calculation of damages in antitrust cases in community competition law

Littlenew literature can be found on the subject, I have therefore used two articles; Awarding damages for breach of competition law in English Courts– Crehan in the Court of Appeal by R

FACULTY OF LAW University of Lund

Filippa Honeth

Calculation of Damages in Antitrust Cases in Community

Competition Law

Master thesis

20 points

Henrik NorinderCompetition law

Autumn 2006

2.3.3

The High Court Judgment

The Court of Appeal Judgment

13 14

4.2 Calculation methods 23

4.2.7.1 4.2.7.2 4.2.7.3

based Valuation Market- based Valuation Asset-based Valuation

Earning-29 30 30

4.2.8 Calculation

in cases of Exclusion

30

4.2.8.1 4.2.8.2 4.2.8.3

Losing Prices Tying

Price Discriminatio n

31 31 31

4.3 Calculation Problems

32

4.3.1 4.3.2 4.3.3

Time-Period Aspect

Ex Ante or

Ex Post Calculation Problems related to Data

32 32 33

4.4 National Damage Cases

34

4.4.1 4.4.2 4.4.3 4.4.4

France Italy United Kingdom Germany

34 35 36 36

5 CONCLUSI

BIBLIOG RAPHY

The Commissio n

Literature Articles

TABLE

OF

CASES

European Court of Justice English Court of Appeal English High Court

40

40 40 40

41

41 41 41

The right to damage in antitrust cases within the European Communityarises from the case Francovich decided by the ECJ The case establishedthat the individual’s right to compensation could be based on Communitylaw The case also established that the national courts are required to applythe right to compensation regardless of the position of the national law Thefirst case to follow the principle established in Francovich was Banks TheAdvocate General argued that the principle founded in Francovich should beapplied also in this case However, the ECJ was of another opinion and didnot apply the rules of the Treaty in the case In the case Factortame III, theprinciple was further elaborated

The first case where remedies for breach of antitrust rules were raised wasCourage v Crehan The ECJ held that Article 81(1) and 82 EC creates adirect effect between the individuals as well as rights the national courtsmust protect The individual can rely on the breach of Article 81(1) EC innational courts even if he is part of a contract liable to restrictions or

distortion of competition In the English Court of Appeal, the judges

followed the line of the ECJ and based its decision on previous decisionsmade by the ECJ together with general Community principles

The Commission has published a Green Paper on damages actions forbreach of the EC antitrust rues The aim of the Paper is to find ways toimprove the facilitation of damage actions in national courts In a studycommissioned by the Commission obstacles to successful damage actionsare identified The conclusion of the study is that the actions of damages inthe Member States are undeveloped and that there is diversity in the

approach taken to damage actions in antitrust cases In the Green Paperthree different questions regarding damages are mentioned; firstly thedefinition of damages, secondly the quantification of damages and thirdlysplit proceedings

One of the largest problem when calculating damages is to establish thecounterfactual scenario; how would the situation been but for the violation

of competition Factors affecting this “but for” scenario, such as demand,range and competition, must be taken into consideration

A number of different calculation methods have been identified to calculatedamages The methods should not be seen separately but complements eachother The more simple methods can be used as cross checks to the morecomplex methods The methods identified are the before-and-after method,the yardstick method, the cost-based method, the market share method,econometric modelling and theoretic modelling

When calculating lost profit, accounting, finance and economic

methodologies are used to estimate the difference between the profit made

1

and the “but for” profit Three different methods can be used for this

calculation; the earning-based method, the market-based method and theasset-based method In cases of exclusion, it is natural to calculate thedamage by calculating the profit the undertaking would have made withoutthe violation

If the violated part is a rival to the violator, it can be more relevant to

calculate the lost profit due to the anti-competitive conduct This calculation

is normally based on the accounting of the undertaking

Some general problems can be related to calculation of damage The period aspect and the information availability are issues that must be

time-recognised

When reviewing national damage cases, some general points can be made.Only a few Member States have rewarded damages in antitrust cases, noMember State is prescribed to use a certain calculation method and allcalculation methods used have been simple and with no relation to

econometric modelling

None of the methods is superior to the others The choice of method must bemade from the information and data available in the specific case

