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antitrust

Europe To Formalize How Consumers, Companies Can Sue Big Fish Like Google Over Antitrust Damages

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Feeling slighted by Google’s dominance in search? In Europe, you may soon be able to sue for damages. A new proposal published today by the European Commission proposes to spell out the details, and effectively make it easier and quicker, for consumers and businesses to sue large companies when they feel that they have been the victims of antitrust violations. These would sit on top of European fines and sanctions on companies for the same violations.

The proposals have been in the works for some time. “Took four years longer than I had hoped,” Neelie Kroes, a VP of the European Commission noted today.

The proposals would cover areas like cartels and abuses of dominant market position, the EC noted today in a statement. You can read the full proposal here.

Although it’s likely that bigger companies will push against the thought of more companies attacking them, this will come as a welcome counterbalance to worries by companies that appeal to the EU for help in antitrust cases. The latter group occasionally feel that some bigger companies get off too lightly, or that resolutions take too long to settle, or that the companies themselves are not getting direct redress for years of abuse.

For example, in an ongoing case concerning Google and search dominance brought by online mapping and travel companies, among others, Google has recently proposed a set of controls that it would put into place to make sure that it doesn’t give its own services preferential placement above those of its competitors. But with Almunia now saying Google must make more concessions, and competitors yet to put in their formal responses, it will be some time before a resolution is reached. In cases like this, now those who feel they’ve been affected will be able to consider whether they want to take more direct action for compensation.

“Infringements of the antitrust rules cause serious harm to European consumers and businesses” said EC VP Joaquín Almunia, who oversees competition issues, in a statement. “We must ensure that all victims of these infringements can obtain redress for the harm they suffered, especially once a competition authority has found and sanctioned such a breach. It is true that the right to claim compensation before national courts exists in all EU Member States but businesses and citizens are not always able to exercise it in practice. Today’s proposal seeks to remove these obstacles”.

It’s not that individuals and companies have not sued in the past, but because the process of doing so has been too difficult or costly, many have avoided this route.

“Due to procedural obstacles and legal uncertainty, only few of these victims actually manage to obtain compensation. This situation particularly affects consumers and SMEs, which most often do not engage in legal action for reparation of their harm,” the EC notes. Only in 25% of all antitrust infringement decisions the Commission took in the past seven years did the victims seek to obtain compensation, it further notes. As with a lot of legal cases in Europe, the fact that there are different rules in each country also has slowed things down.

On top of putting into place some procedures for how people can sue, the EC says it plans to put some pressure on to individual member states to harmonize their “redress mechanisms.”

Here are some of the details of what the proposals hope to cover:

  • National courts will be able to order companies to disclose evidence in compensation claims.
  • An infringement decision by a national competition authority will apply in another member state.
  • “Rules on limitation periods, i.e. the period of time within which victims can bring an action for damages, will be clarified. In particular, this will ensure that victims can effectively claim damages once an infringement has been found by a competition authority.”
  • “The liability rules in cases where price increases due to an infringement are ‘passed on’ along the distribution or supply chain will be clarified. In practice, this will ensure that those who suffered the harm in the end will be the ones receiving compensation.”
  • Settlements will also be tackled, with the idea that these will be easier to reach and in a less costly (probably quicker) manner.

What’s also interesting is that this is not a call for a legal-free-for-all. “Contrary to the U.S. system,” the EC notes with possibly the slightest hint of a sneer at the litigiousness on the other side of the Atlantic, “the proposal does not seek to leave the punishment and deterrence to private litigation. Rather, its main objective is to facilitate full and fair compensation for victims once a public authority has found and sanctioned an infringement.” Whether that will mean ultimately less action at the end of the day remains to be seen.

The next step is for the proposal to be discussed by the European Parliament and the Council “according to the ordinary legislative procedure.” After that approval, member states will have two years to implement the new rules.