Time is Money-But How Much Money Is Time? Interest and Inflation in Competition Law Actions for Damages

• Author: Eckart Bueren, Kai Huschelrath, and Tobias Veith
• Position: Senior Research Fellow, Max Planck Institute for Comparative and International Private Law, Hamburg, Germany/Head, Competition and Regulation Research Group, ZEW Centre for European Economic Research; Director, MaCCI Mannheim Centre for Competition and Innovation; Professor of Economics, University of Mannheim, Germany/Professor of Economics, ...
• Pages: 271-336

TIME IS MONEY—BUT HOW MUCH MONEY IS TIME?

INTEREST AND INFLATION IN COMPETITION

LAW ACTIONS FOR DAMAGES

E

CKART

B

UEREN

K

AI

H

¨

USCHELRATH

T

OBIAS

V

EITH

*

Private enforcement of competition law is on the rise worldwide.

1

In the

United States, it has grown since the 1950s to become a major enforcement

tool.

2

In Europe, private actions for damages have been at the heart of the

legal and policy debate since the Court of Justice handed down the ground-

breaking

3

Courage judgment,

4

spurring reform initiatives by the European

* Eckart Bueren is Senior Research Fellow, Max Planck Institute for Comparative and Inter-

national Private Law, Hamburg, Germany. Kai H¨uschelrath is Head, Competition and Regulation

Research Group, ZEW Centre for European Economic Research; Director, MaCCI Mannheim

Centre for Competition and Innovation; Professor of Economics, University of Mannheim, Ger-

many. Tobias Veith is Professor of Economics, University of Applied Sciences, Rottenburg,

Germany. The authors thank Professor Ulrich Magnus, Walter Doralt, Professor Florian Bien,

Maˆıtre en Droit, and Detlev Witt for helpful discussions on aspects of English, French, and U.S.

law and Gregory K. Leonard and Andreas Reindl for very valuable comments on earlier versions

of the article. Kenny Koa provided valuable research assistance. H¨uschelrath and Veith were

involved in a study on cartel damage estimations which was financially supported by Cartel

Damage Claims (CDC), Brussels. The study is published in German: K

AI

H

¨

USCHELRATH

, N

INA

L

EHEYDA

, K

ATHRIN

M

¨

ULLER

& T

OBIAS

V

EITH

, S

CHADENSERMITTLUNG UND

S

CHADENSERSATZ

BEI

H

ARDCORE

-K

ARTELLEN

:¨

O

KONOMISCHE

M

ETHODEN UND RECHTLICHER

R

AHMEN

(2012). The

present article is the result of a separate research project. Funding by the State of Baden-W¨urt-

temberg as part of the Mannheim Centre for Competition and Innovation (MaCCI) grant is grate-

fully acknowledged.

1

Daniel L. Rubinfeld, Antitrust Damages,in R

ESEARCH

H

ANDBOOK ON THE

E

CONOMICS OF

A

NTITRUST

L

AW

378 (Einer R. Elhauge ed., 2012); David Romain & Ingrid Gubbay, Plaintiff

Recovery Actions, 3 E

UR

. A

NTITRUST

R

EV

. 47, 49–50 (2011).

2

For in depth analysis, see Reza Rajabiun, Private Enforcement and Judicial Discretion in

the Evolution of Antitrust in the United States, 8 J. C

OMPETITION

L. & E

CON

. 187, 192–93,

205–06, 211–18 (2012).

3

Alexander Italianer, Dir.-Gen., Directorate Gen. of Competition of the Eur. Comm’n, Re-

marks at the 5th International Competition Conference: Public and Private Enforcement of Com-

petition Law (Feb. 17, 2012).

4

Case C-453/99, Courage Ltd. v. Crehan, 2001 E.C.R. I-6297.

271

272

A

NTITRUST

L

AW

J

OURNAL

[Vol. 81

Commission

5

and several Member States

6

to facilitate private actions for

damages.

5

The latest reform package at the European level comprises a directive of the European

Parliament and the Council on certain rules governing actions for damages under national law for

violations of the competition law provisions of the Member States and of the European Union.

See infra Part II.B.2.b.

