Catriona Munro: New rules let small firms sue cartels

Catriona Munro says the new rules are expected to bring more claims for competition damages. Picture: Contributed
Catriona Munro says the new rules are expected to bring more claims for competition damages. Picture: Contributed
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Cartels and anti-competitive behaviour harm the economy and competition authorities have long been trying to stamp them out but, until recently, consumers and small businesses who lost out from unfair practices had little chance of claiming redress.

New rules coming into force this month will boost the position of claimants and make indulging in any kind of anti-competitive behaviour riskier still for companies.

The new rules are expected to increase competition damages claims

Catriona Munro

Anti-competitive behaviour can already lead to large fines: a group of major European truck manufacturers was fined almost €3 billion this summer for collusion dating back more than a decade. And it has long been possible – in theory – to bring claims for damages, but these were expensive and faced high hurdles, especially for actions involving large numbers of consumers, each of whom suffered only a small loss. Small businesses, too, have seldom sought compensation because doing so has been expensive and risky.

However, from 27 December, new EU rules will make these types of actions easier to bring. Of course, there is uncertainty surrounding EU legislation since the referendum, but for now it stands and is expected to apply even after the UK leaves the EU.

The new rules are expected to increase claims made by those who suffer loss as a result of anticompetitive behaviour by others. They will allow claimants to obtain disclosure documents from defendants in competition claims in other EU countries.

Actions for damages to compensate for overcharges by cartelists can now be brought on an “opt-out” basis, where those who have suffered loss are automatically party to the action. This law has already resulted in claims previously prohibitively difficult to bring. The new rules are expected to increase competition damages claims, presenting ever-greater risk to firms that infringe competition law.

Ultimately, the EU system looks to achieve a balance, where fair compensation is available to incentivise good corporate behaviour, but without going overboard as in the US. For all businesses, however, the message is clear: ensure your staff know what is and isn’t permitted under competition law, both so they can comply with the law, and so they can enforce their rights against others.

• Catriona Munro is a partner in the EU competition and regulatory practice at law firm Maclay Murray & Spens

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