‘A chain reaction’ or the necessity of collective actions for consumers in cartel cases

Abstract

As a particularity of competition law, damage caused by a legal violation generally travels down the supply chain. An overcharge incurred by the direct purchaser is often at least partially passed on to the next level in the supply chain, and so on, ending with the final consumer. Damage is typically widespread once it reaches the consumer level. Thus, the consumer’s rational response is not to initiate an individual lawsuit. The classical solution is to improve the incentive structure with some form of collective redress. The principle of effectiveness as defined in Article 4 of the Antitrust Damages Directive requires an effective procedural remedy for each victim of a competition law infringement, but the Directive is silent regarding collective actions. Drawing on arguments on the rational apathy problem with consumer lawsuits, we analyse why this ‘silence’ upsets the European principle of effectiveness. We show why this omission is particularly harmful in the competition law case. We conclude that the time to introduce collective actions to ensure the effectiveness of European competition law has arrived. Such mechanisms do not have to be entirely harmonised across the European Union – different shapes in different Member States or even alternative solutions to the same effect are perfectly permissible.