PhD defence P. (Philipp) Kirst

The thesis contributes to the discussion on the shaping of an optimal enforcement regime of the competition rules in the EU and more specifically on the adjustments to the enforcement system that have become necessary following the implementation of Directive 2014/104/EU. The objectives of this Directive on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union appear to be two-fold: it aims (1) to foster the effectiveness of the competition enforcement regime by optimising the interaction between public and private enforcement, and (2) to ensure full compensation to victims of competition infringements. In other words, the Directive strives to guarantee the right to full compensation to victims of competition law infringements and to integrate the rules on damages actions into the enforcement regime in a way to ensure deterrence. Ensuring the right of compensation is not the single goal of the Directive, rather – as the CJEU has recognised in Courage and more recently in Skanska – the compensation of victims contributes to the effective enforcement of the competition rules by discouraging agreements or practices which distort competition. 

The thesis studies the effects of an anticipated rise of civil damages actions and the solutions opted for by the Directive to overcome potential negative effects for an effective enforcement system. As there still exists a hotchpot of different rules across Europe even after the transposition of the Directive in Europe, the thesis studies the provisions of the Directive and refers only exemplarily to specific deviating national rules. The study focuses on three aspects for which an optimisation is crucial to achieve the Directive’s two main objectives. Both goals of effective enforcement and full compensation may be jeopardized by specific features of the EU leniency programme, the methodology for setting fines for competition infringements, and the allocation of civil liability among joint infringers. The study finds that an increased attractiveness of damages claims and the corresponding increase of civil liability for competition infringers will likely lead to negative effects on the deterrence effect of the EU enforcement regime and the victim’s right to compensation. Moreover, the thesis provides concrete policy recommendations to overcome these negative effects. These recommendations address each of the three main aspects to achieve optimal enforcement of the competition rules and the goal of full compensation. Below they are discussed in turn:

The allocation of civil liability among joint infringers 
The Directive requires that civil liability will be distributed based on an infringer’s relative responsibility but has failed to provide national judges with any guidance for how to determine relative responsibility. The thesis proposes a methodology to determine relative responsibility that applies a combination of allocation criteria and distinguishes between direct and indirect purchasers on the one hand and other victims on the other hand. The proposal shows that the determination of contribution can be aligned with the Commission’s existing fining practice and is better suited to ensure deterrence and incentives to settle than the US no contribution rule or any other allocation criterion on its own.

Leniency incentives
The study finds that an increase of civil liability has negative effects on the attractiveness of the leniency programme. The decreasing numbers of leniency applications since the publication of the proposal of the Directive in 2014 appear to confirm the findings of the analysis (which were published for the first time in 2015). Following up on the previous findings, the study shows that allowing leniency applicants immunity from or a reduction of its civil liability in the same proportion that the leniency applicant receives immunity or a reduction from fines can overcome the negative impact on the enforcement regime without jeopardising the right to full compensation. 

Integrating civil liability in the calculation of fines
A rise of civil liability in addition to the existing level of fines will likely lead to a disproportionate level of fines and in turn likely to result in over-deterrence. In light of those welfare losses, the study argues for a new methodology to reconcile fines and damages. By including the harm that was caused to victims of an infringement in the methodology for the calculation of fines, the proposal scores better in terms of deterrence than the current methodology without jeopardising the right to full compensation. This is true even if the level of follow-on actions remains unchanged.

Due to corona, the PhD defences do not take place publicly in the usual way in the Senate Hall or in the Professor Andries Querido Room. The candidates will defend their dissertation either in a small group or online.