2

1 Introduction

Competition on an open market is one of the best guarantees for companies

to increase productivity Therefore, competition law enforcement is one ofthe key elements for economic growth in the European Union The rules onantitrust law are found in Articles 81 and 82 of the EC Treaty and have theaim to deter anti-competitive practices forbidden by antitrust law and toprotect firms and consumers from these practices and any damages caused

competitive behaviour.5 In the absence of Community rules on the matter,the legal systems of the Member States have to provide detailed rules fordamage actions.6 The first case to establish the obligation for nationalCourts to provide remedy for damages in antitrust cases was Courage v.Crehan7 The Green Paper outlines some of the obstacles that relates todamage actions One of these obstacles is the calculation of damages.Little information exists on calculation of damages in antitrust cases

Quantification of damages in antitrust cases can be complex given theeconomic structure of the illegality and the difficulty of reconstructing howthe situation would have been without the infringement Therefore, it isnecessary to look at calculation methods used in the US where more

information can be found and damage assessments cases outside the field ofantitrust

Green Paper COM(2005)672 p 3

1.2 Disposition

In his thesis, I will first look at damages in antitrust cases from a generalpoint of view and then look deeper at calculation of damages and differentmethods of calculation In the second chapter, I am introducing the

background on damages in antitrust cases from the view of the Francovich 8

case It has been argued in literature that the right to damages arises fromthe principle founded in the Francovich case I will then continue by looking

at how the outcome of Francovich has been used in other cases ruled by theECJ (European Court of Justice) in competition law cases

In the third chapter, I look more deeply into the first case, the Courage case,that raises the question of damages in cases of breach of antitrust rules TheEnglish Court of Appeal asked for a preliminary ruling from ECJ in fourquestions regarding compensation in antitrust cases The case has recentlybeen decided in the English Court of Appeal

In the fourth chapter, I focus on the Commission’s Green Paper on damageactions for breach of the EC antitrust rules9 I will first present the generalidea of the paper and then go deeper into how the paper handles the question

of damages and the definition of damages

In the fifth chapter, I start with an introduction to calculation of damages byintroducing different types of claims, the different damage parties and theburden of proof I then present the different calculation methods and

calculation of damages in cases of lost profit I will also look at some

problems related to the calculation methods I end the chapter with a look atcases of damages decided in national courts

1.3 Material

As for material, I have, as a base, used the book Private enforcement ofantitrust law in the EU, UK and USA by Clifford Jones from 1999 Littlenew literature can be found on the subject, I have therefore used two

articles; Awarding damages for breach of competition law in English Courts– Crehan in the Court of Appeal by Renato Nazzini and Mads Andenas andNew prospects for private enforcement of EC competition law: Courage v.Crehan and the community rights to damages by Assimakis Komininos for adeeper perspective on the subject I have also used The Green paper ondamages actions for breach of the EC antitrust rules published by the

Commission and the Study on the conditions of claims for damages in case

of infringement of EC competition rules, both the Comparative and theAnalysis report, by Ashurst to a great extent Lastly a report published bythe Swedish Competition Authority, Metoder för att beräkna privat

Joined Cases C-6/90 and C-9/90 and C-9/90, Andrea Francovich and Others v Italian

