EU system of compensation possible by year end

EUROPEAN CONSUMERS and businesses will have greater scope to pursue claims for damages if they are the victims of anti-competitive conduct, under proposals revealed yesterday.

Neelie Kroes, Europe's competition commissioner, said legislative proposals aimed at establishing a European Union-wide system of compensation could be drawn up by the end of the year.

At present, although companies are frequently fined by regulators for antitrust abuses, few legal actions are brought by their victims. That is in sharp contrast to the US where, under the class-action system, damages actions are commonplace.

The long-awaited proposals from the commission, which reckons that businesses and individuals are losing billions of euros annually from practices such as price fixing, aim to encourage more claims, while avoiding some of the excesses of the US system.

"They offer a middle way between the hurdles to compensation that currently exist in most EU member states and the over-incentives that could lead to excessive litigation, as has been seen in some other jurisdictions," said Ms Kroes.

The commission proposes that victims should be able to get back the real value of the loss suffered but not be able to make double or triple damages claims.

National courts would have the power to order parties to disclose certain categories of relevant evidence. This would overcome the big stumbling block to claims in many EU countries, although not the UK.

Actions could be brought either by groups of victims who had decided to combine their claims, or by consumer associations or trade bodies. However, US-style class actions, typically brought by lawyers on behalf of all victims unless they expressly "opt out", would not be permitted.

Initial reaction from lawyers and consumer groups suggested that the commission might have struck a balance between improving redress and avoiding US-style litigation.