The legal liability of Dutch parent companies for subsidiaries’ involvement in violations of fundamental, internationally recognised rights

I took the distance learning Postgraduate Diploma and MA at King’s College London during the academic years 2007/2009. 
My dissertation considered the interaction between public and private enforcement of the competition rules, and in particular the implications for private actions of alternative enforcement procedures – i.e. leniency programmes, commitments and settlement procedures. 
In the drafting of what would become Directive 2014/104/EU on antitrust damages actions, this issue raised complex policy problems: the European Commission was, in principle, in favour of more private claims for damages, and did not want a system of settlements to render private actions more difficult. 
In 2009, this dissertation took part to the debate: it surveyed a range of evidential, procedural and substantive issues, and expressed opinions on how best to reconcile the settlements procedure and the position of claimants in civil litigation. 
In the first part, the dissertation analyses the context in which the studied interaction materializes by: underlining the main goals and characteristics of the three alternative enforcement procedures; emphasizing briefly the main goals and current issues of damages actions; presenting the key recommendations of the Commission White Paper; and assessing the tension between alternative enforcement procedures and . 
In the second part, the dissertation analyses and assesses the solutions offered by the Commission White Paper to find a balance between alternative enforcement procedures and private enforcement by: identifying the theoretical and practical obstacles to damages actions that alternative enforcement procedures imply; and assessing, in relation with alternative enforcement procedures, the solutions identified in the Commission White Paper. The proposed solutions were often insufficient to remove obstacles to the development of damages actions 
This research was presented and discussed with DG COMP and to university professors. 
Member States needed to implement Directive 2014/104/EU on antitrust damages actions in their legal systems by 27 December 2016. 
In 2017, the impact of alternative enforcement procedures on damages actions is still being discussed and I have been asked to publish this dissertation to help feeding the reflexion of competition law specialists. I would be delighted if such was the case.

The Impact of Alternative Enforcement Procedures Under EC Competition Law on Damages Actions

• Those who have suffered economic damage because of someone else’s illegal activities should not only have the right, but also a realistic prospect of actually getting compensation. Member States that do not live up to the principles laid down by the ECJ should be requested to reform their systems. Other than that we feel subsidiarity should apply, due to Member States’ procedural autonomy, the diversity of legal traditions, and the delicate balance of national civil justice systems.

Henk Snijders

Papers

The White Paper on Damages Actions for Breach of the EC Antitrust Rules

Inspiration From Above: Making and Interpreting Dutch Law on Jurisdiction in Civil and Commercial Matters in Light of European Law