EU crackdown on price-fixing is too soft to make a difference in UK

Consumers and businesses in Europe are losing "billions of euros" every year because companies are breaking EU fair-trading laws, according to Neelie Kroes, the Competition Commissioner. But her plans to make it easier for victims to sue for compensation are unlikely to give law-breakers in Britain many sleepless nights.

Claims against companies that break European laws banning price-fixing, cartels and the abuse of a dominant market provision rarely succeed at present because victims are thwarted by legal and procedural hurdles, Ms Kroes said in an EU White Paper this month.

"These people," she added, "have a right to compensation through an effective system that complements public enforcement, whilst avoiding the potential excesses of the US system."

But the Commissioner's insistence on "balanced measures that are rooted in European legal culture and traditions" means consumers in Europe are likely to be denied the weapons that have made class actions so feared in the US. She is also anxious not to undermine the effectiveness of authorities such as the Office for Fair Trading at getting cartel members to blow the whistle in exchange for leniency.

"These recommendations will not result in a glut of consumer class actions across Europe as some people had expected," said Nicholas Heaton, a partner in City firm Lovells. "This will be a disappointment to consumer groups and US plaintiff firms that have set up in Europe, but a relief to businesses."

Jane Wessel, a London-based lawyer with the US firm Crowell and Moring, agreed that the proposals would not advance the position of claimants in Britain. But she thought they could "effect some fundamental changes" in some other European jurisdictions where recovery actions were less well developed.

One example may be greater disclo-sure. Unlike courts in some other EU member states, judges in Britain will normally order businesses to disclose relevant documents as a matter of course. The White Paper calls for a minimum level of disclosure to claimants across the EU, though controlled by the courts to prevent abuses.

The Commission is not proposing punitive damages. In some US states, claimants can recover three times their losses. On the other hand, it is proposing that victims should have a right to seek compensation once a body such as the OFT has found breaches of anti-trust laws. The right would arise as soon as the company in breach had exhausted all its rights of appeal.

Michael Sanders, from Linklaters, agreed that the proposals were "unlikely to give rise to a US-style litigation culture", pointing out that they were more restrained than the OFT's own recommendations last November. That was because the OFT had envisaged the possibility of "opt-out" actions, under which consumers would have to withdraw from a class action if they did not want to share the benefits of a claim - perhaps because they wanted to bring a separate case themselves.

But the Commissioner will not require other countries to go that far. Instead, she is proposing opt-in collective actions, requiring a positive decision by each individual consumer wanting to take part. There would also be representative actions, brought by consumer groups such as Which?