For a critical review of earlier Commission initiatives, see Jindrich Kloub, White Paper on

Damages Actions for Breach of the EC Antitrust Rules: Plea for a More Holistic Approach to

Antitrust Enforcement, 5 E

UR

. C

OMPETITION

J. 515, 516–18, 532–45 (2009).

6

Clifford A. Jones, Editorial, After the Green Paper: The Third Devolution in European

Competition Law and Private Enforcement, 3 C

OMPETITION

L. R

EV

. 1, 2 (2006). In the United

Kingdom, important private enforcement reforms have entered into force on October 1, 2015 as

part of the Consumer Rights Act 2015. In particular, the Act has (1) introduced a new regime for

collective proceedings that allows for opt-out collective actions as well as opt-in collective ac-

tions, (2) widened the jurisdiction of the Competition Appeal Tribunal (CAT) and granted it

additional powers, most notably to apply a fast track procedure for follow-on damage claims and

to grant injunctions, and (3) empowered the Competition and Markets Authority to approve vol-

untary redress schemes. See generally Lucy Davies, Consumer Rights Act 2015: Reforms to

Damages Litigation in the UK for Infringements of Competition Law, O

LSWANG

(Apr. 22, 2015),

www.olswang.com/20547.aspx (including related posts); Emily Clark & Ruth Sander, Navigat-

ing the Quantum Minefield in Cartel Damage Cases, 6 J. E

UR

. C

OMPETITION

L. & P

RAC

. 153

(2015); Marianne Charrier & Gordon Downie, UK and EU Developments in Collective Action

Regimes for Competition Law Breaches, 35 E

UR

. C

OMPETITION

L. R

EV

. 369, 369–75 (2014);

Stephen Wisking et al., Competition Law Class Actions, C

OMPETITION

L. I

NSIGHT

, Mar. 19,

2013, at 3–5; D

EP

’

T FOR

B

US

. I

NNOVATION

& S

KILLS

(UK), P

RIVATE

A

CTIONS IN

C

OMPETITION

L

AW

: A C

ONSULTATION ON

O

PTIONS FOR

R

EFORM

—G

OVERNMENT

R

ESPONSE

(Jan. 2013),

www.gov.uk/government/uploads/system/uploads/attachment_data/file/70185/13-501-private-

actions-in-competition-law-a-consultation-on-options-for-reform-government-response1.pdf.

In France, the legislature has recently inserted an opt-in group claim mechanism for consumer

damages in Art. L. 623-1 to Art. L. 623-32 of the French consumer code, the Code de la consum-

mation (Ccons.). The amendment, which was brought about as part of the Loi n

°

2014-344 du 17

mars 2014 relative `a la consommation (“loi Hamon”), published in the Journal Officielle de la

R´epublique Fran¸caise, n

°

65 du 18 mars 2014, 54, is (inter alia) to promote claims for damages

in cartel cases (cf. Art. L. 623-1 Nr. 2 et Art. L. 623-24 to Art. L. 623-26 Ccons.). See generally

Class Actions: La France Comble Enfin Son Retard, P

ETITES

A

FFICHES

, Mar. 25, 2014 (Ozan

Akyurek ed.) (special issue of articles); Stephanie Rohlfing-Dijoux, Reform des Verbraucher-

schutzes in Frankreich durch die Einf¨uhrung einer Gruppenklage in das franz¨osische Recht,

2014 E

UROP¨

AISCHE

Z

EITSCHRIFT F¨

UR

W

IRTSCHAFTSRECHT

[E

U

ZW] 771; Kami Haeri & Benoit

Javaux, France,in T

HE

I

NTERNATIONAL

C

OMPARATIVE

L

EGAL

G

UIDE TO

: C

LASS AND

G

ROUP

A

CTIONS

2016 § 1.2 (Glob. Legal Grp. ed., 2015). Further reforms to facilitate private actions for

damages will be brought about following the adoption of the bill for the “loi relatif `a la transpar-

ence, `a la lutte contre la corruption et `a la modernisation de la vie ´economique” (loi Sapin II),

which is pending in parliament at the time of writing. The act will authorize the French govern-

ment to introduce the necessary measures to bring French law in line with the EU Damages

Directive. See infra Part II.BB.2.b, text accompanying notes 81–82.

In Germany, the 8th amendment of the German Act against restraints of Competition (GWB),

in force since July 30, 2013, has expanded private enforcement by consumer associations. Other

important changes to foster private enforcement were implemented with the 7th amendment.

GWB, June 2005, BGB

L

I. at 1954. See Wolfgang Wurmnest, A New Era for Private Antitrust

Litigation in Germany? A Critical Appraisal of the Modernized Law Against Restraints of Com-

petition, 6 G

ERMAN

L.J. 1173–90 (2005).

On September 28, 2016, the Cabinet of the German Government approved a draft by the

German Ministry for Economic Affairs and Energy for the ninth amendment of the GWB

(www.bmwi.de/BMWi/Redaktion/PDF/E/entwurf-eines-neunten-gesetzes-zur-aenderung-des-

gesetzes-gegen-wettbewerbsbeschraenkungen,%20property=pdf,bereich=bmwi2012,sprache=de,

2016]

T

IME

I

S

M

ONEY

273

Irrespective of the legal system in question, the success of private enforce-

ment in making a claimant whole hinges on the accuracy of the damages cal-

culation, i.e., whether the law allows recovery of all elements of the

claimant’s loss. If damages are primarily supposed to fulfill a compensatory

purpose, as typically is the case in Europe,

7

awards should mirror these losses

as closely as possible.

