Editor: Please give our readers a snapshot of your background and professional experience.
Nave: I have been practicing antitrust law since 1984 in New York City and Washington, D.C. In 1998, I relocated to Brussels, and in 2000 to London. I have focused primarily on mergers and acquisitions.
Enser: I am a UK solicitor and senior associate in the antitrust group in Weil's London office since 2000. I recently spent a year in our Washington, D.C. office which has given me good insight into practice on both sides of the Atlantic.
Editor: You are both involved in antitrust/competition practice in the U.K. and EU. Would you give us an overview of the key distinctions between U.S. and UK/EU practice in this area?
Enser: One of the main differences we see is the volume of antitrust litigation. Up until now the U.K. and EU practice has been primarily at the regulatory level, but we think this is likely to change because the EU and UK regulators are both pressing to increase private enforcement efforts. More generally, the European process is less paper intensive, and generally entails a smaller burden on business.
Editor: Is there more private antitrust litigation in the U.S. than in the UK/EU?
Nave: Yes, much more. Incentives to litigate in the U.S. are higher, with more extensive discovery, availability of treble damages, jury trials, and the ease with which classes can be certified for collective recovery. None of this exists to the same extent in Europe to provide the same level of activity.
Editor: Does the UK/EU have anything like the Sherman Act or the Robinson-Patman Act?
Nave: The Sherman Act's equivalent is Article 81 of the EC treaty and Chapter 1 of the UK's Competition Act. There are rules against price discrimination but nothing as formalized as the Robinson-Patman Act, which is almost entirely privately enforced in the U.S.
Enser: Generally speaking, the substantive rules in the EU do not differ greatly from those in the US. The principal differences lie in the procedural framework for enforcing those regimes - jury trials, class actions, treble damages - all the things that make litigation attractive in the U.S. which, for the moment, do not exist in the same way in Europe.
Editor: There has been a lot of criticism of the U.S. for its long arm reaching beyond its borders.
Nave: The U.S. has generated some ill-will over time with its "long arm" discovery, and the UK seems to be starting down a similar course. In a recent cartel case, a UK court essentially held that a foreign plaintiff could sue a foreign defendant that had an English subsidiary, even though the plaintiff was damaged abroad and not by the English subsidiary - a rather attenuated view of jurisdiction.
Editor: What is the London office's role in the firm's antitrust practice in Europe and the UK?
Nave: We have competition specialists in England, France, Germany, Poland, Hungary, and the Czech Republic, all of whom work on both EU and national matters. Roughly half of our practice involves mergers and acquisitions, and the other half involves commercial conduct and cartel proceedings. And, hopefully we are well positioned as private litigation takes off to be active in that arena as well.
Editor: What are the forums for seeking redress in the UK?
Enser: Aside from the European Commission, in the UK a complainant really has three places to go. The Office of Fair Trading is roughly equivalent to the U.S. Department of Justice or FTC. It considers complaints about competitor transactions and conduct, and may investigate how whole sectors of the economy are operating. The UK recently established the Competition Appeals Tribunal, where parties can obtain damages after an antitrust infringement has been established by the OFT or European Commission. And, you obviously have recourse to the civil courts if you want to litigate a case from start to finish.
Editor: Please tell us about the kinds of cases that arise such as cartels, dominance claims and geographic market partitioning.
Nave: The private claims that arise cover the waterfront in antitrust enforcement. An example involving cartel activity in the UK is the recent Vitamins case where, following a regulatory disclosure of a cartel, various private parties have tried to obtain damages. There is an increasingly active bar challenging mergers and acquisitions. One of the most high-profile cases recently was a challenge by an association of independent music publishers to the European Commission's approval of the Sony/BMG joint venture. That caused the Commission to go back and reinvestigate something it had already approved. Private parties can lodge complaints that a company is abusing a dominant position, the case against Microsoft being a good example. And obviously parties can bring a whole range of complaints relating to commercial conduct, between distributors and suppliers, for example.
You mentioned geographic market partitioning. This is a unique focus of EU competition law, which is meant not only to preserve competition but also to help integrate the Common Market; the EU regulators put heavy emphasis on ensuring that companies cannot impede cross-border trade.
Editor: Is it wise to go to the Commission first before you undertake a merger?
Nave: You can always approach the Commission and discuss a transaction informally to see if the Commission is likely to have serious regulatory concerns and, if that is the case, what kind of remedies might be possible. However, the Commission has treaty obligations that require it to open its process for public comment and allow national regulators to weigh in. The Commission will not be able to give a firm decision before an actual filing is made.
