Cartel Leniency and Effective Compensation in Europe: The Aftermath of Pfleiderer
It is trite to note that effective anti-cartel regimes contain three elements: public and private enforcement procedures, and leniency programmes. Public regimes deter, private regimes compensate, and leniency programmes elicit information to enhance the effectiveness of public deterrence. An effective anti-cartel scheme will appropriately balance these components, ensuring that one will not hinder the efficacy of another. The recent judgments in Pfleiderer, CDC Hydrogene Peroxide, Gas Insulated Switchgear (GIS) and Donau Chemie and the interpretation of Pfleiderer by the Amtsgericht Bonn and the English High Court expose a tension between two goals of European cartel control policy: the ex ante desire to prevent and deter the formation of cartels, and the ex post goal to ensure an effective means by which victims of such conduct can have their harms redressed. This tension has been recognised by the European Legislators, who in June 2013 published a draft proposal for a Directive to govern private competition actions. The goal of this Directive is to regulate and harmonise the interaction of public and private enforcement of competition law within Europe, particularly with regard to disclosure of leniency materials, quantification of damages and availability of defences. In this paper, I explore the tension created by the interaction of public and private enforcement and associated leniency programmes in the European regime with the view of assessing the efficacy of the proposed Directive. My thesis is that while the judgement in Pfleiderer, by refusing to recognise or establish a hierarchy between public and private enforcement goals, has opened difficulties with disclosure of leniency materials, the Proposed Directive goes part of the way to resolve these difficulties. However a more complete resolution of these difficulties would necessitate a legislative programme that would contain elements which may be steps too far at this time.
This paper is structured as follows. At the outset, I will present a model of a cartel control system, indicating its features and their interactions. The model will be illuminated by comparisons with the US system, which through evolution has developed into a very sophisticated regime, and is used as a paradigm for other jurisdictions to adopt. I next turn to concerns found in the private enforcement of competition law (particularly regarding the redress of damages), identifying those concerns which are exacerbated by leniency programmes. I then turn to the recent court activity at the EU and Member State level to show the tensions found in the European regime. In the final section of the paper I assess the European legislators' efforts at making the EU's regime more workable.