Republic

9

4

Above note 1

konkurrensskada och krav på precision i domstol, has provided information

on the methods of calculation,

5

2 Background

Few cases on liability arising from infringement of EC competition law

have been ruled by the ECJ In literature, it has therefore been argued that

right to damages arises from the case Francovich10. 11 The theory of

Francovich has been further evolved by the ECJ in a number of cases, the

most important cases being Banks and Factortame III The development of

the Francovich principle has lead to the first judgment on damage recovery

in antitrust cases, the Courage 12 case

2.1 Francovich

In Francovich, the Italian State had failed to implement a Community

directive The failure to implement the directive had been established in a

prior judgment by the ECJ It is clear from the case that an individuals right

to compensation can be directly based on Community law and not only on

national law

The outcome of Francovich is applicable to private individuals as well as to

undertakings and governments The purpose of the Community right to

damages is to assure effective protection of Community rights and must

therefore logically be applied to any category of entity or undertaking which

can be held responsible for breach of Community law.13

Two important points where made in Francovich First, it confirms a

principle of right to damages for breach of Community law After

Francovich it may no longer be of importance whether national law

recognizes damage remedies because Francovich has forged a Community

law damage remedy of wide scope that the Member States are forced to

recognize and enforce The right to compensation is founded directly on

Community law.14

Secondly, if a Member State does not provide for a fully effective judicial

remedy for enforcement of Article 81 and 82 EC, the Member State may

have been in breach of Article 10 EC where the Community law is given

full protection In other words, a Member State that does not judicially or

legislatively provides for antitrust damage remedies for individuals and

undertakings may itself be required to pay damages.15 The breakthrough in

Francovich is therefore that the national courts are required to give effect to

Above not 8

Komninos, New Prospects for Private Enforcement of EC Competition Law: Courage v.

Crehan and the Community Right to Damages, p 454

the right to compensation in private enforcement actions regardless of the

position in national law

There is no compelling reason to differ between State and individual

liability for damage caused by infringement of Community law because the

effectiveness and liability of Community law is not affected by the identity

of the perpetrator.16

2.2 Post Francovich

2.2.1 Banks

The first case to apply the judgment of Francovich in a competition law case

is Banks17 In Banks, a private company claimed that British Coal had

abused its dominant position as a supplier of coal for electricity production

The ECJ decided not to apply the rules of the Treaty The national courts

could not entertain actions for damages if there was an absence of a

Commission decision on compatibility with those rules

However, Advocate General Von Gerven did argue for the principles in

Francovich to be applied in this case The Advocate General argued for

recognition of Community rights to obtain reparation in respect of loss of

damages as a result of infringement of the Community rules which had

direct effect.18 In the opinion of the Advocate General, the basis established

in Francovich was also applicable in cases of “breach of a right which an

individual derives from an obligation imposed by Community law on

another individual” “The full effect of Community law would be impaired

if the former individual or undertaking did not have the possibility of

obtaining reparation from the party who can be held responsible for the

breach of Community law – all the more so, evidently, if a directly effective

provision of Community law is infringed.” 19 The Advocate General was of

the opinion that a Community right to damages in competition law would

make the Treaty’s rules on antitrust law more operational.20

2.2.2 Factortame III

In the joined cases Brasserie du Pêcheur and Factortame III21 the ECJ

further elaborated the principles of Francovich The court rejected the

opinion that the principles only could be applied to situations where the

provisions of Community law breach were not directly effected The right to

Komninos, New Prospects for Private Enforcement of EC Competition Law: Courage v.

Crehan and the Community Right to Damages, p 454

rely only on directly effective provisions was only a minimum guarantee

and is not in itself sufficient to ensure full implementation of the Treaty.22

The court was of the opinion that if individuals cannot obtain remedy when

their rights are infringed the Community law would be weakened and that

the “right to reparation is the necessary corollary of the direct effect of the

Community provision whose breach caused the damages sustained”.23

The court repeated its statement from Francovich saying that the Member

State must make reparation for the consequences of the loss and damages

caused in accordance with the national rules on liability and that these rules

flows directly from Community law.24

The court also discussed the extent of reparation required and concluded

that it was for the national legal system to set the criteria However,

according to the court, certain items are permissible or required, including;

mitigation of damages obligations, loss of profits in economic or

commercial litigation and exemplary damages.25

2.3 Courage v Crehan

2.3.1 The ECJ Judgment

The first cases where the ECJ dealt with substantive aspect of private

enforcement were in Courage26 where the question of remedies in cases of

breach of antitrust rules was first raised.27

2.3.1.1 Facts of the Case

In 1990 Courage Ltd, a brewery, and Grand Metropolitan plc, a catering and

hotel company, agreed to merge their leased public houses (“pubs”) and

found Inntrepreneur Estate Ltd (“IEL”) equally owned by Courage and

Grand Met In an agreement concluded between IEL and Courage it was

stated that all IEL tenants had to buy their beer exclusively from Courage

The prices for beer were specified in a price list applicable to the pubs

leased by IEL. 28

In 1991, Mr Crehan signed two 20-year leases with IEL with the condition

only to purchase beer from Courage The tenant had to purchase a minimum

quantity of specified beers and the IEL agreed to produce the supply of beer

by Courage at the price showed in the price list The rent was under regular

Komninos, New Prospects for Private Enforcement of EC Competition Law: Courage v.

