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      Proskauer on International Litigation and Arbitration:
       Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
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B. Collective Redress in Europe

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1. Redress for Violation of Competition Law

(a)The EC has published a White Paper on damages actions for breach of EC antitrust/competition rules.  The paper analyzes measures, including collective redress instruments, addressed to the specific problems experienced in the area of competition law. 

(b) The Commission suggests a combination of two complementary mechanisms of collective redress:

(i)  Opt-in collective actions, in which victims expressly decide to combine their individual claims for harm they suffered into one single action and

(ii) Representative actions, which are brought on behalf of the victims by qualified entities, such as consumer associations, state bodies or trade associations.  Member state authorities could either designate those qualified entities in advance or certify them on an ad hoc basis for a particular antitrust infringement.

2. Consumer Collective Redress

(a) We also note with interest the "Green Paper" titled "On Consumer Collective Redress" (Commission of the European Communities, COM (2008) 794 final (Brussels 11/27/08).  The paper echoes many of the points above, but does not go as far as we do in declaring the matter over, and seeks comments by March 1, 2009. 

(b) This second initiative is more general in suggesting diverging collective redress options which may be appropriate to address harm caused by breaches of a wide range of consumer protection laws.  The Green Paper only concerns harm suffered by consumers, while the White Paper concerns both consumers and businesses.  See generally the EU initiative working papers and supporting documents (press releases/staff reports, etc). 

(c) A related development has concerned litigation funding, which is discussed below.

3. Legislative Initiatives:  A country by country summary can be found at the EU's useful Consumer Protection website.  To take a few examples:

(a) Netherlands:  There are proposals on encouraging more settlement, but there has been no swift move to fill the gap by introducing a front-end class action procedure. 

(b) Italy:  In July 2008 the new Berlusconi government delayed of introduction of the Class Action Act until January, 2009. It is unclear will happen then. The Act has been criticized by scholars, and various changes to it are being considered.

(c) France:  The government has delayed introduction of any proposals, which is of some significance given that France currently holds the EU Presidency and has chosen not to lead or push this issue. The new Sarkozy government appears interested in limiting any impact on business.

(d) Poland:  A draft Act has been developed. But it provides for an opt-in in approach.

(e) Germany:  It is noteworthy that the largest European national economy has taken no steps to introduce any reform or new class action procedure.  Indeed, the Federal competition authority has strongly opposed implications of the Commission's White Paper. But the government has introduced a new law permitting contingency fees where no alternative funding exists, albeit with restrictions

(f) Sweden:  A government report has been published based on five years experience of their Class Action Act. It proposes various amendments to tighten the procedure, and also suggests an introduction of contingency fee arrangements in certain circumstances. The government is, however, not keen on introducing contingency fees.

(g) UK:  The government has enacted innovative powers for many public enforcement authorities to impose Restoration Requirements (which would include compensation) on infringers, as part of the armory of enforcement powers:  Regulatory Enforcement and Sanctions Act 2008.  The UK has embraced with apparent zeal third-party funding of contingent fee litigation, while nonetheless rejecting attempts to make UK's law on awarding compensatory damages more closely akin to US law.  A lawsuit was brought by poultry farmers and animal feed manufacturers against several chemical companies, including Aventis, BASF and Roche, that allegedly operated an illegal cartel to fix the price and supply of vitamins.  Specifically, although the plaintiff in this competition case could not prove that it had suffered a financial loss - of incomplete documentation - it nonetheless argued that it was entitled to a share of the cartel's illegally gained profits.  It also asked the court to impose exemplary, or punitive, damages against the vitamin suppliers in order to act as a deterrent against other cartelists.  Both claims were rejected ultimately by the Court of Appeal, which ruled that the traditional system of compensatory damages was adequate.  Devenish Nutrition Ltd v. Sanofi-Aventis SA, 2008 WL 4153573 (Ct. App. 10/14/08).

(i) In our view, this ruling represents the state of the decisional law in the absence of any modification or amendment.  It does not change our view, and we do not think its will is inevitable. 

(ii) Many are concerned that proposals put forward by the Civil Justice Council (which recently published proposals to make it easier for consumers and small businesses to seek redress through the courts) and the Office of Fair Trading to encourage so-called private enforcement of competition law will lead to an explosion of costly US-style class action lawsuits.  In our view, they are right to be concerned.

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