One of the chief considerations here is confidentiality. Clients are typically very skeptical about early disclosures to regulators because they do not want word of their transaction to become public before they have actually signed up.
Editor: Is there another body where you can go besides the European Commission?
Enser: It depends on the size of the parties involved in the transaction. If the party's revenues meet certain thresholds, they have essentially no choice but to start out at the European Commission. For smaller mergers, national authorities have initial jurisdiction. However, it is becoming increasingly common for parties to get cases transferred to and from Brussels to make sure that a transaction finds its way to the appropriate regulator.
Editor: Do you have anything comparable to Hart-Scott-Rodino?
Nave: There are mandatory notification regimes in most of the EU member states. Luxembourg does not have one, and the UK's regime is nominally voluntary, though the OFT often self-initiates investigations. Most of the EU jurisdictions require reporting of certain transactions, and the general rule is review and clearance before closing, just as it is in the States.
Editor: Are double or treble damages available to litigants as they are in the U.S.?
Nave: It is not clear yet. Compensatory damages certainly are available. There has been a good deal of litigation recently over whether companies that have committed wrongdoing can be forced to disgorge their unjust gains. There also has been litigation over whether punitive or exemplary damages can be collected. In the UK, the most recent decision involving parties impacted by the Vitamins cartel suggest that exemplary and restitutionary damages are not available, but that decision is subject to further appeal. So this is an area of uncertainty.
The regulators are increasingly encouraging private litigation as a way to supplement their own limited resources. One of the ways to do that is to make extra damages available. It is undesirable to make so much available that parties institute frivolous strike suits but at the same time, recognizing the cost of litigation and other factors, both the EU and the OFT have been talking about some enhanced recovery here.
Editor: Could you tell us more about the long, ongoing Vitamins case?
Enser: It is an extended series of cases following successful prosecutions by regulators in the U.S., EU and elsewhere. A number of follow-on claims in the UK have raised precedent setting issues regarding the availability of damages and jurisdiction.
Nave: The parties paid some record fines in the Vitamins case and one of the interesting policy questions before the courts is: since those companies paid fines, is it fair or just to also expose them to punitive damages in private litigation? The most recent decision says no, but that is still subject to appeal. The Vitamins cartel came to light right when greater interest was emerging in private litigation, so that has developed into a test-case for a lot of these issues.
Editor: Does the UK or EU give more lenient treatment if the first party involved in a cartel comes forward?
Enser: Yes. In both the EU and many of the member states a leniency program operates for cartel participants.
Nave: This is fairly new, ten years at most, and seems to be working well. Both the EU and the OFT are now discussing the elimination of joint and several liability in private actions so that a whistle-blower has incentives to come forward rather than facing potentially ruinous damages after disclosing a cartel.
Editor: What should we be telling our readers about the management of EU antitrust risk?
Nave: It is time to undertake an audit and to initiate a serious compliance program, to see where the exposures might be and to clean up any potential problems. Criminal sanctions are becoming somewhat more common in Europe and companies need to consider competition law here with the same seriousness as in the U.S.
Enser: Companies will also want to consider the procedural differences in Europe and adapt their compliance strategies appropriately. For example, in-house counsel do not enjoy attorney-client privilege in Europe and, therefore, their communications are discoverable by the Commission. On the plus side, however, it is also a good time to consider whether you have profitable claims, allowing you to take advantage of the competition rules.
Nave: For example, if you believe that you are not getting competitive pricing from your suppliers where the supply structure is fairly concentrated, you might think about the possibility of claims for collusion at that level. And, as is increasingly common, companies are challenging mergers and acquisitions that might give their competitors an unfair advantage. On the one hand it creates risks, on the other hand it creates opportunities.
Editor: Where would you like your practice to be in five years?
Nave: What we are hoping to see in Europe is an increasingly vigorous culture of competition. Europe has been very successful in introducing market reforms and helping to imbed in the business community a true appreciation that the competition rules help society and the economy function better. The emergence of private litigation is another step on that road, and we think is probably a good one. The critical thing to remember is that there needs to be a balance. Something the UK has gotten correct, in my view, is ensuring that decision-makers in competition cases are well-informed about competition law and economics. A specialized competition tribunal has been set up and competition cases have been taken outside the scope of jury trials. Civil cases are normally referred to the chancery division. The UK is balancing and saying: yes, these things can go to a court but they have to go to an informed and objective court. The same issue exists with respect to damages. On one hand one wants to provide sufficient incentives that people comply with the law and others can challenge them if they don't. On the other hand, one wants to avoid excessive forms of recovery that can lead to strike suits. So what we are hoping to see in five years is this kind of balanced development in the culture of competition.
Published January 1, 2008.