Crehan and the Community Right to Damages ,p 449

28

8

C-453/00 Courage v Crehan, paragraph 3

review and was to be the highest of the rent for the immediately precedingperiod or the best open market rent obtainable for the residue of the term onthe other terms of the lease.29

In 1993, Courage brought an action against Mr Crehan for recovery ofunpaid deliveries of beer Mr Crehan contested the action saying it wascontrary to Article 85 (now Article 81) EC He also counter-claimed fordamages on the ground that Courage sold beer to independent tenants at alower price than the price in the price list imposed on IEL tenants Thehigher prices reduced the profitability of the tied tenants forcing them out ofbusiness.30

The standard lease agreement used by the Courage, Grand Met and theirsubsidiaries was notified to the Commission in 1992 In 1993 the

Commission published a notice stating its intention to grant an exemptionunder Article 85(3) (now Article 81(3)) EC The notification was withdrawn

in 1997 followed by a new standard lease from IEL, also notified to theCommission The new lease is not at issue in the main proceedings since theaction concerns the beer tie under the old lease.31

The Court of Appeal referred the question to the ECJ on the ground thatEnglish law does not allow the party of an illegal agreement to claim

damages from the other party Because of this, Mr Crehan’s claim for

damages would fail since the Court of Appeal considered the agreementillegal.32

The Court of Appeal had in a prior judgment held that Article 85(1) (nowArticle 81(1)) EC had the intention to protect third parties and not parties ofprohibited agreements since they where the cause, not the victim, of theagreement.33

The following questions were therefore referred to the ECJ:34

1 Is Article 81 EC (ex Article 85) to be interpreted as meaning that aparty to a prohibited tied house agreement may rely upon that article

to seek relief from the courts from the other contracting party?

2 If the answer to Question 1 is yes, is the party claiming relief entitled

to recover damages alleged to arise as a result of his adherence to theclause in the agreement which is prohibited under Article 81?

3 Should a rule of national law which provides that courts should notallow a person to plead and/or rely on his own illegal actions as a

necessary step to recovery of damages be allowed as consistent withCommunity law?

4 If the answer to Question 3 is that, in some circumstances, such arule may be inconsistent with Community law, what circumstancesshould the national court take into consideration?

2.3.1.2 The Judgment

The ECJ begins with stating that the Treaty is not only the subject forMember States but also for their nationals It gives both burdens on andrights tn individuals that become their legal assets The rights are not onlythose that are clearly stated in the Treaty, but also those that are imposed in

a clearly defined manner by the Treaty on both individuals and the MemberStates and the Community institutions.35

The court continues by addressing the importance of Article 85 (now Article81) EC saying that it “constitutes a fundamental provision which is essentialfor the accomplishment of the tasks entrusted to the Community and, inparticular, for the functioning of the internal market”36

Articles 85(1) and 86 (now Articles 81(1) and 82) EC creates a direct effect

in relations between the individuals and creates rights which the nationalcourts must protect.37

From that reasoning, the court states that it is clear that an individual canrely on a breach of Article 85(1) (now Article 81(1)) EC in a national courteven though he is part of contract liable to restrictions or distortion ofcompetition.38

The possibility to seek compensation for loss caused by such a contractmust be guarded by the national courts The task of the national courts is toapply the Community law in areas within their jurisdiction and ensure thatthe rules take full effect to protect the rights of the individual.39 That

effectiveness would be put at danger if an individual cannot seek

compensation caused by a contract or by conduct liable to restrict or distortcompetition.40 “There should not therefore be any absolute bar to such anaction being brought by a party to a contract which would be held to violatethe competition rules”41