8

Furthermore, private enforcement in the EU is also

supposed to deter violations,

9

a goal that would be compromised if damages

are systematically underestimated. However, a systematic overestimation may

also produce adverse effects, e.g., by increasing incentives to pursue meritless

claims.

10

Moreover, where damages are deliberately increased to achieve a

rwb=true.pdf). The ninth amendment, inter alia, serves to transpose the EU Damages Directive

and thereby to strengthen the right to damages of cartel victims by making it easier and quicker

to obtain damages in court. For overviews of the draft amendment, see Harald Kahlenberg &

Lena Heim, Referentenentwurf der 9. GWB-Novelle: Mehr Effizienz f¨ur die private und beh¨or-

dliche Rechtsdurchsetzung, BB 2016, 1863-1871; Rainer Bechtold, Zum Referentenentwurf f¨ur

eine 9. GWB-Novelle—Ein kurzer ¨

Uberblick, 2016 NZK

ART

391–96.

Apart from the three aforementioned EU countries that we consider in detail in this study,

other EU Member States have implemented important reforms as well. For example, Austria

included special provisions on claims for damages in § 37a of its law against cartels (KartG) on

March 1, 2013, to facilitate claims for damages. Section 37a KartG, inter alia, provides for an

explicit right to damages, grants cartel victims interest on damages from the occurrence of the

loss, makes final decisions of European competition authorities (within the meaning of council

regulation (EC) No 1/2003) binding for the Austrian civil courts with respect to the finding of an

infringement, and authorizes the judge to estimate damages pursuant to the code of civil proce-

dure taking into account the cartel member’s gains. At the time of writing, a draft for a further

amendment of the KartG is pending to transpose the EU Damages Directive. The draft will

introduce new provisions in the KartG (§§ 37 a bis 37 m KartG) that serve to strengthen the right

to damages of cartel victims by making it easier and quicker to obtain damages in court. For an

overview of the draft amendment, see Raoul Hoffer, Kartellgesetz-Novelle in ¨

Osterreich—Der

Begutachtensentwurf des Bundesministeriums f¨ur Justiz, 2016 NZK

ART

466–71.

The developments in the European Union have also triggered a reform initiative in Switzer-

land which has, however, recently been rejected by the National Council, the Grand Chamber of

the Swiss Federal Assembly. See A

NDREAS

H

EINEMANN

, S

TRUKTURBERICHTERSTATTUNG

N

R

. 44/

4, E

VALUATION

K

ARTELLGESETZ

, D

IE PRIVATRECHTLICHE

D

URCHSETZUNG DES

K

ARTELLRECHTS

(2009); Carl Baudenbacher, Schweizer Kartellrechtsreform gescheitert, W

IRTSCHAFT UND

W

ETTBEWERB

[W

U

W], Nov. 2014, at 1065 –69 (Ger.).

7

See Clifford A. Jones, Private Antitrust Enforcement in Europe: A Policy Analysis and

Reality Check, 27 W

ORLD

C

OMPETITION

13, 16 et seq. (2004); Paolisa Nebbia, Damages Actions

for the Infringement of EC Competition Law: Compensation or Deterrence?, 33 E

UR

. L. R

EV

. 23

(2008); Joaqu´ın Almunia, Speech Before the European Parliament, ECON Comm.: Public En-

forcement and Private Damages Actions in Antitrust (Sept. 22, 2011) (SPEECH/11/598). Nota-

bly, this is compatible with the position that private actions for damages also contribute to the

prevention of violations. See Gerhard Wagner, Schadensersatz bei Kartelldelikten 10 (German

Working Papers in L. & Econ., Paper No. 18, 2007); Daniel Zimmer & Jan H¨oft, “Private

Enforcement” im ¨offentlichen Interesse?, 38 Z

EITSCHRIFT F ¨

UR

U

NTERNEHMENS

-

UND

G

ESELL-

SCHAFTSRECHT

[ZGR] 662, 688 (2009).

8

Wouter P.J. Wils, Should Private Antitrust Enforcement Be Encouraged in Europe?, 26

W

ORLD

C

OMPETITION

473, 479 (2003).

9

Case C-453/99, Courage Ltd. v. Crehan, 2001 E.C.R. I-6297, ¶ 27; Joined Cases C-295/04

to C-298/04, Vincenzo Manfredi v. Lloyd Adriatico Assicurazioni SpA, 2006 E.C.R. I-6619,

¶ 91.

10

Wils, supra note 8, at 482–83.