Interplay of public and private enforcement cartel sanctioning
Interplay of public and private enforcement – cartel sanctioning and deterrence ICN Cartel Working Group SG 1 call series 15 September 2015 Marc Braithwaite, Assistant Director, Competition & Markets Policy Competition and Markets Authority 1
Overview ● Public enforcement and private damages actions primarily serve different purposes and are therefore complementary ● Need to ensure that public enforcement and private actions enhance rather than undermine each other ● Role of public authorities in facilitating compensation? ● Interaction between cartel fines and compensation 2
Purposes of public enforcement and private actions (1) ● Public enforcement focused on - Detecting, examining and bringing anti-competitive activity to an end - Imposing sanctions for infringements, to punish and deter future infringements ● Private damages focused on - Compensating those who have suffered harm as a result of infringements The two are therefore complementary 3
Purposes of public enforcement and private actions (2) ● BUT, each can also contribute to the objectives of the other - - Public enforcement can facilitate private actions, e. g. through • Stimulating follow-on actions • Clarifying the law Private damages actions can • Contribute to deterrence through increasing the overall cost of infringing • Address anti-competitive activity in those cases not / only partially addressed by public enforcement 4
Need to ensure that public enforcement and private actions enhance each other ● Key issues include: (1) Maintenance of leniency incentives – protection of leniency documents; joint and several liability (2) Access to authorities’ files – should not prejudice authority investigations or be overly burdensome to authorities Both addressed in EU Damages Directive (3) Role for authorities in private actions – should be relatively limited and not divert significant resources from core enforcement role (more on this later) (4) Advocacy / amicus role for competition authorities in appropriate cases (underpinned by notification and intervention powers) 5
Role of public authorities in facilitating compensation? ● Detecting and establishing infringements to facilitate follow-on actions (already mentioned) ● New power in UK for competition authorities to approve voluntary redress schemes - Limited authority role, concerned largely with approving the process by which voluntary compensation is devised • Detailed compensation determined by a Board of independent experts - May be treated as a mitigating factor leading to a penalty reduction (up to 20%) for offering compensation in certain cases – intended to incentivise voluntary provision of redress 6
Interaction between cartel fines and compensation ● Given primarily different roles of public enforcement and private damages actions, cartel fines and damages should not in principle greatly affect one another ● Nevertheless, some potential interactions: - May be appropriate to treat compensation as a mitigating factor in limited cases (e. g. new UK power mentioned above) - Private damages rather than public enforcement might be the means of punishing and deterring infringements in exceptional cases – exemplary damages (Devenish, Cardiff Bus) 7
Conclusion ● Important to manage public and private interactions given their complementary roles ● A number of recent significant changes to the EU and UK private actions landscape - Potential for more effective private actions is welcome - However, also potentially new challenges in ensuring that public and private parts of the competition regime work well together 8
Interplay of public and private enforcement – cartel sanctioning and deterrence ICN Cartel Working Group SG 1 call series 15 September 2015 Marc Braithwaite, Assistant Director, Competition & Markets Policy Competition and Markets Authority 9
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