The court continues by saying that in the absence of Community rules, thenational legal systems of the Member States have the jurisdiction to lay

down the details regarding procedural rules governing actions of the rights

of individuals that derives directly from Community law These rules mustnot be less favourable than national rules governing similar domestic

actions The rules cannot render the exercise of rights conferred by

Community law, the principles of equivalence and effectiveness becomingpractically impossible or excessively difficult.42

National courts can, if the above circumstances are fulfilled, deny a partywho is significantly responsible for distortion of competition the right toobtain damages from other contracting parties The national court should,when assessing a party’s responsibility, take into account the economic andlegal context, the respective bargaining power and conduct of the parties,whether the party who claims to have suffer loss is in a weaker position thanthe other party and therefore cannot negotiate the contract freely and if part

of a network the effects on competition of similar contracts.43

2.3.1.3 The Advocate General

Advocate General Mischo in his opinion argues that it is clear from the factsfrom the Court of Appeal that Mr Crehan can succeed in the case only if hecan rely on rights deriving from the EC Treaty rights the national court mustconsider.44

The Advocate General continues by saying that an individual must be able

to go before the national court to seek enforcement of all the consequences

of automatic nullity of contractual matters incompatible with Article 81 EC.Article 81 EC must therefore be “interpreted as meaning that a party to aprohibited lease of a public house containing an exclusive purchase clausemay rely on the nullity of that lease before the courts”45.46

The second question47 laid before the ECJ must be interpreted to meanwhether Community law precludes that rule of English law. 48 Article 81 ECprecludes direct effect in the relation between directly created rights andindividuals which the national courts must safeguard This must be seen asincluding the right to protect individuals from the effect of an agreement,which is automatically void It is primarily third parties who can benefitfrom such protection A party to the agreement can normally not benefitsince he is the cause of the agreement, based on that a party may not benefitfrom his wrongdoing However, the responsibility of a party’s wrongdoingshould be measured in regard to the party’s responsibility of the distortion

of competition If he genuinely bears such responsibility, he cannot profitfrom his wrongdoing by enjoying protection against the agreement in the

way a third party can If the responsibility is less significant, there is not a

reason why the party should not be protected by Article 81 EC The party

has in that case had the agreement imposed upon him rather than freely

entering it The party has more in common with a third part rather than withthe author of the agreement.49

2.3.1.4 Analysis

The ECJ had to choose between two routes when judging the case, either thetraditional way or the integrationist way It could consider the whole

question of damage as a question for national law where the Community

law is the minimum requirements of equivalence and practical

non-impossibility or adequacy, or it could proceed in the recognition of a

Community right in damages as Advocate General Van Gerven proposed in

Banks and many commentators had urged The court followed the latter

way. 50

If the court had followed the Advocate General Mischo’s opinion, it would

have been unfortunate for the whole cause involved in the case It is not

very common for national courts to refer similar questions on civil liability

arising out of the Treaty competition rules.51

The Courage case stresses the importance of the principle of equivalence

and effectiveness with delegating further questions to national laws and

courts The concern of the case is the effectiveness of the Community law

and effective judicial protection The case is of importance for general

Community law and must therefore be seen in the context of earlier case law

on State liability.52

The principle of effectiveness-effective protection have been used by the

Court in different cases in order to strike down or check national rules that

may impair with Community law-based rights The result of this protection

can be attained not only by positive common prescription by the court, as

Factortame III, but it can also be served in other areas with other measures

in a more indirect-negative way The positive way is defined by the

pertinent constitutive conditions and the negative way by checking if the

executive conditions governed by national law offend the principle of

equivalence and effectiveness-adequacy The court has stressed, both in

Francovich and in Factortame III, the need for flexibility by saying that the

liability arising “depends on the nature of the breach of Community law

giving rise to the loss and damage” 53.54

Ibid., paragrapghs 37-39 and 42-44

Komninos, New Prospects for Private Enforcement of EC Competition Law: Courage v.

