There are multiple layers of complexity in an article seeking to clarify and explain those legal rules, their application, and their rationale. First, indirect purchaser litigation is merely a part of the wider context and debate on competition law private enforcement, and the specific approach adopted to the issue forms part of the broader development of the institutional and legal framework for competition law damages litigation, which are still in their relative infancy in the United Kingdom (and European Union). Second, the various strands of the discussion have several levels of interconnectedness, which makes it impossible to isolate and focus on the question of indirect purchaser standing without an understanding of these links: it is difficult to disentangle competition law and private law as they coincide to determine the legal playing field for indirect purchasers; it is difficult to disentangle the treatment of indirect purchasers in the legal systems of the United Kingdom from the wider development of EU law to facilitate the private enforcement of EU competition law; it is difficult to disentangle the sub-category of indirect purchasers from that of consumers and the underlying notion that consumers are at the heart of competition law; it is also difficult to disentangle indirect purchasers’ right to a damages remedy from a broader understanding of how we quantify and assess loss and damages and the rationale for awarding damages. Finally, it is difficult to disentangle the position of indirect purchasers from the (non-) availability of the passing-on doctrine (in an offensive or defensive capacity) and also from the related wider objective of achieving a “global” compensation arrangement for competition law infringements.
Accordingly, this article will look at competition law private enforcement for indirect purchasers from a UK perspective, focusing on the rights of consumers qua indirect purchasers. Of course, unlike the position with respect to other collectivized consumer claims for mass torts where the direct victim may be a consumer (for instance, in product liability/environmental damage claims), in competition law claims with respect to cartelized products the losses are often (though not always) mediated through intermediate parties in the production or supply and distribution chain with final consumers various steps away from the infringing party. The standard requirements in damages actions to prove causation and quantification of damages can always be problematic, but in competition law claims there are additional potential complications: how the calculation of losses suffered by parties at different levels of the supply chain should take into account whether and to what extent overcharges have been passed on by suppliers. Accordingly, the flip side of the right of indirect purchasers to sue is the availability of a passing-on defense to defendant companies in damages claims brought by persons who claim to have suffered losses due to the infringement of competition law. Such a defense would operate on the basis that the alleged amount for which the claimant was overcharged was actually passed-on to the claimant’s customers. In effect, the defendant may assert that the claimant did not actually suffer a loss. As shall be discussed, the availability and scope of the two related mechanisms in any legal system depends to a great extent on the value attached to the respective goals of deterrence and compensation. As shall be stressed in particular in Part IV infra, divergences in approach in this area may reflect the comparative prioritization in the U.S. enforcement system of deterrence whereas the EU/UK legal systems value and emphasize compensation as driving private enforcement policy and practice. Nonetheless, it should be stressed that any debate focusing on achieving effective consumer redress should recognize that a viable, workable collective redress mechanism is vital in ensuring that rules facilitating indirect purchaser rights benefit consumers in practice.
This article is set out in the following four parts. Part I looks at the institutions, rules, and processes—i.e., the private enforcement architecture for indirect purchaser claims generally and consumer claims specifically at both the EU and UK levels. Part II considers the case law developments in the UK courts, exploring the issues of damages, standing, and collectivized consumer competition law claims. Part III reflects on the contrasting rationale and aims of private enforcement generally and the rules on indirect purchaser standing specifically in the United States and the European Union (and United Kingdom), considering the primacy of the respective arguments based on deterrence and compensation. Part IV concludes by comparing and contrasting the approaches to indirect purchaser claims in the United Kingdom and the United States and the impact on access to justice for consumers as indirect purchasers.
I. The Legislative and Institutional Context for Indirect Purchaser Claims Under EU and UK Law
In this Part I shall trace the evolution and development of the principles, rules, and mechanisms designed to facilitate private enforcement, and on indirect purchasers and the passing-on defense in particular, at the EU and UK levels. Of course, the UK withdrawal from the European Union complicates matters, but the position in the United Kingdom will continue to be a mixture of UK and EU-developed rules for the foreseeable future.
This Part will proceed as follows. The first section will discuss EU developments in private enforcement generally and in relation to indirect purchasers and consumers specifically. EU law has been driven by the concept of direct effect, and this has been buttressed by the effectiveness doctrine. There has been a slow evolution from a reflexive approach based on respect for national procedural autonomy, to direct determination of certain key aspects of the right to damages under EU law, primarily through the Antitrust Damages Directive, which also makes express provision with respect to indirect purchasers. One of the key constraints on consumer-led damages litigation is the absence of any European Union-wide specific provision for collective actions in relation to competition law infringements. This reflects a degree of ambivalence at the EU level to make private enforcement effective, despite legislative initiatives, evidenced by the weak Recommendation on consumer redress and opt-out mechanisms and the rhetoric on avoiding the “toxic cocktail” of U.S. private competition enforcement. I will consider the impact of these developments, including implementation of the Damages Directive, together with an analysis of the implications arising from the United Kingdom’s withdrawal from the European Union.
The second section will look specifically at the UK legal and institutional developments arising from three key pieces of legislation: the Competition Act 1998, the Enterprise Act 2002, and the Consumer Rights Act 2015. The United Kingdom has witnessed considerable change and ongoing developments regarding private enforcement and consumer rights in particular.
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