Crehan and the Community Right to Damages, p 466

C-Many unexplored issues are left unanswered in Courage The case is more

of the type of Francovich than Factortame III since it is the first case in the

field, setting the principle.55

2.3.2 The High Court Judgment

The case reverted in the English courts and came to trial in the High

Court 56

In the High Court, the claim by Mr Crehan failed The judge, Mr Justice

Park, held that it failed on the evidence since it was not proved that the

balance of probabilities, that in the relevant period the UK market for the

supply of beer to on-licensed premises, was foreclosed He argued that

Inntrepreneur’s argument that its standard lease did not infringe Article

81(1) EC was not an abuse of process and that the court was not bound by

the decisions made by the Commission in previous cases57

Mr Crehan argued that the standard lease of Inntrepreneur hade been

notified to the Commission and that the Commission took the view that it

infringled Article 81(1) EC The reason the Commission did not make a

formal decision was because Inntrepreneur withdrew its notification The

High Court judge firstly held that the Commission never adopted a formal

decision which Inntrepreneur could bring an action on for annulment under

Article 230 EC Secondly, the Commission never engaged in a full debate

on the application of Article 81(1) EC Thirdly, Innetrepreneur was

suggested by the Commission to withdraw its notification and that it was up

to the national courts to decide whether Article 81(1) EC was infringed

Fourthly, Inntrepreneur never conceded that the standard lease infringed

Article 81(1) EC

Mr Crehan held that previous decisions58 should be adopted in this case

The judge disagreed saying that, firstly, Inntrepreneur was not a party of

those proceedings Secondly, it was not possible to justify passages of the

Commission’s decisions on the basis of evidence before the court Thirdly, aconsiderately body of evidence was before the court enabling it to decide thepoint Fourthly, the Commission had in a letter stated that the national

courts was to decide whether Article 81(1) EC was infringed

Komninos, New Prospects for Private Enforcement of EC Competition Law: Courage v.

Crehan and the Community Right to Damages, p 474 and 477-478

55

56

High Court of England and Wales

57

L186/1, Whitbread [1999] OJ L88/26 The cases regard agreement between different parties

but addressing the issue of foreclosure of the market at the relevant times.

58

13

Ibid., p 478 Bernard Crehan v Inntrepreneur Pub Co (CPC) [2003] UKCLR 834 Judgment of the

The judge concluded by saying that Mr Crehan had failed to establish that

the UK market for the supply of beer to the on-licensed premises was

foreclosed by addressing the evidence Mr Crehan was not awarded

damages. 59

2.3.3 The Court of Appeal Judgment

The judges in the Court of Appeal 60, Lord Justice Peter Gibson, Lord JusticeTuckey and Sir Martin Nourse, reversed the judgement of the High Court

and awarded Mr Crehan damages The main reason for doing so was that thecourt gave more weight to the Commission’s decisions in Scottish &

Newcastle, Bass Holdings Ltd, Bass Lease and Whitbread61 The court

started by confirming two points from the High Court Firstly,

administrative decisions from the Commission are not legally binding for

anyone but parties directly addressed Secondly, it was not an abuse of

process from Inntrepreneur to argue that the standard lease did not infringe

Article 81(1) EC However, unlike the High Court, the Court of Appeal rely

on a number of Community principles: the principle of cooperation under

Article 10 EC, the principle of full effectiveness of Community law and theprinciple that national courts should avoid giving judgment that are in

conflict with decisions adopted by the Commission Therefore, the Court ofAppeal adopted the decisions of the cases Scottish & Newcastle, Bass

Holdings Ltd, Bass Lease and Whitbread, despite the fact that these cases

where related to agreement between different parties

The weight to be given to decisions made by the Commission in cases

relating to the same kind of facts but between different parties depends on

different Community principles First, In order to achieve the objectives of

the Treaty, Article 10 EC requires Member States to cooperate with

Community institutions One of those objectives is the establishment of a

system to ensure that competition on the common market is not distorted

Secondly, the different tasks of the Commission and national courts in the

application of EC competition law presuppose the primacy of the

Commission’s role Thirdly, the principle of legal certainty will not be

guaranteed if the national courts give judgment in conflict with decisions

made by the Commission Therefore, decisions by the Commission must betaken into account if they are relevant for the case even though they are not

legally binding. 62

Nazzini and Andenas, Awarding Damages for Breach of Competition Law in English

Courts – Crehan in the Court of Appeal, p 1193

The court concluded by saying that decisions by the Commission that are

not legally binding must still be adopted by national courts if they are

relevant for the factual issue.63

2.3.3.1 Analysis

It must be seen as clear that the judgment made by the Court of Appeal is

more in line with the ruling of the European Court of Justice than the

judgment made by the High Court The safeguard of the effectiveness of the

Community law is not protected by the possibility of damage awarding Theprotection must be measured in remedies actually awarded in concrete

cases If damages where rarely awarded because of the claimant’s

difficulties in discharging the burden of proof, the effectiveness of the

Community law would be set aside Therefore, the judgment of the Court of

Appeal is important for the development of remedies for breach of

Community law that is directly effective. 64

The fact that the Court of Appeal is basing its factual findings on the

evidence of previous decisions made by the Commission dealing with the

same issue but between other parties regarding a different agreement is a

significant change The earlier established principle of “a strict rule of

privity applies to limit the binding effect of findings of fact or law by

judicial or administrative authorities to the parties, their privies, or

successors in title”65 is abandoned.66

The primary point in the judgment of the Court of Appeal is the binding

capacity of Community law The question is how to weigh the factual

findings made in a decision by the Commission in national law between

different parties and relating a different agreement.67 The judgement of the

Court of Appeal can be of great importance if other national courts follow

the same approach It extends the effect of the Commission’s decisions to

third parties in proceedings of similar issue of the decision.68

2.4 Summary

The Francovich case has founded the base for all damage rewarding The

principle of the individuals right to damages based on Community law has

been further developed in Banks and Factortame III This principle was

applied in the first case regarding damage rewarding in an antitrust case,

Courage

Nazzini and Andenas, Awarding Damages for Breach of Competition Law in English

Courts – Crehan in the Court of Appeal, p 1197-1198

Still, many questions regarding damage for breach of antitrust rules are leftunanswered The Commission published a Green Paper 69 on damageactions for breach of the EC antitrust rules in 2005 The aim of the Paper is

to improve the facilitation of damage actions in national courts.70 The mainpoints of the Paper are presented in chapter three of the thesis

COM(2005)672

COM(2005)672, p 6

16

3 Green Paper

3.1 Introduction

The aim of the Green Paper71 and the Commissions Staff Working Paper72

is to find ways to improve the facilitation of damage actions in nationalcourts The compensation of victims and the enforcement activities of publicenforcement authorities will hereby be better This is part of enforcement ofCommunity competition law The paper deals with the question of privateenforcement and not public enforcement The difference is that privateenforcement is legal actions brought by the victim of anti-competitivebehaviour before the national court, whereas in public enforcement thepublic authority investigate suspect violation of competition law being able

to impose measures such as fines on infringing undertakings.73

In private damage actions, is it fundamental that the victim of a violationwho suffers loss is entitled to compensation Damages be claimed in actionsboth between co-contractors and third parties Improved private

enforcement will help make the market open and competitive By makingthe opportunity to enforce rights better the competition rules and the

involvement will be brought closer to both the citizens and the business.74

The advantages for private parties to have availability of private actions aremany For example the claim can be combined with other claims and thecourt can apply civil sanctions to contractual relationship at the same time ashearing the damage claim In the wider context, the competition can

encourage innovation and efficiency and lead to improved growth andproductivity The reason for competitiveness is to achieve an open andcompetitive market and ultimately a higher standard of living This is

acknowledged in the Commission’s Action Plans for the renewed LisbonStrategy forming a Partnership with the Member States.75

Despite the importance of the advantages of the private enforcement, it isalso important to consider the costs associated with private competition lawlitigation in the case of unmeritorious or not well founded claims The aim

of the Commission is to find better ways to compensate for breach of

antitrust rules, but at the same time to avoid situations where defendantssettle because the litigations costs are too high.76

COM(2005)672 Green Paper Damages actions for breach of the EC antitrust rules COM(2005)672 Commission Staff Working Paper, Annex to the Green Paper Damages

actions for breach of the EC antitrust rules